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THE UNITE GROUP PLC
Annual Report and Accounts 2022
HOME FOR SUCCESS
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Unite provides high-quality homes to
students from the UK and around the
world. Together, we are committed
to raising standards in thestudent
accommodation sector for our
customers, investorsand people
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
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818p
790p
927p
847p
2019 20202018 2022
20202018
89p
2019
-32p -32p
91p
2022
34%
29%
31%
37%
2019 20202018 2022
13.2%
-3.4%
11.7%
20192018 2020
8.1%
2022
24.0p
34.1p
40.9p
37.1p
2019 20202018 2022
29.0p
12.75p
10.25p
20192018 2020
32.7p
2022
27.6p
2021
22.1p
2021
10.2%
2021
86p
2021
882p
2021
29%
2021
Adjusted earnings per share
1, 2
(p)
40.9p
IFRS basic earnings per share (p)
89p
Dividend per share (p)
32.7p
EPRA NTA per share
1, 3
(p)
927p
Total accounting return
1
(%)
8.1%
Loan-to-value ratio
1
(%)
31%
FINANCIAL HIGHLIGHTS
OPERATIONAL HIGHLIGHTS
•
Return to full occupancy in 2022/23, strong
demand for 2023/24
•
Best-in-class operating platform supports continued
earnings growth in 2023
•
Successful project deliveries in 2022, four committed
developments for delivery in 2023–2026
•
Shortage of quality student homes creates significant
opportunities to grow our platform
•
Rental growth more than offsetting the impact
ofrising property yields
•
Sustainability strategy delivering a positive impact
through People and Places
1. The financial statements are prepared in accordance with International Financial Reporting Standards (IFRS). These financial highlights are based on the European Public Real
Estate Association (EPRA) best practice recommendations and these performance measures are published as they are intended to help users in the comparability of these
results across other listed real estate companies in Europe. The metrics are also used internally to measure and manage the business and to align to the performance related
conditions for Directors’ remuneration. See note 8 for calculations and reconciliations.
2. Adjustment made to EPRA EPS to remove the impact of the LSAV performance fee and abortive acquisition costs. Further details are provided in notes 2 and 8.
3. 2018 based on EPRA NAV as previously reported.
01
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
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OUR
PURPOSE-LED
STRATEGIC
APPROACH
WHY INVEST
IN UNITE
OUR 2022 ANNUAL REPORT AT A GLANCE
Our purpose, Home for
Success, is fundamental
to everything we do at
Unite. It means providing
a safe and welcoming
home where students
from the UK and all over
the world can achieve
their aspirations.
Read more
Read more
We are the UK’s largest owner, manager
and developer of purpose-built student
accommodation, servingthe UK’s world-
leading Higher Education sector.
View our 2022 Annual Report & Accounts
online at: unitegroup.com/investors/
reports-and-presentations
Page references are shown throughout
for links to important content
CONTENTS
STRATEGIC REPORT
01 Highlights
02 Our 2022 Annual Report
at a glance
04 Being purpose-led
05 Who we are
06 Our purpose
08 Business model
06 Why invest in Unite
14 Chief Executive’s review
20 Market overview
24 Our strategic objectives
30 Key performance indicators
32 Financial review
46 Sustainability and non-financial
reporting
66 Section 172
69 TCFD
77 Risk management
CORPORATE GOVERNANCE
88 Chair’s introduction to
Governance
90 Board of Directors
94 Board statements
97 Board leadership and purpose
105 Division of responsibilities
107 Board activities
115 Nomination Committee
119 Audit & Risk Committee
125 Sustainability Committee
128 Health & Safety Committee
131 Remuneration Committee
164 Directors’ Report
167 Statement of Directors’
Responsibilities
FINANCIAL STATEMENTS
169 Independent auditor’s Report
179 Consolidated income statement
179 Consolidated statement of
comprehensive income
180 Consolidated balance sheet
181 Company balance sheet
182 Consolidated statement of
changes inshareholders’ equity
183 Company statement of changes
inshareholders’ equity
184 Consolidated statement of
cashflows
185 Notes to the financial
statements
OTHER INFORMATION
244 Financial record
245 Glossary
248 Company information
12
04
02
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BUSINESS
MODEL
CHAIR’S
INTRODUCTION
TO GOVERNANCE
CHIEF
EXECUTIVE’S
REVIEW
We align our portfolio to
the best locations and
strongest Universities.
Our scale allows us to
deliver value-for-money
to customers, alongside
sector-leading returns.
Read more
Read more
We delivered a strong operational
performance in 2022, with earnings and
dividends surpassing their pre-pandemic
levels on the back of a return to full occupancy
and improving rental growth.
Under our sustainability strategy, we focus
on making a positive impact through People
and Places. We continue to make progress
on our objective of being a net zero carbon
business by 2030, and have committed 1% of
our annual profits to social initiatives.
Read more
The business has had a strong 2022
performance, built on our best-in-class
operating platform and affordable and well-
located portfolio, but ultimately delivered
through the hard work and commitment of our
people serving our customers. This has helped
deliver the strong recovery in our operational
performance with 99% occupancy and our
financial performance, with earnings and
dividends above their pre-pandemic peak.
08
14
88
03
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
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BEING PURPOSE-LED
Home for Success means providing a home where students from the
UK and all over the world can achieve their aspirations. It is also our
commitment to be a valued partner to Universities, and a workplace
where our people can grow, belong and succeed.
Our corporate strategy is underpinned by our strategic objectives,
our values and our brand promises.
HOME FOR SUCCESS
STRATEGIC OBJECTIVES
VALUES
BRAND PROMISES
 
Read more about our three strategic objectives on pages 24–29
 
Read more about our values on pages 98–99
DOING WHAT’S
RIGHT
RAISING THE
BAR TOGETHER
KEEPING
USSAFE
CREATING
ROOM
FOR EVERYONE
BE THERE WHEN
YOU NEED US
PROVIDE A SPACE TO
GROW AND THRIVE
PROVIDE A PLACE
TO BELONG
A RESPONSIBLE AND
RESILIENT BUSINESS
DELIVERING FOR
OUR CUSTOMERS
AND UNIVERSITIES
ATTRACTIVE RETURNS
FOR SHAREHOLDERS
04
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7
5
3
2
9
4
6
8
10
1
Liverpool
Aberdeen
Edinburgh
Glasgow
Newcastle
Durham
Leeds
Sheffield
Manchester
Leicester
Nottingham
Loughborough
Coventry
Birmingham
London
Medway
Bournemouth
Southampton
Bath
Portsmouth
Cardiff
Bristol
Oxford
WHO WE ARE
Unite is the UK’s largest owner, manager
and developer of purpose-built student
accommodation, meeting the country’s demand
for high-quality student housing
Properties
157
Operate in 23 cities and
towns across England,
Scotland and Wales
Beds
70,000
In properties across the UK
University partners
>60
Work alongside University
partners to deliver their
accommodation needs
Ranked
No. 1
The largest provider of
student accommodation
inthe UK
CITY
COMPLETED
BEDS (22/23)
2022
rank
1 London 12,574
2 Liverpool 5,975
3 Manchester 5,639
4 Birmingham 5,582
5 Leeds 5,533
6 Bristol 4,085
7 Newcastle 3,763
8 Cardiff 3,481
9 Sheffield 2,798
10 Portsmouth 2,706
Top 10 52 ,136
Total 69,737
05
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
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A safe and welcoming home where students can learn and thrive.
That’s the promise at the heart of everything we do at Unite.
Home for Success is our purpose, and part of our DNA. It’s our commitment
to providing a place where students from all over the world can achieve their
ambitions. It’s also our commitment to be a valued partner to Universities,
anda workplace where our team can grow, belong and succeed.
It’s fundamental to everything we do.
A HOME FOR SUCCESS
OUR PURPOSE
06
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STUDENT
WELLBEING
COMMUNITY
AND
ENVIRONMENT
The cost-of-living crisis, coupled with the
aftermath of the pandemic, meant that
supporting students mattered more than ever.
In response, we partnered with experts to
help students with financial planning, access
to employment, and where needed, support
to staysafe and well. Our team members are
trainedin mental health, available 24/7, and
collaborate closely with University partners
onstudent wellbeing.
Through the Unite Foundation, we continued
our commitment to helping care leavers and
estranged students gain a University education
that would otherwise be out of reach.
DIVERSITY
AND
INCLUSION
We’re creating a culture
where everyone is welcome
and able to thrive, no matter
their background.
This year we launched
our new learning and
development Academy to
help our teams reach their
career goals. Employee
forums gave a voice to
diverse perspectives from
across the business and
ledto enhanced family
leavepolicies.
The Living Black at University
Commission brought the
industry together to make
student accommodation a
more inclusive space, and
our head offices took part
in the 10,000 Black Interns
programme.
When it comes to sustainability, our ambition is to lead the
sector. Each year, we commit 1% of our annual profits to
socialinitiatives.
We’re working towards becoming a net zero carbon business
by 2030, finding ways to use fewer resources, and future-
proofing our buildings through investments in energy
initiatives and sourcing 100% renewable energy.
Being a good neighbour matters to us. We partner with a range
of charities to help vulnerable young people in our local areas
and support our team to engage in our local communities.
07
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BUSINESS MODEL
WHAT WE DO
We are the UK’s largest owner, manager
and developer of purpose-built student
accommodation
BEDS
70,000
in 157 properties
acrosstheUK
100%
of development pipeline in
the strongest university cities
31
year track record in student
accommodation
CUSTOMER NPS
+38
LOAN-TO-VALUE RATIO
31%
High-quality, value-for-
money portfolio
We align our portfolio to the best
locations and strongest Universities.
Value-for-money is central to our
customer offer and we provide an
all-inclusive fixed price and added
serviceswhich deliver a hassle-free
experience to students.
Unrivalled customer insight
The customer is at the heart of everything we do and we
invest significant time into understanding the wants and
needs of students through regular research and insight.
New investment opportunities
We source opportunities for new acquisitions and
developments in the strongest University markets
tosupportthe future growth of our business.
Best-in-class
operating system
Our scale and PRISM technology
platform allow us to deliver the best
all-round customer experience for
students, alongside sector-leading
operating margins.
We are leaders in sustainability,
health, safety and student welfare in
the student accommodation sector.
Robust and flexible balance sheet
We nurture strong relationships with our shareholders,
co-investment partners and debt providers to ensure
continued access to capital.
Partnerships with the
strongest Universities
We partner with Universities to deliver their long-term
accommodation strategies. Our Higher Education
Engagement team work closely with Universities to
identifynew opportunities for University partnerships.
52%
of beds let under nomination
agreements
EMPLOYEES
1,900
Committed and
talented people
Our teams are central to delivering
our purpose of providing a ‘Home for
Success’ for students. Staff training
is focused on student welfare and
peer support provided by Resident
Ambassadors.
08
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HOW WE DO IT
We are differentiated by our operating platform,
long-standing University partnerships, our
development expertise and our values
Best-in-class
operating
platform
We dispose of assets to
provide funding for new
investment and improve
portfolio quality
RECYCLE
Portfolio enhancement
We manage two co-investment
vehicles, USAF and LSAV, which
provide recurring fee income and
access to additional capital
MANAGE
We drive superior rental growth
and improve the environmental
performance of our buildings
through targeted refurbishments
IMPROVE
We partner with leading
UK Universities through
nomination agreements
PARTNER
We provide a ‘Home for Success’
for the students wholive with us
SERVE
We appraise and acquire single assets and
portfolios which enhance portfolio quality
ACQUIRE
We develop high-quality PBSA in
the strongest University markets
DEVELOP
09
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BUSINESS MODEL continued
THE VALUE WE CREATE
STUDENTS OUR PEOPLE UNIVERSITIES
Key issues
•
Value-for-money
•
Customer service
•
Safety and welfare support
How we engaged
Our front-line property teams engage
with students on a day-to-day basis,
supplemented by peer-to-peer
support provided by our Resident
Ambassadors. We also engage with
students using our MyUnite app and
social media channels.
This is complemented by our
customer research programme
whichincludes surveys on specific
issues, including student views on
climate change.
Value creation in 2022
•
Increased peer-to-peer support
for students through our Resident
Ambassador programme
•
Supported the award of
accommodation scholarships
to100 students through the
UniteFoundation
•
Re-launch of our Leapskills
programme for school leavers
inpartnership with UCAS
Priorities for 2023
We remain focused on delivering a
Home for Success for the students
who live with us. In 2023, we are
focused on improving the customer
experience through a range of
initiatives. This will include testing new
design concepts for our bedrooms,
kitchens and amenity spaces ahead
of a roll-out in our new developments
and refurbishment projects. We are
also investing to upgrade our PRISM
technology platform to deliver an
improved end-to-end experience for
students from the point of booking,
through their time with us and
ultimately when they leave.
Key issues
•
Learning and development
•
Diversity, equity and inclusion
•
Health, safety and wellbeing
How we engaged
We held four sessions of our
employee engagement forum,
Culture Matters, during the year
with attendance by Non-Executive
Director, Ilaria del Beato. Feedback
from our representatives has helped
to inform the review of our people-
related policies.
We hold regular ‘Unite Live’ sessions
with our CEO and key senior leaders
to provide business updates with the
opportunity to ask questions.
We conduct regular employee
engagement surveys with findings
shared with our teams to help jointly
develop action plans.
Value creation in 2022
•
One off payment to help with cost-
of-living pressures
•
Launch of our Diversity, Equity,
Belonging & Wellbeing strategy,
We are US
•
Launch of the Academy offering
a personalised, tailored, learning
experience for our teams
•
Enhanced leave for
non-birthingparents
Priorities for 2023
Our focus is to provide our
employees with a great place to work.
In 2023 we will focus on delivering
on our talent agenda by investing
in our learning and development
programmes through The Academy
and continuing our focus on diversity,
equity, inclusion and belonging.
Key issues
•
Student welfare
•
Operational performance
•
Health and safety
How we engaged
Through our Higher Education
Engagement team, we meet
regularlywith leaders across the
UK University sector. We engage
at various levels in institutions
fordiscussions ranging from
strategicplanning to day-to-day
operational requirements.
In addition, we engage actively
inthewider Higher Education
sector,presenting at conferences
and contributing to Higher
Educationresearch.
Value creation in 2022
•
Provided 37,000 beds to
Universities for the 2022/23
academic year
•
Delivered University partnership
developments for University of
Bristol and King’s College London
•
Publication of ‘Living Black at
University’ report
Priorities for 2023
Supporting the growth ambitions
of our University partners through
nomination agreements and
strategicpartnerships.
To progress these objectives,
we have increased the resource
allocated to strategic engagement
with Universities regarding their
accommodation estates.
10
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See our s172 statement on page 66
COMMUNITIES SUPPLIERS INVESTORS
Key issues
•
Trust and transparency
•
Land use
•
Local investment and job creation
How we engaged
Our operational teams are
activeintheir communities
throughour Company-wide
volunteering programme.
We relaunched our Positive Impact
programme in 2022, which includes
awards for projects undertaken
by employees aimed atdelivering
measurable benefits intheir
localcommunities.
We also engage actively with local
stakeholders for our development
projects to ensure the design
ofour buildings, public spaces
andcommunity facilities meet
theirneeds.
Value creation in 2022
•
Employment for 1,400 people
inour local communities
•
Invested £13 million in initiatives to
reduce our environmental impact
•
124 hours of employee
volunteering in the year
Priorities for 2023
We aim to increase community
engagement through our Positive
Impact programme, via new
initiativesdelivered by local teams
inour properties.
In addition, we will continue to
engage with local authorities
and local communities around
new development activity, such
as our proposed development
in Paddington, to explain how
the community benefits from
creating new, high-quality student
accommodation.
Key issues
•
Quality
•
Performance and efficiency
•
Risk management
How we engaged
The business embarked on a
procurement programme in 2022
which redesigned and centralised
our procurement approach with
an initial focus on estates, facilities
management, and technology.
We continued to ensure our buildings
meet existing and emerging safety
regulations, including planned work
forthe remediation of cladding,
where required.
Value creation in 2022
•
Spent £275 million with
suppliers across development
activity, cladding remediation
andrefurbishments
•
Higher quality service from
suppliers, supporting improved
NPS scores from customers
•
Reduced risk through anenhanced
supplier vettingprocess
Priorities for 2023
We will expand our new procurement
approach across the wider business
and progress the development
ofour new technology platform
withpartners.
We also plan to publish our
Sustainable Construction Framework
during the year, which will inform the
way in which we procure net zero
developments in the future.
Key issues
•
Financial performance
•
Strategic direction
•
Sustainability and risk management
How we engaged
We engaged regularly with investors
around our financial results as well
as through ad-hoc events, such as
property tours, investor conferences
and meetings.
Key themes for engagement during
the year were our response to higher
inflation and increased interest
rates. These discussions informed
our decision to reduce investment
activity and delay some parts of our
development pipeline.
We also sought feedback from
investors ahead of our pilot build-
to-rent (BTR) investment. Feedback
was supportive on testing our
capabilities in the BTR sector and we
subsequently completed our debut
BTR acquisition in October 2022.
Value creation in 2022
•
Delivered 99% occupancy and
rental growth of 3.5%
•
48% growth in adjusted EPS
•
Total accounting return of 8.1%
•
Full year dividend per share
of32.7p
Priorities for 2023
Delivering growth in EPS, through
rental growth and resilience in
operating margins, while ensuring
arobust capital structure.
We aim to achieve this through
a strong sales performance for
2023/24, ongoing cost discipline and
management of interest rate risk.
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WHY INVEST IN UNITE
Sector leader in UK student accommodation
delivering attractive returns
See pages 22–29 for more information See pages 62–69 for more information
See pages 56–61 for more information
HIGH-QUALITY
PORTFOLIO
Aligned to the strongest
Universities
Our portfolio is increasingly
focusedon the UK’s leading
Universities, where we see the
strongest prospects for student
number growth, through our new
investment activity and disciplined
capital recycling.
Value-for-money
We offer students a hassle-free living
experience, with support on hand
when it is needed. Our pricing is
inclusive of utilities, Wi-Fi, contents
insurance and maintenance.
Investing to enhance our
operational estate
There is a multi-year opportunity
toenhance rents and reduce
operational costs through
investments in our customer
proposition and the energy
efficiency of our buildings.
STRUCTURALLY
GROWING
SECTOR
Demographic growth
The UK’s 18-year-old population is
set to grow by 19% by 2030,
supporting demand for an additional
c.140k undergraduate places at
current participation rates.
Rising Higher Education
participation
2022/23 saw a record share of
18-year-olds applying to University,
demonstrating young people’s
recognition of the opportunities
andlife experience that University
provides. Demand for postgraduate
courses also continues to grow,
asreflected in a 37% increase in
postgraduate intake over the past
three years.
Growing international
demand
The UK Government remains
committed to the target of at least
600,000 international students
studying in the UK each year with a
particular focus on attracting more
students from Africa, the Middle
East and Asian countries outside
ofChina.
BEST-IN-CLASS
OPERATING
PLATFORM
Over 60 University
partnerships
We are the partner of choice for a
large number of the UK’s leading
Universities, reflecting our track
record, focus on student support
and our high-quality, affordable
products and services.
Passionate frontline teams
Service excellence is delivered by
our passionate front-line team of
1,400 employees. This brings
together our experience of over
30years of operating in the student
accommodation sector.
Sector-leading
operating margins
We drive cost efficiencies through
our scale using our PRISM
technology platform. Management
fees from joint ventures and
fundsalso cover two-thirds of
ourannual overheads.
18-year-old
participation
rate in 2022/23
37.5%
Share of the rental
portfolio by value in
Russell Group cities
94%
Number of beds let under
nomination agreements
for2022/23
37,000
SUSTAINABLE GROWTH
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THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
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See pages 70–73 for more information
See pages 20–26 for more information See pages 34–55 for more information
HIGH VISIBILITY
OVER RETURNS
SUBSTANTIAL
GROWTH
OPPORTUNITIES
LEADERSHIP IN
SUSTAINABILITY
Targeting attractive total
returns of 8.5–10% p.a.
Achieved through recurring
earnings, rental growth and
development profits.
Growing dividends
As a REIT, we target sustainable
growth in dividends for our
investors. We distribute 80% of
ourrecurring earnings each year
asdividends.
Sustainable rental growth
Underlying rental growth driven by
student demand and contracted
increases under our multi-year
University nomination agreements,
supported by ongoing investment
into our estate.
Accretive development
activity
Proven ability to drive earnings and
development profits through our
in-house development team. 5,000
bed secured pipeline focused on
thestrongest student markets.
Market share gains
fromHMO sector
Almost one million students live
inhouses of multiple occupancy,
providing a significant opportunity.
Development of 1,500–2,000
beds per annum
Investment focused on the strongest
8–10 markets in the UK, with
increasing opportunities in London
and major regional cities.
New University partnerships
Opportunities for new developments
on and off-campus as well as
partnerships for the transfer
of Universities’ existing
accommodation stock.
Emerging young
professional market
Significant potential from expanding
our platform to cater for the growing
number of professional renters living
in major student cities.
Net zero carbon
Becoming a net zero carbon
business for both our operations
and developments by 2030, based
on SBTi-validated targets.
Energy-efficient homes
80% of our portfolio already
achieves an EPC rating of A–C with
asset-level plans to reach 100%.
1% of profits commitment
We have committed to donating 1%
of annual profits to social initiatives
aligned to our purpose of providing
a Home for Success for students
andwidening participation in
HigherEducation.
Unite Foundation
Through our financial commitment,
the charity we founded provides
scholarships for estranged and
care-experienced students
throughout the course of
theirstudies by addressing
housingfragility.
Total accounting
returns over the
past 10 years
13.2% p.a.
Full-time students living
in University-owned
accommodation or HMOs
1.8 million
Target reduction in
Scope 1 and 2 carbon
emissions by 2030
56%
13
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONSTRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
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CHIEF EXECUTIVE’S REVIEW
“Despite the challenging economic environment,
the business remains well-positioned thanks
to increasing student numbers and growing
demand for high-quality, purpose-built student
accommodation across our markets.”
Richard Smith
Chief Executive Officer
The business has performed strongly in 2022, delivering
an increase in earnings and dividends to above their pre-
pandemic peak. This reflects the strength of our best-in-
class operating platform, the commitment of our teams
and the appeal of our affordable, well-located portfolio.
Earnings and dividend ahead of their
pre-pandemicpeak
The business delivered a strong recovery in financial
performance in 2022, with adjusted earnings of
£163.4million and adjusted EPS of 40.9p, both up 48%
year-on-year. This reflects an increase in occupancy to 99%
and rental growth of 3.5% for the 2022/23 academic year
(2020/21: 94% and 2.3%, respectively). IFRS profit before tax
of £358.0 million and EPS of 88.9p also reflects the valuation
growth of our property portfolio during the year. We have
proposed a final dividend of 21.7p which, if approved,
makes32.7p for the full year, representing a payout ratio
of80% of adjusted EPS, underlining our confidence in future
business performance.
Total accounting returns for the year were 8.1%, underpinned
by a 5% increase in EPRA NTA per share to 927p. Our LTV
ratio increased to 31% during the year, reflecting the positive
impact of rental growth in our property valuations and the
increase in net debt to fund our investment activity. This
provides the financial headroom to deliver our committed
development pipeline and pursue new growth opportunities.
EARNINGS AHEAD OF
PRE-PANDEMIC LEVELS
Supported by our best-in-class operating
platform, people and portfolio
Financial highlights
1
2022 2021
Adjusted earnings £163.4m £110.1m
Adjusted EPS 40.9p 27.6p
IFRS profit before tax £358.0m £343.1m
IFRS basic EPS 88.9p 85.9p
Dividend per share 32.7p 22.1p
Adjusted EPS yield 4.6% 3.4%
Total accounting return 8.1% 10.2%
EPRA NTA per share 927p 882p
IFRS net assets per share 945p 880p
Loan to value 31% 29%
1. See glossary for definitions and note 7 for alternative performance measure
calculations and reconciliations. A reconciliation of profit before tax to EPRA
earnings and adjusted earnings is set out in note 7 of the financial statements.
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THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
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24.0p
34.1p
40.9p
37.1p
2019 20202018 2022
27.6p
2021
20202018
89p
2019
-32p -32p
91p
2022
86p
2021
Positive outlook for 2023/24
We see strong demand for student accommodation, which is
reflected in our excellent progress with reservations for the
2023/24 academic year. Across the Group’s entire property
portfolio, 83% of rooms are now sold for the 2023/24
academic year, significantly ahead of the prior year as well
aspre-pandemic levels (2022/23: 67%).
In our strongest markets, we have seen an increasing
number of students looking to secure accommodation
earlier in the sales cycle than previous years. This early
customer interest reflects the appeal of our all-inclusive,
fixed-price offer and lower availability in the houses in
multiple occupation (HMO) sector as some landlords choose
to leave the market in response to rising costs and increasing
regulation. We have also seen increased demand from
universities, following more cautious behaviour during the
pandemic, who see quality accommodation as a key part of
their proposition to prospective students.
As a result of this strong demand and the need to offset cost
pressures in our business, we now expect to deliver rental
growth of 6–7% for 2023/24 (previously at least 5%).
Value-for-money
We recognise the cost-of-living pressures faced by students
and parents and are confident that our fixed price, all-
inclusive offer will continue to provide value-for-money
compared to alternative options in the purpose-built student
accommodation (PBSA) and HMO sectors. Our pricing is
comparable in cost to HMOs once bills are included. This
is before allowing for the price certainty on utilities and
additional product and service features that we provide,
such as on-hand maintenance teams and 24/7 security, in
locations close to campus.
Given increases in energy prices, we estimate that students
living in HMO will pay over £900 per year for their utilities,
Wi-Fi and contents insurance. Thanks to our scale and forward
purchasing of utilities, these same services will cost the
Company less than £600 for the 2022/23 academic year. These
savings equate to around two weeks’ rent, which wepass on
to students through a single price, fixed at the time of booking,
giving our customers certainty over their living costs.
We also recently launched our ‘Financial Support to Stay’
pilot in partnership with Aldi supermarket, which will see
food vouchers distributed to students most in need of
financial support, as decided by their university. This pilot
scheme will collaborate with universities, including Liverpool
John Moores University, Middlesex University, Birmingham
City University and the University of Westminster.
Inflation protection
Like many businesses, inflation is creating cost pressures
in parts of our operations and development supply chains.
Yet,the business is well protected from these impacts
through the inflation-hedging characteristics of our income
and risk management through cost hedging.
Our rooms are either resold each year on a direct-let basis
or repriced based on RPI, CPI or fixed rental inflators under
our multi-year nomination agreements. The combination of
these open market and contractual rental increases supports
rental growth of 6–7% across our total portfolio for the
2023/24 academic year.
Our utility costs are fully hedged through 2023 and 65%
for 2024, but costs are increasing as the benefit of cheaper
hedges pre-dating the war in Ukraine expire. We are also
seeing increased pressure on staffing costs for our frontline
teams, driven by competition for staff in similar service
sectors, as well as our commitment to being a Real Living
Wage employer. We have honoured the 10% increase in the
Real Living Wage for 2023 and provided an additional £500
in financial support to our frontline property teams during
2022 in recognition of the cost-of-living challenges facing our
staff. These cost pressures have been partially mitigated by
the restructuring of the Group’s operational business during
the first half of the year, which delivered an annualised
£2million saving in staff costs.
Despite these cost increases, we have delivered an
improvement in our EBIT margin to 67.9% in 2022 (2021:
62.3%) thanks to our strong income performance. We are
targeting further margin growth to 70% in 2023, driven by
the increase in occupancy secured for the 2022/23 academic
year and a positive outlook for rental growth for 2023/24.
Adjusted earnings per share
1, 2
(p)
40.9p
IFRS basic earnings per share (p)
89p
1. The financial statements are prepared in accordance with International Financial Reporting Standards (IFRS). These financial highlights are based on the European Public Real
Estate Association (EPRA) best practice recommendations and these performance measures are published as they are intended to help users in the comparability of these
results across other listed real estate companies in Europe. The metrics are also used internally to measure and manage the business and to align to the performance related
conditions for Directors’ remuneration. See note 8 for calculations and reconciliations.
2. Adjustment made to EPRA EPS to remove the impact of the LSAV performance fee and abortive acquisition costs. Further details are provided in notes 2 and 8.
15
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
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OUR STRATEGIC
OBJECTIVES
DELIVERING FOR
OUR CUSTOMERS
AND UNIVERSITIES
HOME FOR SUCCESS
A RESPONSIBLE AND
RESILIENT BUSINESS
ATTRACTIVE RETURNS
FOR SHAREHOLDERS
Strategic overview
Our best-in-class operating platform provides us with strong
foundations to adapt to evolving student needs and deliver
an enhanced customer experience. There are also significant
opportunities to invest in our well-located and affordable
estate to drive rental growth and improve the environmental
performance of our buildings.
Our strategy is focused on three key objectives, which will
deliver value for our range of stakeholders:
•
Delivering for our customers and universities
•
Attractive returns for shareholders
•
Being a responsible and resilient business
Delivering for our customers and universities
We have a best-in-class operating platform in the student
accommodation sector, underpinned by our PRISM operating
platform, passionate frontline teams and sector-leading
student support. We introduced a new operating model
during the year, meaning all our properties are now staffed
24/7, 365 days a year, so that students can access in-person
support when they need it. We have also made various
service enhancements, including further improvements to
student support in collaboration with our Higher Education
partners as well as digital upgrades to better enable our
customers to self-serve the services they need. In addition,
we are investing to upgrade PRISM over the next 12–18
months, which will deliver an improved customer experience
alongside cost savings through greater efficiency.
The success of our customer initiatives is reflected in an
increase in our Net Promoter Score to +38 for the class of
2022 (2021: +35). For those buildings where we delivered
major refurbishments during the year, NPS scores improved
by an average of more than 50 points. We have also seen a
significant increase in our retention of direct-let customers
for 2023/24 and have secured demand from universities
for an additional 5,000 beds under nomination agreements
compared to the same stage in the prior year.
Our long-term university relationships remain a key
differentiator for Unite and a source of potential growth
opportunities. This is reflected in over 60% of our
development pipeline by cost being underpinned by university
partnerships. For developments completing in 2022, 78%
were let under nomination agreements for an average of nine
years with the University of Bristol and King’s College London.
We continue to evolve the customer offer in our properties
to better appeal to the different customer segments who
live with us. There is a significant opportunity to attract
more non-first year students who have historically chosen
to stay in the HMO sector given their desire for greater
independence. We successfully extended our postgraduate
trials in six buildings for the 2022/23 academic year and
also deliberately tailored our three major refurbishments
in Manchester to different segments: UK undergraduates,
postgraduates and international students.
Attractive returns for shareholders
We achieved a return to full occupancy for the 2022/23
academic year, as market conditions normalised following
the disruption of the previous two years during the
Covid-19 pandemic. This supported rental growth of 3.5%
for the 2022/23 academic year and an improvement in
our EBIT margin to 67.9% (2021: 62.3%). We also delivered
total accounting returns of 8.1% for the year, driven by
our recurring earnings and the positive impact of rental
growthon our property valuations (2021: 10.2%).
The quality, location and scale of our portfolio is key
to delivering attractive, sustainable returns for our
shareholders. During the year, we made disposals totalling
£339 million (Unite share: £256 million) at a blended yield
of 5.7% to enhance our overall portfolio quality and fund
reinvestment into the improvement of our estate. These
proactive sales have reduced our footprint from 25 to 23
markets and completes the disposals of non-strategic assets
identified following our acquisition of Liberty Living in 2019.
The proceeds were partially redeployed to increase our
investment in USAF, which increased our share of the fund’s
portfolio by £177 million at an effective acquisition yield of
5.1% and takes our ownership share to 28%. The Group also
successfully delivered £275 million in developments and
major asset management projects in the year at a blended
yield of 6.2%. The schemes were delivered in line with budget
and all are fully let for the 2022/23 academic year.
We are committed to four development projects, requiring
£200 million in future capex and expected to deliver a yield
on cost of 6.7%. We are also reviewing future development
starts to ensure projects deliver earnings accretion in an
environment of higher funding costs. However, given the
strength of demand from students and universities, we
expect to commit to further developments during 2023.
CHIEF EXECUTIVE’S REVIEW continued
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THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
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Q&A
with Karan Khanna
Chief Customer Officer,
Unite
Karan leads the operational and commercial functions
for Unite, working with his team to enhance the student
experience, deliver commercial performance and raise
brand awareness. He joined the business in June 2021 from
InterContinental Hotels Group, where he served as managing
director for the UK and Ireland. Here, Karan explains some of
the focus areas for the year.
Q: How has Unite delivered value for
customers during the cost-of-living crisis?
A: Our costs are very competitive when compared to other forms
of student accommodation. We offer a simple, fixed rent that
includes utilities, Wi-Fi, maintenance, security, and insurance, so
students have certainty on cost. Due to our scale, we purchase
utilities on competitive terms, so we can also offer students
significant savings on their bills.
Looking beyond costs, the value we offer to students is about
the experience we create. We want to offer a home where they
feel happy, secure, and able to be at their best. Our students –
some of whom are away from home for the first time – may need
support, so last year we moved to a 24/7 model – which means
our trained team are there for students any time they need us.
Q: So, what investments have been made
in supporting students’ wellbeing?
A: We recognise the pressures facing today’s students and have
taken a number of actions to improve the wellbeing of students
in our properties.
A new framework – Support to Stay – has been designed in
partnership with universities to help students maximise their
success despite any medical, physical or mental health difficulties
they may be experiencing.
Student wellbeing is also a core focus for our front-line team
members. Alongside a dedicated student support team, we
also have a Resident Ambassador programme so students can
provide peer-to-peer support to one another.
Right now, we know that financial wellness is top of mind for
students. That’s why we joined forces with financial planning
experts, Blackbullion, to offer students practical tools to help
them manage their money.
Q: Do you see student expectations evolving?
A: Definitely. Today’s students have high expectations of their
accommodation experience – they want more than just a room
to sleep in.
Gen Z expects a seamless digital journey, and we connect with
them throughout their time with us through our MyUnite app.
Recent enhancements to the app include customer notifications,
digital check-out, and also a dedicated space for student welfare.
We continue to invest in making our buildings great spaces for
students to thrive. Last year this included two new properties
and three major refurbishments, with the buildings benefiting
from social spaces, karaoke rooms, cinema rooms and gyms.
Sustainability sits at the heart of all developments to ensure
they remain fit for the future. This year’s projects incorporated
improved insulation, solar panels and air source heat pumps to
reduce carbon emissions and improve their EPC ratings.
Q: Are you investing in your team and platform
to create a better experience for students?
A: Yes, and this is a top priority for us. Last year saw the launch of
The Academy, which delivers tailored learning experiences for all
employees – especially focused on student safety and wellbeing.
Customer data shows that social connections matter greatly, so
alongside a Higher Education partner we are also trialling how we
can use data and technology to place students in flats with the
people they will most likely get along with best.
Looking ahead, we are teaming up with an award-winning design
agency to create the next generation accommodation experience
which we will be rolling out shortly.
Q: Finally, what actions have you taken
to keep buildings fire safe for students?
A: We were one of the first companies to take action to remove
Aluminium Composite Material (ACM) cladding from our
buildings and continue to survey our estate and undertake any
necessary remedial work, putting the safety of our students at
the heart of what we do.
We have a dedicated fire safety team of four people with
extensive experience in risk management. But we recognise that
educating students on fire safety also plays a part. That’s why
we hold an annual fire safety education week – which last year
included live events hosted by the fire service.
For more about this project, go online to:
unitegroup.com/partnerships/insights
17
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CHIEF EXECUTIVE’S REVIEW continued
Being a responsible and resilient business
Our sustainability strategy is focused on delivering a positive
impact through our People and Places initiative. This is driven
by the social contribution we make to the students who live
with us, our employees and local communities as well as our
progress in minimising our impact on the environment.
We continue to make progress towards our objective of
becoming a net zero carbon business by 2030. During the
year, we invested £13 million in energy initiatives to reduce
consumption, save carbon and ensure ongoing compliance with
regulations, up from £3 million in 2021. This contributed to a
further improvement in the EPC ratings of our portfolio during
the year, with 80% of the portfolio now A–C rated (2021: 57%).
We are committed to donating 1% of our annual adjusted
earnings to social initiatives. These initiatives will be closely
aligned to our purpose of providing a Home for Success
for students and supporting wider participation in Higher
Education. This includes the Unite Foundation, the charitable
trust founded by Unite to provide free accommodation for
care leavers and estranged students while at university. The
Foundation marked its tenth anniversary this year and, to
mark the milestone, Unite provided financial support for 100
new student scholarships for the 2022/23 academic year as
well as home starter kits for over 200 additional students.
Over 600 students have now benefited from scholarships
during the Foundation’s 10-year history.
Higher Education Policy
The Government concluded its consultation on Higher
Education policy in 2022, which emphasised a focus on
investing in the UK’s world-class universities, enabling high-
quality outcomes for graduates and making sure that Higher
Education remains accessible to all. Going forwards, the
Office for Students (OfS) will be responsible for monitoring
minimum standards for Higher Education providers based
on continuation and completion of courses as well as
graduate progression. Application of these standards is in
its early days and the OfS will initially work with providers
to understand the context for any underperformance. We
are confident that our strategic alignment to high- and mid-
ranked universities positions us to successfully navigate any
risks from restrictions on low-value courses.
International students contribute an estimated £29 billion
to the UK economy each year and provide a vital source of
funding for universities. However, international students and
their impact on migration remains topical, with attention
currently focused on the number of dependents coming to
the UK with students. Given our product is focused on single-
occupancy bedrooms, we see relatively limited risk in the
event of more restrictive visa rules for dependents.
Opportunities for growth
The outlook for student accommodation remains positive,
with structural factors continuing to drive a demand/supply
imbalance for our product. Demographic growth will see the
population of UK 18-year-olds increase by 140,000 (19%) by
2030. Application rates to university have also grown steadily
over recent years, reflecting the value young adults place
on a higher level of education and the life experience and
opportunities it offers.
This backdrop creates significant opportunities to grow the
business in the UK student accommodation sector through
development and targeted acquisitions in our strongest
markets and partnerships with universities.
The HMO sector, which provides homes to over one million
students, is increasingly expensive due to rising mortgage
costs for landlords and utility costs for tenants. We expect
these cost pressures to only grow for private landlords
given increasing regulation around the quality of homes
and environmental performance standards through EPC
certification. We expect this to further reduce the availability
of private rented homes over time, increasing demand for
the purpose-built, sustainable accommodation we provide.
We believe that there is also an exciting opportunity to
grow our platform in the wider living sector by catering to
the growing number of young professional renters living in
major UK cities. We already serve this market through the
9,000 postgraduate students who live with us each year. In
September, we acquired a pilot build-to-rent (BTR) property
in Stratford, East London for £71 million. The pilot offers the
opportunity to test our operational capability in the sector
and understand the potential synergies with our core student
business through increased customer retention and cost
efficiencies in areas such as maintenance and procurement.
Early signs are positive, with new lettings and renewals
achieving average rental uplifts of 11%. The property is set to
be fully integrated into our operating platform from Q2 2023
and our initial review suggests we have the capabilities to
operate effectively and efficiently in the BTR sector.
Positive Outlook
We are confident in the outlook for the business, which
remains positive, reflecting the underlying strength of
student demand, our alignment to high-quality universities
and the capabilities of our best-in-class operating platform.
We have seen a strong start to the 2023/24 sales cycle, reflecting
the appeal of our high-quality portfolio and fixed-price,
all-inclusive offer, which provides students with significant
savings and certainty on their bills. We now expect to deliver
rental growth of 6–7% for the 2023/24 academic year, enabling
us to offset cost pressures and improve our EBIT margin to
70% for 2023. Growing income also offers support to our
property valuations as the market adjusts to an environment
of higher funding costs. As a result, we expect to deliver 5–8%
growth in adjusted EPS in 2023 and a total accounting return
of 8–10% before the impact of property yield movements.
There remains a clear need for new high-quality, affordable
student accommodation to support the growth of our
university partners. We are exploring a variety of routes
to fund new growth, while ensuring we maintain a robust
and resilient balance sheet. Despite pressures from
higher funding and operating costs, we remain confident
in our ability to grow earnings and deliver attractive total
accounting returns for shareholders.
Richard Smith
Chief Executive Officer
28 February 2023
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THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
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Q&A
with Helene Murphy
Group People Director,
Unite
Helene became Group People Director in January 2021, with
a renewed vision for the People function. Leading all aspects
of the People strategy, Helene has brought her experience
from international start-ups and multi-national organisations
to Unite. Here, Helene shares more about Unite’s ambition to
deliver a Home for Success for our employees.
Q: As the cost-of-living crisis took hold,
what did Unite do to support employees?
A: We are extremely conscious of the pressures that the cost-of-
living crisis is having on our people – but especially the lowest
paid in our business.
As the conversations around cost-of-living grew, we discussed the
ways we could support our employees and introduced additional
financial wellbeing measures such as educational webinars and
new financial support providers. An additional one-off payment
of £500 was also made to support our people.
We also announced our highest ever pay award, following a
tiered approach by salary with 95% of our employees receiving
5% or more, and our lowest earners being awarded 10%,
reaffirming our long-standing commitment to being a Real
LivingWage employer.
Q: How do you ensure that employees
grow and develop with the business?
A: In late 2022, we were proud to launch The Academy; a fresh
approach to employee lifelong learning, delivering a combination
of online learning, bitesize modules, and face-to-face learning
forall.
Continuing to invest in our people, we launched bespoke Institute
of Leadership and Management (ILM) programmes, supporting
our leaders and managers to become focused, high-achieving,
and knowledgeable leaders.
Q: What progress was made in Diversity,
Equity, Inclusion and Belonging in 2022?
A: I am excited to have launched our first diversity, equity,
inclusion and belonging (DEIB) and wellbeing strategy:
We are US, which outlines our plan for the next three years.
Our employee forum, Culture Matters, has been integral in
embedding our strategic vision. They have sponsored a more
inclusive and equitable culture, and in 2022 the forum headed
the reform of our family leave policies, promoting more inclusive
language and first of its kind benefits for those who experience
child-loss. We have bolstered our diverse talent pipelines through
sponsorship of National Student Pride and programmes such as
#10000BlackInterns, a charitable organisation which provides
internships to students from Black heritage backgrounds – both
under-represented groups in the labour market.
We also launched a new DEIB learning programme under The
Academy, designed to give our employees the knowledge and
skills they need to become more consciously inclusive.
Delivering a Home for Success is not just about looking inwardly
at our employees and students, but also considering the impact
we have on our stakeholders and wider communities. We have
made important strides forward in DEIB and Wellbeing in 2022,
and look forward to continuing this journey in 2023.
Q: Finally, how do you recognise employees
for a job well done?
A: The Stars Awards is the hottest date on the Unite calendar,
and I was really proud to host them this year. We recognised
our colleagues who go above and beyond in categories such
as teamwork, leadership, safety and wellbeing, allyship, and
sustainability. The event showcased our commitment to our
values, with feedback praising its inclusivity and the opportunity
to engage with other teams.
For more about this project, go online to:
unitegroup.com/partnerships/insights
19
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MARKET OVERVIEW
The outlook for our business is influenced by structural trends in Higher Education and
student accommodation, which impact the size of our addressable market. Cyclical factors
also have an impact on the economic conditions we face, the cost and availability of funding
for the business and the level of investment in student accommodation. Together these
factors influence our strategy and the long-term growth prospects of the Group.
UK Higher Education Policy recognises the global standing
of the UK’s universities which attract students from all over
the world, conduct vital research, and generate enormous
benefits for our economy and our society.
The Skills for Jobs White Paper, published in 2021,
underlines the Government’s commitment to widening
participation in post-18 education and strengthening
the global standing of the UK Higher Education sector.
The Higher Education sector regulator, the Office for
Students (OfS), is separately reviewing the quality of Higher
Education provision and value-for-money for students
and the taxpayer. This may lead to the introduction of
minimum standards for Higher Education providers based
on course completion rates and the share of students
going on to employment or further study.
Full-time student numbers in UK Higher Education
have grown by 545,000 (32%) over the past 10 years,
driven by acombination of rising participation rates
andinternational growth.
Application rates to university by UK school leavers are
now at their highest ever level, reflecting the value young
adults place on a higher level of education and the life
experience and opportunities it offers. International
student numbers have also continued to grow thanks to
increased demand from non-EU markets such as China
and India, which has more than offset a reduction in EU
student numbers post-Brexit.
Looking forward, we anticipate strong growth in student
numbers over the next decade. This reflects significant
demographic growth, which will see the population of
UK18-year-olds increase by 140,000 (19%) by 2030.
SUPPORTIVE
GOVERNMENT POLICY
GROWING DEMAND
FORHIGHER EDUCATION
What it means for Unite
•
Potential for stronger growth in student numbers
for those universities and cities delivering highly-
valued teaching, better employment prospects
for graduates and high-quality research
•
We are confident that our strategic alignment to
high and mid-ranked universities positions us
to successfully navigate future changes to the
Government’s Higher Education Policy
What it means for Unite
•
Increased demand for purpose-built
studentaccommodation from students
anduniversity partners
•
Opportunities for new development in
marketsbenefiting from the strongest
growthinstudent numbers
STRUCTURAL TRENDS
Demand for purpose-built student accommodation is underpinned by
a range of structural drivers, which support growth in student numbers
for UK Higher Education.
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THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
MARKET TRENDS
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The number of households living in the private rented
sector in England and Wales has more than doubled over
the past 20 years. As a result, Government Policy in the
private rented sector is focused on ensuring that homes
are of good quality and safe for tenants. The Government
estimates that over a fifth of privately rented homes are in
poor condition and launched a consultation in the second
half of 2022 on whether minimum standards should be
introduced in the sector.
The UK’s commitment to achieve net zero carbon by 2050
will require significant reductions in energy use from
domestic properties. This includes increasing Minimum
Energy Efficiency Standards (MEES) which will require
rental properties to achieve EPC ratings of at least C by
2027 and B by 2030.
Universities recognise that high-quality student
accommodation is a major differentiator in their ability
to attract and retain students and will typically seek to
guarantee accommodation for their domestic first year and
international students. Universities own around 300,000
beds of their own accommodation but new investment
tends to be prioritised towards their academic estate and
investment in research capabilities. As a result, universities
have relied on private owners of Purpose Built Student
Accommodation (PBSA) to deliver new accommodation to
support growing student numbers.
The Covid-19 pandemic has increased the operational and
financial challenges faced by universities and there is a
growing appetite for partnerships with leading operators
of student accommodation.
FOCUS ON QUALITY,
SUSTAINABLE HOUSING
UNIVERSITY
OUTSOURCING
What it means for Unite
•
New regulation of the HMO sector may result
in some private landlords seeking to exit the
market, creating the opportunity for the PBSA
sector to capture a growing share of students
requiring accommodation
•
Increasing likelihood of a ‘green premium’ or
‘brown discount’ for PBSA assets as sustainability
considerations grow in importance for stakeholders
•
The growing number of long-term renters in the
UK supports the growth of the BTR sector. We
believe there is an exciting opportunity to grow
our platform in the living sector by catering to the
growing number of young professionals living in
major UK cities
What it means for Unite
•
Demand for new, long-term nomination
agreements with universities
•
Opportunities for strategic university
partnerships for on and off-campus
developmentas well as the transfer
ofexistingaccommodation stock
We expect supply of competing student accommodation to remain
constrained given universities’ desire to focus their investment on their
academic estates and increasing regulation for private landlords.
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MARKET OVERVIEW
ECONOMIC
OUTLOOK
The UK saw a significant slowdown in economic activity
during 2022 and is expected to enter a short technical
recession during 2023. This reflects a combination of
geo-political uncertainty created by the war in Ukraine,
lower business confidence and declines in real household
income as a result of rising inflation. Inflation is expected
to moderate during 2023 as the impact of higher utility
prices reduces.
Demand for Higher Education has historically proven to be
non-cyclical with increased application rates for university
during periods of economic weakness.
FUNDING
CONDITIONS
In response to high inflation, central banks have
significantly increased interest rates over the past year.
Liquidity has also reduced in debt and equity capital
markets resulting in above-average borrowing spreads
forcompanies and limited capital raising activity.
We saw a slowdown in investment volumes for PBSA
assets in the second half of 2022 given the more
challenging funding environment for potential purchasers.
Despite these short-term pressures, the PBSA sector’s
fundamentals are likely to continue to attract significant
levels of institutional capital over the medium term.
Our portfolio currently yields 4.8%, which offers attractive
returns given the positive outlook for rental growth.
CYCLICAL TRENDS
Economic and financial conditions have become more challenging over the past year.
Demand for Higher Education and student accommodation has historically proven to
be counter-cyclical and the business is well protected from rising costs through rental
growth and its risk management approach.
What it means for Unite
•
Inflation has a positive impact on rental growth
through the c.33% of our beds under nomination
agreements with contractual uplifts linked to RPI
or CPI. In addition, we have the opportunity to re-
price our remaining beds on an annual basis
•
We will monitor the impact of inflationary
pressures on our student customers and their
guarantors to ensure we continue to offer
affordable, value-for-money accommodation
•
We expect increases in operating costs and
overheads in 2023, particularly around utility
and staff costs, which we will mitigate through
operational efficiencies and utilities hedging as
well as higher income growth for the 2023/24
academic year
What it means for Unite
•
We anticipate an increase in our cost of debt
from3.4% in 2022 to 3.6% in 2023
•
It is possible we will see a rise in valuation yields
for PBSA in 2023, albeit any negative impact on
property valuations will be offset by the strong
outlook for rental growth
•
We are reviewing our future investment plans
to ensure investment activity delivers earnings
accretion and attractive total accounting returns
•
We expect attractive opportunities to emerge
for new acquisitions and developments given the
funding constraints faced by some PBSA owners
and developers
MARKET TRENDS continued
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COMPETING
SUPPLY
CONSTRUCTION
COSTS
There has been a steady slowdown in new supply of PBSA
from a peak of 30,000-35,000 beds p.a. in 2017-2019 to
only 19,000 beds delivered in 2022. This reflects delays to
development deliveries resulting from the pandemic as
well as tighter financial conditions for developers.
The stock of student housing in the HMO sector is also
expected to reduce as a result of increasing regulation
for private landlords. This includes increasing Minimum
Energy Efficiency Standards (MEES) which will require
rental properties to achieve EPC ratings of at least C by
2027 and B by 2030. This will result in additional costs
for HMO landlords and may see many choose to exit the
market, which we expect to be reflected in higher rents
forstudents living in HMOs.
Strong construction market activity following the pandemic
and energy-driven material price increases have driven
high levels of recent build cost inflation, as reflected in
theBCIS forecast for 7.9% UK price increases in 2022.
A recessionary environment in 2023 suggests that the
market has peaked post-pandemic and is entering a new
phase. Input cost prices for key materials such as concrete,
steel and wood have fallen from their highs in the summer
of 2022. Contractors also anticipate more competitive
tendering for projects as the volume of new work reduces.
This is expected to contribute to build-cost inflation
subsiding to lower levels in 2023 and 2024.
However, the business is not immune to pressures created
by inflation and higher interest rates.
What it means for Unite
•
Tight supply conditions and healthy student
demand are supportive of strong occupancy
forthe 2023/24 academic year
•
Lower supply and increasing costs in the HMO
sector create an opportunity to retain more first
year customers who might otherwise move into
the HMO sector
•
Reducing construction activity in the PBSA
sector and wider economy is likely to result in
a reduction in land pricing and construction
costsover time
•
Slowing development activity will create
significant demand/supply imbalances
in stronger markets, which increase the
attractiveness of development activity
What it means for Unite
•
Higher development costs for projects in our
development pipeline, where we are yet to
commit to fixed-price build contracts. This
presents challenges for the viability of new
development, particularly when combined
withhigher funding costs
•
These challenges have caused us to delay the
delivery of certain projects in our development
pipeline while we seek to improve returns
•
We are targeting higher returns on new
development activity to reflect the higher funding
cost environment, which will require a reduction
in land values or build costs as well as potentially
increased rents
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
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OUR STRATEGIC OBJECTIVES
•
Delivering a best-in-class student experience
•
Investment to enhance our physical estate
•
Investment in our digital capabilities and
technology platform
•
Segmentation of our product and service
•
Moved to new operating model with 24/7
on-property staffing
•
Further improved student support developing
aHigher Education-aligned framework
•
Launched digital check-out, customer
notificationsMyPerks and student welfare
self-serve via our app
•
Opened two new properties, Campbell House
and Hayloft Point, and fully refurbished three
properties in Manchester
•
Delivered enhancements in our Service and
Emergency Contact Centre availability for
students and guarantors
STRATEGIC FOCUS
PROGRESS IN 2022
DELIVERING FOR OUR
CUSTOMERS AND
UNIVERSITIES
The key pillars of our strategy reflect our commitment
to deliver long-term value for our range of stakeholders.
This means providing a Home for Success for students and
universities, delivering attractive returns for shareholders
and ensuring we deliver a positive impact for the
environment, our people and communities.
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•
Build great frontline leaders and teams, attracting
the right talent, fully trained and engaged
•
Deliver an enhanced digital experience through
continued investment in our technology platforms
•
Deliver Morriss House development in Nottingham
for the 2023/24 academic year
•
Student Net Promoter Score
•
Higher Education Net Promoter Score
•
Customer retention
•
New nomination agreements and
universitypartnerships
•
Social advocacy
OBJECTIVES FOR 2023 LINKS TO PERFORMANCE
24/7
NEW PROPERTIES
on property
staffing
opened in 2022: Campbell House
and Hayloft Point
1. Further analysis of operational KPIs can be found on page 30
and in the Financial review on pages 32–34.
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•
Sustainable growth in earnings
•
Delivery of attractive total accounting returns
•
Increasing portfolio alignment to the
strongestuniversities
•
Sourcing new growth opportunities through
development and university partnerships
•
Disciplined capital management with new
capitalto pursue growth opportunities
•
Achieved 99% occupancy and 3.5% rental
growthfor the 2022/23 academic year
•
EBIT margin increased to 67.9%
•
Delivered 1,489 new beds through development
completions and refurbishments
•
Secured planning approval for our Jubilee House
development in Stratford
•
£339 million (Unite share: £256 million)
ofdisposals, increasing portfolio quality
PROGRESS IN 2022
ATTRACTIVE RETURNS
FOR SHAREHOLDERS
STRATEGIC FOCUS
99%
1,489 NEW BEDS
occupancy for
the 2022/23
academic year
through development completions
and refurbishments
OUR STRATEGIC OBJECTIVES continued
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•
Deliver new funding to support the Group’s
growthactivities
•
Improve returns on uncommitted schemes
inthedevelopment pipeline
•
Identify new investment opportunities through
development and university partnerships
•
Review investment activity into the estate and
identify opportunities for accretive refurbishments
•
Earnings per share
•
NTA per share
•
Total accounting return
•
Like-for-like rental growth
•
Earnings before interest and taxes (EBIT)margin
•
Loan-to-value (LTV)
OBJECTIVES FOR 2023 LINKS TO PERFORMANCE
1. Further analysis of operational KPIs can be found on page 30
and in the Financial review on pages 32–34.
27
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CREATING A
RESPONSIBLE AND
RESILIENT BUSINESS
OUR STRATEGIC OBJECTIVES continued
•
Becoming net zero carbon across our operations
and developments by 2030
•
Ensuring compliance with future EPC regulations
•
Supporting wider access to Higher
Educationthrough the Unite Foundation
andtheLeapskills programme
•
Providing opportunities for people
to develop and grow
•
Increasing the diversity of our leadership teams
•
Maintaining our proactive approach to fire safety
•
Delivered energy-efficient capital projects
representing over £13 million in total investment
•
Increased the proportion of buildings achieving
A-C EPC ratings from 57% to 80%
•
Created The Academy to give tailored learning
experiences for all our employees
•
Launched our Diversity, Equity, Inclusion,
Belonging and Wellbeing strategy
•
Introduction of enhanced family leave policies
•
Increasing diversity within our leadership team
•
Completed fire safety works for the replacement
of HPL cladding on 6 high-rise properties
PROGRESS IN 2022
STRATEGIC FOCUS
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
80%
THE ACADEMY
of buildings
achieving A-C
EPC ratings
was created to give tailored
learning experiences for all
ouremployees
•
Enhance the Group’s reputation with
keystakeholders
•
Deliver lasting improvements in environmental
performance through capital projects and
studentengagement
•
Increase engagement and ownership by
employees around sustainability objectives
•
Continue to progress fire safety
improvementprojects
•
Carbon emissions
•
Energy and water intensity
•
EPC ratings
•
Employee engagement
•
Investment in social initiatives
•
Gender and ethnic diversity
•
Unite Foundation scholarships
•
Global Real Estate Sustainability Benchmark
(GRESB) rating
•
Number of reportable accidents
OBJECTIVES FOR 2023 LINKS TO PERFORMANCE
1. Further analysis of operational KPIs can be found on page 30
and in the Financial review on pages 32–34.
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34.1p
2018
37.1p
2019
24.0p
2020
27.6p
2021
40.9p
2022
20212019
790p
847p
818p
882p
20202018 2022
927p
13.2%
2018
11.7%
2019
-3.4%
2020
10.2%
2021
8.1%
2022
29%
29%
2018
37%
2019
34%
2020 2021
31%
2022
1. The financial statements are prepared in accordance with International Financial Reporting Standards (IFRS). The Group uses alternative performance measures (APMs), which
are not defined or specified under IFRS. These APMs, which are not considered to be a substitute for IFRS measures, provide additional helpful information and are based on
the European Public Real Estate Association (EPRA) best practice recommendations. The metrics are also used internally to measure and manage the business and to align to
the performance-related conditions for Directors’ remuneration. See glossary for definitions and note 8 for calculations and reconciliations.
2. 2018 based on EPRA NAV as previously reported.
The business delivered a strong performance in 2022
FINANCIAL KPIs
KEY PERFORMANCE INDICATORS
Adjusted earnings
per share
1
(p)
40.9p
EPR A NTA
per share
2
(p)
927p
Total accounting
return (%)
8.1%
Loan-to-value
ratio (%)
31%
Link to remuneration
Bonus and LTIP
Measure
EPRA NTA per share
measures the market value
of rental properties and
developments, less any
debt used to fund them,
and working capital in
thebusiness.
Performance in 2022
The NTA increase has
beendriven by an increase
in the value of the Group’s
property portfolio (largely
due to rental growth),
development surpluses
andretained profits.
Link to remuneration
Bonus and LTIP
Measure
Total accounting return
measures the growth
in EPRA NTA per share
plus dividends paid, as a
percentage of opening EPRA
NTA per share.
Performance in 2022
Growth in EPRA NTA was the
key component of the total
accounting return delivered
in the year, alongside
dividends paid of 26.6p.
Link to remuneration
Bonus
Measure
Loan-to-value measures net
debt as a proportion of the
value of our rental properties
and developments, on a
Unite share basis.
Performance in 2022
The increase in LTV during
the year was primarily driven
by expenditure on our
development pipeline, the
acquisition of units in USAF
and capital expenditure on
our rental properties, which
more than offset the impact
of disposals and property
valuation increases during
the year.
Link to remuneration
Bonus and LTIP
Measure
Adjusted earnings measures
the level of profit delivered
by operating activities, on a
per share basis.
Performance in 2022
The business delivered
a strong operational
performance in 2022, with
adjusted earnings of 40.9p,
up 48% year-on-year,
surpassing their pre-
pandemic level. This reflects
an increase in occupancy
to 99% and rental growth
of 3.5% for the 2022/23
academic year.
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6
2018
2
2019
12
2020
7
2021
7
2022
2018 2019
33
2020
35
2021
41
44
38
2022
N/A
2020
21
2018
24
2019
20
2021
7
2022
78
74
7575
2018 2019 2020 2021
65
2022
OPERATIONAL KPIs
Safety
(Number of accidents)
7
Customer
satisfaction
38
Employee
engagement
65
Higher Education
trust
7
Link to remuneration
Taken into consideration
Measure
The number of RIDDOR
reportable accidents in our
health and operations each
year acts as an indicator
of our health and safety
management.
Performance in 2022
There were seven reportable
incidents in 2022. Four
reports comprised of
incidents or accidents that
resulted in our employees
being absent from work for
over seven days. There were
no significant trends in terms
of causation.
Priorities going forward
Our focus for 2023 will be
improving our safety culture,
colleague engagement
and competence. We will
ensure our people have
the tools they need to work
effectively while continuing
to review our health and
safety training courses,
alongside our learning and
development team.
Link to remuneration
Bonus
Measure
Customer Net Promoter
Score (NPS) provides a
commercially relevant
customer experience
measure, based on an
annual externally provided
survey.
Performance in 2022
The Net Promoter Score
for our 2022 student arrival
check-in was 38, a 3 point
improvement year-on-year,
after adjusting for properties
that were non comparable
due to cladding remediation
works. An improvement
in the score followed the
launch of our new operating
model and further training
being delivered in our Class
of 22 programme, to give our
teams the tools for a service
excellence experience.
Priorities going forward
With the business
embedding the new
operating model and
continued investment in
training frontline teams,
further improvement in
NPSis anticipated.
Link to remuneration
Bonus
Measure
Independent, anonymous
surveys are undertaken
by an external provider
amongst our employees to
gain regular and insightful
feedback on how they feel
and how we can continue
toimprove.
Performance in 2022
Employee engagement for
2022 was 65, a 10 point
reduction year-on-year.
2022 was a challenging year
for our people, in part due
to cost-of-living pressures,
but also as a result of
implementing our new
operating model and above
average employee turnover.
Priorities going forward
Providing training sessions
and supporting toolkits to
line managers, enabling
them to take appropriate
and meaningful action for
their teams.
Bi-annual surveys will be
undertaken, supplemented
by a number of other
engagement channels
including Unite Live,
SeniorManager Briefings
and Class of 23 events.
Link to remuneration
Bonus
Measure
HE Net Promoter Score
(NPS) provides a measure
of how we have met
the needs of our Higher
Education partners and
theirperception of Unite.
Performance in 2022
The Net Promoter Score
for 2022 was 7, a 13 point
reduction year-on-year.
2022 was a year of transition
for the relationship
management approach
with universities as we
implemented changes to
our operational structures
at city level. Our partners
still commented positively
on Unite’s response and
sector leadership during
the pandemic and the
organisation’s ability to react
in support of students and
wider stakeholders.
Priorities going forward
With new leaders in place,
we are committed to
building back our strong
working relationships
withUniversities.
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FINANCIAL REVIEW
IMPROVED OCCUPANCY
FOR 2022/23
We achieved occupancy of 99% across our total portfolio
for the 2022/23 academic year (2021/22: 94%, 2020/21:
88%), reflecting strong student demand and significantly
less disruption from the Covid-19 pandemic than the
previous two academic years.
Undergraduate student intake for 2022/23 was flat at
563,000 (2021/22: 562,000), although significantly up
from the last pre-pandemic year in 2019/20 (541,000), as
universities adjusted their offer making after two years
of teacher assessed grades. We saw the highest ever
admissions for UK students and non-EU students, up 1% and
15% from the previous year. However, this was offset by the
continued reduction in EU student numbers following Brexit
and the loss of home fee status for students from the EU.
The recovery to pre-pandemic occupancy levels for the
2022/23 academic year was helped by the return to
examinations for UK school leavers, which led to a more
normal distribution of grades and therefore students
between universities. The normalisation of travel conditions
during 2022 has allowed international students to return to
studying in the UK despite some localised travel restrictions
in China.
“We delivered a strong financial performance
in 2022 with earnings and dividends surpassing
their pre-pandemic level driven by a return to
full occupancy, improving rental growth and
investment into our estate.”
Joe Lister
Chief Financial Officer
OPERATIONS REVIEW
Occupancy by type and domicile by academic year
Direct let
Nominations UK China EU Non-EU Total
2019/20 57% 16% 15% 4% 6% 98%
2020/21 53% 16% 11% 4% 4% 88%
2021/22 51% 21% 13% 3% 6% 94%
2022/23 52% 24% 14% 2% 7% 99%
Strong rental growth
Annual rents increased by 3.5% on a like-for-like basis for
2022/23 (2021/22: 2.3%), reflecting average increases of
4.0% through nomination agreements and 3.1% average
increases in direct-let rents. On a like-for-like basis, for beds
sold in both 2021/22 and 2022/23, rental growth was 4.5%.
Occupancy was broadly consistent across our wholly-owned
portfolio, USAF and LSAV.
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We started the 2022/23 sales cycle cautiously in late 2021,
with the Omicron variant and ‘Plan B’ Covid-19 restrictions in
place, and initially prioritised securing occupancy over rental
growth. During the second half of the sales cycle, we saw the
pace and pricing of lettings strengthen as concerns around
the Omicron variant eased and associated restrictions were
gradually lifted.
2022/23 rental growth and occupancy Rental growth
1
Occupancy
2
Nomination agreements 4.0%
Direct-let 3.1%
Total 3.5% 99%
1. Like-for-like properties based on annual value of core student tenancies.
2. Beds sold.
We have maintained a high proportion of income let to
universities, with 36,611 beds sold (52% of total) for 2022/23
under nomination agreements (2021/22: 37,359 and
51%). The slight increase in the percentage of beds under
nomination agreements reflects greater confidence from
universities, as demand for accommodation has normalised
following the pandemic and the disposal of a number of
primarily direct-let properties during 2022.
The unexpired term of our nomination agreements is 6.3
years, slightly down from 6.7 years in 2021/22. A balance of
nomination agreements and direct-let beds provides the
benefit of having income secured by universities, as well as
the ability to offer rooms to rebookers and postgraduates
and determine market pricing on an annual basis. We expect
to maintain nomination agreements at around 50–55% of
beds going forward.
63% of our nomination agreements, by income, are multi-
year and therefore benefit from annual fixed or inflation-
linked uplifts based on RPI or CPI. The remaining agreements
are single year, and we achieved a renewal rate of 75% on
these agreements for 2022/23 (2021/22: 74%). Together,
nomination agreements delivered rental uplifts of 4.0% for
2022/23 and are expected to support overall rental growth
of 6–7% for 2023/24.
Agreement length
Beds
2022/23
% Income
2022/23
Single year 14,210 39%
2–5 years 9,107 27%
6–10 years 5,491 14%
11–20 years 6,003 15%
20+ years 1,800 5%
Total 36,611 100%
UK students account for 72% of our customers for 2022/23
(2021/22: 70%), making up a large proportion of the beds
under nomination agreements with universities. This
represents a significant increase in our weighting to UK
students, which stood at only 60% immediately prior to the
pandemic, and reflects our success in attracting students
from the HMO sector. In addition, 25% and 3% of our
customers come from non-EU and EU countries respectively
(2021/22: 25% and 5%), reflecting the relative appeal of
our all-inclusive, hassle-free product when compared with
alternatives in the private-rented sector.
Postgraduates continue to make up around 25% of our
direct-let customer base and rebookers accounted for 23%
of our direct-let bookings for the 2022/23 academic year
(2021/22: 20%), reflecting the proactive retention campaign
in our properties. The growing share of postgraduate and
non-first year undergraduate students in our properties
supports our strategy of increasing segmentation of our
customer offer.
Positive outlook for 2023/24
Applications data for the 2023/24 academic year is
encouraging, with total applications down 2% on 2022/23
but still 5% ahead of pre-pandemic levels. We continue to see
strongest demand for the high- and mid-tariff universities
to which we align our portfolio. Application rates remain
strong for UK 18-year-olds at 41.5% and there continues
to be significant unmet demand for university places, as
demonstrated by the nearly 200,000 unplaced students in
2022/23. Applications from international students are 3%
higher for 2023/24, with 4% growth from non-EU markets
more than offsetting a 2% reduction in EU applicants.
Demand for the Group’s accommodation has continued
to be strong through the sales cycle to date. Across the
Group’s entire property portfolio 83% of rooms are now
sold for the 2023/24 academic year, significantly ahead of
the prior year and pre-pandemic levels (2022/23: 67%). We
have seen increased early demand from universities who
see quality accommodation as a key part of their proposition
to prospective students. Current reservations under
nomination agreements account for 54% of available beds
for 2023/24, up 6 percentage points versus the same stage in
the 2022/23 sales cycle.
In our strongest markets, we have also seen an increasing
number of students looking to secure accommodation
earlier in the sales cycle than previous years and a significant
increase in the level of rebookers who now make up 28% of
direct-let reservations (2022/23: 23%). This is supportive of
our guidance for full occupancy and rental growth of 6–7%
for the 2023/24 academic year.
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Operating costs
The war in Ukraine and other macro-economic factors contributed to inflationary cost pressures during the year. We
are partially protected but not immune from the effects of inflation on our cost base, thanks to our hedging policies and
proactive steps to deliver efficiencies through technology and a review of our operating model. Inflationary pressures,
combined with higher marginal costs from increased occupancy, resulted in a 9% increase in property operating costs
during2022.
Staff costs increased by £1.2 million due to underlying wage increases and the cost-of-living payment made to employees,
partially offset by savings following the implementation of our new 24/7 operating model during the year. Our new operating
model was implemented in July, with all properties now staffed 24/7 so that students can access in-person support when
they need it. Each property now has a general manager, responsible for all aspects of safety, performance and student
experience in their property.
We hedge our utility costs in advance of letting rooms, providing visibility over our cost base at the point of sale. This policy
helped limit utility cost increases to 4% or £0.9 million during the year. Our utility costs are fully hedged through 2023 and
65% for 2024.
Summer cleaning costs increased by £1.8 million as we returned to a full summer lettings cycle, which delivered incremental
income of £10.3 million. Around 15% of the incremental summer income and costs were attributable to the Commonwealth
Games in Birmingham where we provided accommodation to support services, including the police. Reflecting the increased
summer activity and overall occupancy, marketing costs increased by £0.9 million during the year.
Central and other costs increased by £3.0 million due to inflationary cost increases in respect of buildings insurance, reactive
maintenance, broadband and council tax/HMO licences, as well as targeted investment in learning and development to
support our new operating model.
Property operating expenses breakdown
2022
£m
2021
£m Change
Staff costs (29.6) (28.4) 5%
Utilities (22.8) (21.9) 4%
Summer cleaning (5.1) (3.3) 55%
Marketing (6.7) (5.8) 16%
Central costs (11.3) (9.7) 15%
Other (23.2) (21.8) 7%
Property operating expenses (98.7) (90.9) 9%
FINANCIAL REVIEW continued
OPERATIONS REVIEW continued
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PROPERTY REVIEW
Our property portfolio saw a 4.4% increase in valuations on a like-for-like basis during the year (Unite share: 4.0%), driven
principally by rental growth. The see-through net initial yield of the portfolio was 4.7% at 31 December 2022 (December
2021: 4.9%). After disposals and new openings, this reflects like-for-like yield compression of 2 basis points in the year.
LSAV reported the largest valuation growth (+5.6%) within the Group, reflecting the strength of rental growth from its
predominantly London-based portfolio.
Breakdown of like-for-like capital growth
1
£m
Valuation
31 Dec 2022
Rental
growth
Yield
movement Other
2
Total
Wholly-owned 3,623 111 (6) 1 106
LSAV 1,921 101 (4) 5 102
USAF 2,888 117 29 (19) 127
Total (Gross) 8,432 329 19 (13) 335
Total (Unite share) 5,397 185
% capital growth
Wholly-owned 3.6% (0.2)% 0.0% 3.4%
LSAV 5.6% (0.2)% 0.2% 5.6%
USAF 4.2% 1.1% (0.7)% 4.6%
Total (Gross) 4.3% 0.3% (0.2)% 4.4%
Total (Unite share) 4.0%
1. Excludes leased properties and losses on disposals.
2. Other includes changes to operating cost assumptions and income adjustments on reversionary assets.
The proportion of the property portfolio that is income generating is 96% by value, up from 94% at 31 December 2021.
Properties under development have decreased to 4% of our property portfolio by value (31 December 2021: 6%), following
the completion of our developments at Hayloft Point in London and Campbell House in Bristol during the year.
The PBSA investment portfolio is 40% weighted to London by value on a Unite share basis, which is expected to rise to 45%
on a built-out basis following completion of our secured development pipeline.
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FINANCIAL REVIEW continued
PROPERTY REVIEW continued
Development and university partnership activity
The combination of growing student demand, slowing
supply of new purpose-built student accommodation and a
shrinking HMO sector creates significant opportunities for
new development. There is widespread acknowledgement
from universities and local authorities of the need for new
student accommodation to relieve pressure on housing
supply. As a result, the current market environment
offersthe strongest opportunity for new development
inrecent years.
Our current development pipeline includes 4,863 beds,
with a total development cost of £850 million, of which
2,239 beds or 63% by development cost will be delivered
incentralLondon.
We reviewed our development activity during the year in
light of interest rate increases and higher build cost inflation.
We have deferred starts on some developments, enabling
us to improve returns through reductions in land prices
in some cases and greater certainty over build costs. The
improvement in funding markets in recent months also
supports greater earnings accretion from our pipeline.
Reflecting this improved outlook, we have recently
committed to complete our Lower Parliament Street and
Abbey Lane schemes in time for the 2025/26 academic
year. We are now committed to four development schemes,
totalling 2,123 beds and £339 million in total development
costs. The £200 million of costs to complete these projects
is fully funded from the Group’s cash and available credit
facilities, which totalled £397 million at 31 December 2022.
We also expect to commit to further development activity
during 2023 through a combination of schemes in our
secured pipeline and new opportunities at attractive returns.
Completed schemes
During the year, we completed our developments of Hayloft
Point and Campbell House, together comprising 1,351 beds
at a cost of £229 million and a development yield of 6.0%.
Both schemes are fully let for the 2022/23 academic year.
Campbell House is fully let to the University of Bristol under
a 15-year nomination agreement and two-thirds of the total
beds at Hayloft Point are let to King’s College London under a
5-year nomination agreement. Both schemes have achieved
BREEAM Excellent ratings and EPC A ratings and are fully
electric, with no gas reliance, supporting our commitment
tonet zero carbon by 2030.
Committed schemes
The Group is committed to four development schemes: Derby
Road and Lower Parliament Street in Nottingham, Abbey Lane
in Edinburgh and Jubilee House in Stratford. The schemes
have a total development cost of £339 million, delivering a
blended yield on cost of 7.0% for the PBSA elements.
Our £60 million Derby Road development, offering 705 new
beds, will complete for the 2023/24 academic year and is
located adjacent to the University of Nottingham campus.
We are trialling an enhanced design for the common areas,
which we expect to improve customer experience and our
ability to offer a Home for Success.
In January 2022, we added Lower Parliament Street, a
271-bed direct-let scheme in Nottingham city centre, to our
pipeline. We expect to deliver the fully-consented scheme
forthe 2025/26 academic year.
At Abbey Lane in Edinburgh, we are planning to deliver a
segmented development offering 298 beds in cluster-flats
as well as 66 two- and three-bed clusters in a separate
block. These smaller flats will be available for postgraduate
students, university staff and other young professionals.
Weare targeting completion for the 2025/26 academic year.
In December 2022, the Group acquired the land for
our Jubilee House scheme for £73 million. The student
accommodation element of the fully-consented scheme
is expected to be delivered in time for the 2026/27
academic year, with construction due to start in the second
quarter of 2023. The development will be delivered as a
university partnership, with over half of the beds let under
a nomination agreement. The mixed-use scheme will also
deliver 65,000 square feet of academic space, let for an
initial 35-year term to the Secretary of State for Levelling Up,
Housing and Communities.
Secured pipeline
The remaining 2,740 beds in our secured pipeline are
uncommitted schemes with negligible future capital
commitments. We are reviewing the expected returns from
these schemes, and will commit to them only where there
is a meaningful spread between development yields and
funding costs to adequately compensate for the risk of new
development. Where planning has not been secured, we
have been working with land vendors and our contractors to
re-visit development costs to improve returns in response
to higher funding costs. Given positive progress with
this activity, we expect to commit to further schemes at
attractive returns during the course of 2023.
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New development opportunities
In addition to our uncommitted pipeline, we continue to
progress a number of further development opportunities in
London and prime regional markets at attractive returns.
Reflecting increased funding costs, we are seeking higher
prospective returns on new direct-let schemes at around
7.5–8.0% in provincial markets and 6.5–7.0% in London. We
have lower hurdle rates for developments that are supported
by universities or where another developer is undertaking
the higher-risk activities of planning and construction. For
new schemes, increasing rental growth in our strongest
markets is supporting development viability. We also expect
moderating build-cost inflation and the opportunity to
renegotiate land prices to further enhance returns.
University partnerships pipeline
We continue to make progress with our strategy of delivering
growth through strategic partnerships with universities
where student numbers are growing fastest. Universities
increasingly view the availability of high-quality and
affordable accommodation as a barrier to their recruitment
and an important factor for students when considering
where to study. Reflecting the financial and operational
constraints faced by universities, there is a growing appetite
for strategic partnerships to address this need.
We have agreed to provide a temporary college for Durham
University at our 348-bed Rushford Court site in Durham,
while an existing college is redeveloped by the university.
Subject to planning, there will be additional welfare
and common areas to support college living. Following
completion of the redevelopment works at Hild Bede
college, it is expected that Rushford Court will become
Durham’s eighteenth college for a 30-year period, further
strengthening our partnership with the university.
We intend to deliver our three future London schemes as
university partnerships, in line with requirements in the
London Plan for the majority of new beds to be leased to
a Higher Education provider. Our two Bristol schemes will
be delivered as partnerships with the university, building
on ourexisting city-wide agreement with the university,
and helping to address an acute shortage of student
accommodation in Bristol.
In addition, we are in active discussions with a range of
high-quality universities for new partnerships which
we are looking to progress over the next 12–18 months.
These include discussions around stock transfer and
refurbishment of existing university accommodation as well
as new development both on- and off-campus. Our existing
university relationships through nomination agreements,
best-in-class operating platform and development capability,
as well as access to capital, provides us with a unique
opportunity to deepen these partnerships.
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FINANCIAL REVIEW continued
PROPERTY REVIEW continued
Secured development and partnerships pipeline
£m Type
1
Target
delivery
Secured
beds/units
No.
Total
completed
value
£m
Total
development
costs
£m
Capex in
period
£m
Capex
remaining
£m
Forecast
NTA
remaining
£m
Forecast
yield on
cost
%
Committed development
Derby Road, Nottingham DL 2023 705 88 60 28 18 14 8.2%
Lower Parliament Street,
Nottingham DL 2025 271 44 36 8 28 9 7. 3%
Abbey Lane, Edinburgh DL 2025 431 73 51 8 40 19 7.0%
Jubilee House, East London
3
UPT 2026 716 237 192 78 114 39 6.1%
Total Committed 2,123 442 339 122 200 81 6.7%
Uncommitted development
Temple Quarter, Bristol UPT 2025 595 85 19 63 7.3%
Freestone Island, Bristol
2
UPT 2026 622 79 1 78 7.0%
Meridian Square, East London
2
UPT 2027 951 194 3 191 6.4%
TP Paddington, London
2
UPT 2027 572 153 2 147 6.3%
Total Uncommitted 2,740 511 25 479 6.6%
Total pipeline 4,863 850 147 679 6.7%
1. Direct-let (DL), University partnership (UPT).
2. Subject to obtaining planning consent.
3. Yield on cost assumes sale of academic space for c.£65 million.
Asset management
In addition to our development activity, we see significant opportunities to create value through asset management projects
in our estate. These projects typically have shorter lead times than new developments, often carried out over the summer
period, and deliver attractive risk-adjusted returns.
In September, we completed three asset management schemes in Manchester. Investment across the three projects totalled
£46 million in aggregate and delivered a 7% yield on cost. The projects delivered new accommodation, refurbished existing
rooms and enhanced the environmental performance of the properties. The upgraded assets are fully let for the 2022/23
academic year and support our segmentation strategy, with the three buildings targeted at different market segments
according to their designs.
We have a pipeline of further asset management opportunities which support £35–50 million p.a. of future investment
activity (Unite share).
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Disposals
We continue to manage the quality of the portfolio and
our balance sheet leverage by recycling capital through
disposals. During the year, the Group completed £339million
of disposals (Unite share: £256 million) at a blended 5.7%
yield, which completed the disposal programme set out
at the time of our acquisition of Liberty Living in 2019. The
disposals saw the Group exit less attractive markets in
Reading and Bedford and certain smaller, less operationally
efficient assets. The disposals were priced in line with
prevailing book value after deductions for associated
transaction costs and required fire safety works.
We will continue to recycle capital from disposals to maintain
LTV around our 30–35% target range. The level of planned
disposals will adjust to reflect capital requirements for our
development and asset management activity as well as
market pricing.
Acquisitions
During the first half of the year, Unite increased its
investment in USAF with the acquisition of £141 million
of units through participation in an equity raise and the
acquisition of existing units in the secondary market,
increasing our stake to 28.2% (31 December 2021: 22.0%).
This investment equated to an increase in Unite’s see-
through GAV of £177 million at an effective property yield
of5.1%, supporting the earnings growth delivered during
theyear.
We continue to review potential acquisition opportunities
alongside our other uses of capital. We are focused on
opportunities in our strongest markets aligned to high-
quality universities, where we see the ability to deliver
attractive and sustainable rental growth over the long term.
Build-to-rent
In October, the Group acquired 180 Stratford, a 178-unit
(319 bed) purpose build-to-rent (BTR) asset in Stratford,
East London for £71 million. The acquisition will enable
the Group to test its operational capability to extend its
accommodation offer to young professionals and retain
them as customers as they move on to the next stage in their
lives. The property adds to the Group’s significant existing
presence in the Stratford market, where Unite already
operates 1,700 student beds and has two further student
developments in its secured pipeline. The acquisition of
180Stratford will increase Unite’s scale in the Stratford
market to around 3,700 beds.
Since acquiring the asset, we have begun transferring
operational management onto our platform and have
significantly advanced our understanding of BTR operations.
There are opportunities to leverage our existing operating
platform to deliver cost efficiencies and use our BTR
product to retain student customers seeking a more
independent living experience. Rental growth to date has
been significantly ahead of our acquisition assumptions,
withnew lettings and renewals 11% above previous rental
levels. We plan to complete a rolling refurbishment of the
building, including new common space and the creation of
new units during 2023 and 2024, which will provide further
rental upside.
We do not expect to increase our capital commitment to BTR
in the short term. Instead, we are considering opportunities
to increase the scale of our BTR operations through co-
investment with institutional investors, where Unite
would act as asset manager. Subject to identifying suitable
opportunities, such a structure would enhance returns for
the Group while limiting capital requirements as we develop
our understanding of the opportunity in the BTR sector.
Fire safety
The Government has proposed a Building Safety Bill,
covering building standards, which is likely to result in more
stringent fire safety regulations. Fire safety remains a critical
part of our health and safety strategy, and we have a proven
track record of leading the sector on fire safety standards
through our proactive approach. Our buildings are all safe
to operate and we will continue to make future investments
in fire safety, as required, to comply with Government
regulations.
We have identified 37 properties with High-Pressure
Laminate (HPL) cladding, or requiring other fire safety
improvements across our estate. We have completed the
remediation works for 10 properties (six of which completed
during the year) and are currently carrying out the remaining
replacement works with activity prioritised according to
our risk assessments. We spent £50.5 million (Unite share:
£19.4million) on fire safety capex during the year and have
made a further provision for £71.8 million (Unite share:
£28.2million) of future remediation works. At the year-end,
the total outstanding provision for cladding remediation
works was £113.3 million (Unite Share: £59.2 million), the
costs for which will be incurred over the next two years.
We are seeking to mitigate the costs of cladding replacement
through claims from contractors under build contracts,
where appropriate. We have already recovered £28 million
(Unite share: £20 million) through successful claims and
ultimately expect to recover 50–75% of total replacement
costs over time. This is not reflected in our balance sheet due
to uncertainty over the timing of any recoveries.
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FINANCIAL REVIEW continued
FINANCIAL PERFORMANCE
The Group uses alternative performance measures (APMs), which are not defined or specified under IFRS. These APMs,
which are not considered to be a substitute for IFRS measures, provide additional helpful information and include, among
others, measures based on the European Public Real Estate Association (EPRA) best practice recommendations. The metrics
are used internally to measure and manage the business.
EPRA and adjusted earnings
We delivered a strong operating performance in 2022, with adjusted earnings increasing by 48% to £163.4 million (2021:
£110.1 million), reflecting an increase in rental income and broadly stable costs, including interest, when compared to the
prior year. Adjusted EPS also increased by 48% to 40.9p (2021: 27.6p).
2022
£m
2021
£m
Rental income 339.7 282.7
Property operating expenses (98.7) (90.9)
Net operating income (NOI) 241.0 191.8
NOI margin 70.9% 67.8%
Management fees 17.4 15.9
Overheads (27.7) (31.5)
Finance costs (63.0) (63.3)
Development and other costs (5.8) (2.8)
LSAV performance fee – 41.9
EPRA earnings 161.9 152.0
LSAV performance fee – (41.9)
Abortive acquisition costs 1.5 –
Adjusted earnings 163.4 110.1
Adjusted EPS 40.9p 27.6p
EPRA EPS 40.5p 38.1p
EBIT margin 67.9% 62.3%
A reconciliation of profit after tax to EPRA earnings and adjusted earnings is set out in note 2.2b of the financial statements.
Sales, rental growth and profitability
Rental income increased by £57.0 million to £339.7 million, up 20%, as a result of higher occupancy, rental growth and
the removal of pandemic-related restrictions and rental discounts. Like-for-like rental income, excluding the impact of
acquisitions, disposals and development completions, increased by 23% during the year.
This exceeded the 14% increase in operating expenses for like-for-like properties, primarily driven by increased utility costs
as a result of higher occupancy, increased staff costs and greater investment into marketing to drive sales for the 2022/23
academic year.
Total net operating income increased by 26% to £241.0 million, translating to an increase in NOI margin to 70.9%
(2021:67.8%).
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THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
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FY 2022 FY 2021 YoY change
£m
Wholly
owned
£m
Share of
fund/JV
£m
Total
£m
Wholly
owned
£m
Share of
fund/JV
£m
Total
£m £m %
Rental Income
Like-for-like properties
223.6 87. 3 310.9 184.7 68.1 252.8 58.1 23.0%
Non-like-for-like properties 18.1 10.7 28.8 24.1 5.8 29.9 (1.1)
Total rental income 241.7 98.0 339.7 208.8 73.9 282.7 57.0 20.2%
Property operating expenses
Like-for-like properties (66.0) (24.6) (90.6) (58.6) (21.1) (79.7) (10.9) 13.7%
Non-like-for-like properties (6.0) (2 .1) (8.1) (9.1) (2.1) (11. 2) 3.1
Total property operating
expenses (72.0) (26.7) (98.7) (67.7) (23.2) (90.9) (7.8) 8.6%
Net operating income
Like-for-like properties 157.6 62.7 220.3 126.1 46.9 173.1 47.2 27. 3%
Non-like-for-like properties 12.1 8.6 20.7 15.0 3.8 18.7 2.0
Total net operating income 169.7 71.3 241.0 141.1 50.7 191.8 49.2 25.7%
Overheads decreased by £3.8 million, reflecting lower performance related pay as well as underlying cost control. Recurring
management fee income from joint ventures increased to £17.4 million (2021: £15.9 million), driven by higher NOI and
property valuations in USAF and LSAV. Our EBIT margin improved to 67.9% (2021: 62.3%) or 68.4% excluding the impact of
non-recurring restructuring costs relating to the implementation of our new 24/7 operating model.
We are targeting an improvement in our adjusted EBIT margin to 70% in 2023, driven by higher occupancy, rental growth
andfurther efficiencies over time in areas such as staff costs, procurement and the enhanced use of technology.
Finance costs were held broadly flat at £63.0 million in 2022 (2021: £63.3 million), with reduced borrowings offsetting the
increase in our average cost of debt to 3.4% (2021: 3.0%). £6.4 million of interest costs were capitalised during the year
(2021:£5.2 million) in relation to our development pipeline.
Development (pre-contract) and other costs increased to £5.8 million (2021: £2.8 million), reflecting a non-recurring tax
credit of £2.8 million in the prior year and non-recurring abortive acquisition costs.
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FINANCIAL REVIEW continued
FINANCIAL PERFORMANCE continued
IFRS earnings
IFRS profit before tax increased to £358.0 million in the year (2021: £343.1 million), driven by the increase in adjusted
earnings of £53.3 million, a revaluation gain net of losses on disposal of £119.2 million (2021: £182.2 million) and £70.7 million
from the positive revaluation of interest rate swaps on the back of rising interest rates (2021: £6.7 million).
2022
£m
2021
£m
Adjusted earnings 163.4 110.1
LSAV performance fee – 41.9
Abortive acquisition costs (1.5) –
EPRA earnings 161.9 152.0
Valuation gains/(losses) and loss on disposal 119.2 182.2
Changes in valuation of interest rate swaps and debt break costs 70.7 6.7
Non-controlling interest and other items 6.2 2.2
IFRS profit before tax 358.0 34 3.1
Adjusted earnings per share 40.9p 27.6p
IFRS basic earnings per share 88.9p 85.9p
A reconciliation of profit before tax to adjusted earnings and EPRA earnings is expanded in section 7 of the financial statements.
EPRA NTA growth
EPRA net tangible assets (NTA) per share, our key measure of NAV, increased by 5% to 927p at 31 December 2022
(31December 2021: 882p). EPRA net tangible assets were £3,715 million at 31 December 2022, up £183 million from
£3,532million a year earlier.
The main drivers of the £183 million increase in EPRA NTA and 45 pence increase in EPRA NTA per share were revaluation
gains on investment properties driven by rental growth and higher occupancy, development surpluses and retained profits,
which more than offset the impact of losses on disposals and a further provision for fire safety capex.
£m
Diluted
pence per
share
EPRA NTA as at 31 December 2021 3,532 882
Rental growth 123 31
Yield movement (12) (3)
Fire safety capex (20) (5)
Development surplus 46 11
Disposals and associated transaction costs (17) (4)
Retained profits/other 63 15
EPRA NTA as at 31 December 2022 3,715 927
IFRS net assets increased by 7% in the year to £3,792.1 million (31 December 2021: £3,527.8 million), principally driven
bypositive revaluation movements and retained profits. On a per share basis, IFRS NAV increased by 7% to 945p.
Property portfolio
The valuation of our property portfolio at 31 December 2022, including our share of properties assets held in USAF and LSAV,
was £5,690 million (31 December 2021: £5,287 million). The £403 million increase in portfolio value reflects the valuation
movements outlined above, a £177 million increase in the Group’s share of USAF, acquisition of a BTR investment property
for £71 million, £256 million of completed disposals, and capital expenditure and interest capitalised on developments of
£284 million.
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THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
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Summary balance sheet
31 December 2022 31 December 2021
£m
Wholly-
owned
£m
Share of
fund/JV
£m
Total
£m
Wholly-
owned
£m
Share of
fund/JV
£m
Total
£m
Rental properties 3,623 1,773 5,396 3,323 1,542 4,865
Rental properties (leased) 90 – 90 98 – 98
Properties under development 204 – 204 324 – 324
Total property 3,917 1,773 5,690 3,745 1,542 5,287
Net debt (1,210) (524) (1,734) (1,030) (492) (1,522)
Lease liability (90) – (90) (94) – (94)
Other assets/(liabilities) (97) (54) (151) (107) (32) (139)
EPRA net tangible assets 2,520 1,195 3,715 2,514 1,018 3,532
IFRS NAV 2,597 1,195 3,792 2,510 1,018 3,528
LTV 31% 29%
Total accounting return
Growth in EPRA NTA was the key component of the 8.1% total accounting return delivered in the year (2021: 10.2%), alongside
dividends paid of 26.6p (2021: 19.25p). Our adjusted EPS yield (measured against opening NTA) increased to 4.6% in the year
(2021: 3.4%), reflecting the growth in recurring earnings.
We expect to deliver a total accounting return of 8–10% in 2023 before the impact of any property yield movements.
Thisreflects our guidance for growing recurring earnings and strong rental growth for the 2023/24 academic year.
Cash flow and net debt
The Operations business generated £134.1 million of net cash in 2022 (2021: £108.1 million) and net debt increased to
£1,734million (2021: £1,522 million). The key components of the movement in net debt were:
•
Disposal proceeds of £256 million
•
Operational cash flow of £141 million on a see-through basis
•
The acquisition of units in USAF for (£141 million)
•
Total capital expenditure of (£355 million)
•
Dividends paid of (£94 million)
•
A (£19 million) outflow for other items
In 2023, we expect see-through net debt to increase as planned capital expenditure on investment and development activity
will exceed anticipated asset disposals.
Debt financing and liquidity
During the year, we witnessed a significant increase in Government bond yields, as well as credit spreads for publicly traded
debt, as markets reacted to higher inflation and a tightening of monetary policy by central banks. In the period immediately
following the UK’s mini-budget in September 2022, new borrowing costs rose to prohibitive levels for new investment activity.
Encouragingly, there has been a significant easing in funding market conditions over recent months and lenders remain
supportive of the Group and the student accommodation sector.
We are well protected from significant increases in borrowing costs through our well-laddered debt maturity profile and
forward hedging of interest rates, but still expect to see our borrowing costs increase over time as we refinance our relatively
inexpensive in-place debt.
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FINANCIAL REVIEW continued
FINANCIAL PERFORMANCE continued
We are focused on maintaining a robust and flexible balance
sheet and will continue to use leverage to support our
growth and enhance risk-adjusted returns. However, higher
borrowing costs mean we are likely to reduce our use of
debt over time by accessing other forms of funding, such as
new equity and co-investment where appropriate, as well
asdisposals.
Key debt statistics (Unite share basis)
31 Dec
2022
31 Dec
2021
See-through net debt £1,734m £1,522m
LTV 31% 29%
Net debt: EBITDA ratio 7.3 8.3
Interest cover ratio 3.7 2.8
Average debt maturity 4.1 years 5.0 years
Average cost of debt 3.4% 3.0%
Proportion of investment
debt at fixedrate
97% 90%
LTV increased to 31% at 31 December 2022 (31 December 2021:
29%), primarily driven by expenditure on our development
pipeline, the acquisition of £141 million of units in USAF and
capital expenditure on the investment portfolio, which more
than offset the impact of disposals and valuation increases
inthe period.
With greater focus on the earnings profile of the business,
we continue to monitor our interest cover and net debt to
EBITDA ratios. In 2022, interest cover improved to 3.7x (2021:
2.8x) and net debt to EBITDA reduced to 7.3x (2021: 8.3x),
reflecting the improved operational performance of the
business. We are targeting to maintain an ICR ratio of >3.0x
and improve our net debt to EBITDA ratio to 6–7x.
The Unite Group has maintained investment grade corporate
ratings of BBB (Stable outlook) from Standard & Poor’s and
Baa2 (Positive outlook) from Moody’s, reflecting Unite’s
robust capital position, cash flows and track record.
Funding activity
As at 31 December 2022, the wholly-owned Group had
£397 million of cash and debt headroom (31 December
2021: £421million), comprising of £29 million of drawn cash
balances and £368 million of undrawn debt (2021: £96million
and £325 million respectively).
During the year, the Group extended its sustainability-linked
revolving credit facility by £150 million to £600 million, on
terms in line with the existing facility. The facility maturity
has been extended by a year to March 2026, which may be
extended by a further year at Unite’s request, subject to
lender consent.
During the year, LSAV raised a new £400 million syndicated
loan for a term of five years, using the proceeds to pay down
existing facilities approaching maturity. The £100 million L&G
loan facility in LSAV matured in January 2023 and was fully
repaid from existing reserves.
USAF has agreed terms for a new £400 million secured loan
to refinance its existing £380 million bond maturity in June
2023. We expect to complete the refinancing in the second
quarter of 2023 at significantly improved pricing levels
compared to the second half of 2022.
Interest rate hedging arrangements and cost of debt
Our average cost of debt based on current drawn amounts
has increased to 3.4% (31 December 2021: 3.0%). At the
year end, 97% of the Group’s debt was subject to fixed or
capped interest rates (31 December 2021: 90%), providing
protection against future changes in interest rates. Based
on our hedging position and market interest rates, we
currently expect a cost of debt of 3.6% for FY2023 and 3.8%
for FY2024.
Our average debt maturity is 4.1 years (31 December 2021:
5.0 years) and we will continue to proactively manage our
debt maturity profile and diversify our lending base. In
addition, the Group has £300 million of forward starting
interest rate swaps at rates meaningfully below prevailing
market levels with a weighted average maturity of just under
11 years.
Dividend
We are proposing a final dividend payment of 21.7p per
share (2021: 15.6p), making 32.7p for the full year (2021:
22.1p) and representing a 48% increase compared to 2021.
The final dividend will be fully paid as a Property Income
Distribution (PID) of 21.7p, which we expect to fully satisfy
our PID requirement for the 2022 financial year.
Subject to approval at Unite’s Annual General Meeting on
18 May 2023, the dividend will be paid in either cash or new
ordinary shares (a ’scrip dividend alternative’) on 26 May
2023 to shareholders on the register at close of business on
14 April 2023. The last date for receipt of scrip elections will
be 4 May 2023.
During 2022, scrip elections were received for 15.4% and
2.8% of shares in issue for the 2021 final dividend and
2022 interim dividend respectively. Further details of the
scrip scheme, the terms and conditions and the process
for election to the scrip scheme are available on the
Company’swebsite.
We plan to distribute 80% of adjusted EPS as dividends for
the 2023 financial year.
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Tax and REIT status
The Group holds REIT status and is exempt from tax on its property business. During the year, we recognised a corporation
tax charge of £0.9 million (2021: £2.8 million credit).
Funds and joint ventures
The table below summarises the key financials at 31 December 2022 for our co-investment vehicles.
Property
assets
£m
Net
debt
£m
Other
assets
£m
Net
assets
£m
Unite
share
of NTA
£m
Total
return Maturity
Unite
share
USAF 2,888 (725) (120) 2,043 575 4.7% Infinite 28%
LSAV 1,921 (639) (41) 1,241 620 8.9% 2032 50%
Property valuations increased by 4.6% and 5.6% for USAF and LSAV respectively over the year, on a like-for-like basis, driven
by rental growth with yields broadly stable.
During the year, Unite increased its investment in USAF through the acquisition of £141 million of units through participation
in an equity issue and acquisition of existing units in the secondary market. In aggregate, the purchases increased Unite’s
ownership of USAF to 28.2% (31 December 2021: 22.0%).
USAF is a high-quality, large-scale portfolio of 28,000 beds in leading university cities. The fund has positive future prospects
through rental growth and investment opportunities in asset management initiatives in its existing portfolio. Unite is
currently engaging with unit holders in its role as fund manager to determine the best way to fund both USAF’s ongoing
capital requirements and continued growth.
Fees
During the year, the Group recognised net fees of £17.4 million from its fund and asset management activities (2021: £57.8 million).
The reduction reflects the recognition of a £41.9 million non-recurring performance fee from LSAV in 2021. Growth in property
valuations and NOI over the past 12 months together contributed to growth in recurring fee income received from USAF and LSAV.
2022
£m
2021
£m
USAF asset management fee 12.6 12.0
LSAV asset and property management fee 4.8 3.9
LSAV performance fee – 41.9
Total fees 17.4 57.8
Joe Lister
Chief Financial Officer
28 February 2023
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SUSTAINABILITY AND NON-FINANCIAL REPORTING
MAKING A POSITIVE
IMPACT THROUGH
PEOPLE AND PLACES
Progress made through 2022
Making a positive impact through People
•
Launched new learning academy and delivered over 19,000
hours of training to employees
•
Committed to invest 1% of profit in social initiatives aligned
with our purpose, and delivered a £2.0 million investment
in2022
•
Launched our new Support to Stay student support
framework including our Winter Wellbeing programme to
helpvulnerable students through the cost-of-living crisis
•
Relaunched our Leapskills programme reaching over 10,000
young people in 2022
•
Relaunched our Positive Impact programme, achieving
Bronzeawards across all properties
•
Announced a bumper intake of 100 new Unite Foundation
scholars to celebrate its 10th anniversary
Making a positive impact through Places
•
Completed detailed surveys of all properties and developed
property-level asset transition plans, identifying c.£100 million
of energy efficiency investments required tohit our 2030 net
zero target
•
Deployed £13 million on energy efficiency measures in the
year, expected to deliver a c.5% cut in energy consumption
•
Appointed dedicated Sustainability Construction Manager
in anew role to help our Development Team hit our
sustainability targets
•
Started development of a new Sustainable Construction
Framework including full life cycle carbon assessment (LCA)
ofall new developments
•
Provided head office space for charity Streets of Growth on
apeppercorn rent in our new Hayloft Point development
“We have always tried to make a real
positive impact, from our founding principle
of providing safe, secure and affordable
accommodation, through 10 years supporting
the Unite Foundation, to our 2030 net
zerocarbontargets.”
Richard Smith
Chief Executive Officer
Operating sustainably is crucial to our long term success, which is why making Unite a responsible and resilient business
is one of our strategic objectives. To help us achieve this, particularly in relation to environmental and social issues, we’ve
created a new sustainability framework focused on “creating a positive impact, through People and Places”. Key ambitions
include targets to be net zero carbon by 2030, invest 1% of profit in social initiatives, and create a consciously inclusive
and equitable workplace that is representative of wider society and helps everyone fulfil their potential. Some of our
achievements are set out below.
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The United Nations Sustainable Development Goals (UN SDGs) (see more details at https://sdgs.un.org/goals) set out the most important
sustainability topics globally, and provide a framework to help focus attention and action where it is most needed. Our ambition to create a
positive impact through People and Places is specifically aligned with 9 of the 17 UN SDGs where we are best positioned to support the goals
and underlying targets, as indicated by the SDG icons on the graphic above.
To deliver on our ambition to make a real difference in the areas that are most materially significant to us we’ve
developed our new sustainability framework:
Making a positive impact through People and Places
Opportunities for people
to develop and grow
We’re giving employees and
students the support they
need to grow and succeed.
To do their best work,
discover their passions and
be their best selves.
Diversity, equity
&inclusion
We’re creating a culture where
being different is valued. A
culture where our people
and students can thrive and
there’s room for everyone, no
matter what their background,
identity or circumstances.
Wellbeing – employees
andstudents
We aspire to build a mindful
culture, where supporting
the mental, physical,
financial and social wellbeing
of students and employees is
a priority for everyone.
Health & safety
We don’t take shortcuts
when it comes to health
and safety. We work hard
to make our people and the
students who live with us
safe and supported.
Transparency and disclosure
We’re committed to transparency when it comes to our sustainability
targets, reporting progress and disclosing performance.
Greener, sustainable
buildings
We’re designing, constructing
and managing our buildings
to be sustainable, support
nature, and provide a healthy
inspiring environment for
those who work or live there.
Playing an active role
inlocal communities
We’re ensuring our actions
have a positive impact
on the communities and
environments around us.
Tackling climate change
We’re playing our part in
keeping global warming
below 1.5°C, reducing
greenhouse gas emissions
from operations and new
buildings in line with science
based carbon targets and to
be net zero carbon by 2030.
Responsible use
ofresources
Reducing resource
consumption and waste,
working with suppliers to
improve circularity, and
helping students and staff
adopt life-long sustainable
behaviours.
Operating with integrity
We do the right thing, always operating with integrity
andexpecting the highest standards.
Everyone is unique. Everyone is important. Everyone
deserves to be safe, respected and included, and to
be their best selves. At Unite, we strive to make that
happen whether you stay with us or work with us.
Our goal is to lead on sustainability and raise standards in the living sector. Our governance and processes ensure that
working responsibly and sustainably isn’t optional, that we always operate with integrity and transparency.
We want to create places that deliver a positive impact
on our people, our communities and the planet.
We’re aiming for net zero carbon buildings, finding
ways to use fewer resources, and helping build strong
communities in and around our properties.
PEOPLE
OUR APPROACH
PLACES
Our ambition is to make a real positive impact:
•
Net zero carbon by 2030:
–
SBTi validated 1.5ºC carbon target of a 56% cut in scope 1+2
emissions by 2030
–
CRREM-based operational energy efficiency target for a
28% cut in energy intensity by 2030
–
RIBA 2030 Climate Challenge-aligned targets for new-build
embodied carbon and energy
–
RE100 commitment to buy 100% renewable electricity by 2030
•
BREEAM Excellent for all new developments
•
Invest 1% of profit in social initiatives
•
Equitable representation of minority groups
•
60:40 (male:female) senior management gender split by 2025
•
75% of managerial vacancies filled internally
•
Zero reportable accidents and incidents
•
Employee engagement score of 80 or higher
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SUSTAINABILITY AND NON-FINANCIAL REPORTING continued
Opportunities for people
to grow and develop
We’re giving employees and students the support
they need to grow and succeed. To do their best work,
discover their passions and be their best selves.
LIFELONG LEARNING
In 2022, we launched our learning Academy with a
commitment to provide our employees with lifelong learning
opportunities. It’s been designed to help everyone realise
theirpotential, following a pathway to success based on five
core principles:
•
Talent: giving employees the power to realise their
potential
•
Learning: providing knowledge and skills within their role
•
Development: building confidence to achieve
•
Mentoring: share expertise and experience new
perspectives
•
Leadership: for their future career at Unite, and beyond
Through 2022, we provided over 19,600 hours of learning
and development to employees covering a range of personal
and professional development.
As part of our commitment to lifelong learning, in 2022 we
offered four one-year industrial placements to students as
part of their degree programme, as well as nine internships
as part of the 10,000 Black Interns programme. These
eight-week long placements spanned a range of areas
including finance, procurement, HR and sustainability.
Our apprenticeship programme also continued, with
54 apprentices working across the business through
2022 in roles including finance, estates, legal and energy
management – an increase of 35 compared to2021.
These programmes help build the skills, knowledge and
confidence of participants, helping get their career off to the
best possible start while also helping Unite identify, attract
and retain the diverse talent we need to succeed.
PEOPLE
Everyone is unique. Everyone is important. Everyone deserves to be safe, respected and included,
and a chance to be their best selves. At Unite, we strive to make that happen whether you stay with
us or work with us.
For more about this project, go online to:
unitegroup.com/sustainability/positive-impact
INVESTING IN
LIFELONGLEARNING
FOROUR TEAMS
Launch of The Academy
The Academy launched in October 2022 to enable on-the-
job learning and development for every Unite employee,
at every career stage. Lifelong learning can be accessed
in the form of workshops, online courses, skill sessions,
leadership programmes, mentoring andcoaching.
As a part of it, in May last year, Unite launched its Grow
Beyond leadership programmes, which includes Institute
of Leadership & Management courses. Our Rising and
Inspiring Leader six month fast-track programmes
have supported our General Managers and Regional
Leadership teams in transitioning into their new roles
post consultation.
Victoria Andrews, Account Support Supervisor who
is enrolled on the level 3 Grow Beyond leadership
programme for aspiring leaders said: “I’m really glad
I’m able to take part in my ILM course – it’s helping me
to develop and grow as a supervisor in my current role
and I’ve enjoyed being able to meet other people in the
Company through this.”
CASE STUDY
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EMPLOYEE VOICE
Our employee engagement forum, Culture Matters, is
designed to put the employee voice front and centre in
supporting the shaping of our People strategy. It provides
a forum for two-way communication between the senior
leadership team and the wider Company, involving and
engaging employees through consultation, enabling them to
contribute to the success of the business. Representatives
from across the business are elected to sit on our Culture
Matters forum, giving every colleague an opportunity
to shape our People strategy and create an inclusive
environment where people can fulfil their true potential.
The Culture Matters forum is overseen by Ilaria del Beato,
our independent Non-Executive Director for Workforce
Engagement, who attends the quarterly sessions ensuring
direct Board-level oversight. Culture Matters also includes a
number of Employee Resource Groups supporting specific
groups and topics including people of colour, women,
LGBTQ+ colleagues, and employee wellbeing. More details
are included in our Section 172 reporting (see page 66)
and the Board Leadership and Purpose section of the
Governance Report (see page 97).
HELPING YOUNG PEOPLE SUCCEED AT UNIVERSITY
Providing a Home for Success means helping young people
access Higher Education, providing the best possible support
throughout their studies, and signposting to opportunities
when they complete their studies. The Unite Foundation
has been facilitating access to university for students from
care backgrounds or who are estranged from their family for
10years.
In 2022, we relaunched our Leapskills programme, aiming
to help students make a successful transition from school
into independent living at university. Working closely with
the University and Colleges Admissions Service (UCAS) we
launched an interactive game reaching more than 25,000
prospective students with resources and content designed to
help build resilience, navigate new relationships, and manage
finances while at university.
We also launched a partnership collaboration with
Startup Sherpas (see https://startupsherpas.org for more
information) providing students with support to get their
own business ideas and innovations off theground.
DOING THE RIGHT THING
FOR OUR COMMUNITIES
Unite Foundation 10th anniversary
The Unite Foundation offers a unique accommodation
scholarship for care leavers and estranged young people
at university.
Since its inception, 10 years ago, we’re proud to have been
its partner and principal corporate donor after setting
up the charity. To date, a total of 614 care leavers and
estranged students have been supported in accessing
Higher Education through the Unite Foundation.
This year, to celebrate its 10-year milestone, the
Foundation announced an expanded cohort of 100
new scholarship students, with our support. All new
scholarship students were provided with a welcome
pack worth £200. For students who were eligible, but
unsuccessful in their application for a scholarship, Unite
provided over £10,000 to give each student a £50 gift
card to support them in making their house a home.
Unite’s financial contributions to the Foundation form
part of our commitment to donate 1% of annual profits to
social initiatives.
Since inception, the Unite Foundation has flourished into
a wholly-independent charity, currently partnering with
26 universities across the country.
CASE STUDY
For more about this project, go online to:
unitegroup.com/sustainability/leapskills
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SUSTAINABILITY AND NON-FINANCIAL REPORTING continued
Diversity, Equity,
Inclusion, andBelonging
We’re creating a culture where being different is valued.
A culture where our people and students can thrive
and there’s room for everyone, no matter what their
background, identity, or circumstances.
This year has been about creating our foundations, setting
our goals for the next three years, and continuing to listen
tothe needs of ouremployees.
In April we launched our first Diversity, Equity, Inclusion,
Belonging (DEIB) and Wellbeing strategy, We are US, which
details our ambitions for 2022–2025, what we want to
achieve, and how we are going to achieve it. At the heart
of this is a focus on instinctive inclusion, creating a place
where our people and students thrive and are at the heart
of who we are and what we do every day. Key ambitions
include achieving a 40:60 female:male gender split in senior
management by 2025, and building a data-led understanding
of wider diversity metrics so we can work towards a
workforce that is truly representative of the communities
wework in at every level.
We have continued to focus on two-way communication,
through our employee forum, Culture Matters. Together,
we have undergone a policy review process, which has
highlighted the need for broader scoping policies, that better
reflect the diversity of Unite. We have consulted the forum
on the most meaningful ways to communicate, and ensured
that our representatives are developed in their knowledge
of business, finance, policy, and soft skills. One year on, it is
evident in our agenda items that the business understands
the importance of employee consultation, in order to deliver
impactful and meaningful projects that land in the right way.
We have kept the messaging of DEIB and Wellbeing
consistent, and started to build the knowledge of our
employees. Utilising employee engagement, we used the
responses from our annual DEIB and Wellbeing survey to
influence the construction of our learning programme,
improve our communications, and set out the behaviours
expected of our employees, and senior leaders.
Looking forward to 2023, we will continue to work closely
with our Culture Matters forum to ensure policies and
procedures on important topics, such as family leave to
support our DEIB ambitions.
For more about this project, go online to:
unitegroup.com/living-black-at-university
LIVING BLACK AT
UNIVERSITY
In February 2022, Unite published its “Living Black at
University” Report, based on a research commissioned
by Unite and carried out by Halpin Partnership that
looked into the experience of Black students in UK
student accommodation – the first report of its kind.
In response, Unite called on universities and student
accommodation providers to collaborate across the
Higher Education sector and take meaningful action in
order to address those issues.
Unite launched a national commission, drawing from
key national organisations and professional bodies.
The initiative aims to support the higher education and
private student accommodation sectors’ response to the
report, aligning with Unite’s strong emphasis on social
impact and its value of “creating room for everyone”.
The commission have shared a number of free,
accessible resources and toolkits with the wider Higher
Education sector whilst Unite continues to bring insights
on the subject to sector conferences. In partnership with
Newcastle University, Unite hosted a cultural services
trial and will host a Living Black at University conference
in 2023.
CASE STUDY
PEOPLE continued
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Wellbeing
We aspire to build a mindful culture, where supporting
the mental, physical, financial and social wellbeing of
students and employees is a priority for everyone.
We recognise our responsibility to create happier, healthier
workplaces. Throughout 2022, we focused on four pillars
of wellbeing: social, mental, physical and financial. We
have developed a range of employee benefits to support
these pillars including flexible working, eyecare vouchers
and Medicash scheme, Employee Assistance programme,
optional childcare vouchers and the opportunity to purchase
additional annual leave. Engagement with our Culture
Matters forum and focus groups through 2022 has helped
us to understand the ongoing needs and expectations
of our employees, and informed the development of a
comprehensive new employee support framework which
we’ll be launching in Q22023.
In 2015, we were the first student accommodation provider
to pay the Real Living Wage, a commitment we still make
today. Recognising the strain that the cost-of-living crisis
is having on our employees, we’ve committed to increase
salaries in line with the requirements of the Real Living Wage
in 2023, and paid all of our employees an additional £500
bonus in autumn 2022.
Life at university can be challenging for young people in
many ways, and so in 2022 we launched our Support to Stay
programme to structure a proactive approach to supporting
our students, whilst also being responsive to situations and
experiences which challenge their wellbeing (e.g. mental,
social, financial). We’ve partnered with Blackbullion (see
https://www.blackbullion.com for more information) to
provide students with sector-leading tools and advice to
help students manage their finances; and we’ve invested
in training to help staff identify and respond to a range of
student needs including recognising the signs and symptoms
of mental health difficulties, handling disclosures, and
supporting students with disabilities, and are expanding
opportunities to include first aid and mental health first aid.
For more about this project, go online to:
unitegroup.com/sustainability/positive-impact
HELPING STUDENTS FEEL
WELL AND WELCOME
Resident ambassadors and
mentalhealth resources
We’re championing an inclusive culture where our
customers and people prioritise their wellbeing.
Our Resident Ambassador programme was relaunched
this year. It has been designed to help new students
settle in, make new friends, build confidence and
improve their employability.
Our updated student support structure includes Support
to Stay, a framework that we’ve developed in alignment
with universities’ initiatives to keep students on track and
give them the best opportunity for success.
Unite and Bournemouth University are collaborating
on a data-sharing approach to improve the allocation
of suitable accommodation to students. The aim is to
support students’ welfare during their stay. Roundtable
events have been held and results of our work will set
the sector’s best practice. Part of this important work
includes guidance around safeguarding students, privacy
and how we deal with critical incidents and signposts.
CASE STUDY
See pages 56–61 for more information
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SUSTAINABILITY AND NON-FINANCIAL REPORTING continued
Health and Safety
Health and Safety is at the core of everything we do. We
are committed to providing a safe and secure workplace
for our people and making sure our customers are safe
and supported. Further details of progress are contained
in the Health and Safety Committee Report in the
Governance section (page 128).
In 2022, we introduced a new operating model based
on an in-depth assessment of our customers’ needs
and expectations. This new model means that all our
buildings have 24/7 staff presence, 365 days a year, across
both frontline and management staff. 2022 also saw the
launchofour Support to Stay framework which aims to
provide a supportive living environment to help students
fulfil their potential, despite any medical, physical or mental
health difficulties.
Throughout 2022, we also continued to uphold our
commitment to being leaders in fire safety standards,
through a proactive, risk-based approach, which is
embedded across our entire business, to ensure that
students and our employees are kept safe. We have a
dedicated fire safety team which has welcomed three
new managers this year, bringing in knowledgeable and
experienced professionals from the fire safety and fire
authority sectors to continue to drive improvement, and
progress significant projects, whilst ensuring we continue
to deliver on our safe and secure promise during a rapidly
changing fire safety and building safety landscape. We also
undertook an independent fire safety organisational audit,
the findings of which will help us continually improve our fire
safety management processes, helping ensure it meets the
highest standards.
For more about this project, go online to:
unitegroup.com/sustainability/positive-impact
FIRE SAFETY MANAGER
AWARD 2022
Championing Fire safety
Last year, our Group Fire Safety Manger Emily Argent
won Fire Safety Manager of the Year at the Women
in Fire Safety awards, which honour the outstanding
achievements and contributions of all women within the
fire safety industry.
Emily, who comes from a background of construction
and fire safety, was praised by multiple fire and rescue
services. Commenting on Emily’s work, the National
Fire Chiefs Council (NFCC) described Emily’s approach
as “what we wish all organisations would do” and
“thedream”.
Emily was recognised for the way she ignites passion
with key stakeholders and brings people together in a
genuinely collaborative approach to ensure effective
solutions are implemented to help keep our students
and colleagues safe.
Speaking of her award, Emily said: “I’m absolutely elated
about the fact I’ve won Fire Safety Manager of the
Year, especially when I’m up against some absolutely
phenomenal women within the industry who I look up to
myself. Fire Safety is a passion for me. Unite is really great
at looking after and nurturing that passion and that’s
what I love about working for Unite. In addition to that,
I get to work with who I consider to be the best in the
industry and that includes my absolutely amazingteam.”
CASE STUDY
PEOPLE continued
52
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Distribution of floor area by energy intensity
0-25 25-50 50-75 75 -100 150-175 175-200 200+
5%
10%
15%
20%
25%
30%
0%
Total energy intensity in 2022 (kWh/m
2
)
Proportion of overall floor area
PLACES
We want to create places that deliver a positive impact on our people, our communities and the planet.
We’re aiming for net zero carbon buildings, finding ways to use fewer resources, and helping build
stronger communities in and around our properties.
Tackling climate change
We’re playing our part in keeping global warming
below 1.5°C, reducing greenhouse gas emissions from
operations and new buildings in line with science-based
carbon targets to be net zero carbon by 2030.
Existing properties
In 2021, we set out our ambition and approach to tackling
climate change in our Net Zero Carbon Pathway document
(see unitegroup.com/sustainability/our-net-zero-pathway)
including science-based carbon targets aligned with a
1.5°C limit to global warming, in line with the Paris Climate
Agreement. In 2022, we completed detailed site surveys and
modelling of every property in the estate, creating building
specific Asset Transition Plans that set out the measures
needed to deliver the required energy, carbon and EPC
improvements. This provides a full picture of the c.£100
million of capital investment required to hit our 2030 net
zero carbon targets, including our energy intensity target
linked to CRREM (the Carbon Risk Real Estate Monitor tool).
The chart below shows the portion of total floor achieving
different levels of energy intensity (consumption per square
metre of floor space) in 2022. As on page 60, 2022 whole estate
average energy intensity was 117.9kWh/m
2
, slightly above the
CRREM pathway benchmark for 2022 of 113.6 (v1.093).
We’ve invested c.£20 million in energy initiatives in the
past two years, achieving a 6.5% cut in absolute energy
consumption from our 2019 base year (see pages 60–61 for
more details of our energy and carbon performance). This
investment has helped us achieve significant improvements
in EPC ratings, with 61% of total floor area now A-B rated and
a further 19% of floor area C rated as shown on the chart,
compared to 35% and 22% respectively in 2021.
We have c.£7 million of capital investment in energy
efficiency planned for 2023, including LED lighting, air-
source heat pumps, and improved heating controls, and are
exploring options to bring more of our purchased electricity
under long-term corporate power purchase agreements
(cPPAs) to meaningfully decarbonise our energy supply.
New developments
2022 saw the recruitment of a new Sustainability
Construction Manager role in our Development team to
steer our development pipeline towards our 2030 targets.
In-house modelling using the OneClick LCA (life cycle
assessment) software package has given us our best-ever
understanding of embodied carbon and the options open to
us to reduce. Wewill publish our Sustainable Construction
Framework later in 2023 to help deliver our net zero carbon
developmentambition.
Working closely with our supply chain, this LCA work has
allowed us to achieve significant reductions in embodied
carbon of new developments. Our Campbell House
development achieved a figure of 817kgCO
2
e/m
2
(RIBA stages
A-C) compared to the RIBA 030 Climate Challenge target of
1,000kgCO
2
e/m
2
for 2020 and 800kgCO
2
e/m
2
for 2025.
In 2023, we will continue to collaborate with leading industry
bodies around themes of embodied carbon, circular
economy and operational energy performance.
50%
80%
Proportion of whole estate by EPC rating
30%
60%
10%
0%
40%
70%
20%
63.6%
12.3%
24.1%
61.2%
19.3%
19.5%
71.4%
13.5%
15.2%
By bed numbers By floor area By asset value
A-B rated
C rated D-G rated
Proportion of total estate
53
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SUSTAINABILITY AND NON-FINANCIAL REPORTING continued
Playing an active role
inlocal communities
We want to ensure that our activity brings real benefits
to local communities, undertaking detailed community
engagement as part of any new development.
We’ve collaborated with local youth intervention charity
Streets of Growth at our new Hayloft Point development
in central London, providing them with their first ever
permanent and dedicated space on a peppercorn rent.
Here, they can deliver a real positive impact for marginalised
young people in Tower Hamlets and the Isle of Dogs through
their street intervention model. Built on the former site of
The Boar’s Head, a sixteenth century playhouse, the space
includes a fully equipped theatre space which Streets of
Growth use for workshops and an ongoing partnership with
TheBritish Bangladeshi Fashion Council.
Our Positive Impact scheme has been developed in
conjunction with the NUS and provides a framework to
help employees support their communities and adopt
sustainable behaviours, including recycling and donations
to charity. 2022 was a milestone year, with 100% of our
properties achieving bronze awards, and teams across the
business working towards silver and gold awards by setting
up long-term projects and collaborations within their local
community to deliver real social or environmental benefit.
Our commitment to invest 1% of profit (on an Adjusted
Earnings basis) in social initiatives represents a target of
£1.6million for 2022 so we are pleased to have invested
a total of over £2.0 million during 2022 in this area.
This includes our contribution to the Unite Foundation,
investment in the Leapskills programme, and the value of
spaces we provide in our buildings such as Hayloft Point.
Through various initiatives including our ongoing partnership
with the British Heart Foundation and the provision of
rooms in Central London free of charge to IntoUniversity
for their summer schools, in-kind donations have totalled
over £260,000. We are working with leading social impact
organisation B4SI to better understand the impact of our
investment in this activity, so that we can target effort where
it delivers the greatest societal benefit and quantify the
impact achieved.
Greener, sustainable
buildings
We’re designing, constructing and managing our
buildings to be sustainable, support nature, and
providea healthy, inspiring environment for those
whowork or live there.
We have targeted BREEAM Excellent for all new buildings
since 2017 as well as an EPC A rating to help ensure they
achieve the levels of performance we demand across areas
including energy efficiency, material selection, biodiversity,
health and wellbeing, and safety.
•
Campbell House, our latest BREEAM Excellent, EPC
A-rated development in our home city of Bristol, includes
over 400 student bedrooms in a new purpose-built block,
as well as the sensitive redevelopment of the original
Bristol Royal Infirmary building dating from the 1730s to
accommodate 431 students. The development makes
use of air source heat pumps for domestic hot water,
networked smart-controllers on all heating, and on-site
solar panels to achieve levels of energy performance we
need to support our environmental targets. See case
study on page 57 for more details.
•
2022 also saw major refurbishment of two large sites
in Manchester, New Medlock Way and Parkway Gate,
which included over £3 million of energy efficiency
improvements to building fabric and services, including
new insulation and glazing, air-source heat pump, solar
panels and building control improvements.
Responsible use
of resources
We’re reducing resource consumption and waste,
working with suppliers to improve circularity,
and helping students and staff adopt life-long
sustainablebehaviours.
We’re working hard to cut water use, reduce waste and
improve recycling across our estate, and to engage with
our supply chain to quantify and decrease the impact of
products and services we consume. In 2022, we retendered
our waste and recycling contracts, ensuring that our new
suppliers would be able to support our transition to a more
circular supply chain.
PLACES continued
WE CONTINUED OUR PARTNERSHIP
WITH THEBRITISH HEART
FOUNDATION THROUGHOUT 2022
Total raised in donations in 2022:
£213,162
Total bags donated in 2022: 15,108
54
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CASE STUDY
HAYLOFT POINT
A major investment
in a prime location
London is an area of key strategic importance for
Unite. The capital is the UK’s largest student market,
and suffers from a shortage of purpose-built student
accommodation.
Hayloft Point, costing £187 million, is our newest
flagship property located in the heart of central London.
The development reached practical completion in
September 2022, and was fully let in its first year.
The 24-storey, 29,000 square feet development in
Aldgate contains 920 beds and offers proximity to
prestigious university campuses. The building boasts
facilities including a cinema, karaoke rooms, gyms and
study spaces.
As part of our commitment to being an active part
of our communities, we partnered with youth
intervention charity, Streets of Growth. The charity is
utilising two floors of the building to offer production,
filmmaking and textile activities to young people.
Hayloft Point is built on the location of a sixteenth
century playhouse, so we worked closely with the
Museum of London Archaeology (MOLA) to ensure
findings of national significance were preserved within
the footprint of the development.
Due to strong university relationships, Unite is well
placed to operate in London, and our development
team has extensive experience navigating the complex
planning environment in the city. We have entered into
a five-year nomination agreement at Hayloft Point with
King’s College London, covering just over 67% of beds
in the building.
Following the development of Hayloft Point, we
are now the capital’s largest owner, manager, and
developer of purpose-built student accommodation,
with over 11,500 beds across the city and 2,400 more
beds in our development pipeline.
For more about this project, go online to:
unitegroup.com/sustainability/positive-impact
55
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SUSTAINABILITY AND NON-FINANCIAL REPORTING continued
OUR APPROACH
Our goal is to lead on sustainability and raise standards in the living sector. Our governance and processes ensure that
working responsibly and sustainably isn’t optional, that we always operate with integrity and transparency. More details can
also be found in the Sustainability Committee Report (page 125), and wider Governance Section of this report (page 88).
Operating with integrity
We strive to always do the right thing, operate with
integrityand expect high standards from our employees
andsuppliers.
Our Code of Conduct and Modern Slavery Statement,
together with other key governance policies on our website,
set out how we expect our employees and suppliers to
behave. We work closely with our supply chain partners to
ensure we are properly managing environmental and social
risks and have developed a new suppliers code of conduct
which all supplies will need to commit to and follow from
2023 onwards (see unitegroup.com/sustainability/policies-
documentation for more details).
Since 2021, our Executive team’s remuneration has been
linked to our environmental and social performance targets
and, in 2022, we introduced sustainability targets for a
portion of the bonus scheme for all employees, linked to
ourPositive Impact awards.
Transparency and disclosure
We’re committed to transparency when it comes to our
sustainability targets, performance reporting and disclosure.
We have worked hard to ensure that we are addressing our
most significant environmental and social risks and issues,
and targeting the areas that can deliver the greatest positive
impact. This includes aligning where possible with established
third-party frameworks or recognised commitments that
help ensure we are setting suitably ambitious targets and
have credible plans in place to achieve them, whether it is
alignment with the UN SDGs, climate targets in line with the
SBTi and CRREM, our commitment to the Real Living Wage, or
the use of BREEAM for new developments. Similarly, we’re
committed to disclosure of our approach and progress in line
with recognised standards and frameworks, and so in 2022
continued to disclose to the Global Real Estate Sustainability
Benchmark (GRESB) (www.gresb.com) and CDP (www.cdp.
net), retaining our four-star GRESB rating and achieving a
Bratingunder CDP. We also disclose in line with the EPRA
sBPR and TCFD guidelines. Looking forward to 2023, we
anticipate that the UK Government’s proposed Sustainability
Disclosure Requirements will bring further clarity and
consistency. Note that as we operate only in the UK we
arenotsubject to the requirements of the EU SFDR. We
publish details of executive remuneration (page 131) and
paygap reporting (search for “Unite Integrated Solutions”
athttps://gender-pay-gap.service.gov.uk).
The Group is a Real Estate Investment Trust or REIT and as
such is exempt from tax on its property business. Further
details are included in the Tax and REIT status note on
page197.
The table below sets out some key performance indicators that linked to our 2022 sustainability targets.
Performance
KPI 2020 2021 2022 2021–22 change
Total social investment £1.8 million £1.8 million £2.0 million 10% increase
Positive impact awards
Programme
suspended due
to pandemic
Programme
suspended due
to pandemic
100% bronze
Programme
relaunched
Scope 1+2 (market based) absolute emissions
(tonnesCO
2
e/yr)
21,086.0 13,178.0 12,957.7 1.7% decrease
Average energy intensity (kWh/m
2
/year) 106.7 113.4 115.6 1.9% increase
EPC ratings by floor area
A–B C D–G A–B C D–G A–B C D–G
23.6% increase
in A–C rated
floor area
35.1% 22.1% 42.8% 35.1% 21.8% 43.1% 61.2% 19.3% 19.5%
GRESB rating 81**** 85**** 84**** 1 point drop
Water consumption per m
2
floor area (m
3
/bed) 36.6 40.1 45.5 13.4% increase
% of electricity from renewable sources 74.0% 99.9% 99.9% no change
Investment in energy efficiency – £3 million £13 million
£10 million
increase
56
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CASE STUDY
SUSTAINABLE
DEVELOPMENT IN
A KEY STRATEGIC
CITY
Campbell House, Bristol
Unite’s newest Bristol property, named after one of
Bristol’s first Black ward sisters, is situated in the heart
of the city on the site of a former Georgian hospital.
Campbell House covers 109,000 square feet, following
an investment by Unite of £44 million. The property
spans six storeys and provides beds for 431 students.
The new accommodation – which is named after
Princess Campbell – provides a host of amenities for
students, including a gym, cinema, karaoke room,
dedicated study spaces, as well as indoor and outdoor
social spaces.
Campbell House has been developed in partnership
with the University of Bristol, which Unite has a long-
standing relationship with. A 15-year nomination
agreement has been agreed to provide beds
for itsstudents, covering 95% of the rooms at
CampbellHouse.
As part of the Group’s commitment to sustainability, the
site has been built with extensive solar panelling, as well
as air-source heat pumps, and the ability to link into the
district heating network. There is also extensive cycle
storage – with enough space for residents and their
guests to store a bike. The development has achieved
aBREEAM “Excellent” rating.
Bristol is one of our key strategic cities where the
company is well-positioned to meet demand from the
city’s 60,000 students. Home to two prestigious Higher
Education institutions, the University of Bristol and the
University of the West of England (UWE), our range of
accommodation provides plenty of options.
Campbell House adds to Unite’s Bristol portfolio
making it our sixth largest city by bed numbers
withopportunity to further expand our Bristol
portfolio through 1,300 beds in our secured
development pipeline.
For more about this project, go online to:
unitegroup.com/sustainability/our-net-zero-pathway
57
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SUSTAINABILITY AND NON-FINANCIAL REPORTING continued
NON-FINANCIAL INFORMATION STATEMENT
The table below summarises how we comply with non-financial performance reporting requirements. Relevant policies and
statements are available online at www.unitegroup.com.
Employees
Social matters
Description of
the business
model
Details of who we are, how we operate
and the value we create can be found
onpage 8 onwards
Our new Diversity, Equity,
Inclusion, Belonging and
Wellbeing strategy is focused on
providing opportunities for all
p50
The Academy provides
learning opportunities to
enhance knowledge, skills
anddevelopment
p48
Our employee engagement
forum, Culture Matters, puts the
employee voice front and centre
p49
Our Whistleblowing Policy
enables employees to raise
aconcern in confidence
p103
Gender diversity and pay gaps
across the Group. Our full
Gender Pay Gap Report can
be found on our website and
at: https://gender-pay-gap.
service.gov.uk/Employer/
KDcxuKgH
p63 &
p155
Our Board Diversity Policy seeks
to enhance the overall diversity
of the Board and ensures an
appropriate and diverse mix of
skills, experience and knowledge
p116
Anti-
corruption
andbribery
Human rights
 
Our Anti-bribery Policy confirms our
zero-tolerance approach to bribery
and corruption and outlines employee
responsibilities. Read our policy at
unitegroup.com
Environmental
matters
Policy, due
diligence and
outcomes
Our policies
 
All of our public policies are available on
our website, unitegroup.com
The policies included in this non-
financial information statement
contain further details (as cross
referenced herein) of the policy,
due diligence conducted and
policy outcomes, which also
include thefollowing:
Risk management detailing our
risk management framework
andrisk review process
p80
Principal risks and uncertainties
considering both internal and
external risks, the potential
impactand details of risk
mitigation in place
p82
Viability statement considering
the viability of the Group for
thenext three-year period
p81
Audit & Risk Committee Report
p119
Group Health & Safety Policy
which details the Group’s
commitment to the health &
safety of our employees, students
and visitors to our site
Non-financial KPIs relevant
totheCompany’s business
p31
Our Resident Ambassador
programme provides peer-to-
peer support for students
p51
Our Positive Impact programme
encourages our people and
teams to work with local
stakeholders on community
impact initiatives
p54
Market overview focusing
ondemographic trends
p20
The Group is the principal
supporter of the Unite Foundation,
the only charity that provides a
home at university for estranged
and care-experienced students
p49
Our response to the cost-of-living
crisis including a one-off payment
p97
Our sustainability strategy sets out
clear objectives and our progress
in respect of environmental, social
and governance matters
p46
TCFD p69
Our Net Zero Carbon Pathway
sets out our pledge to be net zero
carbon by 2030. Read more at
unitegroup.com/sustainability/
our-net-zero-pathway
 
We operate a zero-tolerance approach
to slavery to ensure it does not
occur anywhere within our business
or supply chain. We carry out due
diligence on all third parties we
work with. Read our Modern Slavery
statement and Code of Ethics at
unitegroup.com
58
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Absolute gas consumption
Absolute district heat consumption
Absolute energy consumption
Gas consumption per bed
District heat consumption per bed
Electricity consumption per bed
kWh/bed/yr
3,500.0
2019
base year
202220212020
2,500.0
0
1,500.0
1,000.0
500.0
3,000.0
2,000.0
Utilities consumption per bed Absolute utilities consumption
2019
base year
202220212020
250,000,000
150,000,000
0
50,000,000
200,000,000
100,000,000
kWh/bed/yr
Energy and carbon reporting
2022 saw a return to near normal levels and patterns of
occupancy following the disruption caused by the Covid-19
pandemic and lockdowns over 2020 and 2021. This brought
a corresponding increase in demand for energy and water in
our buildings. This drove absolute total energy consumption
up by 0.3% vs 2021, which combined with the impacts of
disposals and openings saw a 1.9% increase in energy
intensity on a floor area basis. A small reduction in gas use
was achieved due to deployment of air source heat pumps
in the year, which also contributed partly to the increase in
electricity use. Compared to our 2019 base year, however,
both absolute energy consumption and energy consumption
per bed were lower, by 6.5% and 5.4% respectively.
As part of our ongoing commitment to reduce energy
consumption in line with our net zero carbon target, and
building on the £3 million we invested in 2021 on energy and
water efficiency, 2022 saw us invest a further c.£13million
on measures including air source heat pump retrofits,
networked heating controls, building management system
improvements and building fabric improvements as part of
major renovations. These measures are expected to deliver a
c.5% reduction in our future energy consumption.
We remain on track to meet our SBTi validated 2030 green
house gas target of a 56% reduction in combined Scope
1 and 2 (market-based) emissions. Our 2022 Scope 1 and
2 (location-based) emissions fell driven by reductions in
grid carbon intensity, while Scope 1 and 2 (market-based)
emissions rose slightly due to increased district heat use.
AllScope 1 and 2 emissions arise in the UK.
Scope 3 emissions increased by 50% compared to 2021. This
is due to completion of two new builds in 2022 (compared
to none in 2021) which contributed to Scope 3 Category 2
emissions (“capital goods”), and the disposal of six buildings
during 2022 that were previously built by Unite and so
contribute to our Scope 3 Category 11emissions (“use of
soldproducts”) compared to none in2021.
SUSTAINABILITY DATA REPORTING
INCLUDING SECR AND EPRA SBPR
59
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SUSTAINABILITY AND NON-FINANCIAL REPORTING continued
ESTATE DATA
2019 as
reported
2019 new
base year* 2020 2021 2022
Data Data Data
Change vs
2019 base
year
Change vs
prior year Data
Change vs
2019 base
year
Change vs
prior year Data
Change vs
2019 base
year
Change vs
prior year
Year-end bed numbers 49,992 73,990 75,531 2.08% 51.09% 76,171 2.95% 0.85% 69,290 -6.35% -9.03%
Pro rata bed numbers 49,242 73,240 74,193 1.30% 50.67% 74,303 1.45% 0.15% 72,387 -1.16% -2.58%
Pro rata floor area (m
2
) 1,400,011 1,931,148 1,962 ,411 1.62% 40.17% 1,945,560 0.75% -0.86% 1,915,339 -0.82% -1.55%
* Including Liberty Living.
ENERGY & WATER USE
2019 as
reported
2019 new
base year* 2020 2021 2022
Consumption Consumption Consumption
Change vs
2019 base
year
Change vs
prior year Consumption
Change vs
2019 base
year
Change vs
prior year Consumption
Change vs
2019 base
year
Change vs
prior year
Natural gas
Absolute (kWh) 39,616,444 57,414,070 55,587,055 -3.2%
40.3% 59,170,049 3.1% 6.4% 58,816,746 2.4% -0.6%
Relative to bed numbers (kWh/bed) 804.5 783.9 749.2 -4.4% -6.9% 796.3 1.6% 6.3% 812.5 3.6% 2.0%
Relative to floor area (kWh/m
2
) 28.3 29.7 28.3 -4.7% 0.1% 30.4 2.3% 7.4% 30.7 3.3% 1.0%
Electricity
Absolute (kWh) 106,148,132 167,593,224 141,656,529 -15.5%
33.5% 149,211,285 -11.0% 5.3% 150,944,907 -9.9% 1.2%
Relative to bed numbers (kWh/bed) 2,155.7 2,288.3 1,909.3 -16.6% -11.4% 2,008.1 -12.2% 5.2% 2,085.2 -8.9% 3.8%
Relative to floor area (kWh/m
2
) 75.82 86.78 72.18 -16.8% -4.8% 76.7 -11.6% 6.2% 78.8 -9.2% 2.8%
Renewable electricity
As % of overall electricity purchased 60.9% 61.1% 74.0% 21.2%
21.5% 99.9% 38.8% 25.9% 99.9% 38.8% 0.0%
Heat
Absolute (kWh) 11,775,682 11,775,682 12,091,340 2.7%
2.7% 12,312,277 4.6% 1.8% 11,672,055 -0.9% -5.2%
Relative to bed numbers (kWh/bed) 239.14 160.78 162.97 1.4% -31.9% 165.7 3.1% 1.7% 161.2 0.3% -2.7%
Relative to floor area (kWh/m
2
) 8.41 6.10 6.16 1.0% -26.7% 6.3 3.8% 2.7% 6.1 - 0.1% -3.7%
TOTAL ENERGY (gas + electricity + heat)
Absolute (kWh) 157,540,259 236,782,977 209,334,924 -11.6%
32.9% 220,693,611 -6.8% 5.4% 221,433,708 -6.5% 0.3%
Relative to bed numbers (kWh/bed) 3,199.33 3,232.99 2,821.48 -12.7% -11.8% 2,970.2 -8.1% 5.3% 3,059.0 -5.4% 3.0%
Relative to floor area (kWh/m
2
) 112.5 122.6 106.7 -13.0% -5.2% 113.4 -7.5% 6.3% 115.6 -5.7% 1.9%
Water
Absolute (m
3
) 1,954,648 3,037,827 2,723,396 -10.4% 39.3% 2,980,075 -1.9% 9.4% 3,291,267 8.3% 10.4%
Relative to bed numbers (m
3
/bed) 39.7 41.5 36.7 -11.5% -7. 5% 40.1 -3.3% 9.3% 45.5 9.6% 13.4%
Relative to floor area (m
3
/m
2
) 1.4 1.6 1.4 -11.8% -0.6% 1.5 -2.6% 10.4% 1.7 9.2% 12.2%
* Including Liberty Living.
Energy consumption: energy data reported is predominantly half-hourly meter data (90.3% and 81.2% respectively for electricity and gas), with remainder being billing data (7.4%
and 17.5% respectively) and a small number of estimates (2.3% and 1.3% respectively) where neither meter or billing data is yet available, in which case the previous year’s data for
that site and month is used. District heating data is 85.5% billing with 14.5% estimates.
Boundaries: Energy and water consumption reported is whole building including all that used by students, as our all-inclusive billing means these contribute directly to Scope 1 and
2 emissions rather than Scope 3. Energy and emissions are reported along operational control lines (not equity share lines) and includes all Unite Group plc entities, including 100%
of all buildings operated by Unite regardless of ownership.
60
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
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GREENHOUSE GAS EMISSIONS
2019 as
reported
2019 new
base year
*
2020 2021 2022
Emissions Emissions Emissions
Change vs
2019 base
year
Change vs
prior year
1
Emissions
Change vs
2019 base
year
Change vs
prior year
1
Emissions
Change vs
2019 base
year
Change vs
prior year
1
Total Scope 1 emissions
Absolute (tonnes CO
2
e) 7,397 10,669 10,392 -2.6% 40.5% 11,009 3.2% 5.9% 10,905 2.2% -0.9%
Relative to bed numbers (tonnes
CO
2
e/bed) 0.150 0.146 0.140 -3.9% -6.8% 0.148 1.7% 5.8% 0.151 3.4% 1.7%
Relative to floor area (kg CO
2
e/m
2
) 5.3 5.5 5.3 -4.2% 0.2% 5.7 2.4% 6.9% 5.7 3.1% 0.6%
Total Scope 2 emissions (location based)
Absolute (tonnes CO
2
e) 29,205 44,910 35,113 -21.8% 20.2% 33,784 -24.8 -3.8% 31,204 -30.5% -7.6%
Relative to bed numbers (tonnes
CO
2
e/bed) 0.593 0.613 0.473 -22.8% -20.2% 0.455 -25.9% -3.9% 0.431 -29.7% -5.2%
Relative to floor area (kg CO
2
e/m
2
) 20.9 23.3 17.9 -2 3.1% -14.2% 17. 4 -25.3% -3.0% 16.3 -29.9% -6.2%
Total Scope 2 emissions (market based)
Absolute (tonnes CO
2
e) 3,128 18,833 10,694 -43.2% 241.9% 2,170 -88.5% -79.7% 2,052 -89.1% -5.4%
Relative to bed numbers (tonnes
CO
2
e/bed) 0.064 0.257 0.14 4 -43.9% 126.9% 0.029 -88.6% -79.7% 0.028 -89.0% -2.9%
Relative to floor area (kg CO
2
e/m
2
) 2.2 9.8 5.4 -4 4.1% 143.9% 1.1 -88.6% -79.5% 1.1 -89.0% -3.9%
Total Scope 1+2 emissions (location based)
Absolute (tonnes CO
2
e) 36,602 55,579 45,504 -18.1% 24.3% 44,793 -19.4% -1.6% 42,110 -24.2% -6.0%
Relative to bed numbers (tonnes
CO
2
e/bed) 0.743 0.759 0.613 -19.2% -17.5% 0.603 -20.6% -1.7% 0.582 -23.3% -3.5%
Relative to floor area (kg CO
2
e/m
2
) 26.1 28.8 23.2 -19.4% -11.3% 23.0 -20.0% -0.7% 22.0 -23.6% -4.5%
Total Scope 1+2 emissions (market based)
Absolute (tonnes CO
2
e) 10,524 29,502 21,086 -28.5% 100.4% 13,178 -55.3% -37.5% 12,958 -56.1% -1.7%
Relative to bed numbers (tonnes
CO
2
e/bed) 0.214 0.403 0.284 -29.4% 33.0% 0.17 7 -56.0% -37.6% 0.179 -55.6% 0.9%
Relative to floor area (kg CO
2
e/m
2
) 7.5 15.3 10.7 -29.7% 42.9% 6.8 -55.7% -37.0 % 6.77 -55.7% - 0.1%
Total verifiable Scope 3 emissions
Absolute (tonnes CO
2
e) 9,859 15,13 4 12,422 -17.9% 26.0% 15,330 1.3% 23.4% 13,913 - 8.1% -9.2%
Relative to bed numbers (tonnes
CO
2
e/bed) 0.200 0.207 0.167 -19.0% -16.4% 0.206 -0.2% 23.2% 0.192 -7.0% -6.8%
Relative to floor area (kg CO
2
e/m
2
) 7.0 7.8 6.3 -19.2% -10.1% 7.9 0.5% 24.5% 7. 3 -7.3% -7. 8%
Total non-verifiable Scope 3 emissions
Absolute (tonnes CO
2
e) 113,963 113,145 66,924 -49.7% -41.3% 50,448 -62.1% -24.6% 84,562 -36.5% 67.6%
Relative to bed numbers (tonnes
CO
2
e/bed) 2.3 1.8 0.9 -50.4% -61.0% 0.7 -62.7% -24.7% 1.2 -35.7% 72.1%
Relative to floor area (kg CO
2
e/m
2
) 81.4 68.9 34.1 -50.5% -58.1% 25.9 -62.4% -24.0% 44.1 -36.0% 70.3%
Total of verifiable and non-verifiable Scope 3 emissions
Absolute (tonnes CO
2
e) 123,822 148,279 79,346 -46.5% -35.9% 65,778 -55.6% -17.1% 98,475 -33.6% 49.7%
Relative to bed numbers (tonnes
CO
2
e/bed) 2.5 2.0 1.1 - 47.2% -57.5% 0.9 -56.3% -17.2% 1.4 -32.8% 53.7%
Relative to floor area (kg CO
2
e/m
2
) 88.4 76.8 40.4 - 47. 3% -54.3% 33.8 -56.0% -16.4% 51.4 -33.0% 52.1%
* Including Liberty Living.
1. As reported data not base year data.
GHG calculation methodology: GHG emissions have been calculated in accordance with HM
Government’s “Environmental Reporting Guidelines: including streamlined energy and carbon
reporting March 2019 (Updated Introduction and Chapters 1 and 2)” and the GHG Protocol’s “A
corporate Accounting and Reporting Standard (Revised Edition)”. Energy consumption data was
multiplied by the relevant emissions factor to calculate Scope 1 and 2 emissions.
Scope 1 emissions include gas consumed in properties, and fuel consumed in business vehicles.
Scope 2 emissions include grid electricity consumption, and district heating consumption
inproperties.
Verifiable Scope 3 emissions include Category 1 (Purchased goods and services – water,
calculated using water meter and billing data), Category 3 (Fuel and energy-related
activities including T&D and WTT emissions, calculated using same energy data used
for Scope 1 and 2 emissions), Category 6 (Business travel – including direct and indirect
(WTT and T&D) emissions from flights (including RF), and rail travel, calculated using data
provided by travel booking partners), where verifiable data sources exist.
Non-verifiable Scope 3 emissions include Category 1 (Purchased goods and services
– operation and management of real estate assets, calculated using QUANTIS Scope 3
evaluator tool based on spend), Category 2 (Capital goods – new properties, calculated
using a detailed embodied carbon assessment of a real and representative new-build
property, Category 5 (Waste Generated in Operations calculated using QUANTIS Scope 3
evaluator tool based on spend), and Category 7 (Employee commuting calculated using
QUANTIS Scope 3 evaluator tool), where insufficient data is available to verify.
Emissions factors: emission factors used are the relevant factors from the “UK
Government emission conversion factors for greenhouse gas company reporting (2022
data set)”. Scope 2 emissions are calculated using the UK national average grid emissions
factor, whilst Scope 2 emissions are calculated using our supplier Npower’s contractual
emissions factor which is zero for all electricity purchased under our Group supply contract
as 100% is backed by REGOs. We disclose detailed asset-by-asset consumption to CDP and
GRESB (Global Real Estate Sustainability Assessment).
Independent verification: all energy, water and carbon data in tables above for 2022 and
all previous years reported, including year-on-year changes, has undergone independent
verification by SGS UK Ltd to a level of “Reasonable Assurance” against the requirements
of ISO 14064-3:2006 (excluding “non-verifiable” Scope 3 emissions as explained above),
details will be published via our website https://www.unitegroup.com/sustainability.
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SUSTAINABILITY AND NON-FINANCIAL REPORTING continued
EPRA Sustainability Performance Measures – Environment
EPRA
sBPR
Code
EPRA sBPR
Performance
Measure Data Units Commentary
Elec-Abs Total electricity
consumption
150,94 4.9 MWh/yr 100% grid supplied and REGO backed (zero carbon under GHG Protocol
Corporate Reporting rules for market-based Scope 2 emissions). c.20%
purchased via corporate Power Purchase Agreement (cPPA) with a windfarm
in Scotland. Includes all energy consumed across the portfolio including all
tenant energy use. Also see SECR table on pages 60–61.
Elec-Lf L Like-for-like total
electricity consumption
2021: 147,064.8
2022: 149,980.1
MWh/yr As above, but only data from sites in scope for the whole of 2022 and 2021.
Increase of c2.5% vs 2021 is impact of Covid-related under-consumption in
2021. Also see SECR table on pages 60–61.
DH&C-Abs Total district heating &
cooling consumption
11,672.1 MWh/yr 100% of district heating consumption from non-renewable sources (e.g. gas
CHP). No district cooling. Includes all energy consumed across the portfolio
including all tenant energy use. Also see SECR table on pages 60–61.
DH&C-LfL Like-for-like total
district heating &
cooling consumption
2021: 12,312. 3
2022: 11,672.1
MWh/yr As above, but only data from sites that were in scope for the whole of 2022
and 2021. Decrease of c5.2% vs 2021 reflects the reduced heating demand
through 2022 (the warmest year on record in the UK), and lack of any cooling
load (buildings are naturally ventilated).
Fuels-Abs Total fuel consumption 58,816.7 MWh/yr 100% of this fuel use is non-renewable grid supplied natural gas. Includes all
energy consumed across the portfolio including all tenant energy use. Also
see SECR table on pages 60–61.
Fuels-LfL Like-for-like total fuel
consumption
58,816.7 MWh/yr As above, but including only data from sites that were in scope for the whole
of 2022 and 2021. Increase of c1.5% vs 2021 is impact of Covid related under-
consumption in 2021. Also see SECR table on pages 60–61.
Energy-Int Building energy
intensity
3,059.0 kWh/bed/yr Sum total of Electricity + District Heat + Natural gas consumption per bed per
year (pro rata treatment of acquisitions/ openings/ disposals). Also see SECR
table on pages 60–61.
Energy-Int Building energy
intensity
115.6 kWh/m
2
/yr Sum total of Electricity + District Heat + Natural gas consumption per m
2
floor area per year (pro rata treatment of acquisitions/ openings/ disposals).
Also see SECR table on pages 60–61.
GHG-Dir-
Abs
Total direct green
house gas (GHG)
emissions (Scope 1)
10,905.4 metric tonnes
CO
2
e/yr
Scope 1 emissions, calculated using natural gas consumption data and UK
DEFRA/BEIS emissions factors. Includes all emissions across the whole of
Unite’s portfolio including tenant energy use. Also see SECR table on
pages 60–61.
GHG-
Indir-Abs
Total indirect
greenhouse gas (GHG)
emissions (location
based Scope 2)
31,204.3 metric tonnes
CO
2
e/yr
Scope 2 location-based emissions, calculated using grid electricity
consumption data and district heating consumption data and relevant UK
DEFRA/BEIS emissions factor. Includes all emissions across the whole of
Unite’s portfolio including tenant energy use. Also see SECR table on
pages 60–61.
GHG-
Indir-Abs
Total indirect
greenhouse gas (GHG)
emissions (market
based Scope 2)
2,052.3 metric tonnes
CO
2
e/yr
Scope 2 market-based emissions, calculated using supplier’s contractual
emissions factor for grid electricity (zero as 100% REGOs backed), and
relevant UK DEFRA/BEIS emissions factor for district heating. Includes all
emissions across the whole Unite Students portfolio including tenant energy
use. Also see SECR table on pages 60–61.
GHG-Int Greenhouse gas (GHG)
emissions intensity
(Scope 1 + LOCATION
based scope 2)
0.582 metric tonnes
CO
2
e/bed/yr
Scope 1 + location-based 2 emissions, as described above divided by total
number of beds in the portfolio. Also see SECR table on pages 60–61.
GHG-Int Greenhouse gas (GHG)
emissions intensity
(Scope 1 + MARKET
based scope 2)
0.179 metric tonnes
CO
2
e/bed/yr
Scope 1 + market-based 2 emissions, as described above, divided by total
number of beds in the portfolio. Also see SECR table on pages 60–61.
GHG-Int Greenhouse gas (GHG)
emissions intensity
(Scope 1 + LOCATION
based scope 2)
22.0 metric tonnes
CO
2
e/m
2
/yr
Scope 1 + location-based 2 emissions, as described above, divided by total
floor area (pro rata treatment of acquisitions/ openings/ disposals). Also see
SECR table on pages 53–54.
GHG-Int Greenhouse gas (GHG)
emissions intensity
(Scope 1 + MARKET
based scope 2)
6.8 metric tonnes
CO
2
e/m
2
/yr
Scope 1 + market-based 2 emissions, as described above, divided by total
floor area (pro rata treatment of acquisitions/ openings/ disposals). Also see
SECR table on pages 53–54.
Sustainability data reporting
The table below sets out further detail and data on our sustainability performance, aligned with the European Public Real
Estate Association Best Practice Sustainability Reporting Guidelines (EPRA sBPR).
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EPRA Sustainability Performance Measures – Environment
EPRA
sBPR
Code
EPRA sBPR
Performance
Measure Data Units Commentary
Water-Abs Total water
consumption
3,291,266.8 m
3
/yr All water consumed is municipal mains water supply for domestic use
(sanitary and cooking use). Includes all water consumed across the portfolio
including all tenant water use. Also see SECR table on pages 60–61.
Water-LfL Like-for-like total water
consumption
2021: 2 ,953, 27 7.0
2022: 3,264,582.6
m
3
/yr As above, but including only data from sites that were in scope for the whole
of 2022 and 2021. Increase of c5.7% vs 2021 is impact of Covid related under-
consumption in 2021. Also see SECR table on pages 60–61.
Water-Int Building water
intensity
45.5 m
3
/bed/yr Consumption divided by total number of beds in the portfolio. Also see SECR
table on pages 60–61.
Water-Int Building water
intensity
1.7 m
3
/m
2
/yr Consumption divided by total m
2
of floor area per year (pro rata treatment of
acquisitions/ openings/ disposals). Also see SECR table on pages 60–61.
Waste-Abs Total weight of waste
by disposal route
Recycling: 149.9 tonnes
(42.4%)
Energy from waste:
203.3 tonnes (57.6%)
Metric tonnes/
yr and % of
waste by
disposal route
During 2022 we appointed new waste contractors, and so have incomplete
data for commercial waste through 2022. Data reported has been calculated
based on 25 sites served by one individual contractor who was able to
provide completed data on commercial waste generated by Unite (excluding
student generated household waste), extrapolating it up on a “per bed” basis
across the whole estate.
Waste-LfL Like-for-like total
weight of waste by
disposal route
Not available due to
changes of process
anddata
Metric tonnes/
yr and % of
waste by
disposal route
It is not possible to provide like-for-like comparison here as prior to 2022
commercial waste collections also included a significant proportion of student
generated household waste. From 2022 onwards, new collection arrangements
mean we can report pure commercial waste as a separate figure (as reported
here), which cannot be compared with previous year’s data.
Cert-Tot Type and number of
sustainably certified
assets
BREEAM New Construction:
Excellent: 14 properties,
Very Good: 7 Properties,
Good: 1 Property
BREEAM In Use,
Very Good: 1 Property,
Good: 2 Properties
Total number
by certification/
rating/ labelling
scheme
EPRA Sustainability Performance Measures – Social
EPRA
sBPR
Code
EPRA sBPR
Performance
Measure Data Units Commentary
Diversity-
Emp
Employee gender
diversity
Board: 60.0% male,
40.0% female
Management: 68.2% male,
31.8% female
All other employees:
54.1% male, 45.9% female
Overall totals: 54.5% male,
45.5% female
Percentage of
employees
Details of gender breakdown at different levels in the business can be found
on page 65 of this report.
Diversity-
Pay
Gender pay ratio Management: Mean pay
gap 21.9%, median pay
gap19.6%
All other employees: Mean
pay gap 5.7%, median pay
gap 6.2%
Ratio Our full Gender Pay Gap Report can be found at https://gender-pay-gap.
service.gov.uk/Employer/KDcxuKgH although this statutory reporting
operates across a different time period (Apr-Mar) than our annual reporting
cycle (Jan-Dec) so is not directly comparable.
Emp-
Training
Training and
development
11.0 hours per FTE Average hours A total of 19,693 hours of training were delivered in 2022, across a total of
1,798 FTE employees.
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SUSTAINABILITY AND NON-FINANCIAL REPORTING continued
EPRA Sustainability Performance Measures – Social
EPRA
sBPR
Code
EPRA sBPR
Performance
Measure Data Units Commentary
Emp-Dev Employee performance
appraisals
100% Percentage
ofemployees
All employees set annual objectives with their line manager then also
formally review these at the end of the reporting period. Line managers are
expected to hold regular, ideally monthly, 1-to-1 personal development and
performance review meetings.
H&S-Emp Employee health
andsafety
Accident Frequency Rate
per 100,000 hours worked
= 0.22 (based on 7 RIDDOR
reportable accidents
inyear)
Minor injury frequency rate
per 100,000 hours worked
= 4.6 (based on 145 minor
injuries in year)
Fatalities = zero
Total number
and rate
H&S-Asset Asset health and
safetyassessments
100% Percentage
ofassets
Fire: An independent third party undertaken annual fire safety risk
assessments of all properties in line with regulations and fire standards. Any
gaps are collated and managed through to completion based on risk rating.
Avon Fire and Rescue service have been appointed as our primary authority
to consult on all fire safety matters.
Asbestos: Properties are assessed for any asbestos-containing materials
(ACM) to manage in line with the UK Control of Asbestos Regulations (CAR)
2012. If present, a programme of mitigation is introduced by a third-
party independent contractor who is responsible for safe and compliant
remediation or removal and disposal in compliance with all appropriate
legislation.
Building Mechanical Assets: Building services are maintained in line with
current regulations e.g. passenger and goods lifts are covered under UK
Lifting Operations and Lifting Equipment Regulations (LOLER). Equipment
is subject to periodic thorough examination and inspection by competent
third-party contractors. All remedial action identified within the report are
managed through to completion.
Building Electrical Assets: Our safety procedures align with relevant
legislation, i.e. The Electricity at Work Regulations and The Provision and
Use of Work Equipment Regulations, to ensure we cover all UK statutory
requirements to manage danger arising from working on/near, testing, or
operating electrical equipment and systems.
Gas safety: We have responsibilities under the Gas Safety (Installation
and Use) regulations to undertake safety inspections on all gas appliances
and associated equipment, to ensure gas fittings and flues are maintained
in a safe condition. Gas appliances are serviced at least annually and we
maintain the record of the gas safety checks.
H&S-
Comp
Asset health and
safetycompliance
0 incidents No incidence of H&S non-compliance against regulations or voluntary codes.
Comty-
Eng
Community
engagement, impact
assessments and
development
programmes
See commentary All sites liaise and engage with local stakeholders including local
communities, emergency services, partner universities, local authorities
etc. We also engage as a business with key stakeholders including local
communities, as described in our Stakeholder Engagement statement on
pages 66, 102 and 104 of this report.
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EPRA Sustainability Performance Measures – Governance
EPRA
sBPR
Code
EPRA sBPR
Performance
Measure Data Units Commentary
Gov-
Board
Composition of the
highest governance
body
Number of Executive Board
members: 2
Number of Non-Executive
Board members: 7 + 1 chair
Number of Non-Executive
Board members who are
independent: 7
Average tenure of governing
body: 7 years
Number of independent/
Non-Executive
Board members with
competencies relating
to environmental and
social topics: 5 of the
Board members sit on the
Sustainability Committee
See pages 88 onwards of this Annual Report for more details on composition
of the Board.
Gov-Select Nominating and
selecting the highest
governance body
See commentary Board appointments, succession plans and diversity are set out on pages 115
onwards of this Annual Report in the Nomination Committee’s Report.
Gov-CoI Process for managing
conflicts of interest
See commentary Details are set out on page 165 of this Annual Report.
Gender split for EPRA
Male Male % Female Female % Total
Board 6 60.0% 4 40.0% 10
Management
30 68.2% 14 31.8% 44
All other employees
945 54.1% 801 45.9% 1,746
Total
975 54.5% 815 45.5% 1,790
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SECTION 172
Statement by the Directors in accordance with
Section 172(1)(a) to (f) of the Companies Act 2006
Meeting the needs and expectations of our stakeholders is
fundamental to delivery of our purpose, Home for Success.
The Board of Directors confirm that for the year ended
2022, it has acted to promote the success of the Company
for the benefit of the members, having regard to the
interest of stakeholders in their decision-making, as further
detailedbelow.
The likely consequences of any decision in the long
term and desirability to maintain a reputation for
high standards of business conduct
Acting in the long-term interests of the business and all
our stakeholders is central to the Board’s decision-making
process and shapes the Group’s strategy. To help the Board
understand our wider stakeholder relationships and inform
the Board’s decision-making, the Board receives regular
updates from the Executive team, as well as the wider
senior leadership team. In all decision-making, the potential
impact on our stakeholders is taken into account, together
with the likely consequences of these decisions in the long
term and also the desirability of the Company maintaining a
reputation for high standards of business conduct as set out
in our Code of Ethics. You can read more about our principal
decision-making as further detailed on pages 109–113 and
our whistleblowing programme as detailed on page 103.
The Board maintains oversight of the Company’s
performance and reserves specific matters for approval,
including significant new strategic initiatives and major
decisions relating to capital raising and allocation. Through
measurement against long-term objectives, the Board
monitors how management is acting in accordance with the
Board’s agreed strategy and the long-term interests of our
key stakeholders.
The interests of our employees
As a service business, providing homes for 70,000 young
people, who are often living away from home for the
first time, the Board recognises the importance of our
employees and the role they play in delivering our Home
for Success purpose. Following the formation of our
employee engagement forum, Culture Matters in 2021,
the Board receives regular feedback through our Non-
Executive Director for Workforce Engagement, Ilaria del
Beato, who attends the Culture Matters meetings, as well as
regular updates from our Group People Director, ensuring
consideration is given to employee needs and concerns.
The Board also understands employees’ views through our
employee surveys as well as “Unite Live” sessions with our
CEO and senior leaders enabling employees to ask questions
directly. Our commitment to employee engagement can be
seen by our regular employee engagement surveys where we
take the feedback received and turn it into meaningful action.
The need to act fairly between members
oftheCompany
The Board recognises that acting fairly in the interests of all
shareholders increases investor confidence, reduces our cost
of capital and ensures good governance. This also supports
the ability of the business to invest and grow through access
to capital when it is required. We provide all investors with
equal access to information through our public reporting
for financial results and trading statements, as well as
additional disclosures in areas such as sustainability through
our corporate website. Our Annual General Meeting also
provides an opportunity for all shareholders to have their
say. We engage regularly with investors at conferences
and ad-hoc meetings, which address investor groups from
a range of markets and of differing sizes. The Chair of the
Board engages with shareholders on governance matters
and the Chair of the Remuneration Committee engaged
with stakeholders through the 2021/2022 remuneration
consultation process.
The Board had oversight of the Company’s investor
roadshow held in May 2022, focused on progress around
our sustainability strategy. This roadshow included meetings
with our existing top 10 investors to understand their
future sustainability expectations. The Board received
positive feedback overall on the progress made through
the Group’s sustainability strategy, particularly around its
SBTi-validated targets for achieving net zero carbon by 2030.
Investor feedback contributed to the evolution of how our
sustainability strategy is communicated, following approval
from the Sustainability Committee, with a new focus on
People and Places to better highlight the social impact
delivered by the Group.
Further information on employee engagement can be found on pages 97–103
and shareholder engagement on page 104
The need to foster business relationships with
our key stakeholders including our customers,
University partners and suppliers
Our customers
Our purpose, Home for Success, is to provide a safe and
welcoming home for students to engage, learn and thrive
at university, while preparing them for life beyond. Our
regular student surveys provide opportunities for students
to provide direct and frank feedback so that we can
understand what is important to them during their time
living with us and also on wider topics. The Board reviews
the Net Promoter Score from our student surveys which
help the Board decide where to invest in customer service
and property enhancements to ensure we deliver value-for-
money for our customers.
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Student safety is our utmost priority and in response to
customer needs, we introduced a new operating model so
that all our buildings have 24/7 staff presence, 365 days a
year across both frontline and management staff.
Our city teams engage with our student customers on a day-
to-day basis covering welfare issues, complemented by our
Resident Ambassadors, who provide peer-to-peer support
to students, and organise activities in our properties to help
foster like-minded communities.
University partners
Universities are key strategic stakeholders, directly
accounting for around half of our reservations each year
under nomination agreements and the other half indirectly
through their students who book directly with us. The
reputation, health and future growth of our University
partners remains central to our business prospects.
The Group supports the growth ambitions of its university
partners through a range of different approaches from
single-year accommodation arrangements to more strategic
on-campus relationships. Through this partnering, we can
explore opportunities for new University partnerships,
where we can unlock operational efficiencies, alongside new
accommodation options.
Our Higher Education Engagement team and Student
Support team meets regularly with university leaders and
teams at various levels enabling us to discuss this strategic
planning as well as day-to-day operational requirements.
This feedback is shared with our Board who in turn consider
our strategies for delivering value to universities. Our
Student Support team also engage and have collaborative
relationships with Higher Education institutions and
providethe Board with insight into trends and specific
themes relating to student wellbeing across the Higher
Education sector.
Our annual Higher Education Engagement survey provides
the Board with key insight into our reputation and
performance with our University partners as further detailed
as part of our Higher Education trust operational KPI on page
31. This helps inform the way we improve our product and
service. The Board is also regularly updated on trends in the
Higher Education sector in the UK and globally, which inform
the Group’s strategy around the universities with which it
seeks to partner over the long-term.
Suppliers
We work with a wide range of suppliers across our
operations and development activities to deliver a high-
quality, affordable customer offer. Our teams maintain
strong relationships with suppliers and ensure that the
contractors we use have the right skill set and accreditations
to undertake the work in our buildings. The Board recognise
the importance of supplier relationships and is provided with
regular updates throughout the year.
Our impact on the community and the environment
Home for Success is about creating a sense of belonging and
community in our properties and beyond and we’re ensuring
our actions have a positive impact. To maximise the value we
create for communities and ensure our ability to continue
to operate and grow within them, we seek to play an active
role in local communities and build trusted, long-term
relationships with community partners. This can be seen in
our development activity where we actively engage with local
communities to ensure the design of our buildings, public
spaces and community facilities also meets their needs.
Our Positive Impact programme encourages our people
and teams to work with local stakeholders on community
impact initiatives.
As a responsible business, our wider stakeholders
demand we proactively manage environmental, social and
governance risks. Moreover, we understand the significant
contribution that property makes to global carbon emissions
and how essential it is that we play our part in the fight
against climate change.
Through the Sustainability Committee, the Board has
oversight of our environmental impact through continued
review of our sustainability strategy launched externally
in 2021. This strategy specifies clear targets to reduce our
environmental impact over time. In addition, our Net Zero
Carbon Pathway, published in December 2021, details our
approach to reach net zero carbon across our operations and
developments by 2030.
Engagement around environmental impact comes indirectly
through feedback from investors, students, universities and
local communities, all of which is considered by the Board.
During the year, the Sustainability Committee considered the
Group’s communication of the sustainability strategy and
feedback received from internal and external stakeholders.
Following review, we launched an updated and more
engaging communication framework.
Further information on our sustainability strategy can be found on pages 125–127
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SECTION 172 continued
Our 2023 pay award Employee wellbeing is at the heart of the business and following the rise of utility prices
and interest rates, the Board listened to employee concerns and recognised the need for
the business to do what it can to further support our people. The Board had oversight of
the Remuneration Committee’s decision to make a significant pay award to employees,
effective 1 January 2023. This is our highest ever pay award, following a tiered approach
by salary; with 95% of our employees receiving 5% or more, and our lowest earners being
awarded 10.1%.
In addition, employees were also given a £500 one-off payment in August 2022, in
addition to a wider support package.
Supporting a safe and secure
transition to university with our
new operating model
We considered how best to structure and align our frontline teams in order to retain our
market-leading position. As student safety is our utmost priority, we needed to introduce
an operating model where all our buildings have a 24/7 staff presence, 365 days a year.
In doing so, the Board supported the decision for a formal employee consultation to
approve our new operating model. Further details of this decision can be found on
page97.
Acquisition of 180 Stratford, a
178-unit purpose-built build-to-rent
property in Stratford, East London
The Board considered the potential impact of investing in the build-to-rent sector on
our stakeholders including investors and local communities, together with the likely
consequences of the decision in the long term. In doing so the Board recognised that
the acquisition would enable the Group to test its operational capability to extend its
accommodation offer to young professionals and retain them as customers as they move
on to the next stage in their lives. The Board therefore approved the acquisition of a pilot
build-to-rent investment property in Stratford, East London using proceeds of disposals
made in the year. The decision did not impact the Group’s 2022 earnings guidance or
meaningfully impact future financial prospects.
We have highlighted some key decisions demonstrating how the Board has taken Section 172 matters into account in
decision-making:
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TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES
The Board recognise the scale of the challenge posed by
climate change, its potential impact on real estate and
the urgent need to take mitigating action. With the built
environment accounting for c.40% of global greenhouse
gas emissions, we also recognise our responsibility to
do what we can to minimise our carbon footprint and
encourage our customers to do the same. We have set out
a detailed pathway to achieving net zero carbon by 2030,
are committed to improving our buildings’ energy efficiency
and helping our customers adopt sustainable living habits
which will stay with them for life. This is a goal shared by
our investors, customers, suppliers and people. As part of
our Sustainability Strategy we have set carbon reduction
targets which have been validated as 1.5°C, aligned by the
Science Based Targets initiative (SBTi), an operational energy
efficiency target aligned with the CRREM 1.5°C UK Multi-
family Residential trajectory, and have committed under
the RE100 initiative to source 100% of our electricity from
renewable sources by 2030.
We have complied with the requirements of LR 9.8.6R by
including climate-related financial disclosures consistent
with the TCFD recommendations, recommended disclosures,
2021 implementation guidance, and supplemental
disclosures for non-financial groups in this section and other
parts of this Annual Report where cross referenced.
We undertook a comprehensive materiality assessment of
sustainability topics and issues in 2020, and have continued
to engage with key stakeholders to ensure we stay focused
on the most important issues, and report on them in line
with their views and our own commitments. During 2022
we held a sustainability roadshow for investors, to update
them on the Group’s climate performance and priorities,
and hear their views on our sustainability strategy and
performance, particularly regarding our commitments
on climate change. The Board also considers feedback on
our ambition and performance from investors, students,
universities, employees and local communities, to ensure
we remain focused on the most material issues. This
ongoing process of stakeholder engagement, feedback,
and materiality assessment directly informed our first
sustainability strategy published in 2020 and its evolution
into our approach to sustainability reporting detailed on
pages 56 and 58–65; it continues to guide our approach while
planning, implementing, and reporting on our sustainability
strategy and progress.
Governance
Our Chief Executive has overall responsibility for our
climate-related risks and opportunities with ongoing
oversight of climate-related issues delegated to the
Sustainability Committee, a sub-Committee of the Board.
Our Sustainability Committee meets four times per year
to maintain Board oversight of environmental, social and
governance issues, and hold the business to account for
performance in this area including the management of
climate-related risk. Climate risk and performance, including
our plans for achieving and progress towards our 2030 net
zero carbon target, are reviewed by the Committee. Further
details of the Committee’s activity during the year are set
out in the Sustainability Committee Report on page 125.
TheBoard also undertakes a twice-yearly formal risk review
(see pages 77–87) which includes climate-related risks.
Relevant climate-related risks and opportunities are
considered during business planning, proposals and
investment cases prepared for submission to the
Management Boards (the Property Leadership Team and
Customer Leadership Team), the Executive Committee and
the Sustainability Committee, ensuring both management
and the Board have visibility over climate-related risks
and opportunities, and can consider them in planning and
decision making.
Our performance against the annual sustainability
investment budget is reported as a standalone spend
category showing detailed performance against budgeted
levels on a monthly basis. During 2022 the Board specifically
considered climate risk through the transition costs of
meeting future EPC standards and exposure to utility prices,
when it appraised a potential major acquisition.
The Remuneration Committee sets performance objectives
linked to all employees’ bonuses and incentive schemes,
with a number of climate and sustainability metrics
including GRESB rating, energy intensity, EPC ratings and our
employee Positive Impact scheme contributing to overall
remuneration. Details of the Executive Director bonus and
LTIP components, including the weighting and targets can
be found on page 132. Performance against the 2022 bonus
targets can be found on page 152.
Members of the Sustainability Committee are informed
of best practice, market expectations, and given climate-
related updates by internal and external specialists and
expert advisors, including representatives of other listed
peers, investors, analysts and supply chain partners. Board
members gain experience of climate-related risks and
opportunities through their work with other businesses.
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INFORMING REPORTING
INFORMING REPORTING
INFORMING REPORTING
INFORMING REPORTING
UNITE GROUP PLC BOARD
•
Ultimate responsibility for setting Group strategy, prioritisation and capital allocation
•
Provides rigorous challenge to management on target setting and performance
•
Ensures Group maintains an effective risk management framework, including climate-related risks and opportunities
ENERGY AND ENVIRONMENT TEAM
•
Led by the Head of Sustainability, a dedicated team
with operational responsibility for coordinating the
implementation of the Sustainability Strategy
•
Head of Sustainability regularly reports progress to the
Property and Customer Leadership Teams, Executive
Committee and attends Sustainability Committee meetings
•
Responsible for developing asset transition plans,
implementing energy and carbon reduction capital projects,
ensuring EPC and wider energy and climate-related
compliance, investment proposals, and reporting on climate-
related and sustainability performance
CHIEF EXECUTIVE AND EXECUTIVE COMMITTEE
The Chief Executive is responsible for climate risk, opportunities and implementing the Sustainability Strategy with support from the
Executive Committee. The Executive Committee reviews the annual business plan, and longer term Strategic Plan for the Group, which
covers all aspects of performance including climate risks and opportunities ahead of recommending it to the Board. On a monthly basis
the Executive Committee reviews actual and forecast performance, including climate-related performance as appropriate, taking action
to improve wherever necessary, and reports this progress to the Board.
PROPERTY LEADERSHIP TEAM
•
Chaired by the Group Property Director, responsible
forallproperty investment and divestment
•
Manages climate risk and opportunities in investment
decisions such as potential disposals of lower EPC rated
assets or mitigating flood risk on potential development sites
•
Tasked with reducing embodied carbon and improving
operational energy performance of developments in line with
our 2030 net zero carbon target
•
Manages sustainability investment performance against
budgets for the Group including consideration of climate-
related risks and issues in investment opportunities
CUSTOMER LEADERSHIP TEAM
•
Chaired by the Chief Customer Officer, responsible
foroperating the investment property portfolio
•
Manages climate risks and opportunities by ensuring
appropriate forward purchasing of utilities to meet
expected usage, investing in energy and carbon reduction
improvements to buildings and educating customers
toreduce usage
•
Ensures plant is properly maintained to operate
atdesignedenergy efficiency
•
Identifies opportunities to secure low carbon energy
throughPower Purchase Agreements
•
Reviews detailed financial performance monthly relating
to climate risks, taking actions to mitigate variance from
approved budgets
The Board delegates specific climate matters to its Committees:
SUSTAINABILITY COMMITTEE
•
4 meetings in 2022
•
Oversees development and
implementation of our Sustainability
Strategy and recommends any
changes to the Board
•
Reports progress to the Board
quarterly with input from across the
Group
•
Chaired by Dame Shirley Pearce with 3
Non-Executive Director members
•
Attended by Group Chair, CEO,
Investment and Sustainability
Director, Head of Sustainability,
Group People Director and Group
Communications Director
REMUNERATION COMMITTEE
•
3 meetings in 2022
•
Chaired by Elizabeth McMeikan with 3
Non-Executive Director members
•
Engages with shareholders to inform
target setting, including climate-
related objectives
•
Supports the Sustainability Strategy
by aligning remuneration and
incentive targets to the Strategy
AUDIT AND RISK COMMITTEE
•
5 meetings in 2022
•
Chaired by Ross Paterson with 3 Non-
Executive Director members
•
Ensures climate risk and opportunities
are effectively identified, mitigated
and managed
•
Oversees preparation of the Group’s
financial disclosures and Annual
Report
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Strategy
Climate change is a principal risk to Unite which has the
potential to impact our business in the short, medium and
long term. We face potential acute and chronic physical risks
from the direct and indirect effects of climate change on our
business, including extreme weather and flooding. Potential
transition risks associated with the shift to a low-carbon
economy include changing consumer preferences, impacts
on investment property valuations according to their climate
resilience and energy performance, and future policy and
regulation. These also present opportunities where, for
example, our leadership in the sector may be valued by
our customers and ultimately lead to improved financial
performance. Further detail, including the process used to
determine materiality of risks is included within the Risk
Management section.
Time periods:
S
Short term: 0–3 years – Our highest confidence
forecasts including the detailed year budget and
subsequent two years where we have significant
visibility in our Business Plan.
M
Medium term: 3–10 years – Covers the period to our
2030 net zero carbon target, asset transition plans
and other regulatory deadlines such as EPC B in 2029
and the useful life of building fit out.
L
Long term: 10–30 years – The period beyond
our forecasting and planning horizon and the
age where PBSA can begin to face obsolescence
withoutinvestment.
Description Rising average and frequency of heatwaves could
make our buildings uncomfortably hot during the
summer months.
Increased rainfall increases the risk of both flash flooding and rivers
bursting banks.
Impacts We may be required to relocate those customers
living in excessively hot rooms at our expense or
otherwise compensate for disruption.
Sustained increases in temperature may mean
we are unable to let buildings during the summer
without active cooling or investment in passive
cooling technologies.
The impact of a flood could be significant to a single property, either
from temporary disruption to our customers and operations teams,
or damage to the building itself and the plant and machinery within.
Inthe most extreme scenario, a flood may damage the plant room of
abuilding requiring temporary closure whilst repairs are completed.
Operations may also be impacted by flooding elsewhere that disrupts
supply chains or communications even if individual properties are not
directly affected.
Time period
M
 
L S
 
M
 
L
Financial
risks and
opportunities
c.£15 million of summer short term lettings
income at risk of increased cooling costs.
Higher temperatures during winter may reduce
the heating requirement of our buildings.
The geographic diversity of the portfolio means that flood damage is
unlikely to be material in the context of the Group. Closure of a building
for a year due to flood damage could cost up to £12 million of lost
netincome.
A risk assessment using Environment Agency and Scottish
Environmental Protection Agency flood risk data found that
approximately 10% of the total portfolio has a High (1 in 76–100 years)
orVery High (1 in <75 years) risk of flooding. Increased flooding risk will
be reflected in the premiums charged by the Group’s insurers.
Scenario
methodology
We compared forecast temperatures during the
summer under 1.5°C, 2°C and 4.5°C scenarios
using the RCP8.5 projections versus the
1981–2010 baseline. The datasets used for this
analysis were extracted from the UKCP18 data
published by the Met Office Hadley Cell GCMs
(HadREM3-GA705).
We compared forecast rainfall during the winter under 1.5°C, 2°C and
4.5°C scenarios using the RCP8.5 projections versus the 1981–2010
baseline. The datasets used for this analysis were extracted from the
UKCP18 data published by the Met Office Hadley Cell GCMs (HadREM3-
GA705).
Mitigation
and
adaptation
activities
We routinely monitor building temperature
and ensure comfortable temperatures are
maintained at all times as part of Student welfare.
New development schemes and larger asset
management programmes are designed
to ensure appropriate temperatures are
maintained.
We reviewed the flood risk of the portfolio during 2021 in partnership
with our insurers and will continue to do so. We maintain flood response
plans at higher risk properties.
New development schemes and potential acquisitions are reviewed
for flood risk and appropriate mitigations put in place where necessary
to reduce risk to an acceptable level. This includes working with local
government and the Environment Agency to quantify and then mitigate
the risk.
Risk Acute physical
Heat Stress Flooding
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Description Risk that sufficient
improvements to an individual
asset’s performance cannot be
achieved at the pace or scale
required for the transition to a
low carbon economy.
Our 2021 student survey
highlighted climate
change as the number
one priority for students,
we expect climate change
to continue and to be of
increasing importance
for University partners,
investors and other
stakeholders.
Regulation and Government
Policy will continue to evolve and
increase minimum standards.
We face market risk through
energy pricing and increased
costs if our use of energy is not
mitigated through efficiency
investment.
Impacts Individual assets’ operating
costs, asset value and liquidity
may be adversely impacted
if they do not meet evolving
regulatory standards such
as future Minimum Energy
Efficiency Standards (MEES)
for Energy Performance
Certificates (EPCs), or market or
shareholder expectations such
as decarbonisation in line with
the CRREM pathways.
Our leadership in
the sector may be
recognised by our
customers and partners
providing additional
business opportunities
or income benefits
from our leadership in
sustainability.
Failure to at least meet
stakeholder expectations
could be detrimental to
business performance
through many channels
including our ability
to secure nomination
agreements and
increased financing costs.
Regulations may require increases
in scale or pace of investment in
decarbonisation. Introduction
of mandatory carbon pricing
could impact the viability of
our development pipeline and
increase ongoing operating costs
of the existing portfolio.
Failure to meet minimum
standards could also have
significant reputational impacts,
as set out in Principal Risk 8 on
page 85.
Rapid changes in commodity
prices make planning
and forecasting financial
performance increasingly
challenging. Increases in utility
prices seen in 2022 could have
a significant impact on the
Group’s financial performance
if sustained and we have seen
utility cost per bed increase
from £380 in 2020/21 to £470
in 2021/22.
We have seen valuers start to
reflect increased utility costs
in asset valuations and would
expect further downwards
pressure on valuations
if energy efficiency is not
improved to offset this.
Time period
M
 
L S
 
M
 
L M
 
L S
 
M
 
L
Financial
risks and
opportunities
We plan to invest c.£100 million
to support our sustainability
targets.
We target our sustainability
investments to pay back
in 10years or less on an
undiscounted basis.
A “green premium” to asset
values has not yet manifested in
the PBSA sector. It is anticipated
that a “brown discount” will take
effect over the next 3–5 years if
assets are at risk of failing EPC
MEES or expectations on energy
and carbon.
Not usefully quantifiable
with existing data.
The UK Government has set a
legally binding net zero target of
2050. Under our more ambitious
strategy, we expect to spend £100
million on our transition to net
zero carbon by 2030.
It will not be lawful to let any
property not meeting EPC C by
2027 or B by 2029. 20% of our
portfolio is rated D or below,
implying around a £100 million
risk to income across the whole
portfolio if not addressed. The
portion of the portfolio rated C
or above has increased by 23%
during the year due to portfolio
changes, including completed
developments, refurbishment
and disposals, and a change in
classification of PBSA for EPC
certificates.
We spend around £37 million
per year on utilities, being our
second largest category of
spend after people. We expect
our utility costs to grow by
around 10%, p.a. over the next
two years due to rising prices.
We have targeted a 10 year
payback on our sustainability
investment, implying c.£10
million p.a. savings on our
£100 million of total planned
investment. If utility prices
remain high then the potential
savings from this investment
will also increase.
Risk
Transition
Technology Reputation Policy and legal Market risk, commodity and
resource efficiency
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Scenario
methodology
We assess individual assets
against the CRREM 1.5°C
pathways for UK multifamily
residential energy consumption
and carbon emissions (on a
market-based Scope 2 basis),
and have reviewed all EPCs
against relevant EPC MEES
targets in England and Wales
and in Scotland. These have
been compared against current
asset performance, and
expected performance after
the implementation of planned
capital investment over the
next 7 years set out in our asset
transition plans.
Not assessed Not assessed Not assessed
Mitigation
and
adaptation
activities
Delivery of our 2030 net zero
target, in conjunction with
our asset transition plans
are expected to avoid asset
stranding. We will monitor
progress against these plans
and take corrective action where
required. We plan to invest
around £100 million in our
sustainability strategy by 2030.
We actively engage with
our customers, University
partners, suppliers and
investors to explain
and seek feedback
on our sustainability
performance and goals in
addition to understanding
their requirements and
expectations.
We engage with Government and
our advisory teams to understand
likely future legislation and the
impacts that it might have on
Unite. This gives us the greatest
amount of time possible to
adapt to new regulation ahead of
introduction.
Our planned investment in
sustainability initiatives will get all
of our buildings up to minimum
efficiency standards for letting.
Our sustainability and legal
teams, with support from
our expert advisors, routinely
monitor upcoming and proposed
regulation to ensure we remain
compliant.
We forward purchase our
utilities so that we have
price certainty when putting
rooms on sale, allowing us to
confidently set prices at an
appropriate level to reflect the
costs which we face.
Around 20% of our electricity
is secured through a corporate
power purchase agreement,
giving us certainty of supply
over the medium term. We are
actively exploring opportunities
to add to this given the
compelling environmental and
financial impacts.
Risk
Transition
Technology Reputation Policy and legal Market risk, commodity and
resource efficiency
The Group operates solely in the United Kingdom and
generates substantially all of its income through letting
purpose-built student accommodation. Sector and
geographic considerations are therefore not considered
material to climate risk at the Group level. For individual
properties, geographic considerations can be a material risk
as discussed in the Risk Management section.
The Group has potentially significant opportunity to benefit
from the actions it has taken to address climate change.
Improving resource efficiency, particularly where services
are included in the rent, could generate cost savings and
potentially increase asset values. If students recognise and
value our sustainability performance, we may benefit from
increased sales or a reduction in marketing costs. Our use
of low carbon energy sources will reduce the impact of any
future carbon pricing or taxation. Equity and debt capital
may be more readily available, or at lower cost, if we can
meet and exceed market sustainability requirements.
During 2022, climate risks and opportunities were tracked as
part of our financial planning relating to utility costs where
varying levels of usage could have an impact on our financial
performance as energy supply and commodity costs became
a major geo-political issue. Our 2023 budget and planning
include further assessments of our exposure to utility costs
and the potential to mitigate cost increases through capital
investments in energy initiatives.
Green debt issuance, either on public capital markets
or privately, continues to gain pace. The Group has a
Sustainable Finance framework, enabling it to access the
Green Bond market and has also embedded sustainability
performance into the Group’s main bank facility. Failure to
meet the targets set out in the Sustainability Framework may
reduce the Group’s ability to access debt capital markets,
potentially resulting in higher finance costs.
Climate risk, most commonly energy usage, flood and
transition risk are considered in capital allocation decisions.
All potential acquisitions and disposals are reviewed to
identify the costs of meeting our net zero commitments, EPC
requirements and ongoing utility costs and ensure that these
are properly reflected in financial modelling and form an
important part of our due diligence.
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New developments are expected to be net zero carbon, as
defined by the RIBA Climate Challenge, in addition to being
highly resource efficient through the use of technology such
as rainwater harvesting, low water usage shower heads
and solar electric generation. Developments are designed
to mitigate overheating risk and include associated cooling
requirements. For certain development sites, flooding is a
significant risk which must be mitigated through appropriate
design and construction methods to meet regulatory and
local authority planning requirements. The cost of this
mitigation is included within our investment appraisals and
we may require a higher return on investment where the
mitigated risk remains significant.
We assessed flooding and heat stress exposure of our
portfolio under scenarios based upon the Intergovernmental
Panel for Climate Change RCP scenarios consistent with
1.5°C, 2.0°C and 4.5°C temperature rises. The analysis
showed that under a 4.5°C scenario, heat waves, as defined
by the Met Office, become increasingly regular during the
Summer and the risk of flooding increases from a 1 in c.250
year event to a 1 in c.200 year event, with a marginal change
in frequency under 1.5°C and 2.0°C scenarios. Overall the
outputs give us confidence in the resilience of our strategy
under a 2.0°C or lower temperature rise scenario, whilst
werecognise that our strategy and adaptation measures
may need to evolve in the long term, particularly under a
4.5°C scenario.
Under a 4.5°C scenario, our analysis demonstrates that
changes to our strategy and financial planning will be
required as flooding and heat stress losses become more
likely. This will likely include divestment of assets which are
less resilient to extreme heat and rainfall, or investment to
limit the impact of flooding and coastal surge. This scenario
could also result in changes to our customers’ behaviour and
supply chain partners’ viability, including business failures
or supply chain disruption. Increased due diligence in supply
chain selection will be required, particularly considering the
sourcing of construction materials which may be processed
or manufactured in countries where the effects of climate
change are more extreme.
We will continue to assess potential risks in due diligence for
future acquisitions and to make appropriate adaptations,
where required, to our portfolio. We have assessed the
business’s exposure to transition risks and believe the
business’s strategy to deploy capital into highly efficient
properties and make upgrades to our existing assets,
whilst selling lower performing assets, leaves us well-
placed to meet the requirements of the net zero transition.
We consider our strategy to be resilient under both 1.5°C
and4.5°C scenarios.
Risk management
Climate change is a principal risk affecting long-term
decisions made by the Group such as decisions on
investment and divestment. Therefore it is considered in
a broad context within the strategy and as part of our risk
management framework. ‘Create a Responsible and Resilient
Business’ is one of three main objectives of our strategy, with
our net zero commitment being a major part of this, together
with the broader objectives to reduce resource intensity and
work to enable our customers to live more sustainable lives
all contributing to this objective.
We work with teams across the organisation, senior
management, external advisors and stakeholders to identify
the strategic, operational, legal and compliance risks
facing our business. These are included on our Group Risk
Register, which is challenged and validated by the Executive
Committee. Our principal risks, which are a sub-set of our
Group risks, are reviewed by the Board twice annually.
Climate change has been identified as a principal risk and
is managed through our risk management framework. This
framework enables us to effectively manage climate-related
risks – all risks are allocated a risk owner, evaluated for the
potential impact and consequences; controls and control
owners are identified, and finally an evaluation of the
residual risk against our risk appetite is undertaken. Scenario
modelling, including the climate scenario analysis detailed in
this TCFD disclosure, is used to better understand the impact
of these risks on our business model when placed under
varying degrees of stress, enabling interdependencies to be
considered and plausible mitigation plans to be tested.
We undertook a climate-related risk scoping workshop
assessment, as part of our overall risk management process
described in the risk management report, covering the
constituent risks of our broader sustainability and ESG risk,
to identify the most material risks and assess their potential
impacts under different future climate scenarios, as well
as the likelihood, business consequences, and possible
management and mitigation strategies. Risks are assessed
for potential likelihood and impact, and rated using a 5 x
5 matrix on a scale of 1 to 25 (from “very low” to “critical”)
giving each risk a score. This approach is common across
all risks, allowing a comparison of climate risk with all other
risks identified by the Group. When we evaluate risk, we
consider the inherent risk (before any mitigating action)
and the residual risk (the risk that remains after mitigating
actions and controls) as well as the materiality of the risk in
the context of the Group.
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The process for assessing, identifying and managing
climate-related risks is the same as for all principal risks
with responsibility sitting with the Board and is described on
pages 77–87. Details of how we identify, assess and manage
climate-related risks are covered in Principal Risks 8 and 9 on
page 85 which includes a description of the principal climate
-related risks and uncertainties facing the Group.
The Energy and Environment Team is dedicated to
integrating sustainability into the business which includes
tracking, and reporting on, climate legal and policy-related
developments which allows the business to stay well-
informed on regulatory and technological developments
and effectively manage any associated risks. This includes
MEES regulations covering minimum EPC standards and the
development and implementation of transition plans for
those assets which do not meet future standards. We closely
monitor future, or potential regulatory requirements in all
areas of our business including climate change, to ensure
that we are able to take any actions required to meet new
requirements as they become effective.
Portfolio and asset level climate-related risks and
opportunities are identified and assessed through due
diligence for new investment, divestments and risk
assessments for existing assets which cover specific climate-
related risks such as energy efficiency ratings of properties
and physical climate risks, as well as in individual property
level Asset Transition Plans:
Investment and divestment – review of sustainability
risks for investment decisions is undertaken by the
Investment Committee. Geographical location plays an
important part in the identification of physical risks during
the due diligence process, for example through the use
of flood and overheating risk assessments, and transition
risks are identified through reviewing energy efficiency
ratings, existing plant and machinery, construction
type and an estimate of the investment required to
deliver energy intensity targets aligned to our net zero
operational commitment. Where a risk is identified, we
develop appropriate mitigation strategies in the case of
new developments or reflect the risk in acquisition pricing
iftherisk is capable of mitigation to an acceptable level.
Existing assets – risks are identified through compiling and
analysing data on specific property attributes, such as flood
risk, transition risk through the CRREM tool outputs, and
energy performance. This data would typically be analysed
annually and is used to inform asset management decisions
and the business’s disposal strategy.
Metrics and targets
We are committed to transitioning to net zero carbon in
alignment with the UK Government’s 2050 target and with
the goals of the Paris Agreement. Our sustainability strategy
includes a net zero carbon commitment by 2030. This is built
on our science based targets approved by the SBTi, and a
commitment under the RE100 scheme to purchase 100%
renewable electricity by 2030. We published our net zero
pathway during 2021 setting out the action we will take over
the coming decade. As a residential landlord, our customers’
energy use is included within our Scope 2 emissions, this
gives us significant opportunity to reduce both our and
our customers’ impact on the environment. Our strategy
includes ambitious climate-related targets:
•
Science-based target, aligned with a 1.5°C scenario to
reduce our carbon emissions (tCO
2
e) by 56% by 2030
compared with a 2019 baseline (Scope 1 + market-based
Scope 2 emissions)
•
Reduce embodied carbon across our developments by
48% compared, in line with the RIBA Climate Challenge
targets, with a typical building by 2030 by prioritising
asset retention where possible, smart design and using
sustainable materials
•
Reduce energy intensity by 28% by 2030 compared with
2019 baseline
•
Source 100% of total energy consumption from renewable
sources by 2030
We expect that 40% of our 2019 baseline emissions,
beingpredominantly Scope 3 emissions, will remain by 2030
and require either further investment to avoid, or the use
ofoffsetting.
Our 2030 net zero carbon target covers both our operations
and development activity. Our operations targets covers
Scope 1 and 2 emissions from our buildings, including all
building energy used by our student tenants, as well as
selected Scope 3 emissions as per the BBP Climate Change
Commitment. Our development target covers Scope 3
emissions arising from the construction of new buildings,
including embodied energy and construction activity, and a
focus on making new buildings net zero carbon in operation.
This target applies to properties delivered for us by our
supply chain partners on a design-and-build, and new build
properties purchased on a forward-funded basis from other
developers. Further detail is available in our Net Zero Carbon
Pathway. The board have not approved interim targets for
reporting in the 2022 ARA but these will be considered for
future periods.
Additional climate-related KPIs and details of our performance can be found
on page 56
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We have c.£7 million of capital investment in energy efficiency planned for 2023, including LED lighting, air source heat
pumps and improved heating controls, and are exploring options to bring more of our purchased electricity under long-term
power purchase agreements to meaningfully decarbonise our energy supply.
Climate-related metrics are included in Company bonus and incentive schemes as set out in the Governance section of
thisdisclosure.
Our Scope 1, Scope 2, and Scope 3 greenhouse gas emissions, including comparison to prior years, are externally verified
to a reasonable level of assurance and are disclosed on pages 53–65. These disclosures include both absolute and relative
measures to aid comparability in our performance.
We review our performance against the metrics set out above on an ongoing basis as part of our business performance.
Investment into sustainability measures is made with reference to these metrics and our individual asset transition plans
have been developed to support our Net Zero Carbon Pathway. Should performance diverge from the required trajectory
to2030, we will assess and potentially accelerate interventions required to deliver our Net Zero Carbon Pathway.
Cross industry, climate related metrics
TCFD Metric Amount or reference
GHG Emissions See page 61
Transition risks 20% of investment property portfolio EPC D rated or below
Physical risks 100% of investment property portfolio
Opportunities 100% of investment property portfolio
Capital deployment £13 million in 2022, £100 million planned to 2030
Internal carbon prices Not yet adopted
Remuneration See remuneration report on pages 131–166
TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES continued
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THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
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RISK MANAGEMENT
“Identifying and managing the principal
internal and external risks associated
with the delivery of our strategic
objectives is key to our success.”
Joe Lister
Chief Financial Officer
RESILIENT AND AGILE
Our approach to risk management enabled us to
position the business in light of unprecedented levels
of change in the last few years
Governance
The Board has overall responsibility for the oversight of
risk as well as maintaining a robust risk management
framework and internal control system. The Audit & Risk
Committee supports the Board by receiving assurance
reporting, enabling them to review the effectiveness of
our risk management and internal control processes. Our
risk management framework is designed to ensure the
Board can clearly identify our risks, assess our risk profile
and set our risk appetite, and ensure these risks are being
managed and mitigated transparently and effectively.
Integral to this design is ensuring we are agile and resilient
to macroeconomic and political challenges.
Risk management
Our integrated risk management approach combines a
top-down strategic view with a bottom-up operational
view, the output from this approach is a number of
strategic risks under 7 categories.
REFLECTING ON 2022
•
We aligned our principal risks to our
strategyand corporate objectives
•
Continued with our cladding and fire
safetyworks
•
Engaged with leaders in the HE sector
tounderstand emerging risks
•
Tracked and ran scenarios for the
changingeconomic backdrop
OUR PRIORITIES FOR 2023
•
Manage the risks arising from
macroeconomicfactors
•
Monitor and influence the impact
ofpoliticalrisks on the HE sector
•
Further refine our risk management in
ouroperational and support functions
•
Continue to enhance our IT infrastructure
andsecurity
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Internal Audit provides assurance on effectiveness of risk
management process and testing of key controls
Monitor KPIs & risk controls and take appropriate action
Top-down
Strategic risk management
Executive Committee/Customer Leadership Team/Property Leadership Team
Identify principal risks
Direct delivery of strategic actions
in line with risk appetite
Monitor key risk indicators
Consider completeness of
identified risks and adequacy of
mitigating actions
Consider aggregation of risk
exposures across the business
Business units
Report current and emerging risks
Identify, evaluate and mitigate
operational risks recorded in
riskregister
Execute strategic actions
Report on key risk indicators
Board/Audit & Risk, Sustainability and Health & Safety Committees
Review external environment
Robust assessment of principal risks
Set risk appetite and parameters
Determine strategic action points
Assess effectiveness of risk
management process and internal
control systems
Report on principal risks and
uncertainties
Bottom-up
Operational risk management
OUR INTEGRATED RISK MANAGEMENT APPROACH
The Board conducts a twice-yearly dedicated risk review.
As part of this focused risk review, the Board undertakes its
assessment of the principal risks facing the Group, taking
account of those that would threaten our business model,
future performance, solvency or liquidity as well as the
Group’s strategic objectives. The Board considers both
internal and external factors when assessing our risks.
Through 2020 and 2021 Covid-19 was a key consideration for
us; in 2022 and looking ahead to 2023, whilst Covid-19 is still
a consideration, there are a number of other macroeconomic
and political factors. In summary, we have considered the
following when assessing our principal risks.
•
A world emerging from a global pandemic with a seriesof
lockdowns impacting on trade, travel and people’s lives.
•
A disrupted UK labour market with low unemployment
and high vacancies leading to recruitment challenges and
pay increases.
•
The war being waged by Russia against Ukraine that has
led to unprecedented sanctions on Russia; consequential
global shortages of goods, notably oil andgas; and price
increases for all forms of fuel togetherwith a shortage of
goods usually exported from Ukraine.
•
Increased levels of inflation.
•
Recent increases in interest rates.
•
Political change with two changes in UK Prime Minister
during 2022.
These external factors impact our risk profile to varying
degrees and we are already seeing an impact in certain areas
(such as build cost inflation and recruitment), whilst others
are still emerging. Our year-end assessment of risk has
included how these external factors have impacted and the
action we are taking to mitigate them.
RISK MANAGEMENT continued
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THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
OUTPUT – SEVEN RISK CATEGORIES
Read more on
page 82
Read more on
page 83
Read more on
page 84
Read more on
page 83
Read more on
page 87
Read more on
page 85
Read more on
page 86
Market
Manage our
supply and
demand risk
Operational
Minimise the risk
of an incident
Property/
development
Deliver a suitable
development
pipeline
Technology
Maintain a secure
IT environment
People
Retain a high
performing
workforce
Sustainability/
ESG
Meet our
regulatory and
publicly made
commitments
Financial
Manage our
balance sheet
liquidity
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PRINCIPAL RISKS AND UNCERTAINTIES
Our risk appetite
The Group’s risk appetite is considered a fundamental part of
the Board’s strategy setting and annual budget – it does not
happen in isolation. Our risk appetite is underpinned by our
objective of being a responsible and resilient business whilst
delivering for our customers, our people and universities
with attractive returns for our shareholders.
During the year, the Board continued to regularly review
and assess our risk appetite with a primary focus on the
resilience of the business and its agility. This considered both
threats to – and opportunities in – our business as well as
wider macro risk developments impacting the PBSA sector
and the broader Higher Education sector, property market
and economy.
Our overall risk appetite in the year was broadly unchanged
from the previous financial year. Whilst the impact of the
pandemic is now known and reducing, other macroeconomic
factors are extant and the Board continues to take a prudent
approach to risk and opportunity.
Stress testing/scenario planning
and our StrategicPlan
Each year, the Board develops and refreshes the Group’s
Strategic Plan. This is based on detailed three-year strategic/
financial projections (with related scenario planning) and
rolls forward for a further two years using more generic
assumptions. The Board maps our strategic objectives
against our risk profile. Then, always conscious that risk
events do not necessarily happen in isolation, the Board
stress tests these projections against multiple combined risk
events. Through this process, a base case and stress-tested
Strategic Plan are developed.
During 2022, this scenario planning continued to closely
monitor external factors and the Board developed
a wide range of scenarios and stress tests to assess
our preparedness and ability to withstand adverse
marketconditions.
Creating the right corporate culture
for effective risk management
The Group’s risk management framework is designed to
identify the principal and emerging risks, ensure that risks
are being appropriately monitored, controls are in place
and required actions have clear ownership with requisite
accountability.
The organisation has an open and accountable culture,
ledby an experienced leadership team.
The culture of the organisation recognises – and accepts –
that risk is inherent in business and encourages an open and
proactive approach to risk management. By viewing our risks
through the lens of our strategic objectives, the Group is able
to ensure risk management is proactive and pre-emptive and
not a tick box exercise.
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Robust assessment of principal risks
The Directors confirm that they have conducted a robust assessment of the principal
and emerging risks facing the Group, including those that would threaten the Group’s
business model, future performance, solvency or liquidity. The process for how the Board
determined these risks is explained above and these risks are set out on pages 82–87.
The Board has the overall responsibility for the governance of risks and ensures there
are adequate and effective systems in place. It does this in various ways:
OUR RISK MANAGEMENT FRAMEWORK
OUR KEY RISK INDICATORS
Risks and opportunities assessed as part of strategy setting,
annual budget and risk oversight
Owned by the Board and its Committees.
Twice-yearly formal risk review and ongoing monitoring
of risk integral to Board meetings.
Embedded risk management culture
Openness, transparency and clear ownership of risk management
(supported by risk registers) cascades through the organisation.
Risk management and assurance
framework overseen by the Audit and
Risk Committee. Detailed risk trackers
are developed and regularly updated
by the Customer and Property
Leadership Teams.
The Executive Committee reviews
and challenges these risk trackers
and related risk and opportunity; it
considers emerging risks that the
Group is facing or should consider and
then brings these to the Board for its
detailed assessment of these risks.
People and culture
Policies and controls
University
partnerships
Risk management
Our service
platform
Our
properties
The Board
Policies and controls underpin our
riskmanagement framework
(such as Capital Operating
Guidelines; Treasury Policy;
Investment Committee and the
internal controls framework).
Risk assurance is provided through
external and internal auditors as well
as specialist third party risk assurance
where appropriate.
Safety
Higher Education trust
Customer satisfaction
% nominations
Safety
Customer satisfaction
Employee
engagement
Gross asset value
Asset age
Occupancy
Rental growth
PRINCIPAL RISKS AND UNCERTAINTIES continued
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Viability statement
The Directors have assessed the viability of the Group over
a three year period to December 2025, taking account of
the Group’s current position and the potential impact of its
principal risks. The Directors consider the three year lookout
period to be the most appropriate as this aligns with the
Group’s own strategic planning period combined with the
levels of planning certainty that can be derived from the
development pipeline.
The Directors believe that UK universities will continue to
experience strong demand from UK students as 18 year old
demographic growth becomes increasingly favourable and
the further relaxation of international travel restrictions
allows increased numbers of international students to
study in the UK. The Group has an annual business planning
process, which comprises a Strategic Plan, a financial
forecast for the current year and a financial projection for the
forthcoming three years (which includes stress testing and
scenario planning and also rolls forwards for another two
years). This plan is reviewed each year by the Board as part
of its strategy setting process. Once approved by the Board,
the plan is cascaded down across the Group and provides a
basis for setting all detailed financial budgets andstrategic
actions that are subsequently used by the Board to monitor
performance. The forecast performance outlook is also used
by the Remuneration Committee to establish the targets for
both the annual and longer-term incentive schemes.
To stress test the viability of the business, a viability scenario
was prepared using the Group’s strategic plan as a base. The
key viability assumptions were:
•
Rental growth reduced to 2% p.a., reflecting principal
risks1–4
•
Cost growth of 4% p.a., allowing for further sustained
increases in utility and other costs
•
Yield expansion of 50bps, approximately a 10% decline in
asset values
•
Interest costs of 6% on all new and refinancing activity,
reflecting principal risk 10
•
No further development commitments, disposals or
acquisitions, reflecting principal risks 6 and 7
The result of this scenario showed a significant deterioration
in forecast performance, with earnings and NTA significantly
reduced (to 41p and 21p respectively) in 2025 whilst leverage
increased substantially to 40%. Despite the significant
contraction in the size of the business over the forecast
period, the business would remain viable under such
ascenario.
We considered whether the Group’s climate change principal
risk would impact our assessment of the Group’s viability
but concurred that as we have committed to invest £100m
to achieve our science-based net zero target by 2030, this
mitigated the risk sufficiently for this viability assessment.
Following the United Kingdom leaving the European
Union, Brexit, we have seen the proportion of EU students
approximately halve to less than 5% of all students. With EU
students no longer qualifying for home fee status, and facing
full international fees, a significant recovery in numbers is
considered unlikely. Since Brexit, growth in UK and non-
EU students has more than made up for the decline in EU
students, with the Group achieving 99% occupancy for the
2022/23 academic year and a strong outlook for 2023/24.
Brexit is not therefore expected to impact the longer term
viability of the Group.
The financing risks of the Group are considered to have the
greatest potential impact on the Group’s financial viability.
The three principal financing risks for the Group are:
•
short-term debt covenant compliance;
•
the Group’s ability to arrange new debt/replace
expiringdebt facilities; and
•
any adverse interest rate movements.
The Group has secured funding for the committed future
development pipeline, which includes the Unite and Liberty
Living unsecured loan facilities and prepares its Strategic
Plan on a fully funded basis in line with the three year
outlook period. Disposals are an important part of our
strategy with the recycling of assets out of our portfolio
generating capital to invest in development activity and
other investment opportunities.
To hedge against the potential of adverse interest rate
movements the Group manages its exposure with a
combination of fixed rate facilities and using interest rate
swaps for its floating rate debt. During the year the Group
has complied with all covenant requirements attached to its
financing facilities and expects to continue to do so.
The outlook and future prospects beyond the viability
period for the business remains strong, reflecting the
underlying strength of student demand, our alignment
to the strongest universities and the capabilities of our
best-in-class operating platform. There are significant
growth opportunities for the business created by the
ongoing shortage of high quality and affordable purpose-
built student accommodation, universities need to
deliver an exceptional student experience through their
accommodation and the growing awareness of the benefits
of PBSA among non-1st-year students. In particular, we
see opportunities for new developments and University
partnerships, building on the strength of our enhanced
reputation in the sector.
Based on their assessment and the mitigating actions
available, the Directors have a reasonable expectation that
the Group will be able to continue in operation and meet its
liabilities as they fall due over the period to December 2025.
Read our Financial review on pages 32–45
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PRINCIPAL RISK
MARKET
•
Changes in Government Policy
on Higher Education funding
•
Immigration Policy changes
affecting international
students
•
Longer term impact of Brexit
on EU students studying in
the UK
•
Increased blended learning;
more students remain at home
•
Increased regulation over
rents
•
London weighting on loans
and grants removed
•
Further education overtakes
Higher Education
•
Lack of investment in the
quality of our product offering
•
Well funded competitors
improving their offer and
service
•
Unite fails to invest in its brand
•
Unite does not keep pace with
customer expectations
•
Loss of income
•
Reduction in demand affecting
yield and asset values
•
More competition and reduced
demand for year-round
student accommodation in the
longer-term resulting in lower
profitability and asset values
•
More competition for the
best sites
•
Potential impact on rental
growth and occupancy
•
Reduced revenue
and increased costs
associated with part filled
accommodation
•
Maintain dialogue with
Government and Higher Education
providers
•
Ongoing monitoring of
Government Higher Education
andimmigration Policy
•
Invest in developing markets to
attract a wider demographic
•
Regularly review our portfolio to
ensure we have a quality portfolio,
appropriately sized and in the right
locations
•
Disciplined investment approach
to markets with supply/ demand
imbalance
•
Exposure to the best universities
with our new developments
secured with nomination
agreements
•
Geographically diverse portfolio
•
Broad range of product and
priceofferings
•
Long term partnership
arrangements with universities
•
Actively driving differentiation
through our brand investment
andpromises
•
Differing strategies for B2C
and B2B to mitigate against the
different challenges in each market
Offer market leading
customer service to
address any potential
reduction in demand
ensuring we sell
without compromising
price
Maintain our property
portfolio to a high
standard to ensure
enduring relationships
with the high and mid
ranked universities,
and consistently drive
sales performance
Build and maintain a
sector leading offer for
our customers
Events that may
triggertherisk
Potential impactObjective
Risk description:
•
A reduction in demand driven by macroeconomic factors.
Risk description:
•
A reduction in demand driven by value-for-money considerations and affordability.
Risk description:
•
Over supply in the market; as a maturing sector new entrants to the market will increase
competition and could lead to a loss of market share.
1
2
3
PRINCIPAL RISKS AND UNCERTAINTIES continued
Summary of principal risks and uncertainties
The table that follows describes the Group’s principal risks and uncertainties, and explains how these are managed or mitigated.
How we monitor
andnegotiate
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PRINCIPAL RISK
OPERATIONAL
PRINCIPAL RISK
TECHNOLOGY
•
Catastrophic fire or other
incident at a property
•
Incident at construction site
involving Unite employees or
third party contractors
•
Lack of security controls in
place in the IT landscape
•
Inadequate incident
responseplan
•
Increase in phishing activity
•
PC security update failures
– patches not deployed to
allmachines
•
Fatality or injury
•
Reputational damage and
lossof trust in Unite as
reliablepartner
•
Significant loss of personal or
confidential data or disruption
to the corporate systems
•
Reputational and/or financial
damage with increased
scrutiny including sanctions
and fines
•
Board supervised Health & Safety
Committee in place
•
Highly skilled and experienced H&S
team in place
•
Customer Leadership Team and
Property Leadership Team focused
on H&S
•
Expert external assurance on
development safety risk and
preparing for Building Safety Act,
Fire Safety Act changes
•
Visible leadership for Safety &
Wellbeing driven by our senior
leaders
•
Use of audits and external
consultants
•
Comprehensive cladding
replacement programme
underway
•
Defined governance structure for
information security
•
Technical security controls aligned
to SANS CIS Critical Security
Controls and certified under
CyberEssentials+ scheme
•
Full suite of awareness activities
•
Agreed Information Security
Strategy & Technical Security
Roadmap
•
Information security and data
protection policies in place
•
Scheduled internal phishing
campaigns
•
Mimecast intercepts potentially
harmful emails
•
Monitoring of emerging
cyberthreats
•
Information security incident
management procedures in place
Minimise the risk of
an incident that could
impact the safety
of our customers,
contractors and
employees
Events that may
triggertherisk
Potential impact How we monitor
andnegotiate
Objective
Maintain a secure
IT footprint that
discourages attacks
and informs us when
issues have been
detected
Risk Description:
•
Major health and safety (H&S) incident in a property or a development site.
Risk Description:
•
Significant loss of personal or confidential data or disruption to the corporate systems
either through cyber attack or internal theft/error.
•
The risk of falling victim to a cyber attack – either targeted or random.
4
5
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PRINCIPAL RISK
PROPERTY & DEVELOPMENT
•
Challenging planning
environment
•
Increased regulation in
construction design
•
Land scarcity and increased
competition for the best sites
•
Delays or failure to get
planning
•
Construction risk – build cost
inflation due to increasing
development
•
Construction execution risk
– delivery delays impacting
labour/materials coming from
outside the UK
•
Inability to execute our
disposals programme
•
Climate risk – physical,
regulatory and transactional
risks associated with climate
change and the environmental
impact of our development
activity
•
Lost revenue where schemes
are delayed whilst consents
are agreed
•
Reputation/brand damage
when works are late/ongoing
when students in occupation
•
Inability to deliver the planned
growth
•
NTA and EPS affected by
deferred schemes and/or
reduced financial returns, with
cash tied up in development
•
Reputational impact of
delivering a scheme late,
leaving students without
accommodation
•
Recycling our portfolio
through disposals is a critical
aspect of our development
strategy and failure to deliver
planned disposals may result
in a deteriorating net debt
position and negatively impact
our ability to commit to all our
planned development pipeline
•
Potential increases in
construction costs as we
seek to reduce the carbon
intensity of our developments
and comply with building
regulations
•
Consult and lobby at a national and
local level to promote the benefits
of student accommodation
•
Cautious control of external fees,
converting any STP deals to options
may allow sites and consents to
continue
•
Comprehensive due diligence
is completed on unconditional
sites prior to purchase, including
seeking a pre-application
assessment from the relevant
localauthority
•
Clear planning and stakeholder
consultation programme
•
Planning underway to ensure that
we are ready for impact of the
Building Safety Act
•
Using mixed use sites strategically
to gain positive outcomes
•
Experienced development team
with strong track record of delivery
•
Strong relationships with
construction partners
•
Group Board approval for
commitments above a certain
threshold
•
Financial investment in schemes
carefully managed prior to grant
ofplanning
•
Detailed due diligence before
siteacquisition
•
Build cost inflation regularly
appraised and refreshed
•
Mid-sized framework contractors
used and longer-term relationships
established
•
Engagement with our supply chain
regarding future reductions in
embodied carbon through our
development activity
Deliver a suitable
development pipeline
Deliver schemes on
time and to budget
Events that may
triggertherisk
Potential impact How we monitor
andnegotiate
Objective
Risk description:
•
Inability to secure the best sites on the right terms.
Risk description:
•
Schemes are delivered late and/or over budget impacting our financial returns and
damaging our reputation with students.
6
7
PRINCIPAL RISKS AND UNCERTAINTIES continued
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PRINCIPAL RISK
SUSTAINABILITY (more information about our Climate and Sustainability risks is included on pages 69–76)
•
Lack of understanding of the
commitment made and the
component parts
•
Lack of awareness or
understanding of the
Regulatory requirements that
the company/USAF/LSAV is
obliged to meet
•
No clear plan to deliver the
required outputs
•
Lack of engagement from the
stakeholders on delivery of the
commitments
•
Extreme weather events
(flooding, high wind, heat
waves) the occurrence of
which are outside of our
control.
•
Increasing legislative burden
(EPC Minimum Energy
Efficiency Standards, Energy
Saving Opportunity Scheme,
Taskforce on Climate- Related
Financial Disclosures,
more stringent planning
requirements and building
regulations etc)
•
Increasing, volatile and
unpredictable energy, carbon
and water costs
•
Increasing stakeholder
expectation
•
Insufficient prioritisation of
investment
•
Supply chain risks not
managed
•
Non-compliance with
regulations – regulatory
action/fines/penalties
mayfollow
•
Brand damage with resultant
loss of revenue
•
Loss of investor confidence/
trust
•
Increased costs as we fail to
manage the requirements and
plan ahead
•
Potential reduction in Group
credit ratings
•
Damage to property
•
Injury to people
•
Disruption to supply chain
•
Increased insurance costs
•
Increased capital costs
•
Potential for compensation
payments being required
•
Regulatory action/fines/
penalties
•
Brand damage with resultant
loss of revenue
•
Loss of investor confidence/
trust
•
Asset stranding/value
write-downs; inability to
dispose of assets that do not
meet regulatory compliance
standards
•
Formal business policies in place
and updated regularly
•
Effective communication
and reporting internally to
increase engagement and track
progress, and externally to
keep stakeholders appraised of
ambition and progress
•
Ongoing stakeholder consultation
and dialogue to ensure strategy
and reporting are aligned
•
Sustainability Strategy and Group
Board Sustainability Committee
well established
•
Governance structure in place with
clear Board oversight for climate
related issues
•
Monitor performance against key
ESG targets
•
Procurement decisions consider
environmental and climate change
performance
•
Utilities purchasing strategy to
purchase only 100% REGO backed
renewable electricity
•
Incident management plan/
procedures in place to react
to extreme weather incidents
efficiently and effectively
•
Active horizon scanning for new/
changes to legislation
•
Governance structure in place with
clear Board oversight for climate
related issues
•
Monitor performance against key
ESG targets
To meet external
public commitments
and regulatory
requirements made in
respect of ESG
Mitigate or prepare for
the impact of climate
related physical and
transition risks
Events that may
triggertherisk
Potential impact How we monitor
andnegotiate
Objective
Risk description:
•
Failure to meet external, public commitments and regulatory requirements made in respect ESG.
Risk description:
•
Failure to meet external, public commitments and regulatory requirements in respect of climate
and wider factors.
•
Failure to identify, mitigate or prepare for impact of climate change.
8
9
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PRINCIPAL RISK
FINANCIAL
•
High rates of inflation caused
by oil prices, labour shortages,
supply chain disruption and/or
other factors
•
Reduced access to capital
markets due to external
factors e.g. global financial
crisis
•
Significant reduction in
revenue or other adverse
business event affecting the
market’s perception of Unite
risk and future performance
•
Significant reduction in
property valuations or
increase in debt
•
Increased financing costs
leading to reduced profitability
and property values (through
resulting expansion of
valuation yields and lower
valuations)
•
Possible forced sales at below
valuation
•
Slowdown in development
activity
•
Breach of debt covenant
could lead to an event of
default followed by repayment
demand
•
Movements in interest rates and
the impact of different outcomes
are considered at the Capital
Strategy Committee
•
Hedge strategy is approved by the
Board each year
•
Minimum hedge ratio of 75% is
defined in the Group’s capital
operating guidelines. Most debt is
fixed rate or hedged with swaps
or caps
•
Revolving Credit Facility to provide
liquidity headroom
•
Property Leadership Team
routinely reviews capital
commitment
•
Maintain good relationships with
lenders
•
We manage the balance sheet
ratios defined in capital operating
guidelines
•
Annual funding strategy approved
by the Board
•
Monitoring of debt covenants
across a range of income scenarios
and risks
•
Increasing attention on interest
cover covenants, with six monthly
monitoring
Manage our balance
sheet liquidity within
tolerable levels and
maintain compliance
with our debt
covenants
PRINCIPAL RISKS AND UNCERTAINTIES continued
Events that may
triggertherisk
Potential impact How we monitor
andnegotiate
Objective
Risk description:
•
Risk that borrowing costs rise rapidly, increasing the cost of debt and we are not able to achieve the
lowest funding cost within risk tolerances.
•
Risk that we are unable to renew or secure funding to meet committed or intended business plans,
potentially leading to our having to slow development, defer capital expenditure or cut dividends.
•
Risk that we fail to comply with contracted loan agreement covenants.
10
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PRINCIPAL RISK
PEOPLE
•
Lack of leadership
development
•
Lack of managed succession
planning and opportunity for
career advancement
•
Ad-hoc/uncoordinated
training plans
•
Lack of or poor performance
management
•
An insufficient pool of diverse
and capable people
•
Cost-of-living crisis driving
wage inflation
•
Inability to deliver challenging
business strategy in next five
years
•
High attrition rates, increasing
costs
•
Reputational impact of
not meeting diversity and
inclusion targets
•
Loss of capability and
knowledge from the business
impacting on service levels
•
Increased recruitment and
wage costs
•
Highly skilled and experienced HR
lead team
•
Academy launched; training co-
ordination and central tracking to
ensure consistency
•
Performance framework in
development
•
New learning and development
programme established and rolled
out with seven cohorts following
one of four levels of leadership
pathways
•
External partners in place
to support high volumes of
recruitment and candidates
•
Culture Matters engagement
forum launched
•
Talent review process for
succession planning for key roles
Retain a high
performing workforce
with suitable
succession plans
Risk description:
•
Loss of talent and capability, especially our high performing people or our people with specialist/
industry knowledge and people with specialist/industry knowledge & contacts.
•
Lack of strategic leadership capability to deliver a challenging business strategy in the next five years.
11
Events that may
triggertherisk
Potential impact How we monitor
andnegotiate
Objective
The Strategic Report on pages 1–87 was approved on 28 February 2023 by the Board and is signed on its behalf by:
Richard Smith
Chief Executive Officer
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“The business has had a strong 2022
performance, built on our best-in-class operating
platform and affordable and well-located
portfolio, but ultimately delivered through the
hard work and commitment of our people serving
our customers. This has helped deliver the strong
recovery in our operational performance with
99% occupancy and our financial performance,
with earnings and dividends above their
pre-pandemic peak.”
Richard Huntingford
Chair
CHAIR’S INTRODUCTION TO GOVERNANCE
Our governance and risk management
framework focuses on our three strategic
objectives, helping ensure we continue
to bring value for all our stakeholders.
The Board oversees how we deliver for
our customers and universities, ensuring
appropriate levels of investment in our
operating and technology platform along
with service enhancements, especially in
student welfare. The Board also ensures
the ongoing delivery of attractive returns
for our shareholders, carefully balancing
optimal occupancy with affordability and
rental growth. These returns depend
on the quality, location and scale of our
portfolio and the Board ensures we
develop new properties in the right cities,
balanced with appropriate disposals,
which this year saw us open two new
properties (Hayloft Point, London and
Campbell House, Bristol) whilst reducing
our footprint from 25 to 23 markets.
BOARD FOCUS AREAS IN 2022
•
Delivering for our customers and universities:
investment in our platform and service enhancements
•
Attractive returns for our shareholders: balancing
occupancy, with affordability and rental growth,
alongside new developments and disposals
•
Delivering a positive impact: implementing our
sustainability strategy, through People and Places,
with the social contribution we make to students living
with us and reducing our environmental impact
•
Safety: ensuring a safe and secure home, with a focus
especially on fire safety and student mental health
and wellbeing
Read more about the key activities of the Board on pages 107–108
A STRONG
PERFORMANCE IN 2022
Board Governance overseeing delivery of
strong operational and financial performance
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FURTHER INFORMATION
Health and Safety Committee Report on page 128
Sustainability Report on page 46
Sustainability Committee Report on page 125
Board engagement on page 102
Stakeholder engagement on page 104
With this increasing demand, the Board continues
to explore opportunities to grow the business in UK
PBSA through development, targeted acquisitions and
partnerships with universities. Alongside this, the Board
continues to explore exciting opportunities for growth
in the wider living sector catering to young professional
renters living in major UK cities. Our pilot BTR acquisition in
Stratford, East London in September 2022 provides us the
opportunity to test our operational capability in this sector
and understand potential synergies with our core PBSA
business. This will help the Board inform our next steps as
we explore growth in PBSA and the wider living sector.
The following pages explain how our governance has
supported us through 2022 and how it will continue to
support our growth and sustainability in the longer-term.
Richard Huntingford
Chair
28 February 2023
Our governance and risk framework ensures we do all this
responsibly and sustainably, delivering a positive impact
through People and Places.
The safety of our customers and employees is one of
our key risks and a key governance area for the Board.
In 2022, the Board oversaw the introduction of our new
operating model, with our people on site 24/7/365, and
the introduction of our new Support to Stay framework,
providing a supportive living environment for students.
This is especially important with increasing mental health
issues for students following the pandemic. The Board has
also overseen our fire safety and cladding remediation
programme, ensuring appropriate investment across the
portfolio. The Health and Safety Committee Report on page
128 details further our safety governance.
The Board’s focus on our values and specifically “doing
what’s right” and “raising the bar together” continues as
we implement our sustainability strategy. Through the
detailed work of the Sustainability Committee, we oversee
our progress towards becoming a net zero carbon business
by 2030, having invested £14 million in 2022 in energy
initiatives to reduce consumption, save carbon and ensure
ongoing compliance with regulations as well as further
improvement in the EPC ratings of our portfolio. For more
detail, see the Sustainability Report on page 46 and the
Sustainability Committee Report on page 125.
Through 2022, the Nomination Committee continued to
review our Board composition and succession planning,
ensuring we have the right mix of skills and expertise
across the higher education, real estate, finance, retail and
hospitality sectors. With Elizabeth McMeikan coming up for
nine years on the Board in 2023, the Committee conducted
a search for a new Non-Executive Director, leading to the
appointment of Nicky Dulieu in September 2022. Nicky
brings a wealth of listed company Board experience as well
as extensive consumer-facing executive experience, adding
significant value to the Board. I would like to thank Elizabeth
for her passion for the business and sound judgement
during her nine years with Unite, especially as Chair of our
Remuneration Committee and Senior Independent Director.
Nicky will take over as Remuneration Committee Chair and
Senior Independent Director on 1 March 2023 following
Elizabeth’s departure.
The Board continues to see increasing demand for student
accommodation in the UK, with supply constrained due to
slowing PBSA development and a shrinking HMO sector.
Affordability, especially with increasing cost-of-living
pressures, continues to be key for students, parents and
universities and the Board oversees how we deliver safe
and secure, high-quality, value-for-money homes for our
customers, many of whom are living away from home for
the first time.
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BOARD OF DIRECTORS
Richard Huntingford
Chair
Years on the Board: 3
Richard joined the Board on
1 December 2020 and became
Chair on 1 April 2021.
Relevant skills, experience
and contribution
Richard is a chartered accountant, and
has over 30 years of plc board experience
including as Chief Executive of Chrysalis
Group plc between 2000 and 2007 and as
a Non-Executive Director of Virgin Mobile
Holdings (UK) plc. His Chair roles have
included Wireless Group plc (formerly
UTV Media plc), Creston plc and Crown
Place VCT plc and Richard is currently
Chair of Future plc.
Richard’s proven FTSE chair, wider
non-executive and executive experience
helps us ensure best practice in Board
effectiveness and corporate governance.
His wealth of experience in public
company governance and leadership,
corporate finance, investment, business
development, investor relations and
media helps us drive our strategy
development and effective engagement
with our wider stakeholders.
External appointments
•
Future plc (Chair)
Richard Smith
Chief Executive Officer
Years on the Board: 11
Richard became Chief Executive Officer
in June 2016 after working as Unite’s
Managing Director of Operations since
2011 and joining the business as Deputy
Chief Financial Officer in 2010.
Relevant skills, experience
and contribution
Prior to Unite, Richard spent 19 years in
the transport industry, working in the
UK, Europe, Australia and North America.
Richard spent 14 years at National
Express Group where he held a range of
senior finance, strategy and operations
roles, including Group Development
Director and Chief Financial Officer,
North America.
Richard continues to lead the successful
development, communication and
implementation of the Group’s strategy,
providing clear and valued leadership
and delivery of the Group KPIs. His
engagement with our investors helps
ensure our strategy is well understood
and valued. His operational expertise has
helped ensure the business’s resilience
and ongoing delivery through the
challenges of Covid-19 and more recent
economic uncertainty, whilst ensuring
the Group continues to be well-placed
for growth.
External appointments
•
Industrials REIT Limited
(Non-Executive Director)
Joe Lister
Chief Financial Officer
Years on the Board: 14
Joe joined Unite in 2002 and was
appointed Chief Financial Officer in
January 2008 having previously held a
variety of roles including Investment
Director and Corporate Finance Director.
Relevant skills, experience
and contribution
Joe has continued to lead the design
and delivery of the Group’s sustainable
growth and financial performance and
his deep experience of our business and
especially our funding arrangements
was critical in helping us navigate the
challenges of Covid-19 and the more
recent economic uncertainty.
Together with Richard Smith, Joe ensures
the development and communication
of the Group’s ongoing performance
and strategy with our investors. Joe
is the Executive Board lead for our
sustainability strategy, our property
portfolio and our Information Systems
and Technology (this includes Board
responsibility for information security
and data protection).
External appointments
•
Helical PLC (Non-Executive Director)
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Composition of the Board
Non-Executive Directors 1
Independent
Non-Executive Directors 7
Chair
Executive Directors
Non-Executive Directors
Gender diversity
Female 4
Male 6
40%
60%
Independence
Ross Paterson
Non-Executive Director
Years on the Board: 6
Ross joined Unite in September 2017
andbecame the Audit Committee Chair
in January 2018.
Relevant skills, experience
and contribution
Ross is a former Chief Financial Officer
of Stagecoach Group and Non-Executive
Director of Virgin Rail Group Holdings
Limited. Ross has experience in
finance, business development and
legal gainedfrom his finance role at
Stagecoach Group.
Ross contributes to Unite’s Board using
his many years’ experience of managing
finance in a complex operational
business like our own. He also brings
valued insight to innovation as we
continue to enhance our service offer
to our student customers. Ross uses
his financial and broader business
experience as Chair of the Audit & Risk
Committee, helping oversee the Group’s
financial rigour and delivery.
External appointments
•
Institute of Chartered Accountants
of Scotland (Business Policy Panel
member)
Elizabeth McMeikan
Senior Independent Director
Years on the Board: 9
Elizabeth was appointed a Non-Executive
Director in February 2014 and became
the Senior Independent Director of Unite
in January 2018. Elizabeth will retire from
the Board after nine years of service on
28 February 2023.
Relevant skills, experience
and contribution
Elizabeth has significant experience in
customer-focused businesses previously
working at Tesco and Colgate Palmolive,
where she was successful in driving
growth through an understanding of
customer needs and an innovative
marketing approach. Previously she
was Senior Independent Director of JD
Wetherspoon plc and Chair of Moat
Homes Ltd, a leading housing association
in the South East.
Elizabeth has brought her extensive
consumer-focused experience, both as
an executive and also on the boards of
other FTSE companies, to help oversee
the design and development of our
customer proposition and enhanced
customer service. As Senior Independent
Director of Unite, Elizabeth supports
the Chair in the effective running of the
Board, and as Chair of the Remuneration
Committee, has helped ensure the
Executive Directors’ and broader senior
leadership’s remuneration is aligned
tothe long-term sustainable success
ofthe Group.
External appointments
•
Custodian REIT plc (Senior
Independent Director)
•
Dalata Hotel Group Plc (Non-
Executive Director)
•
Fresca Group Ltd (Non-Executive
Director)
•
McBride plc (Senior Independent
Director)
•
Nichols plc (Non-Executive Director)
1
2
7
Nomination Committee Member
Audit & Risk Committee Member
Remuneration Committee Member
Health & Safety Committee Member
Sustainability Committee Member
Committee Chair
Committee key
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BOARD OF DIRECTORS continued
Ilaria del Beato
Non-Executive Director
Years on the Board: 5
Ilaria was appointed a Non-Executive
Director in December 2018. Ilaria is also
our Designated Non-Executive Director
for Workforce Engagement.
Relevant skills, experience
and contribution
Ilaria is CEO of Frasers Property UK,
part of Frasers Property, a global real
estate group. Ilaria was formerly CEO
of GE Capital UK, a regulated Bank and
corporate lender and led GE Capital
Real Estate UK, a commercial real estate
investor, developer and lender.
Ilaria brings over 30 years of experience
in real estate, including asset
management, investment and lending,
to the Group. This experience is vital to
the Group as we navigate the ongoing
and upcoming market uncertainties
andincreasing professionalisation of
thesector.
External appointments
•
Frasers Property UK (CEO)
Dame Shirley Pearce
Non-Executive Director
Years on the Board: 4
Dame Shirley joined the Board in
November 2019 as a Non-Executive
Director and Chairs our Sustainability
Committee.
Relevant skills, experience
and contribution
Dame Shirley has held chair, senior
executive and non-executive roles at
board level in Higher Education, health
and policing with experience of both the
public and private sectors. Shirley was Vice
Chancellor of Loughborough University
from 2006–2012 and was board member
at the Higher Education Funding Council
for England, the Universities and Colleges
Employers Association, and the Healthcare
Commission, as well as being a Non-
Executive Director of Health Education
England, and the Norfolk, Suffolk
and Cambridgeshire Strategic Health
Authority. She has held senior governance
roles at the LSE, and was appointed an
independent reviewer of the Teaching
Excellence Framework. She was appointed
CBE in 2005 for services to education in
the NHS and in 2014 appointed DBE for
services to Higher Education.
Dame Shirley brings her wide-ranging
and hands-on experience in the Higher
Education sector to the Board. This is
especially critical at a time of ongoing
change in the sector, where her insight
and knowledge of Higher Education and
broader policy initiatives help inform the
Board on our strategic direction. As Chair
of the Sustainability Committee, Shirley
helps ensure appropriate oversight of
our sustainability strategy.
External appointments
•
Committee on Standards in Public
Life (Independent member)
•
Higher Education Quality Assurance
Panel for the Ministry of Education
in Singapore
•
Royal Anniversary Trust (Trustee)
•
HCA (Advisory Board member)
•
Association of University
Administrators AUA (Hon President)
Thomas Jackson
Non-Executive Director
Years on the Board: 4
Thomas joined as a Non-Executive
Director in November 2019 following
the Group’s acquisition of Liberty
Living from Canada Pension Plan
Investment Board (CPPIB).
Relevant skills, experience
and contribution
Thomas has been the head of CPP
Investments’ UK real estate business
since 2015 and is responsible for CPP
Investments’ entry into a number of new
real estate sectors, including student
housing, life sciences and the build-to-
rent sector. In addition to sitting on the
Board of The Unite Group PLC, Thomas
also sits on a number of CPP Investments’
office, retail and logistics joint venture
boards. Beyond the UK, Thomas is also
responsible for CPP Investments’ real
estate investment activity in Germany
and the CEE regions. Thomas originally
joined CPP Investments in 2011 and was
instrumental in its transaction activity in
Spain, the Nordics and India.
Prior to joining CPP Investments, Thomas
was a Vice President in the real estate
investment banking team at Macquarie
bank and focused on M&A transactions
within the UK and European public and
private real estate companies.
Thomas brings wide-ranging real estate
experience, not only from the student
housing sector, but also his wider build-
to-rent, retail and logistics real estate
experience to the Board. His international
experience will also be invaluable for
the Board, helping provide a wider
perspective on developments in real
estate as the Board progresses further its
strategic thinking.
External appointments
•
Canada Pension Plan Investment
Board (Managing Director, Head of
Real Estate, UK)
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Professor Sir Steve Smith
Non-Executive Director
Years on the Board: 3
Professor Sir Steve joined the Board
on1 April 2020.
Relevant skills, experience
and contribution
Professor Sir Steve brings his wealth
of experience in the Higher Education
sector. He was the Vice-Chancellor and
Chief Executive of the University of Exeter
from 2002 to August 2020. Sir Steve was
the President of Universities UK (UUK)
(2009–2011), Chair of UCAS (2012–2019),
served on the boards of UUK and the
Russell Group, and was Chair of the UUK
International Policy Network (2014–2020).
Between 2007 and 2010, Sir Steve led
for Higher Education on the Prime
Minister’s National Council of Excellence
in Education, which provided advice
to Government about strategy and
measures to achieve world-class
education performance for all children
and young people. Sir Steve was knighted
in 2011 for services to Higher Education
locally and nationally.
Sir Steve’s extensive experience in the
Higher Education sector contributes to
how the Board navigates a changing
Higher Education sector. In addition,
his hands-on knowledge and insight
into how universities operate help us
develop stronger university partnerships.
Sir Steve also Chairs our Health and
Safety Committee and his on-campus
knowledge helps us ensure our approach
to safety is well aligned with our
customers, universities, employees and
wider stakeholders.
External appointments
•
Chair of the Liveable Exeter
Place Board
•
Trustee for Fulbright Programme
Nicky Dulieu
Non-Executive Director
Years on the Board: 1
Nicky joined the Board on 1 September
2022 and will replace Elizabeth McMeikan
as Senior Independent Director and Chair
of the Remuneration Committee with
effect from 1 March 2023.
Relevant skills, experience
and contribution
Nicky is a chartered accountant
and a proven business leader with
an established plc track record and
extensive experience in consumer facing
markets having been the Chief Executive
of Hobbs between 2008 and 2014.
Prior to this, Nicky was also the Finance
Director of Marks & Spencer’s Food
Division following a career at the retailer
spanning 1982–2005.
Nicky also has extensive Non-Executive
Director experience which includes
chairing Remuneration and Audit
Committees and as a Senior Independent
Director. Nicky’s previous board
appointments include Marshall Motor
Holdings, Huntsworth and Notcutts.
External appointments
•
WH Smith Plc (Non-Executive
Director)
•
Redrow Plc (Senior Independent
Director)
•
Adnams Plc (Non-Executive Director)
Chris Szpojnarowicz
Company Secretary
Years with Unite: 9
Chris was appointed Company Secretary
and Group Legal Director in 2013.
Relevant skills, experience
and contribution
Prior to Unite, Chris held General
Counsel roles at GE, MTV Networks and
other multinationals. He was previously
an M&A/corporate and commercial
lawyer at Clifford Chance and Baker
McKenzie. Chris uses his general
counsel and corporate/commercial legal
experience to ensure our corporate
and risk governance is aligned with our
businessactivity.
External appointments
•
The West of England Friends
Housing Society (Board Trustee)
Nomination Committee Member
Audit & Risk Committee Member
Remuneration Committee Member
Health & Safety Committee Member
Sustainability Committee Member
Committee Chair
Committee key
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BOARD STATEMENTS
Under the UK Corporate Governance Code, the
Board is required to make a number of statements.
Thesestatements are set out below:
The Unite Group PLC is listed on the
London Stock Exchange and is subject to
the requirements of the UK Corporate
Governance Code 2018 (the “Code”). The
Board is required to apply the principles
of the Code and to either comply with the
provisions of the Code or, where it does not,
explain the reasons for non-compliance.
The code is available at www.frc.org.uk.
In accordance with the requirements of the
new Listing Rule 9.8.6R(9) which applies
to accounting periods starting on or after
1 April 2022, the Board is required to
provide a statement as to whether it has
met certain targets related to gender and
ethnic diversity at Board level. The Board
has chosen to provide these disclosures on
a voluntary basis this year.
The Board is required to assess the viability
of the Company taking into account the
current position and the potential impact
of the principal risks and uncertainties set
out on pages 82–87.
The Board considers that the Company has,
throughout the year ended 31 December 2022,
applied the principles and complied with the
provisions set out in the Code except in relation
to Provision 38: alignment of Executive Director
pension contributions with the workforce
(see explanation on page 133 of the Directors’
Remuneration Report).
The Board confirm that as at 31 December 2022,
2 out of 3 diversity targets were met:
1. 40% of the Board were women.
2. One of the senior Board positions (the Senior
Independent Director) was held by a woman.
3. None of the Directors were from an ethnic
minoritybackground.
Taking account of the Company’s current
position and principal risks, the Directors have
a reasonable expectation that the Group will
be able to continue in operation and meet its
liabilities as they fall due over the three-year
period to December 2025.
Details on how the Company
has applied the principles and
complied with the provisions
can be found throughout this
Corporate Governance section
of the Annual Report.
The table below on page 96 details
where disclosure against the
principles of the Code can be found
in this Corporate Governance Report.
More details on the Company’s
compliance with the Listing Rules
relating to Board diversity amongst the
Board and executive management can
be found on pages 115–118.
More details on the Viability
statement can be found on page 81.
REQUIREMENT
REQUIREMENT
REQUIREMENT
BOARD STATEMENT
BOARD STATEMENT
BOARD STATEMENT
MORE INFORMATION
MORE INFORMATION
MORE INFORMATION
COMPLIANCE WITH THE CODE
LISTING RULE – BOARD DIVERSITY
VIABILITY STATEMENT
The Board is required to confirm that the
Group has adequate resources to continue
in operation for the foreseeable future.
After making enquiries and having considered
forecasts and appropriate sensitivities, the
Directors have formed a judgement, at the
timeof approving the financial statements,
that there is a reasonable expectation that the
Group has adequate resources to continue in
operational existence for the foreseeable future,
being at least 12 months from the date of these
financial statements.
More details on the Going Concern
statement can be found on pages
185–186.
REQUIREMENT BOARD STATEMENT MORE INFORMATION
GOING CONCERN
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THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
The Board is required to confirm that it
has carried out a robust assessment of
the principal and emerging risks facing
the Company and include a description
of these principal risks, what procedures
are in place to identify emerging risks, and
an explanation of how these are being
managed or mitigated.
The Board is required to monitor the
Company’s risk management and internal
control systems and, at least annually,
carry out a review of their effectiveness.
The Board should confirm that it considers
the Annual Report, taken as a whole, is
fair, balanced and understandable and
provides the information necessary for
shareholders to assess the Company’s
position and performance, business model
and strategy.
A robust assessment of the principal and
emerging risks facing the Company was
undertaken during the year, including those
arising from climate change and those that would
threaten its business model, future performance,
solvency or liquidity, together with an assessment
of the procedures to identify emerging risks.
The Board conducted a review of the
effectiveness of the internal controls, supported
by the work of the internal audit team and their
reports to the Audit & Risk Committee.
No significant weaknesses were identified
through the course of the reviews.
The Directors consider that the Annual
Report, taken as a whole, is fair, balanced and
understandable and provides the information
necessary for shareholders to assess the
Company’s position and performance, business
model and strategy.
Information around key risks and
risk management processes and
how they are being managed or
mitigated can be found on pages
77–87 and on page 122 of the Audit
&Risk Committee Report.
Details on the systems of risk
management and internal control
and the review of their effectiveness
can be found on pages 77–87 and
122–123.
See the Audit & Risk Committee
Report on pages 119–124.
REQUIREMENT
REQUIREMENT
REQUIREMENT
BOARD STATEMENT
BOARD STATEMENT
BOARD STATEMENT
MORE INFORMATION
MORE INFORMATION
MORE INFORMATION
PRINCIPAL AND EMERGING RISKS FACING THE GROUP
RISK MANAGEMENT AND INTERNAL CONTROL
FAIR, BALANCED AND UNDERSTANDABLE
95
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
COMPLIANCE WITH THE CODE
The Company’s disclosures on its application of the principles of the Code can be found in the table below:
BOARD STATEMENTS continued
A. Long-term sustainable success and contribution
B. Purpose, values and culture
C. Resources and control framework
D. Engagement with shareholders and stakeholders
E. Workforce policies and practices
F. Board leadership
G. Board composition and responsibilities
H. Role and commitment of Non-Executive Directors
I. Board effectiveness
J. Board appointments, succession plans and diversity
K. Board experience, skills and knowledge
L. Board evaluation
M. Internal and external audit – independence and effectiveness
N. Fair, balanced and understandable
O. Risk management and internal controls
P. Remuneration policies and practices – long-term strategy and success
Q. Development of policy on remuneration
R. Judgement and discretion
Pages 10–13, 16, 47 and 66–69
Pages 97–100
Pages 77–87 and 100
Pages 10–11, 54, 66–68, 102 and 104
Pages 10, 19, 50, 56, 100
Pages 97–104
Page 105
Page 105
Page 114
Pages 115–117
Pages 90–92, 105 and 114–116
Page 114
Page 123
Pages 119–124
Pages 77–87 and 122
Pages 133–163
Pages 131,133 and 137–140
Pages 132, 138, 141–158
BOARD LEADERSHIP AND COMPANY PURPOSE
DIVISION OF RESPONSIBILITIES
COMPOSITION, SUCCESSION AND EVALUATION
AUDIT, RISK AND INTERNAL CONTROL
REMUNERATION
PAGE
PAGE
PAGE
PAGE
PAGE
96
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
commitment to develop diverse and inclusive teams, filled
with positive energy and new ideas. We provide a range of
career pathways and make opportunities for progression
available to all, which was demonstrated by the high
number of internal promotions as part of our new operating
model launched in 2022.
The Board has ultimate responsibility to Unite’s shareholders
for all the Group’s activities as well as a broader responsibility
to consider the views of other key stakeholders including our
customers, universities, employees and the communities
we operate in as well as considering environmental and
social issues when making decisions. This responsibility is
intertwined into our purpose of Home for Success.
Our values, people and culture
We remain committed to our purpose, continuing to evolve
through our stakeholder engagement and our people. The
Board’s ambition is to have a “One Team” culture, where our
values can reflect the mindset, behaviours and attitudes we
aspire to role model across the business. These continue to
shape our culture, our ambitions, the things we believe in
and how we act. They connect us and drive our behaviours.
As we progress on our journey, we do so with an enhanced
commitment to doing what’s right. This goes beyond regulatory
compliance and relates to all aspects of the business
including the impact on our people and communities.
Through our Culture Matters employee forum (founded
in 2021), our employees’ voice remains front and centre
ensuring dialogue between the Board and the wider
Company, engaging employees and enabling them to
contribute to the success of our business. Ilaria del Beato,
our Designated Non-Executive Director for Workforce
Engagement, attends the forum meetings and provides
feedback to the Board to inform its decision-making (more
details on Ilaria’s role and activities this year can be found
on page 102). This feedback helps inform how we develop
greater gender and ethnic diversity in our senior leadership
and create a more diverse workforce.
How the Board monitors our culture
Our culture defines what makes Unite a great place to work
and a great Company to do business with and forms the
fundamental basis for our governance. The Board monitors
corporate culture through interaction and dialogue with our
people though our Designated Non-Executive Director for
Workforce Engagement and also through regular employee
engagement surveys and site visits. This Board’s interaction
takes place through the organisation, helping ensure our
values and culture are well understood and giving our
people the opportunity for frank and open feedback and
the sharing of different views.
Our employee surveys help measure engagement through
their participation rates as well as the feedback received
across the broad range of topics surveyed. During 2022,
members of the Board visited Bristol and Manchester and
met with regional and local managers and team leaders.
Our Higher Education trust score monitors how universities
view us and provides insight on our culture from our external
stakeholders. Our initiatives undertaken to support our values,
mentioned on pages 97–99, reflects our values-led culture.
BOARD LEADERSHIP AND PURPOSE
The Board is responsible for establishing the Company’s
purpose, values and strategy, promoting its culture,
overseeing its conduct and affairs, and for promoting the
long-term sustainable success of the Company, generating
value for shareholders and contributing to wider society.
Our purpose – Home for Success
The Board has defined our purpose: to create a Home
for Success for all our students by building communities
within our properties where students can succeed both
professionally and personally. Our purpose describes
our shared commitment and motivation and contributes
to the delivery of our strategic objectives by informing
the development of our business model and strategy,
operatingpractices, approach to risk and how we engage
with our stakeholders.
Home for Success is about providing the right home
experience for all the tens of thousands of students that
come to live with us each year from across the world and
to enable them to achieve whatever goals and ambitions
they aspire to. The Board oversees our service proposition
and how we keep our students safe and secure. This led to
the introduction of a new operating model across all our
properties providing a 24/7 staff presence, 365 days a year.
Our purpose of Home for Success and “doing what’s right”
led to the Board’s decision to give 90% of our employees a
£500 one-off payment to help with the rising cost-of-living
pressures. This is in addition to a wider package of support
provided to employees.
We awarded our largest ever annual pay increase in
January 2023 of 10% to the majority of our operational
team members and team leaders. We have proudly been a
Real Living Wage employer for many years – the first in our
sector – and this increase means that 90% of our employees
will be paid in excess of the new 2023 Real Living Wage
rates. For our operations management and support teams
we introduced a sliding scale pay award, starting from 3% for
a small number of our leadership roles, rising to 10.1% for the
lowest paid. Overall, this amounts to an average pay award of
8.6% to all eligible employees across the business, with 95%
of our people receiving a 2023 pay increase of 5% or more.
Home for Success is also about ensuring the right platform
for our University partners by understanding their long-term
aspirations, accommodation requirements and evolving
expectations around student welfare. This means our offer
is built around the priorities of students and universities
alike. Our focus on our Home for Success purpose and
our support to students throughout the pandemic was
recognised when we were named Student Accommodation
Operator of the Year at the leading property sector awards,
RESI. We also won Operator of the Year at Property
Week’s 2022 Student Accommodation Awards. This award
recognised the financial support we provided to students
affected by Covid-19 closures and our efforts to tackle
inequality in the student accommodation sector.
With our people being at the heart of our business, the
Board’s focus on Home for Success is also about ensuring
an environment whereby our employees can grow,
develop, succeed and belong. The Board is driven by our
97
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Being authentic and striving for a truly
diverse and inclusive environment
Unite is a business that strives to be welcoming
and inclusive to all and where every individual is
respected and valued. The Board has zero tolerance
of any form of discrimination and embraces cultural
diversity to provide a positive working environment
that enables everyone to be their true selves,
creating a sense of belonging for everyone.
Our first Diversity, Equity, Inclusion, Belonging
and Wellbeing strategy, We are US, was launched
in 2022. The strategy is authentic to Unite and
was built after listening and learning across the
business. It lays out our three-year plan, recognising
our responsibility to create healthier and happier
workplaces, in which we can all strive for more
equitable and sustainable futures.
Safety is at the heart of our brand and
at the core of everything we do
The Board believes we are at our best when everyone
around us is at their best. Looking after everyone’s
wellbeing, both physically and mentally remains the
Board’s key priority. Safety is not just something
else we do, it is part of everything we do and is
woven through the entire business and culture.
BOARD LEADERSHIP AND PURPOSE continued
Our values in action
•
40% female/60% male gender split in
leadershipteam
•
60% of managerial roles filled internally
•
614 Foundation scholars supported since
2012and 296 scholars graduated
•
9 interns joined us on an 8-week paid placement
as part of the 10,000 Black Interns programme
•
Partnered with UCAS to showcase our Leapskills
programme across three cities
•
Commitment of 1% annual profits to social
initiatives every year
•
Launch of Instinctive Inclusion, our first Diversity,
Equity, Inclusion, Belonging and Wellbeing strategy
Our values in action
•
7 Reporting of injuries, diseases and dangerous
occurrence regulations (RIDDOR) accidents
•
New operating model across our properties
ensuring 24/7 staff presence, 365 days a year
•
Launch of Support to Stay framework
•
Introduction of Student and Parent Safety
leaflets at check-in
•
Student welfare training across the operational
business
OUR VALUES
The Board’s continued oversight of our values guide the organisation
in delivering our purpose of a Home for Success, where everyone
feels they belong, has their voice heard and is treated equally.
CREATING ROOM
FOR EVERYONE
KEEPING
US SAFE
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THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
Always operate with a highly ethical,
collaborative and solution-driven mindset
Being a responsible business is part of our DNA.
The Board always looks to do the right thing in the
right way, creating trust for all our stakeholders
and the communities we operate in. This drives the
Board’s actions and decisions as demonstrated by
the Board’s leadership in the decision to give around
90% of our employees a £500 one-off payment to
help with the rising cost-of-living pressures. The
Board challenges the status quo when needed and
takes accountability for its actions.
Continuously focused on improving
the way things are done
The Board’s ambition is to constantly strive to
be better, by embracing an inquisitive mindset
and exploring the potential of our people’s own
development. This does not mean constantly trying
new ideas but focusing on our own expertise and
building on that. The Board uses clear insight and
data to help inform us and understand what really
matters to students, driving efficiency, effectiveness
and a great customer experience every time.
Our values in action
•
Net zero carbon commitment by 2030
•
Real Living Wage employer
•
Gold Investor in people accreditation
•
Over £99 million invested in replacement
ofcladding
•
Increased participation in social programmes
including Leapskills and Unite Foundation, which
celebrated its 10th anniversary
•
Partnership with the British Heart Foundation
•
Participation in the Positive Impact programme
•
Partnered with Streets of Growth, a youth
intervention charity
Our values in action
•
+38 Customer satisfaction NPS
•
Student Accommodation Operator of the Year
2022 at the REIS awards
•
Alternatives Specialist award at the EG Awards in
recognition of our “commitment to doing what’s
right” and our response during Covid-19
•
Service improvements driven by employee
feedback
•
Maintained a GRESB 4-star rating
•
Roll out of the Resident Ambassadors
programme
For more about our culture and values, go online to:
unitegroup.com/cultureandvalues
DOING
WHAT’S RIGHT
RAISING THE
BAR TOGETHER
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
BOARD LEADERSHIP AND PURPOSE continued
Forward Together and “Class of 22”
Following the launch of our new 24/7/365 operating model
in June 2022, we brought employees together for our
Forward Together events. These events focused on sharing
our plans and strategy to deliver on our core purpose,
Home for Success, and creating opportunities for all
through our People Strategy.
The Board was keen to build upon the 2021 Fresh Start
events to reinvigorate our purpose, values and culture
and update our teams on our strategy. To support this,
the business ran “Class of 22” events across 5 cities, with
everyone across the business invited. The Board’s focus
for these events was to prepare our teams for the 22/23
academic year student arrivals and working together to
build a world-class customer offering.
Unite Live
Unite Live provides employees with an opportunity to
engage directly with our Chief Executive Officer and the
senior leadership team through an online forum. Any
question can be tabled about working in Unite with regular
questions relating to safety, wellbeing and diversity.
We update our people on business developments through
weekly updates from our Communications team and via a
range of platforms including the employee intranet, the Hub.
During 2022, the Board resumed in-person meetings and
ensured there was opportunity to listen and hear directly
from the leadership team, the wider business and our
stakeholders. Through 2022, the Board engaged with our
employees and stakeholders on the impact of the rising
cost-of-living pressures, as well as our environmental and
social impact.
The Board receives updates on business performance
from our leadership team, including the Chief Customer
Officer, Group Investment & ESG Director, Group Property
Director, Group People Director, Deputy Chief Financial
Officer, Chief Strategy Officer, Group Safety Director, Group
Communications Director, Head of Sustainability, Higher
Education Engagement Director and Group Legal Director &
Company Secretary (among others).
The Board is also responsible for:
•
Assessing, monitoring and promoting the Company’s
culture, and ensuring that this closely aligns with its
purpose, values and strategy (see pages 98–99, Our
Values and Culture).
•
Ensuring the necessary resources are in place for the
business to meet its strategic objectives.
•
Establishing workplace policies and business practices
that align with the Company’s culture and values and
support its strategy (see pages 102–103).
•
Overseeing the implementation of a robust controls
framework to allow effective management of risk, with
this oversight delegated to the Audit & Risk Committee
(see pages 119–124).
•
Effective succession planning for key senior personnel,
much of which is delegated to the Nomination
Committee (see pages 115–118).
The Board has ultimate responsibility to Unite’s
shareholders for all the Group’s activities as well as a
broader responsibility to consider the views of other key
stakeholders. These include our customers, universities,
employees, suppliers and the communities we operate in,
as well as considering environmental and social issues when
making decisions. All of the Board’s significant decisions are
considered having regard to Section 172 and specifically
the likely consequences of these decisions in the long-term
and their impact on our stakeholders. Pages 66–68 highlight
how the Board has sought to effectively consider and
engage with our shareholders and wider stakeholders.
While the above summarises the key areas of Board
responsibility, it is not intended to be exhaustive.
Board oversight
The Board discharges some of its responsibilities directly
and others through Committees and senior management.
Terms of Reference for the Committees are available in our
Governance Framework, published on www.unitegroup.
com/about-us/corporate-governance. To discharge their
broader responsibility effectively, the Group operates in an
open, harmonious and transparent manner, ensuring open
communication between the Board and the business and
its stakeholders.
100
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
Board Committees
The Board has delegated certain responsibilities to its Committees, as detailed on the following pages.
The terms of reference for each Committee are reviewed annually.
The current membership of each Committee of the Board is set out in the chart below:
 Ross Paterson
Ilaria del Beato
Nicky Dulieu
Professor Sir Steve Smith
 Elizabeth McMeikan*
Nicky Dulieu**
Ross Paterson
Shirley Pearce
Professor Sir Steve Smith
 Professor Sir Steve Smith
Elizabeth McMeikan*
Ilaria del Beato
Richard Smith
Shirley Pearce
 Shirley Pearce
Ilaria del Beato
Richard Smith
Ross Paterson
Thomas Jackson
AUDIT & RISK
COMMITTEE
The Audit & Risk Committee
oversees the financial reporting,
risk management and internal
control procedures.
REMUNERATION
COMMITTEE
The Remuneration Committee
determines the remuneration
policy in consultation
with shareholders for the
remuneration of the Board and the
implementation of this policy.
HEALTH & SAFETY
COMMITTEE
The Health and Safety Committee
oversees the performance of the
Group’s health and safety and
helps drive the Group’s “Safe and
Secure” promise.
SUSTAINABILITY
COMMITTEE
The Sustainability Committee
oversees the implementation of
the sustainability strategy and
helps ensure Unite is a responsible,
resilient and sustainable business.
See Committee report on pages 125–127 See Committee report on pages 128–130
 Committee Chair
 Richard Huntingford
Elizabeth McMeikan*
Ilaria del Beato
Nicky Dulieu
Richard Smith
Ross Paterson
Shirley Pearce
Professor Sir Steve Smith
Thomas Jackson
NOMINATION
COMMITTEE
The Nomination Committee
reviews the structure, size,
composition, skills and experience
of the Board and focuses on
succession planning with due
regard to diversity.
See Committee report on pages 115–118 See Committee report on pages 119–124 See Committee report on pages 131–163
* Elizabeth McMeikan will retire as a Non-Executive Director on 28 February 2023.
** Nicky Dulieu has been appointed as Chair of the Remuneration Committee effective 1 March 2023.
101
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
FURTHER INFORMATION
Stakeholder engagement on pages 66–68
Wellbeing strategy on page 50
Positive Impact programme on page 10
Remuneration Committee on pages 131–163
BOARD LEADERSHIP AND PURPOSE continued
How the Board operates and
stakeholder engagement
The Board has an annual operating rhythm with an
agendaof items for the forthcoming year built around
ourstrategic objectives. The Board’s meetings are split
between strategy (considered in light of principal and
emerging risks, opportunities and the approval of specific
investments above certain thresholds, as well as ESG
and longer-term sustainability) and routine operational,
property and financial updates (providing context for the
strategic discussions as well as governance oversight of in-
year activity).
Meetings usually take place throughout the UK or in
our operating cities and enable the Board to meet
employees and learn about their experiences with Unite.
Meetingsresumed in person this year with the flexibility
of hybrid meetings to allow for increased participation
from across the business, including senior leaders who
are regularly invited to attend meetings and present to the
Board. These meetings provide the Board, and in particular
the Non-Executive Directors, with direct and open access to
leaders throughout the Group and helps build a culture of
openness and directness. In addition, external experts are
also invited to present to the Board (such as university Vice-
Chancellors, institutional investors and property valuers) to
give the Directors a broader and independent perspective
and to increase knowledge and development.
Stakeholder engagement on pages 66–68 explains how
the Board engages and measures the views of our key
stakeholders and the outcomes from this engagement.
Workforce engagement and the role of our
Designated Non-Executive Director
The Board has designated one of its Non-Executive
Directors (Ilaria del Beato) to help ensure the views and
concerns of the workforce are brought to the Board and
taken into account following the framework of “listen,
reflect and represent”. The Board chose Ilaria since she
is a CEO at a real estate group and thus well placed to
understand current challenges faced by employees.
Ilaria is also a member of our Sustainability Committee
which covers ESG, including social impact, as part of
itsremit.
Her role includes:
•
attending the Culture Matters forum;
•
monitoring our employee engagement surveys
andactions arising;
•
soliciting the views of employees on remuneration
structures and processes across the Group;
•
collaborating with our Group People Director, the
Senior Belonging, Equity and Engagement Manager
and the wider People team who also hear the views
of the workforce directly; and
•
providing feedback to the Board on people concerns
and the results of surveys and other liaison.
By attending the Culture Matters forum and engaging
with people across our organisation, Ilaria is able to:
•
understand the concerns of the workforce and share
these at Board meetings;
•
ensure the Board, and in particular the Executive
Directors, take appropriate steps to evaluate the
impact of proposals and developments on the
workforce and consider what steps should be
taken to mitigate any adverse impact; and
•
ensure plans are fed back to the workforce.
This chosen engagement mechanism continues to
be the subject of feedback from the workforce in
determining that it is an appropriate and effective
mechanism for engagement and is included in the
annual agenda of the Culture Matters forum.
102
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
Workforce engagement has led to shaping the Board’s
decision-making which included the launch of our first
Diversity, Equity, Inclusion, Belonging (DEIB) and Wellbeing
strategy. Through 2022, the Board’s decisions were
primarily focused on our people as well as safety and
wellbeing. See page 10 on how we engaged with our people
in 2022. Our engagement resulted in the following:
•
An EDI survey completed by employees to better
understand their needs and assess our progress.
•
The expansion of the DEIB and Wellbeing team to assist
with the implementation and embedding of the DEIB
and Wellbeing strategy into the culture of our business.
See more on page 50.
•
Launch of the Academy and our first Diversity, Equity,
Inclusion and Belonging course for all employees.
•
The Board continued to support flexibility in our ways of
working. See more on page 51 on enhancing the health
and wellbeing of our employees and students.
•
Ongoing participation in the Positive Impact programme
(see more on pages 10 and 54 about this programme).
The Board, through the detailed work of the Remuneration
Committee, also monitors pay and practices across the
wider workforce with the Group People Director attending
these meetings to update on workforce initiatives and offer
an employee perspective to the Committee’s deliberations.
See more on page 134.
The Board also considers diversity, equity, inclusion,
belonging and wellbeing across the workforce, by considering
(among other things) our gender and ethnic diversity
throughout the Group as well as our gender pay gap.
Investment in workforce
The Company invests in our people, conscious that we can
only deliver a home for our students, and ultimately our
purpose of Home for Success, through our people. Our
people are a key stakeholder and how we engage with them
and measure this is set out on pages 10, 31 and 49–51.
The Company is a fully accredited Living Wage employer and
provides recognition through pay awards, annual bonuses
for all employees and our annual employee scheme, Stars
Awards, recognising individuals and teams. Senior leaders
are eligible to participate in the Long Term Incentive Plan.
All employees are eligible to participate in the Company’s
SAYE scheme.
The Academy was launched in 2022 and provides
employees with a personalised and tailored learning
experience. Training has been rolled out throughout the
business across diversity, equity, inclusion and belonging,
student support, sustainability and leadership, including
the launch of our ninth leadership development cohort.
We refreshed our corporate induction during 2022
providing information about the business, roles and
properties so that each new joiner has everything they
needto succeed at Unite.
As a responsible and sustainable business, creating diverse
and engaged teams is critical to our ongoing success.
Whistleblowing programme
The Board annually reviews our whistleblowing programme
and the nature of concerns raised. Our Whistleblowing
Policy and a clear explanation as to how employees can
raise a concern in confidence, is readily available and
published on our intranet. This includes raising a concern
via an independent third-party if someone feels this is
necessary. Concerns raised are then investigated by the
Company Secretary and escalated as appropriate.
OUR DIVERSITY,
EQUITY, INCLUSION,
BELONGING AND
WELLBEING STRATEGY
LAUNCHED IN 2022
103
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Investors attend our year-end and half-year
results presentations which resumed in person
this year.
After our results, our Executive Directors held
meetings with investors to ensure their views
were taken into consideration as we develop
our strategy, help them understand the
ongoing performance of the business and our
approach to the reinstatement of dividends.
We held an investor roadshow in May
dedicated to sustainability. This included
meetings with our largest investors, updating
our progress around our sustainability
strategy and learning more about the future
sustainability expectations of our investors.
We also engage with investors throughout
the year on various aspects of environmental,
social and governance matters.
The Board is made aware of the views of
major shareholders concerning the Company
through, among other means, regular analyst
and broker briefings and shareholder surveys.
These will continue throughout 2023. The Chair,
Richard Huntingford, also reaches out to the
top 20 shareholders each year.
Our 2022 Annual General Meeting
resumed in person allowing
shareholders the opportunity to
attend and to raise questions of the
Board. In addition, shareholders were
invited to ask questions via email in
advance of the meeting.
All resolutions put to the 2022
AGMreceived overwhelming
supportfrom our shareholders.
Theresults of voting are available at:
www.unitegroup.com/investors/agm.
There were no resolutions with less
than 80% voting in favour and
therefore Code Provision 4 did
notapply.
Bond holders
Bond holders are invited to an annual
meeting with senior management and
Treasury to update them on performance
and business strategy. Other discussions
are held with bond holders on specific
topics as required, such as ESG and our
sustainability strategy.
Lenders
Regular dialogue is maintained with our
key relationship lenders, through meetings
or conference calls with our CFO and
Treasury team. Our Treasury team also
actively engages with new and potential
lenders. During 2022, engagement with
our lenders focused on addressing our
financing commitments more generally.
Credit Rating Agencies
During the year, business and financial
updates were provided by our Treasury
team to Standard & Poor’s and Moody’s
who reaffirmed our investment grade
corporate rating of BBB with a stable
outlook and Baa2 with a positive outlook,
respectively.
INSTITUTIONAL INVESTORS
INSTITUTIONAL INVESTORS: c.750
NUMBER OF EQUITY INVESTORS: c.1,2 00
RETAIL INVESTORS
PRIVATE INVESTORS: c.450
DEBT INVESTORS
NUMBER OF LISTED BONDS: 5
Section 172 of the Companies Act 2006 (Section 172)
Section 172 requires the Directors to take into consideration the interests of stakeholders in their decision-making. In
particular, Section 172(1) states that regard should be had to the long-term consequences of decisions; the interests of the
Company’s employees; the need to foster the Company’s business relationships with suppliers, customers and others; the
impact of the Company’s operations on the community and the environment; the impact of the Company maintaining a
reputation for high standards of business conduct and the need to act fairly as between members of the Company. Pages
66–67 explain how this was considered during 2022. Further, page 68 explains Board activity and decision-making during the
year which flowed from our stakeholder engagement and how this is aligned to our strategic objectives.
How we engage with our investors
The Board values effective communication with shareholders and other providers of capital to the business and welcomes
their views on the Group’s approach to corporate governance. The Board creates sustainable value for our three types of
investors: institutional, retail and debt investors.
BOARD LEADERSHIP AND PURPOSE continued
The Company continues to offer a scrip dividend alternative to shareholders, which enables them to opt for shares rather
than cash with no dealing costs or stamp duty. The scheme was renewed for a further three years at the 2021 Annual
General Meeting. Full details are available on our website. The Company has frequent discussions with shareholders on
a range of issues affecting its performance, both following the Company’s announcements and in response to specific
requests. The Company regularly seeks feedback among its shareholders, the investor community more broadly and its
wider stakeholders.
104
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
DIVISION OF RESPONSIBILITIES
Composition of the Board
The composition of the Board is set out in the table
on page 91.
The Board currently consists of the Chair, two Executive
Directors and seven Non-Executive Directors.
With effect from close of business on 28 February 2023,
Elizabeth McMeikan, the Senior Independent Director of the
Company and Chair of the Remuneration Committee, will
retire from the Board after nine years of service. Elizabeth’s
insight, experience and commitment has been invaluable to
the Board over the last nine years and we wish her the very
best for the future.
All of the Directors (except for Elizabeth McMeikan) offer
themselves for election or re-election at the Annual
General Meeting, to be convened this year on 18 May 2023,
in accordance with the requirements of the Code. Brief
biographies of all the Directors and their skills, experience
and contribution to the long-term sustainable success of
the Company, are set out on pages 90–93. Following the
individual performance evaluations of each of the Directors
seeking election or re-election, it is confirmed that the
performance of each of these Directors continues to be
effective and that they each demonstrate commitment
to the role and add value and relevant experience to
theBoard.
Independence
The Board considers six of its seven Non-Executive
Directors to be independent. Thomas Jackson is not
considered to be independent, having been nominated
as a Director of the Company by its largest shareholder
Canada Pension Plan Investment Board (CPPIB) pursuant
to a Relationship Agreement signed as part of the Liberty
Living acquisition. Accordingly, the Company meets the
requirement of the Code that at least half of the Board
(excluding the Chair) is made-up of independent Non-
Executive Directors and this will continue to be the case
following Elizabeth McMeikan’s departure. In addition,
Richard Huntingford (Chair of the Board) was considered
independent on his appointment to the role.
Roles
The Chair and the Non-Executive Directors constructively
challenge and help develop proposals on strategy, and bring
strong, independent judgement, knowledge and experience
to the Board’s deliberations. The roles of the Chair and CEO
are clearly separated. Summaries of the responsibilities of
the Chair, CEO and Senior Independent Director are set out
in the tables to the right.
Richard Huntingford’s principal responsibilities are:
•
to establish, in conjunction with the Chief Executive,
the strategic objectives of the Group for approval by
the Board;
•
to organise the business of the Board; and
•
to enhance the standing of the Company by
communicating with shareholders, the financial
community and the Group’s stakeholders generally.
Role: Chair
Richard Smith has responsibility for:
•
establishing, in conjunction with the Chair, the
strategic objectives of the Group, for approval
by the Board;
•
implementing the Group’s business plan and
annual budget; and
•
the overall operational and financial performance
of the Group.
Role: Chief Executive
As Senior Independent Director, Elizabeth McMeikan’s
(and, going forwards from 1 March 2023, Nicky Dulieu’s),
principal responsibilities are to:
•
act as Chair of the Board if the Chair is conflicted;
•
act as a conduit to the Board for the communication
of shareholder concerns if other channels of
communication are inappropriate; and
•
ensure that the Chair is provided with effective
feedback on his performance.
Role: Senior Independent Director
The terms and conditions of appointment of the Non-
Executive Directors are available for inspection at
the Company’s registered office and at the Annual
GeneralMeeting.
Time commitment
Non-Executive Directors are expected to commit
approximately 20 days per annum to the business of the
Group. We have reviewed the responsibilities of allDirectors
and are satisfied that they can fully fulfil thiscommitment.
It is the Board’s Policy to allow Executive Directors to accept
directorships of other unconnected companies so long
as the time commitments do not have any detrimental
impact on the ability of the Director to fulfil his duties. It is
considered this will broaden and enrich the business skills
of Directors. Any such directorships must be undertaken
with prior approval of the Board.
105
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Board tenure
Each of the Executive Directors has
a rolling contract of employment
with a 12-month notice period,
while Non-Executive Directors
are, subject to re-election by
shareholders, appointed to the
Board for a term of approximately
three years. The adjacent chart
shows the current tenure of the
Non-Executive Directors (rounded
up to the nearest year).
Professional advice and training
Directors are given access to independent professional
advice at the Company’s expense when the Directors
deem it necessary in order for them to carry out their
responsibilities. The Directors also have regular dialogue
with, and direct access to, the advice and services of the
Company Secretary, who ensures that Board processes and
corporate governance practices are followed.
The Board considers it important that the Committee
Chairs continue to receive sector and relevant functional
training (such as on accounting, corporate governance
and executive remuneration reporting developments) and
accordingly the Committee Chairs attend relevant external
seminars. The Board as a whole receives ongoing training
on corporate governance and other relevant developments.
Board induction
On appointment to the Board, each Director takes part in
a comprehensive and personalised induction programme.
This induction is also supplemented with ongoing training
throughout the year to ensure the Board is kept up to
date with key legal, regulatory and industry updates.
Any Director on appointment undertakes an induction
programme following this framework:
•
The business and operations of the Group and the
Higher Education sector; the role of the Board and
matters reserved for its decisions; the terms of reference
and membership of Board Committees; and powers
delegated to those Committees.
•
The Group’s corporate governance practices and
procedures and the latest financial information about
the Group. The legal and regulatory responsibilities as
a Director and, specifically, as a Director and Chair of a
listed company.
DIVISION OF RESPONSIBILITIES continued
Richard Huntingford
Ilaria del Beato
Elizabeth McMeikan*
Ross Paterson
Dame Shirley Pearce
Tom Jackson
Professor Sir Steve Smith
0 2 4
NED Tenure
61 3 5 7 98
* Elizabeth McMeikan retires from the Board on 28 February 2023.
As part of the induction programme, they meet with key
senior executives, so from the outset they have access to
people throughout the organisation to help them form their
own independent views on the Group, its performance
and the sector we operate in. In addition, they meet
with representatives of the Company’s key advisers.
Arrangements are made for each Director to visit key
locations to see our business operations and properties
first-hand and the Higher Education institutions with which
we partner.
Spotlight on Nicky Dulieu, our new
Non-Executive Director
“As part of my induction I was keen to visit Bristol, the
original home of Unite, and see some of the very first Unite
properties as well as the very latest ones. I also had the
opportunity to meet our front-line teams, hearing first-
hand about their experiences of working with our student
customers and universities. I am passionate about creating
an environment supporting young people’s growth and
development and it is good to see how Home for Success
supports this for our customers and employees.”
Nicky Dulieu
106
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
Thomas Jackson
29 November 2019
BOARD ACTIVITIES
NUMBER OF
MEETINGS
4
NUMBER OF
MEETINGS
4
NUMBER OF
MEETINGS
3
NUMBER OF
MEETINGS
3
NUMBER OF
MEETINGS
5
NUMBER OF
MEETINGS
8
Richard Huntingford
01 December 2020
Joe Lister
02 January 2008
Richard Smith
01 January 2012
Elizabeth McMeikan
1
01 February 2014
Ross Paterson
21 September 2017
Ilaria del Beato
01 December 2018
Dame Shirley Pearce
01 November 2019
Professor Sir
Steve Smith
01 April 2020
Nicky Dulieu
2
01 September 2022
Sustainability
Committee
See Committee
report on pages
125–127
Health &
Safety
Committee
See Committee
report on pages
128–130
Nomination
Committee
See Committee
report on pages
115–118
Remuneration
Committee
See Committee
report on pages
131–163
Audit & Risk
Committee
See Committee
report on pages
119–124
Board
Board activities in 2022
Directors’ attendance at meetings
1. Retiring on 28 February 2023.
2. Nicky Dulieu was appointed to the Board in September 2022 and unable to attend the November 2022 meetings due to existing prior commitments.
Attend
Didn’t attend
CHAIR/INDEPENDENT
EXECUTIVE DIRECTORS
INDEPENDENT DIRECTORS
NON-INDEPENDENT DIRECTORS
107
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
BOARD ACTIVITIES continued
2022 Board activities table
FEBRUARY
MARCH
MAY
JULY
SEPTEMBER
NOVEMBER
DECEMBER
Governance Strategy
Financial &
risk management People
Operational
and commercial
Approval of Annual
Report
Property valuer
market review
Preliminary results
final dividend
Remuneration
review
City strategy and
proposed property
acquisition
IR review and
feedback
Group strategy
deep dive
Debt review Review of Board
composition and
succession planning
Employee
and student
engagement update
Annual General
Meeting
External auditor
effectiveness review
People strategy
update
Risk and assurance
H1 review and H2
preview
Cladding review
Listing Rules update Interim results
Interim dividend
Principal and
emerging risk
review
Plans for our 2022
Board evaluation
Environmental
performance
and sustainable
investment
Property,
development and
asset management
strategy
Interims feedback Student welfare
review
Investment market
update
Board & Committee
evaluation feedback
Strategy execution
update
Technology
implementation
update
Budget 2023 themes
Defence planning
Workforce
engagement
update from
Designated Non-
Executive Director
for Workforce
Engagement
Customer and
operations update
Building Safety Act
update
Whistleblowing
review
Annual tax strategy
and tax review
Principal and
emerging risks
review
2023 budget
approval
Pay award and
bonus scheme
Unite Foundation
update
108
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
Board decision-making during 2022
STRATEGIC OBJECTIVE
DELIVERING FOR OUR
CUSTOMERS AND UNIVERSITIES
Safety, health and wellbeing:
Governance to ensure the
health, safety, wellbeing and
security of our customers is
paramount.
During 2022, this has
continued with a particular
focus on student support and
fire safety.
Ensuring our product is
affordable and provides
good value-for-money for
ourcustomers.
Operational risk
Major health and safety
incident in a property or
a development site
Market risks
Demand reduction:
driven by value-for-
money/affordability
The Board reviews the safety of our students, visitors and
employees, as well as contractors at our development sites,
ateach Board meeting.
•
Student support: the Board is committed to ensuring the
business provides the right support to help students fulfil
their potential. During 2022, the Board reviewed and approved
our Support to Stay framework to provide a supportive living
environment to students, despite medical, physical or mental
health difficulties. Further information about our Support to
Stay framework can be found on page 51.
•
Fire safety: the Board and the Health and Safety Committee
review and challenge our fire safety programme, a critical part
of our health and safety strategy. The Board is committed to
the business being a leader in fire safety standards through
a proactive, risk-based approach embedded across the
business and ensuring that students and our employees are
kept safe. The Board also oversees our cladding remediation
programme and related spending.
Board analysis of the Higher Education accommodation sector,
and ensuring we continue to offer an affordable and value-for-
money product.
Board analysis of our customer offer and how we service
undergraduate first year students through lettings to
universities under nomination agreements. Also, considering the
opportunities to tailor our customer proposition to better meet
the needs of returning students seeking greater independence
and postgraduate and international students who may be willing
to pay a premium for a higher level of service. Board approval
and oversight of our pilot purpose-built build-to-rent property in
Stratford, East London to test our operational capability to extend
our accommodation offer to young professionals and retain them
as customers as they move on to the next stage in their lives.
BOARD’S GOVERNANCE ROLE LINK TO PRINCIPAL RISK WHAT THE BOARD DID IN 2022 AND ITS DECISION-MAKING
Read more about Health & Safety Committee Report on pages 128–130
Read more about Operations review on pages 32–34
Read more on page 83
Read more on page 82
109
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
BOARD ACTIVITIES continued
Board decision-making during 2022 continued
STRATEGIC OBJECTIVE
DELIVERING FOR OUR
CUSTOMERS AND UNIVERSITIES continued
Governance to ensure our
best-in-class operating
platform delivers for our
customers and University
partners.
Ensuring our “safe and
secure” promise extends to
keeping our customers’ and
employees’ personal data safe
and secure.
Market risks
Supply and demand
Technology risk
Information Security
and Cyber threat
Through our direct engagement with VCs and other levels of
management within universities, the Board is able to take into
account the views of these stakeholders as well as monitoring
andmeasuring our performance.
Board oversight that our operating platform and our customer
facing operational apps (such as the MyUnite app) deliver:
•
a robust booking system;
•
an improved and scalable platform for revenue management
and customer engagement;
•
enhanced service levels for both universities and students; and
•
market differentiation.
Board review of our technology and information security
and its governance.
BOARD’S GOVERNANCE ROLE LINK TO PRINCIPAL RISK WHAT THE BOARD DID IN 2022 AND ITS DECISION-MAKING
Read more about Operations review on pages 32–34
Read more about Stakeholder engagement on pages 66–68
Read more on page 82
Read more on page 83
110
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
STRATEGIC OBJECTIVE
ATTRACTIVE RETURNS
FOR SHAREHOLDERS
Property/development
pipeline: Board scrutiny of
city and site selection for
new developments against
a backdrop of increasing
competition for the best sites.
Governance of developments/
acquisitions to ensure they run
to budget and schedule and
are earnings accretive.
Disposals: Board governance
of our portfolio recycling as we
increase our exposure to the
UK’s best universities, while
generating capital to invest in
further development activity.
Dividend Policy: Board
governance role in framing of
our Dividend Policy.
Property/
development risk
Property/
development risk
Financing risk
Board oversight of:
1. Delivery of our two new 2022 properties: 920-bed Hayloft
Point (London) and 431-bed Campbell House (Bristol), with
acombined total development cost of £235 million.
2. The £65 million refurbishment of three existing properties
inManchester.
3. Our build-to-rent pilot, the acquisition of 180 Stratford,
a 178-unit purpose-built build-to-rent property in Stratford,
East London.
Board oversight of the sale of 11 properties and £306 million
of assets to enhance our overall portfolio quality and fund
reinvestment into the improvement of our estate and entry
intothe build-to-rent market.
Board focus on dividend payments with a payout ratio
of 80% of adjusted EPS.
BOARD’S GOVERNANCE ROLE LINK TO PRINCIPAL RISK WHAT THE BOARD DID IN 2022 AND ITS DECISION MAKING
Read more about Development and partnership activity on pages 36–39
Read more about Disposals on page 39
Read more on page 84
Read more on page 84
Read more on page 86
111
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
BOARD ACTIVITIES continued
Board decision-making during 2022 continued
STRATEGIC OBJECTIVE
A RESPONSIBLE AND
RESILIENT BUSINESS
Sustainability and ESG: as
a listed plc and responsible/
trusted business, our wider
stakeholders demand
we proactively manage
environmental, social and
governance risks. The Board
oversees the setting and
implementation of our
sustainability strategy, which
has the overarching ambition
for Unite to clearly lead the
student housing sector on
sustainability issues and be in
the leading pack of real estate
companies in the wider sector.
Fire safety: proactive Board
oversight of improvements in
fire safety and demonstrating
leadership on cladding
remediation.
Employee wellbeing:
governance to ensure the
health, safety, wellbeing
and security of our 1,000
employees is paramount.
Diversity and inclusion
Sustainability/ESG risk
Operational risk
Major health and safety
incident in a property or
a development site
Operational risk
Major health and safety
incident in a property or
a development site
The Board continued its oversight of our sustainability strategy
and Net Zero Carbon Pathway, built on science-based targets
validated by the SBTi, to achieve our objective of becoming
net zero carbon across both the Company’s operations and
development activities by 2030. Further information can be found
within our Sustainability Report on pages 46–65.
The Board also interrogated our ongoing ESG regulatory and
reporting compliance.
The Board considered the Board’s specific climate change risks,
identifying them across: Regulatory risk; Physical risk; Transition
risk; and Stakeholder risk. The Board considered the impact of
these risks and oversees the assurance of the corresponding
riskmanagement.
The Board oversaw the Group being one of the first companies
to take action to remove Aluminium Composite Materials (ACM)
cladding and later High-Pressure Laminate (HPL) cladding on our
properties and the governance of our cladding remedial plan
and the investment to be incurred over the next 12–36 months
implementing this plan.
The Board has designated one of its Non-Executive Directors
(Ilaria del Beato) to help ensure the views and concerns of the
workforce are brought to the Board and taken into account.
The Board continues to monitor our Culture Matters forum which
puts the employee voice front and centre and consulting on
strategic change.
The Board also has oversight of our Diversity, Equity, Inclusion,
Belonging (DEIB) and Wellbeing initiatives. We expanded our DEIB
and Wellbeing team following the development of our DEIB and
Wellbeing strategy and embedding diversity, equity, inclusion,
belonging and wellbeing into the culture of the business through
a learning and development programme.
BOARD’S GOVERNANCE ROLE LINK TO PRINCIPAL RISK WHAT THE BOARD DID IN 2022 AND ITS DECISION-MAKING
Read more on page 85
Read more on page 83
Read more on page 83
Read more about employee wellbeing and DEIB initiatives
under Workforce engagement on pages 50, 103 and 126
112
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
Higher Education
Government Policy:
Continued focus on potential
Higher Education Government
Policy changes.
Covenants’ compliance:
Group Board oversight of
our Covenants’ compliance.
Capital structure: Group
Board focus on a strong and
flexible capital structure,
which can adapt to market
conditions, and reducing
and diversifying the cost
offunding.
Leadership development
and succession planning/
talent pipeline.
Market risk
Supply and demand
Market risk
Supply and demand
Financing risk
Financing risk
Ongoing Board monitoring of Higher Education Government
Policy and its impact for PBSA and universities more widely.
The Board monitors Covenants’ compliance across a range of
income/stress scenarios to ensure that if any risks emerge, the
Board is ready to identify further action and work with lenders
well in advance.
Covenant compliance also has oversight in the Audit & Risk
Committee and by the external audit review of our Covenant
compliance through the Going Concern process.
Board oversight of our capital structure, including the £450
million sustainability-linked unsecured revolving credit facility.
The Nomination Committee focuses on Board succession and
diversity as well as our broader talent pipeline and leadership
development.
BOARD’S GOVERNANCE ROLE LINK TO PRINCIPAL RISK WHAT THE BOARD DID IN 2022 AND ITS DECISION-MAKING
Read more on page 82
Read more on page 82
Read more on page 86
Read more on page 86
STRATEGIC OBJECTIVE
A RESPONSIBLE AND
RESILIENT BUSINESS continued
Read more about Financial review on pages 32–45
Read more about Financial review on pages 32–45
Read more about succession planning/talent pipeline on pages 115–118
113
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
2022 performance evaluation
Each year the Board, its Committees and Directors are
evaluated, considering (among other things) the balance
of skills, experience, independence and knowledge on the
Board, its diversity (including gender), how it works together
as a unit and other factors relevant to its effectiveness.
The Company’s Policy is to conduct an externally facilitated
evaluation every third year. During 2022, the evaluation was
conducted internally. The previous external evaluation was
in 2020 and the next external evaluation is expected to be
during 2023.
Board and Committee evaluation process
The Board and its Committees completed an anonymous
online questionnaire using Thinking Board, provided by
Independent Audit Limited that addressed a broad range of
issues and which enabled it to provide comments on a range
of matters. The questions covered Board and Committee
performance, culture, the content and scope of topics
covered at Board and Committee meetings, the nature
and dynamics of Director contributions at meetings and
Chair of the meetings. The questions set were consistent
with previous years to provide comparative results. There
were separate questionnaires for the Audit, Remuneration,
Health & Safety, Nomination and Sustainability Committees.
The conclusions were discussed by the Board and each
Committee at their meetings in Q4 of 2022.
Conclusion from this year’s Board
and Committee evaluation
The general conclusion was that the Board and its
Committees continue to work effectively and operate
to a high standard. Key areas of strength included the
skills and experience of the Non-Executive Directors
both to challenge and support the Executive team, and
contributions to Board discussion and decision-making.
The consensus is that the Board is effectively developing
BOARD ACTIVITIES continued
2021 BOARD EVALUATION RECOMMENDATIONS 2022 PROGRESS AGAINST THESE RECOMMENDATIONS
Progress against the 2021 Board evaluation recommendations
and reviewing its wider business strategy while considering
stakeholders and incorporating ESG into the Board’s
strategic decision-making. The Board’s decision making
continues to align around our Purpose and Values. The
Directors believe that the Board fulfils its role relating to
strategy, risk, governance and oversight of operational and
financial performance well. The key areas where there are
opportunities for further development include:
•
continuing organisation oversight, with a particular
regard to succession planning and meeting more of the
wider leadership team;
•
a better understanding of risks and mitigation around
IT, data and cyber security and how this may inform our
strategy and more generally understanding how our
risks link to our strategy;
•
a better understanding of our people issues and data for
improved organisational insight; and
•
upskilling in fast developing areas such as Technology,
Sustainability and net zero.
The Board and each of its Committees reviewed the
suggestions and outcomes of the Board evaluation and
have developed an implementation plan. The Board also
considered its and the Committees’ current composition.
Richard Smith was added as a member of the Nomination
Committee (effective 1 February 2022) so as CEO he
could share his views on the Board’s structure, size and
composition and helping ensure the Board has the right
balance of skills, diversity and experience. Following Nicky
Dulieu’s appointment as a Non-Executive Director, she was
appointed to the Remuneration, Audit and Risk Committee
and Nomination Committee. Nicky will replace Elizabeth
McMeikan as Chair of the Remuneration Committee
following Elizabeth’s retirement from the Board. Nicky
brings a wealth of experience and proven track record as
aNon-Executive Director.
1 Create more opportunities for the Board members
to spend more in-person time and meet more of the
wider leadership team
The Board meetings during 2022 were held in-person
with informal time together outside of the meetings. In
addition, members of the leadership team were invited
to join Board meetings and will continue to be invited
throughout 2023.
2 Non-Executive Director interaction with key
stakeholders
The Chair of the Remuneration Committee engaged
with stakeholders through the 2021/22 remuneration
consultation process. Our Non-Executive Director for
Workforce Engagement has regular interaction with
employees through our Culture Matters forum.
3 Develop the Board’s insight and ability to challenge
how technology and data should drive our strategy
Following detailed discussions, the Board approved our
Technology and Data Roadmap in 2021 and during 2022
we entered the initial implementation phase of our new IT
infrastructure.
4 Organisation oversight
The Board held dedicated succession planning and talent
mapping sessions throughout the year, including insights
into key people data, our culture and values.
1 14
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
COMMITTEE MEMBERSHIP
Richard Huntingford
Chair of the Nomination Committee
Elizabeth McMeikan*
Senior Independent Director
Ross Paterson
Non-Executive Director
Ilaria del Beato
Non-Executive Director
Dame Shirley Pearce
Non-Executive Director
Thomas Jackson
Non-Executive Director
Professor Sir Steve Smith
Non-Executive Director
Richard Smith
Chief Executive Officer
(Joined the Committee on 1 February 2022)
Nicky Dulieu
Non-Executive Director
(Joined the Committee on 1 September 2022)
“The Nomination Committee’s
focus was on the composition of
the Board and succession planning
this year, leading to the Board
appointment of Nicky Dulieu
in September 2022.”
Richard Huntingford
Chair
NOMINATION COMMITTEE
PEOPLE GOVERNANCE
Diversity and succession planning continues
astheCommittee’s primary focus
Nomination Committee Chair’s overview
The Committee is focused on succession planning, with
emphasis on growing the diversity of the Board. It also
monitors ongoing executive succession planning and our
talent and leadership development.
Composition
The Committee consists of all the Non-Executive Directors
including Nicky Dulieu, who was appointed as a Non-
Executive Director with effect from 1 September 2022.
Richard Smith also joined the Committee in early 2022 as
the Committee felt it important that the Chief Executive is
a member of the Committee for Board composition and
wider leadership succession discussions and planning.
* Elizabeth McMeikan will retire as a Non-Executive Director on 28 February 2023.
NUMBER OF MEETINGS
3
ATTENDANCE
See page 107
115
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
NOMINATION COMMITTEE continued
Board succession planning for executive roles is also
considered by the Committee, looking to ensure the
business has a deep, diverse and inclusive talent pipeline
for future Board appointments. As an integral part of
executive succession planning, the Committee oversees
our talent mapping to ensure we are growing and nurturing
our talent and developing our high-performers’ potential.
Our diversity and inclusivity initiatives (outlined below) are
aligned with this succession planning.
Diversity and inclusion
The Board recognises that diversity and inclusion is
fundamental to the culture of the Group, our purpose
of Home for Success and ultimately our long-term
sustainability. With employees a key stakeholder and at
the heart of our business, the Board’s focus is on creating
a workplace where people feel they belong and can bring
their whole and true selves into the workplace. Our values
recognise this, especially “creating room for everyone”.
The Board continues to oversee the development and
growth of our Culture Matters forum created in 2021
to ensure the employee voice is “front and centre” in
supporting the shaping of our People strategy and
consulting on strategic change. Through listening and
learning from across the business, we launched our first
Diversity, Equity, Inclusion, Belonging and Wellbeing
strategy, We are US, in 2022. This strategy is authentic to
the business and recognises our responsibility to create
healthier and happier workplaces, striving for more
equitable and sustainable futures.
Board Diversity Policy
The Board and Nomination Committee drives the agenda
for diversity across the business. We are making progress,
but recognise we need to do more.
The objectives of the Board’s Diversity Policy are to ensure
that Board and Committees of the Board appointments:
(a) are made on merit and relevant experience, while
taking into account the broadest definition of
diversity (which includes factors such as ethnicity,
sexual orientation, disability and socio-economic
background, as well as age, gender, education and
professional background); and
(b) ensure Unite has, on an ongoing basis, the most
effective Board and leadership team to operate the
business for the benefit of all its stakeholders.
At the invitation of the Committee, other people may be
invited to attend meetings of the Committee if considered
desirable in assisting the Committee in fulfilling its role.
Role of the Nomination Committee
The role of the Committee is to:
•
Ensure that appropriate procedures are adopted
and followed in the nomination, selection, training,
evaluation and re-election of Directors and for
succession planning, with due regard in all cases to the
benefits of diversity on the Board, including gender.
•
Regularly review the structure, size, composition,
skills and experience of the Board and to make
recommendations with regard to any adjustments
considered necessary.
•
When it is agreed that an appointment to the Board
should be made, lead a selection process that is formal,
rigorous and transparent.
•
Be responsible for identifying, reviewing and
recommending candidates for appointment to
theBoard.
Review of Board composition
andsuccessionplanning
At the start of 2022 and conscious of the tenure of
longer standing Non-Executive Directors, a dedicated
sub-committee was created to oversee the search for
a new Non-Executive Director with assistance from an
external search consultancy, MWM Consulting. MWM is a
signatory to the Enhanced Voluntary Code of Conduct for
Executive Search Firms and has no other connection with
the Company or any individual Directors. Following an
extensive search, Nicky Dulieu was appointed as a Non-
Executive Director on 1 September 2022, bringing wide-
ranging consumer and finance experience to the Board.
The Committee believes the Board currently has the correct
balance of skills, experience, independence and knowledge,
however, notes that additional diversity would strengthen
the Board. Consequently, in late 2022 the Committee
started the search for an additional Non-Executive Director
who brings additional diversity to the Board. MWM
Consulting has also been appointed to support this search.
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THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
The Committee ensures that when making Board appointments, the retained search firm places an emphasis on putting
forward candidates who would enhance the overall diversity of the Board and seeks to appoint search firms that are
signatories to the Enhanced Voluntary Code of Conduct for Executive Search Firms where practicable. On an ongoing basis,
the Committee keeps under review the tenure and experience of the Executive and Non-Executive Directors to ensure the
Board, and the respective Committees, has an appropriateand diverse mix of skills, experience, knowledge anddiversity.
As described above, Nicky Dulieu was appointed to the Board on 1 September 2022 and the Board is in the process of
recruiting a further Non-Executive Director to bring additional diversity to the Board.
Board and senior leadership diversity
The Company voluntarily reports our Board and executive management diversity data, as at 31 December 2022, in
accordance with the new UK Listing Rules targets and associated disclosure requirements.
As of 31 December 2022, the Board comprised 40% women, one of the four senior positions on the Board was held by a
woman and there were no Directors from an ethnic minority background. Following Elizabeth McMeikan’s departure on
28February 2023, the Board will comprise 33% women and one of the four senior positions on the Board will continue to be
held by a woman, following the appointment of Nicky Dulieu as Senior Independent Director with effect from 1 March 2023.
The Board is fully committed to ensuring diversity at all levels of the Company. As set out in last year’s Annual Report, the
Nomination Committee has been working to build a pipeline of diverse candidates with a view to complying with the Parker
Review’s recommendation that each FTSE 250 Board should have at least one director of colour by 2024. The Company
was promoted to the FTSE 100 in June 2022 and this, combined with the new UK Listing Rules targets, has underlined the
importance of the Company’s efforts in this area. The Board expects to make further progress against the Listing Rules
targets over the course of 2023 (including in light of the ongoing recruitment of another Non-Executive Director).
Gender identity and ethnicity as at 31 December 2022
Number of
Board members
Percentage
of the Board
Number of senior
positions on the Board
(CEO, CFO, SID and Chair)
Number in
executive
management
Percentage
of executive
management
Men 6 60% 3 6 75%
Women 4 40% 1 2 25%
Not specified/prefer not to say 0 0% 0 0 0
Number of
Board members
Percentage
of the Board
Number of senior
positions on the Board
(CEO, CFO, SID and Chair)
Number in
executive
management
Percentage
of executive
management
White British or other White
(includingminority-white groups) 10 100% 4 7 87.5%
Mixed/Multiple Ethnic Groups 0 0% 0 0 0%
Asian/Asian British 0 0% 0 1 12.5%
Black/African/Caribbean/Black British 0 0% 0 0 0%
Other ethnic group, including Arab 0 0% 0 0 0%
Not specified/prefer not to say 0 0% 0 0 0%
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
NOMINATION COMMITTEE continued
Approach to data collection
Gender and ethnicity data for the Board and executive
management is collected on an annual basis through a
standardised process managed by the Company Secretary.
Each Director and member of the executive management
team is asked to complete a standard form questionnaire
on a confidential and voluntary basis, through which
the individual self-reports on their ethnicity and gender
identity (or can specify that they do not wish to provide such
data). The criteria of the questionnaire are aligned to the
definitions specified in the UK Listing Rules and set out in the
tables above:
•
Self-reported gender identity – selection from (a) male, (b)
female or (c) not specified/prefer not to say; and
•
Self-reported ethnicity – selection from (a) White British or
other White (including minority-white groups), (b) mixed/
multiple ethnic groups, (c) Asian/Asian British, (d) Black/
African/Caribbean/Black British, (e) other ethnic group,
including Arab or (f) not specified/prefer not to say.
The Company’s approach to data collection is consistent for
the purposes of all diversity-related reporting requirements
under the Listing Rules and across all individuals in relation
to whom data is being reported.
As of 31 December 2022, the number of women in the
Executive Committee and their direct reports (including the
Company Secretary as required by the Code) was 13 (out of a
total of 40) representing 32.5% of this Group. Following some
structural changes during 2022, the size of this Group has
reduced, however, we are looking to grow the percentage of
women in leadership positions.
Male Female Total
Executive Committee
and Company Secretary 6 2 8
Direct Reports 21 11 32
Total 27 13 40
Total (%) 67.5% 32.5% 100%
In addition, the Committee will continue its focus on
delivering diversity for the wider business to help the
Company develop a deep and diverse succession plan at
more senior levels within the organisation.
Richard Huntingford
Chair – Nomination Committee
28 February 2023
Gender diversity
Female
Male
13
27
32.5%
67.5%
Gender diversity for the purposes of the
UKCorporate Governance Code
118
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
“During 2022, the Committee
continued to focus on the quality and
integrity of the financial statements
alongside its oversight of risk and
internal controls.”
Ross Paterson
Chair
AUDIT & RISK COMMITTEE
FINANCIAL GOVERNANCE
The Audit & Risk Committee provides oversight for the
Board in respect of the Group’s financial reporting process,
the audit process, the system of internal controls, and the
identification and management of significant risks
COMMITTEE MEMBERSHIP
Ross Paterson
Chair of the Audit & Risk Committee
Ilaria del Beato
Non-Executive Director
Nicky Dulieu
Non-Executive Director
Professor Sir Steve Smith
Non-Executive Director
NUMBER OF MEETINGS
5
ATTENDANCE
100%
Audit & Risk Committee Chair’s overview
During the year, the Audit & Risk Committee continued its
key oversight role for the Board with its specific duties as
set out in its terms of reference to reassure shareholders
that their interests are properly protected in respect of the
Group’s financial management and reporting.
The Audit & Risk Committee works to a structured
programme of activities, with agenda items focused to
coincide with key events in the annual financial reporting
cycle. The Audit & Risk Committee reports regularly to the
Board on its work.
During the year, the Audit & Risk Committee has continued
to monitor the integrity of the Group’s financial statements
and supported the Board with its ongoing monitoring of
the Group’s risk management and internal control systems
in line with the requirements under the UK Corporate
Governance Code. The Audit & Risk Committee determined
the focus of the Group’s internal audit activity, reviewed
findings, and verified that management was appropriately
implementing recommendations. The Audit & Risk
Committee also challenged the approach to assessing the
Group’s ability to continue as a going concern and its likely
loan covenant compliance, by reviewing various scenarios
for future performance.
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AUDIT & RISK COMMITTEE continued
The Audit & Risk Committee undertook a review of its
effectiveness in August 2022. The review found that
the Audit & Risk Committee is working effectively. The
review identified areas in which we can strengthen our
performance and these are reflected in the Committee’s
priorities for 2023.
During 2022, the Audit & Risk Committee undertook a
full evaluation exercise of the Deloitte audit approach to
ascertain the effectiveness of the external audit function.
Further to the completion of the evaluation of the external
audit process, we are satisfied with both the auditor’s
independence and audit approach and have recommended
to the Board that Deloitte be re-appointed as auditor
in2023.
Following the 2021 appointment of a Group Risk &
Assurance Director, all oversight of internal audit and risk
management are now insourced. Whilst internal, we still
consider the team to be independent of management
with a direct line of communication to the Audit & Risk
Committee. As is usual with an internal team, there are
still areas where it is appropriate to engage third parties to
undertake specific pieces of work and the relationship with
PricewaterhouseCoopers (PwC) has been maintained.
As noted in this Corporate Governance statement, the
Board delegates certain duties, responsibilities and powers
to the Audit & Risk Committee, so that these can receive
suitably focused attention. However, the Audit & Risk
Committee acts on behalf of the full Board, and the matters
reviewed and managed by the Audit & Risk Committee
remain the responsibility of the Directors as a whole.
Role of the Audit & Risk Committee
The Audit & Risk Committee has delegated authority from
the Board set out in its written terms of reference. The
terms of reference for the Audit & Risk Committee take into
account the requirements of the Code and are available
for inspection at the registered office, at the Annual
General Meeting and on the Group website at http://www.
unitegroup.com/about-us/corporate-governance.
The key objectives of the Audit & Risk Committee are:
•
To provide effective governance and control over the
integrity of the Group’s financial reporting and review
significant financial reporting judgements.
•
To support the Board with its ongoing monitoring of the
effectiveness of the Group’s system of internal controls
and risk management systems.
•
To monitor the effectiveness of the Group’s internal
audit function and review its material findings.
•
To oversee the relationship with the external auditor,
including making recommendations to the Board in
relation to the appointment of the external auditor
and monitoring the external auditor’s objectivity
andindependence.
Composition of the Audit & Risk Committee
The members of the Audit & Risk Committee are set out
on page 101 of this Corporate Governance statement. The
Audit & Risk Committee members are all independent Non-
Executives and have been selected with the aim of providing
the wide range of financial and commercial expertise
necessary to fulfil the Audit & Risk Committee’s duties.
The Board considers that as a chartered accountant with
substantial experience in senior finance roles, including as
Chief Financial Officer of a UK-listed company, I have recent
and relevant financial experience and that the Committee
as a whole has competence relevant to the sector.
Audit & Risk Committee meetings
The Audit & Risk Committee met five times during the
year and attendance at those meetings is shown on page
107 of this Corporate Governance statement. Meetings
are scheduled to coincide with key dates in the financial
reporting cycle and a forward agenda is agreed by the
Committee and reviewed on an ongoing basis.
Meetings are attended, by invitation, by the Chair of the
Board, the Chief Financial Officer, the Group Finance
Director and the Group Risk & Assurance Director.
I also invite our external auditor, Deloitte, to most meetings.
The Audit & Risk Committee regularly meets separately
with Deloitte without others being present. Deloitte meets
the Group Risk & Assurance Director to receive an update
on any audit findings and how risks are being managed;
Deloitte considers the impact of these on its approach to
itswork.
Main activities of the Audit &
Risk Committee during the year
Meetings of the Audit & Risk Committee generally take
place just prior to a Group Board meeting and I report to
the Board, as part of a separate agenda item, on the activity
of the Audit & Risk Committee and matters of particular
relevance to the Board in the conduct of its work. At its
five meetings during the year, the Audit & Risk Committee
focused on the following activities.
The Audit & Risk Committee reviewed the half-year and
annual financial statements and the significant financial
reporting judgements. As part of this review, the Audit
& Risk Committee supported the Board by reviewing the
financial viability and the basis for preparing the accounts
on a going concern basis. This included challenging forecast
cash headroom and reviewing scenarios, which were
determined by management, to stress test the impact of a
range of performance outcomes upon the viability of the
business, in particular with regard to loan covenants.
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The Audit & Risk Committee also reviewed and challenged
the external auditor’s report on these financial statements.
As discussed above, the effectiveness of the external
audit function was considered during 2022. During the
evaluation process the Audit & Risk Committee considered:
the independence and objectivity of the external auditor;
the make-up and quality of the audit team; the proposed
audit approach and the scope of the audit; the execution
of the audit and the quality of the audit report to the
shareholders; as well as ultimately the fee structure.
The Audit & Risk Committee discussed reports from
Group Risk & Assurance and its audit and assessment of
the control environment. The Committee reviewed and
proposed areas of focus for the internal audit programme
to review including the approach to ensure that the internal
audit activity continues to be aligned to the principal
Grouprisks.
The Audit & Risk Committee has considered the
Department for Business, Energy & Industrial Strategy
(BEIS) consultation white paper: “Restoring trust in audit
and corporate governance” published in March 2021
and the Government’s response to the consultation
responses published in May 2022. The Queen’s Speech
on May 10th 2022 included plans for a Draft Audit Reform
Bill and whilst there is no timetable setting out when the
Bill will be published, the Audit & Risk Committee will
continue to review the potential impact on the Group
withmanagement.
Financial reporting
The primary focus of the Audit & Risk Committee, in relation
to financial reporting in respect of the year ended 31
December 2022, was to review with both management and
the external auditor the appropriateness of the half-year
and annual financial statements concentrating on:
•
The quality and acceptability of accounting policies
and practices.
•
The clarity of the disclosures and compliance with
financial reporting standards and relevant financial
and governance reporting requirements.
•
Material areas in which significant judgements have
been applied or where there has been discussion with
the external auditor.
•
Whether the Annual Report and Accounts, taken as a
whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess
theGroup’s position and performance, business model
and strategy.
The Audit & Risk Committee’s assessment of the Annual
Report to ensure that it is fair, balanced and understandable
and took into account the following considerations:
•
A review of what fair, balanced and understandable
means for Unite.
•
The high level of input from the Chief Executive Officer
and Chief Financial Officer with early opportunities for
the Board to review and comment on the Annual Report.
•
Ensuring consistency in the reporting of the Group’s
performance and management information (as
described on pages 24–29), risk reviews (as described on
pages 77–87), business model and strategy (as described
on pages 8–11 and 30–31).
•
A cross-check between Board Minutes and the Annual
Report is undertaken to ensure that reporting is
balanced.
•
Whether information is presented in a clear and concise
manner, illustrated by appropriate KPIs to facilitate
shareholders’ access to relevant information.
To aid our review, the Audit & Risk Committee considers
reports from the Group Finance Director and reports from
the external auditor on the outcomes of their half-year
review and annual audit. As an Audit & Risk Committee, we
support Deloitte in displaying the necessary professional
scepticism its role requires.
Significant issues considered by the Committee
After discussion with both management and the external
auditor, the Committee determined that the key risk of
misstatement of the Group’s 2022 financial statements
related to:
•
Property valuations
•
Joint venture accounting
Further information about property valuations can be
found below and joint venture accounting can be found
onthe next page.
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AUDIT & RISK COMMITTEE continued
Property valuations
The Group’s principal assets are investment properties
and investment properties under development that are
either owned on balance sheet or in USAF or LSAV. The
investment properties are carried at fair value based on
an appraisal by the Group’s external valuers who carry
out the valuations in accordance with the RICS Red Book
valuation guide, taking into account transactional evidence
during the year. The valuation of property assets involves
significant judgement and changes in the core assumptions
could have a significant impact on the carrying value of
these assets. The Committee noted that the 31 December
2022 valuations involved an increased level of judgement
considering heightened macroeconomic uncertainty with
higher UK inflation and interest rates.
Management discusses the underlying performance of
each asset with the external valuers and provides detailed
performance data to them including rents, university
lease agreements, occupancy, property costs and costs
to complete (for development properties). Management
receives detailed reports from the valuers and performs
a detailed review of the valuations to ensure that
management considers the valuations to be appropriate.
The valuation report is reviewed by the Chief Financial
Officer prior to sign-off.
Prior to finalising the 2022 accounts, the Committee met
with members of the Group’s valuer panel and challenged
them on the basis of their valuations and their core
assumptions, including the yield for each property, rental
growth and forecast costs.
The Audit & Risk Committee questioned the external
valuers on market trends and transactional evidence that
supports the valuations. The Audit & Risk Committee
was satisfied that the Group’s valuers were appropriately
qualified and provided an independent assessment of the
Group’s assets. The Audit & Risk Committee was satisfied
that an appropriate valuation process had taken place, the
core assumptions used were reasonable and hence the
carrying value of investment and development properties in
the financial statements was appropriate.
The external auditor explained the audit procedures to test
the valuation of investment and development properties
and the associated disclosures. The Committee met with
a Deloitte real estate specialist who was involved in the
audit. On the basis of the audit work, the external auditor
reported no inconsistencies or misstatements that were
material in the context of the financial statements as a
whole. Further analysis and detail on asset valuations is set
out on pages 35–39.
Joint venture accounting
Two of Unite’s significant assets are its investments in USAF
and LSAV which the Group has historically accounted for as
joint ventures.
The Group reports under IFRS 10–12 which provides
guidance on how an investor should account for its
interests in other entities, including a definition of control
and guidance on how to classify and account for jointly
controlled arrangements. During the year, management
undertook a detailed review of its classification for both
USAF and LSAV, and following that analysis concluded that
both USAF and LSAV should continue to be treated as joint
ventures. The Audit & Risk Committee considered this and
agreed there was no material change and accordingly it
was appropriate to continue to account for USAF and LSAV
as joint ventures under IFRS 11, with Unite recording its
28.15% share of the results and net assets of USAF as a joint
venture using equity accounting and likewise 50% for LSAV.
Other issues considered by the Committee
Accounting for the cost of cladding remediation
The Group has provided for the estimated cost of
remediating cladding on properties where there is either a
legal/regulatory requirement to do so or where the Group
has a constructive obligation. The Audit & Risk Committee
reviewed, challenged and agreed the basis on which costs
associated with the remediation of cladding have been
included in the Financial Statements. The Committee
also reviewed, challenged and agreed the extent to which
the Group had any constructive obligations in respect of
cladding remediation that should be provided for. Based on
this, the Committee was comfortable with the process and
controls adopted by management around the disclosures
and estimation of costs and provisions associated with
cladding remediation.
Risk management
The Group’s risk assessment process and the way in which
significant business risks are managed is a key area of focus
for the Audit & Risk Committee.
Our work here was driven primarily by performing an
assessment of the approach to risk taken by the Group’s
Executive Committee and senior leadership team. The
Executive Committee is responsible for the delivery of
the Group’s risk management framework. The Executive
Committee and senior leadership team set the objectives
for the Group and then assess what risks could prevent
the Group from meeting these objectives. This assessment
results in a number of principal and emerging risks that are
brought to the Board for a detailed assessment.
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The Audit & Risk Committee considered the work of the
Executive through the year and has approved both the
Group’s Risk Management Framework, and the Group’s
assessment of its principal risks and uncertainties, as set
out on pages 79–87.
Through these reviews, the Audit & Risk Committee
considered the risk management procedures within the
business and was satisfied that the key Group risks were
being appropriately managed.
The risk assessment flags the importance of the internal
control framework to manage risk and this forms a separate
area of review for the Audit & Risk Committee.
The Board also formally reviewed the Group’s principal risks
at two meetings during the year.
Internal controls
Led by the Group’s risk assessment process, we reviewed
the process by which the Group evaluated its control
environment. The Board has delegated responsibility to
Management for establishing effective risk management
and maintaining adequate internal controls, although the
board retain oversight responsibility. Internal controls
are designed to provide reasonable assurance regarding
(among other things) the reliability of financial reporting
and the preparation of the financial statements for external
reporting purposes. A comprehensive strategic planning,
budgeting and forecasting process is in place. Monthly
financial information and performance insight is reported
to the Board.
Internal audit
The Group used the internal Group Risk & Assurance team
for internal audit services through the year. The team
embedded third line of defence audits in our operations,
developing a framework of Operational Compliance Audits
for our rental properties. The property audits are designed
with a focus on safety and, where there are gaps identified,
action plans are developed and monitored. The results are
shared with our Customer Leadership Team to enable the
sharing of best practice and drive improvements across all
of our operations where themes are identified. In addition
to this, the team completed three other pieces of internal
audit work. The first was over compliance with UK Data
Protection regulations and the efficient operation of the
data protection team; the second was over the use and
management of video and voice recording equipment
in our rental properties (CCTV, Bodyworn Cameras
and SoloProtect (personal voice recording equipment
that is used when lone working)); the third was on the
management of asbestos in our student properties.
Overall, the conclusion of all audits was that there were
no significant issues and controls were well designed, but
noted there were some areas of improvement to be made
to maximise controls and operational efficiency, which
management is in the process of implementing.
External audit
The effectiveness of the external audit process is facilitated
by appropriate audit risk identification at the start of the
audit cycle which we receive from Deloitte in a detailed
audit plan, identifying its assessment of these key risks.
For the 2022 financial year, the significant risks identified
were in relation to valuation of properties, classification
of joint ventures and management override. These focus
areas were discussed at the Audit & Risk Committee and
it was agreed that they should be the principal areas of
focus as they represent the areas with the greatest level of
judgement and materially impact the overall performance
of the Group. These risks are tracked through the year
and we challenged the work done by the auditor to test
management’s assumptions and estimates around
theseareas.
We assess the effectiveness of the audit process in
addressing these matters through the reporting we receive
from Deloitte at both the half-year and year-end and
alsoreports from management on how these risks are
being addressed.
For the 2022 financial year, the Audit & Risk Committee
was satisfied that there had been appropriate focus and
challenge on the primary areas of audit risk and assessed
the quality of the audit process to be good. We hold private
meetings with the external auditor at each Audit & Risk
Committee meeting to provide additional opportunity
for open dialogue and feedback from the Audit & Risk
Committee and the auditor without management being
present. Matters typically discussed include:
•
The auditor’s assessment of business and financial
statement risks and management activity thereof.
•
The transparency and openness of interactions with
management, confirmation that there has been no
restriction in scope placed on them by management and
the independence of its audit.
•
How it has exercised professional scepticism.
I also meet with the external lead audit partner outside the
formal Audit & Risk Committee process.
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Independence and external audit tender
The Audit & Risk Committee considers the re-appointment
of the external auditor (including the rotation of the audit
partner which is required every five years) each year and
also assesses its independence on an ongoing basis. 2022 is
the eighth year during which Deloitte has been the Group’s
external auditor.
The Audit & Risk Committee reviewed Deloitte’s audit
work and determined that appropriate plans are in place
to carry out an effective and high quality audit. Deloitte
confirmed to the Audit & Risk Committee that it maintained
appropriate internal safeguards to ensure its independence
and objectivity. As part of the Audit & Risk Committee’s
assessment of the ongoing independence of the auditor, the
Audit & Risk Committee receives details of any relationships
between the Group and Deloitte that may have a bearing on
their independence and receives confirmation that they are
independent of the Group.
As discussed above, the Committee undertook an
assessment of Deloitte’s effectiveness, its processes, audit
quality and performance in May 2022 following completion
of the 2021 audit.
The Audit & Risk Committee also regularly considers when
it next intends to complete a competitive tender process
for the Company’s external audit. As noted above, the
Audit & Risk Committee remains satisfied with Deloitte’s
effectiveness and independence. In view of this, the Audit
& Risk Committee does not currently anticipate that it
will conduct an audit tender before 2024 in respect of the
2025 financial year for which a tender would be required in
accordance with applicable law and regulations. The Audit &
Risk Committee considers this to be in the best interests of
the Company’s shareholders for the reasons outlined above
and will keep this decision under review.
The Committee confirms compliance with the provisions of
the Statutory Audit Services for Large Companies Market
Investigation (Mandatory Use of Competitive Tender
Processes and Audit & Risk Committee Responsibilities)
Order 2014.
Non-audit services
To further safeguard the objectivity and independence
of the external auditor from becoming compromised, the
Committee has a formal policy governing the engagement
of the external auditor to provide non-audit services. No
material changes have been made to this policy during
the year. This precludes Deloitte from providing certain
services, such as valuation work or the provision of
accounting services.
For certain specific permitted services (such as reporting
accountant activities and compliance work), the Audit & Risk
Committee has pre-approved that Deloitte can be engaged
by management, subject to the policies set out above, and
subject to specified fee limits for individual engagements
and fee limits for each type of specific service. For all other
services, or those permitted services that exceed the
specified fee limits, I as Chair, or in my absence, another
member, can pre-approve permitted services.
During the year, Deloitte was appointed to undertake
non-audit services. Fees for non-audit work performed
by Deloitte for the year ended 31 December 2022 were
£0.1 million (2021: £0.1 million). The non-audit fees related
to the work undertaken by Deloitte LLP in its role as
external auditor to the Group for the review of the half-year
report. Further disclosure of the non-audit fees incurred
during the year ended 31 December 2022 can be found in
note 2.6 to the consolidated financial statements on page
200. Accordingly, the Audit & Risk Committee was satisfied
that both the work performed by Deloitte LLP, and the level
of non-audit fees paid to it, were appropriate and did not
raise any concerns in terms of Deloitte LLP’s independence
as auditor to the Group.
The Audit & Risk Committee approved the fees for audit
services for 2022 after a review of the level and nature
of work to be performed, including additional audit
procedures required as a result of changes in the regulatory
environment, and after being satisfied by Deloitte that the
fees were appropriate for the scope of the work required.
Audit & Risk Committee evaluation
The Audit & Risk Committee’s activities formed part
of theevaluation of Board effectiveness performed
in the year. Details of this process can be found under
“Performance evaluation”.
Ross Paterson
Chair – Audit & Risk Committee
28 February 2023
AUDIT & RISK COMMITTEE continued
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“It has been inspiring to see the
intensity of action right across the
business in the implementation of
our sustainability strategy this year.”
Dame Shirley Pearce
Chair
SUSTAINABILITY COMMITTEE
SUSTAINABILITY GOVERNANCE
A responsible and sustainable business, doing
the right thing through People and Places
COMMITTEE MEMBERSHIP
Dame Shirley Pearce
Chair of the Sustainability Committee
Richard Smith
Chief Executive Officer
Ilaria del Beato
Non-Executive Director
Ross Paterson
Non-Executive Director
Tom Jackson
Non-Executive Director
NUMBER OF MEETINGS
4
ATTENDANCE
100%
The sustainability strategy forms a key component of our
business planning and is central to delivering our Home for
Success purpose and our values, especially “doing what’s
right”. The Sustainability Committee reviews the Group’s
performance against its targets and ambitions to ensure
Unite is a responsible and resilient business, keeping in
mind the paramount importance of our responsibility to
stakeholders and the wider community. Our commitment to
transparency can be seen through our sustainability-related
targets and ongoing disclosure of our performance.
2022 highlights and progress
•
Continued implementation of the sustainability strategy
with regular reviews of our sustainability targets and
performance of the business.
•
Oversight of the asset transition plans, produced for
each of our properties in 2022 and, a review of our
sustainable investment approach.
•
Oversight of our commitment to donate 1% of annual
profits to social initiatives including additional funding
for the Unite Foundation scholars 2022/23 academic
year as well as the Group’s ongoing investment in
the Leapskills programme for school leavers. We also
made progress in the development of our community
investment performance metrics which will launch in
2023, aligned to the Societal Impact (B4SI) Framework.
•
Supported the launch of our first Diversity, Equity,
Inclusion, Belonging (DEIB) & Wellbeing strategy and
participation in the 10,000 Black Interns programme.
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SUSTAINABILITY COMMITTEE continued
Through the Committee’s oversight, the business reviewed
the framework for communicating our sustainability
strategy and determined to communicate the essential
elements of the sustainability strategy in terms of impact
on People and Places.
Our people
Everyone is unique. Everyone is important. And
everyone belongs in a community where they are
safe,respected and included and we strive to make
thathappen.
The Sustainability Committee oversees that the
sustainability strategy is being embedded across the
business, with engagement sessions with managers, “Unite
Live” sessions with employees and The NUS Positive Impact
programme. This programme is a collaboration between
the business and the National Union of Students aimed
at helping students adopt lasting sustainable living habits
through wellbeing, community and social impact initiatives
and comprised of a network of champions across the
operation and support side of the business.
Our employee forum, Culture Matters, has become a very
valuable forum for understanding and engaging with
employees, offering two-way communication between
the senior leadership team and the wider business by
way of elected representatives. Through our Designated
Non-Executive Director for Workforce Engagement, the
Sustainability Committee receives regular updates on
our people. Through this engagement, the Sustainability
Committee helped oversee the launch of the Group’s
first Diversity, Equity, Inclusion, Belonging and Wellbeing
strategy, We are US, in 2022. The strategy is authentic to
Unite and sets out clear objectives to deliver our Home
for Success purpose and our value of “creating room for
everyone”. Full details of our DEIB & Wellbeing strategy can
be found on page 50.
Our continued commitment to employee engagement can
be seen by our regular employee engagement surveys and
addressing concerns raised by all teams. The feedback of
these surveys is presented to the Sustainability Committee
which monitors the process for identifying and addressing
concerns raised by the employees. Through engagement
with the Sustainability Committee, the Academy was
launched in October 2022 providing tailored learning and
development opportunities for employees to enhance their
knowledge and skills.
The Sustainability Committee is keen to ensure the
wellbeing, both physically and mentally of everyone across
the business remains one of the Board’s key priorities.
Safety is part of everything we do and is woven through the
entire business and culture with further details on page 52.
Our places
We want our places to deliver sustainable growth. For
our people, our communities and the planet. We are
working towards net zero carbon and finding ways
to use less resources, future-proof our buildings and
enable people to do their bit for the environment.
The Sustainability Committee is keen to ensure the
continued implementation of the sustainability strategy
and its ambitions and targets become “business as usual”
for our employees and is intrinsically aligned with Home
forSuccess.
Following the publication of our Net Zero Carbon Pathway
in December 2021, the Sustainability Committee continues
to provide oversight of our pathway to net zero in both
our operations and developments. The Sustainability
Committee tracks our progress using reporting metrics
covering the key activities for delivery of our strategy as
detailed below.
Step one – reduce absolute carbon emissions
bycutting operational energy use
To support our targeted energy reductions, the
Sustainability Committee has overseen the £10 million
of energy initiatives delivered in the year including EPC
improvements and the launch of a student behavioural
change pilot, MyFootprint. This is a data-led energy
reduction pilot using data to drive change and set
expectations at the individual customer level. Further
information can be found on page 59.
Step two – decarbonisation of our energy supply
through investment in renewable energy
We already source around 25% of our annual electricity
supply from a Scottish wind farm under a corporate power
purchase agreement and continue to review options for
further power purchase agreements in the future, as part of
our commitment to source 100% renewable power by 2030.
Step three – reducing embodied
carbon of newbuildings
The Sustainability Committee reviews and has oversight
of our developing sustainable construction framework
including the application of alternative design and
construction approaches such as modular construction, the
use of lower carbon materials including timber and cement-
replacements, and a focus on cutting construction activity-
related emissions.
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The Sustainability Committee also monitors how our
science-based target reductions in carbon emissions will
be delivered through a significant reduction in energy
use and property specific asset transition plans, which
were completed during 2022. These asset transition
plans specify the physical improvements to building
fabric and services and their impact on carbon emissions,
energy consumption, utility costs and EPC compliance in
accordance with Minimum Energy Electricity Standard
(MEES) targets. For new developments, the Sustainability
Committee has initially targeted at least a 33% reduction in
the embodied carbon of new buildings (from the materials
and construction process) with a view to achieving a
48% reduction by 2030 to achieve the RIBA 2030 Climate
Challenge benchmark of 625kgCO
2
, where possible. In
addition, the Committee is looking towards a 75% reduction
in operational energy use on completed schemes again in
line with the RIBA 2030 benchmarks.
Our approach
Our goal is to lead on sustainability and raise
standardsin the living sector. Our governance and
processes ensure that we always operate with integrity
and transparency.
With input from the Sustainability Committee, the business
continues its compliance with the Taskforce on Climate-
related Financial Disclosures (TCFD) and maintained a stable
Global ESG Benchmark for Real Assets (GRESB) rating, with
the business ranked second among listed residential real
estate companies. The Sustainability Committee notes
that while the GRESB rating was just below the Threshold
target set for the financial year, positive progress was
made in a number of areas. The MSCI rating has also been
reconfirmed at AA in the 2022 review (2021: AA).
Alongside Governance, oversight of compliance with EPC
regulations remains a key focus for the Sustainability
Committee and the tightening of minimum standards to
“B” by 2030 in England and Wales, and “C” by 2027 (2025 in
Scotland). Following the UK Government’s official update
to the EPC methodology, 80% of the Group’s floorspace
is rated A–C, and 100% is fully compliant with current
regulations. The Sustainability Committee steered the
completion of asset transition plans for every property
which helped determine the investment required to ensure
ongoing EPC compliance, alongside reductions in energy
consumption, carbon emissions and utility costs. These
investments include a variety of improvement measures
such as LED lighting, heating controls and air source
heatpumps.
During 2022, the Group reviewed our revolving credit
facility and the three KPIs linked to our environmental
and social initiatives, namely: (1) targeted reductions in
Scope 1 & 2 carbon emissions, (2) improvements in the %
of assets with an A–C EPC rating and (3) the value of social
investments made by the business, including the Unite
Foundation. We extended the revolving credit facility by a
period of 12 months to ensure continued alignment with
our wider sustainability commitments.
Key focus areas for 2023
Looking ahead to 2023, the Sustainability Committee will:
•
Continue to oversee the embedding and implementation
of the sustainability strategy with regular reviews of
sustainability targets, performance and investment
activity linked to sustainability-related objectives.
•
Oversee increased engagement with employees around
sustainability, with a view to enabling them to play a
greater role in delivering the Group’s sustainability
objectives.
•
Monitor and oversee the student behavioural change
pilot, MyFootprint.
•
Oversee the ongoing commitment to invest 1% of annual
profits into social initiatives.
Dame Shirley Pearce
Chair – Sustainability Committee
28 February 2023
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“The health & safety of our people
and customers remains our top
priority. Following the introduction
of our new operating model in 2022,
all our properties now have 24/7
staff presence, 365 days a year.”
Professor Sir Steve Smith
Chair
HEALTH & SAFETY COMMITTEE
HEALTH AND SAFETY
GOVERNANCE
Health and Safety is at the core of everything we do.
We are committed to providing a Safe and Secure
workplace for our people and customers living withus
COMMITTEE MEMBERSHIP
Professor Sir Steve Smith
Chair of the Health & Safety Committee
Richard Smith
Chief Executive Officer
Dame Shirley Pearce
Non-Executive Director
Elizabeth McMeikan
Senior Independent Director
Ilaria del Beato
Non-Executive Director
NUMBER OF MEETINGS
4
ATTENDANCE
100%
2022 highlights
Student safety and support
We introduced a new operating model in 2022, which means
that all our buildings have our people on site 24/7/365
days a year. 2022 also saw the launch of our Support to
Stay framework, providing a supportive living environment
to help students fulfil their potential, regardless of any
medical, physical or mental health difficulties.
Health and safety training
We reviewed our health and safety training courses and
worked alongside our learning and development team to
develop a new Fire Marshall course and Incident Response
online learning. We continued to deliver health, safety,
security, fire and wellbeing training courses to our existing
employees and new starters. Alongside this, we continued
our mandatory e-learning modules for all employees.
Third-party H&S and security inspections
We continued our programme of H&S and security
inspections throughout our buildings, with this now
overseen by our Group Risk & Assurance team.
Contractor forum
We launched our new cross-functional Contractor Forum
meetings, an initiative to drive greater safety collaboration
and an improved safety culture for all those working at our
development sites and within the construction industry
more generally.
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Safety award
We launched our new Safety Award, encouraging
contractors to submit innovative safety ways of working
atour development sites.
Fire safety
Fire safety team
We have a dedicated Fire Safety team, whose sole focus
is fire safety. This team welcomed three new managers
this year, bringing in valuable hands-on knowledge and
experience from fire authorities. This hands-on experience
ensures we can continue to deliver on our Safe and Secure
promise, during a rapidly changing fire and building safety
regulatory environment.
Our Fire Safety team also work closely with Fire and Rescue
services, local authorities, the Department for Levelling Up,
Housing and Communities, as well as fire safety experts,
to provide advice and guidance through the life of our
buildings, from development design through to disposal.
These relationships have grown stronger through 2022
and with the increasingly complex and dynamic regulatory
environment, we expect this to continue through 2023.
Authority inspection activity
During 2022, we experienced an increase in inspection
activity by Fire Authorities and local authorities
alongside the Department for Levelling Up, Housing
and Communities prior to the coming into force of the
Building Safety Act 2022. These inspections have been
helpful and collaborative, allowing us to better understand
responsibilities and helping ensure we are ready for the
Building Safety Act and evolving fire safety legislation. The
Health and Safety Committee oversaw the progress of this
inspection activity throughout theyear.
Fire Safety Regulations and Fire Safety Act 2022
The introduction of the Fire Safety Act 2022 and Fire
Safety Regulations 2022 this year highlighted the best
practice approach taken by Unite in our day-to-day fire
safety activities, with few minor changes being required to
ensure compliance with this newly introduced legislation.
This approach was overseen by the Committee to ensure
effective and efficient adoption of changes, alongside
challenging existing approaches.
Fire risk assessments
All our properties continue to be confirmed as safe to
operate by our external third-party accredited fire risk
assessors as part of the comprehensive annual fire risk
assessment completed at every property. This reflects
the robust fire safety and fire impairment management
across our portfolio, as well as the continued proactive
surveying and remediation of our external façades, smoke
control systems, passive fire protection and fire doors.
The Committee continues to drive improvement on the
completion of fire risk assessment actions, with changes in
national approach adopted to drive further improvements
in 2023.
Fire impairment management
The Committee oversaw the ongoing fire impairment
remedial work, which is predominantly the remediation of
smoke control systems, external façades and passive fire
protection. Recognising Unite’s values and commitment
to “doing what’s right” and the emerging challenges
highlighted by the national building safety crisis, we
launched a dedicated Fire Impairment team in 2022, whose
focus is the remediation of non-external façade-related
impairments. This team works alongside another newly
created team, the Special Projects team, whose dedicated
focus is remediating external façades. The work of these
teams has led to significant improvements in the fire safety
of our properties.
Health and wellbeing in our workplace
Recognising the changing and challenging workplace
environment after the pandemic, we adapted our wellbeing
communication strategies during 2022 to ensure our
employees are getting the information they need regarding
the health and wellbeing benefits we offer and the support
available. This resulted in our new employee support
framework, designed with our people’s wellbeing in mind
and based upon employee feedback through structured
conversations, focus groups and surveys as well as our
employee forum, Culture Matters. This framework is being
rolled out in the first half of 2023 and includes resources
to promote better mental, physical, financial and social
wellbeing and encourages and empowers our people to
take ownership of their health and wellbeing.
Our focus for 2023
The Committee continues to oversee the governance of
health and safety practices across the business. We will
continue to prioritise the safety of our customers, people,
properties and our workplace and strive to deliver our value
“Keeping uS Safe”. Through upskilling our frontline teams
and establishing core standards for safety and security, our
people can assist to deliver our Safe and Secure promise.
Safety and Student Welfare continues as a priority as we
work closely with our University partners to help students
deal with the pressures of university living.
2023 safety priorities
•
Improving our safety culture, colleague engagement and
competence.
•
Ensuring effective business tools are provided to enable
teams to deliver safety.
•
Effective performance monitoring through assurance,
auditing & investigation.
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Hours worked
Reportable
incidents
Reportable
incidents
benchmark
Reportable
incident KPI
Non-reportable
incidents
Non-reportable
incidents
benchmark
Non-reportable
incident KPI
2020 718,467 3 0.30 0.42 15 5.00 2.09
2021 806,774 0 0.30 0 16 5.00 1.98
2022 1,860,904 0 0.30 0 26 5.00 1.4
KPI calculated as: No of incidents worked x 100,000 hours/hours worked.
Safety in our development activity
2022 saw another busy whilst safe year of development
activity, with:
•
the completion of the refurbishment of three properties
in Manchester (Parkway Gate, Kincardine Court and New
Medlock House). This £65 million upgrade improved the
fire safety and sustainability of these properties, as well
as creating an additional 100 beds. All three properties
were completed in time for the start of the 2022/23
academic year; and
•
the delivery of two new properties (the 920-bed Hayloft
Point in London and 431-bed Campbell House in Bristol)
with a combined total development cost of £235 million.
Our comprehensive approach to safety across our
development and refurbishment activity, resulted in 0
RIDDOR reportable injuries and 26 minor incidents in
2022. This represents good safety performance against
the industry norm and is well within our Unite internal
benchmarks.
Development safety – 2022 in review
•
Site safety/Covid-19 – continued to work alongside
our contractors to ensure our sites are safe to operate,
together with Covid-19 testing and personal protective
equipment in place.
•
Wellbeing – reviewed our wellbeing offering for
construction operatives and engaged with external
providers to improve mental health and wellbeing
awareness across our development sites. The British
Safety Council is conducting a Wellbeing Gap Analysis
which we will implement later in 2023.
•
Safety reporting – encouraged safety observation
reporting, with a particular focus on near miss reporting
which is especially helpful for creating an improved
Safety culture.
•
Safety Audits – we enhanced our safety audits across
our development and refurbishment projects with
a more challenging metric. This seeks to push our
contractors to achieve industry-leading standards which
far exceed statutory compliance. All sites inspected
under this revised performance metric have exceeded
statutory compliance and helps to reinforce our Safe and
Secure promise.
Professor Sir Steve Smith
Chair – Health and Safety Committee
28 February 2023
HEALTH & SAFETY COMMITTEE continued
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REMUNERATION COMMITTEE
The Remuneration Committee focuses on
ensuring that executive reward is linked to
the delivery of strategic objectives and that
it reinforces the Group’s values
REMUNERATION GOVERNANCE
“The Committee’s decision-making during
2022 has been framed by the Group’s broader
performance context. The cost-of-living crisis
has been a key area of focus for us, and our
decisions around executive remuneration have
sought to acknowledge the pressures faced by
colleagues, customers and other stakeholders.”
Elizabeth McMeikan
Chair
COMMITTEE MEMBERSHIP
Elizabeth McMeikan
Chair of the Remuneration Committee
Nicky Dulieu
Non-Executive Director
Ross Paterson
Non-Executive Director
Dame Shirley Pearce
Non-Executive Director
Professor Sir Steve Smith
Non-Executive Director
As in previous years, this report is split into three sections:
this Annual Statement, the Policy Report and the Annual
Report on Remuneration. Our Remuneration Policy was
last submitted to shareholders at the 2022 AGM, with the
Committee very pleased to receive 97.83% votes in favour.
No changes are being proposed to the policy this year;
however, we have reproduced the Policy Report in full over
pages 137–147 for both ease of reference and in order to
provide context to the decisions taken by the Committee
during the year.
2022 performance and reward
As always, the Committee’s decisions around executive
remuneration for FY22 have been framed by the Group’s
broader performance context.
2022 was another strong year for Unite with progress made
against each of our key strategic objectives. The Group
continues to deliver attractive returns for shareholders, with
financial highlights including a 48% increase in both earnings
and dividends, a 5% increase in EPRA NTA, and an overall
total accounting return of 8.1%. Unite’s record in delivering
for customers and universities is evidenced by a return to
full occupancy and a 3-point increase in customer NPS, with
the Group having made a range of service enhancements
(including around student welfare support) during the year.
On delivering a positive impact, the Group has continued to
progress its Sustainability Strategy and move closer towards
its objective of becoming a net zero business by 2030, with
material investments in energy initiatives contributing to
improvements in EPC ratings across the portfolio.
NUMBER OF MEETINGS
3
ATTENDANCE
See page 107
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REMUNERATION COMMITTEE continued
Long-term incentives
Following the publication of TAR results by comparators
with March 2022 year-ends, the Committee confirmed the
final vesting of the 2019 LTIP awards as 36.8%, in line with
the estimate set out in last year’s report.
LTIP awards made in April 2020 reached the end of their
performance period as at 31 December 2022. These
awards were based equally on absolute EPS, relative TSR
and relative TAR, with Unite’s performance for both the
TAR and TSR elements compared to the constituents of the
FTSE350 Real Estate Supersector Index. Over the three-
year performance period Unite’s relative TSR ranked just
below median versus the comparator group (equating to 0%
vesting), whilst EPS performance was below the threshold
target (0% vesting). Vesting of the relative TAR element
will be finalised following the publication of comparator
results over the coming months, with the latest interim
performance assessment suggesting that Unite is currently
ranked just below median. Overall estimated vesting of the
2020 LTIP is therefore 0%. Further details are included on
page 153.
Also during the year, Executive Directors were each granted
an award under the LTIP in April 2022 which will vest
based on performance over the three financial years to
31 December 2024. As disclosed in last year’s report, the
Committee resolved to introduce two relevant sustainability
metrics linked to the Group’s new strategy – operational
energy intensity and EPC ratings – for these awards,
alongside absolute EPS, relative TSR and relative TAR. Any
award vesting will required to be held for an additional
two-year period. Further details on the number of shares
granted and targets are included on page 158.
Overall pay outcomes for 2022
Taken as a whole, the Committee is satisfied that overall pay
outcomes in respect of the year ended 31 December 2022
are appropriate and accordingly we have not applied any
discretion to this year’s incentive outcomes.
Finally, Unite has continued to demonstrate its commitment
to the health and safety of employees, visitors and
students, with management working proactively to address
issues faced and ensure there is a strong safety culture
across the Group.
In addition to the above successes, there have also
been challenges for the Group, with year-on-year falls in
Higher Education trust and employee engagement scores
driven by factors including the implementation of a new
operating model and above average employee turnover.
These outcomes have commensurately impacted incentive
outcomes for 2022, and will be areas of particular focus for
the 2023 annual bonus. Ongoing cost-of-living pressures
faced by Unite’s stakeholders have also been a key area
of focus, and the Committee has been pleased with the
executive team’s leadership in this area, in particular
around the support provided to our dedicated and
hardworking frontline colleagues (further details on which
are included throughout this report).
Salaries
As disclosed in last year’s report, following a comprehensive
review and reflecting positive feedback received in
consultation with shareholders, Executive Director salaries
were increased by the first of a planned two-stage rebasing
of 10.6% (CEO) and 7.0% (CFO) with effect from 1 January
2022. These increases took into account the considerable
increase in size, scale and complexity of the Group since
base pay levels had last been reviewed, and in respect of
the CEO, the discount which had been applied to his salary
relative to that of his predecessor back in 2016. Salary
increases across the Group averaged 3.0% in 2022, with
higher increases applied to entry level salaries reflecting
our commitment to being an accredited Real Living Wage
employer and the rates set by the Living Wage Foundation.
Annual bonus
The annual bonus scheme was operated in line with the
policy for Executive Directors in 2022. Following a review
of performance against the targets set at the start of
the year, the Committee has confirmed that Executive
Directors will each receive bonuses of 36.0% of maximum
(equating to 50.4% out of a maximum of 140% of salary).
This overall outcome reflects mixed results against both
financial and non-financial targets set at the start of the
year, with full payouts recorded under both the LTV and
customer satisfaction metrics, and an EPS outturn just
above Threshold, but with zero payouts recorded under the
other performance measures. The Committee has reviewed
this outcome in the context of overall Group performance
and believes that although some of the bonus targets were
particularly stretching this year, the outcome is both fair
and appropriate. Further details, including bonus targets
and outcomes are included on page 152.
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Implementation of the policy in 2023
The Committee is confident that the policy continues
toeffectively support Unite’s short- and long-term
strategicobjectives and promote management and
shareholder alignment.
Salaries
In summary, Executive Directors will each receive a 3.0%
salary increase with effect from 1 January 2023, with
implementation of the higher increases set out in last
year’sreport delayed until a more appropriate time.
In January 2023 it had been intended that Executive
Directors would receive the second (and final) of their
phased salary increases. At its December meeting, the
Committee satisfied itself that the qualifying conditions
set out in last year’s report around continued strong
performance and personal contributions had been
achieved by each of Richard Smith and Joe Lister, and
thatthe planned increases would ordinarily have been
fullywarranted.
However, noting the cost-of-living pressures facing both
colleagues and customers, Executive Directors indicated
a preference – supported by the Committee – that their
January salary increases instead be aligned with those
awarded to other senior leaders. Accordingly, salaries of
both Executive Directors have instead been increased
by 3.0% with effect from 1 January 2023, in line with the
increase for other senior management, and below the
average increase across the Group of 8.6%. In practice, the
Group has sought to target the available increase in salary
budget at those colleagues most impacted by inflationary
pressures, in particular our front-line employees, with over
95% of the workforce receiving a salary increase of 5% or
more. Unite remains committed to being an accredited Real
Living Wage employer and has implemented the rates set
by the Living Wage Foundation (8.1% in London and 10.1%
across the rest of the UK), with tiered salary increases
across the rest of the organisation.
The Committee views this as a further example of Executive
Directors’ principled leadership and commitment to
the Group’s values, in particular “Doing what’s right”.
Acknowledging the strong support received last year from
shareholders on the proposed Executive Director salaries,
and recognising that the rationale for these increases
remains valid, the Committee has resolved that it will
retain the flexibility to implement the previously-disclosed
full-year percentage increases – 10.6% for the CEO and
7.0% for the CFO – at a future date within the next 18
months. Any such increases would again be dependent
on the Committee satisfying itself of the continued strong
performance and personal contributions from both
Executive Directors.
Pension
Executive Directors will continue to receive a pension
scheme contribution, a cash allowance of equivalent cost to
the Company or a combination of both. With effect from 1
January 2023, total employer pension contributions will be
further reduced to an equivalent of up to 11% of salary for
both Executive Directors. This represents the final planned
reduction in Executive Director pension contribution levels
and brings both the CEO and CFO in line with the offering
available to the wider employee population.
Annual bonus
There will be no changes to the maximum opportunities,
performance metrics or weightings under the annual bonus
for 2023, with the Committee satisfied that the current
blend of financial and non-financial measures supports
the Group’s strategy and reinforces its values. For both the
financial and non-financial elements, targets have been set
to be challenging relative to business plan. Further details
are included on page 159.
Long-term incentives
As with the annual bonus, there will be no change to the
operation of the long-term incentive in 2023. Executive
Directors will each receive an award of up to 200% of
salary delivered through a combination of the PSP and
ESOS, with the actual award levels to be approved by the
Committee closer to the date of grant, taking into account
the share price at that time, as compared to the share
price used to determine awards over the last few LTIP
cycles. The Committee is not proposing any changes to
the performance metrics used for the 2023 LTIP, which
will continue to include the two sustainability metrics
introduced last year. Further details are included on pages
159–160.
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REMUNERATION COMMITTEE continued
Finally, details of our gender diversity and pay gaps across
the Group are provided on pages 63 and 155, with the
Committee pleased to note a further modest improvement
in both the mean and median gender pay gaps in 2022.
The Committee also noted from the analysis the increase
in female representation in the upper quartile this year,
and took this as evidence of the Group’s 2022–25 diversity,
equity, inclusion, belonging and wellbeing strategy starting
to produce positive results. As for most companies, there is
still work for Unite to do in this space and our 2022 Gender
Pay Gap Report therefore references an updated action
plan to further progress activity in this area over the short-
and medium-term.
Committee changes
Nicky Dulieu joined the Unite Board with effect from
1 September 2022, and is currently a member of
the Remuneration, Audit and Risk and Nominations
Committees. Fees paid to Nicky are in line with the fees
paidto the other Non-Executive Directors, as disclosed
onpage 151.
After nine years on the Board, I will be stepping down with
effect from 28 February 2023. I am delighted that Nicky,
who brings with her significant experience in chairing the
remuneration committees of other FTSE-listed companies,
will take over as Chair of the Remuneration Committee at
that time.
Looking ahead
The Committee will continue to monitor market
developments throughout the 2023 AGM season and will
consider the appropriateness of any emerging trends for
Unite. I hope that you find this report a clear account of the
Committee’s decisions for the year; my successor, Nicky,
would be happy to answer any questions you may have at
the upcoming AGM.
Elizabeth McMeikan
Chair – Remuneration Committee
28 February 2023
Workforce remuneration considerations
The Committee continues to monitor pay and practices
for other senior executives and more broadly across the
wider workforce when considering the remuneration of
Executive Directors. The Group People Director is invited to
attend Committee meetings on a regular basis to provide
updates on workforce initiatives and to offer an employee
perspective to the Committee’s deliberations.
This year the Committee has been particularly mindful
of ongoing cost-of-living pressures and has supported a
range of management proposals to help those employees
most impacted by rising prices and interest rates. In August
2022, around 90% of employees received a one-off £500
payment. Originally intended as an early release of the 2022
annual bonus scheme, it was subsequently agreed that this
amount would be paid in addition to the normal bonus to
recognise the excellent work of our employees. Additionally,
and as noted above, the available increase in the 2023
salary budget was targeted towards those colleagues
most impacted by inflationary pressures, with over 95% of
colleagues receiving a salary increase of 5% or more, and
with planned increases for the Executive Directors being
postponed until a more appropriate time.
In November 2022, our Designated Non-Executive Director
for Workforce Engagement facilitated a discussion at
the Culture Matters employee forum on the topic of
remuneration. Further details on the session, feedback
received and subsequent actions is included on page 102
and 138.
We have continued to review and disclose both the
statutory CEO pay ratios and additional ratios looking at
both fixed pay and pay excluding long-term incentives.
This year, the headline ratio of CEO total remuneration to
the median employee, has fallen from 56:1 to 33:1, driven
primarily by the lower bonus outcome for 2022 and the
nil estimated vesting under the 2020 LTIP. The Committee
remains satisfied that the year-on-year fluctuations mainly
reflect differences in the structure of pay at different levels
of seniority.
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Base salary
Pension,
benefits
Annual
bonus
LTIP
•
Salaries increased with effect
from 1 January 2022, as follows:
− CEO = £522,500 (+10.6%)
− CFO = £411,250 (+7.0%)
•
Pension contributions (or
equivalent cash allowance) at a
maximum of 14% of salary for
CEO and CFO.
•
Benefits in line with policy.
•
Annual bonuses of 50.4%
of salary for each Executive
Director (36.0% of maximum
opportunity).
•
50% of these amounts will be
deferred in Unite shares for
twoyears.
•
2019 LTIP final vesting confirmed
at 36.8%.
•
2020 LTIP final vesting to be
finalised once comparator TAR
results are published. Expected
total vesting of 0% based on:
− Relative TSR ranking just
below median compared
to the constituents of the
FTSE350 Real Estate Index
− 2022 adjusted EPS below
thethreshold target
− Estimated relative TAR ranking
just below median compared
to the constituents of the
FTSE350 Real Estate Index
•
Salaries increased with effect
from 1 January 2023, as follows:
− CEO = £538,175 (+3.0%)
− CFO = £423,588 (+3.0%)
•
Pension contributions (or
equivalent cash allowance)
reduced to a maximum of 11%
of salary for CEO and CFO with
effect from 1 January 2023.
•
No change to benefits for 2023.
•
Maximum annual bonus
opportunities of 140% of salary.
•
2023 bonuses to be based:
− 25.0% on adjusted EPS
− 25.0% on TAR per share
− 20.0% on Loan to Value
− 7.5% on customer satisfaction
− 7.5% on university reputation
− 7.5% on employee
engagement
− 7.5% on GRESB rating
•
Awards of up to 200% of salary
to be made to each Executive
Director in 2023.
•
Performance to be measured
over the period 1 January 2023 to
31December 2025. Awards based:
− 28% on adjusted EPS
− 28% on relative TAR
− 28% on relative TSR
− 8% on operational energy
intensity
− 8% on EPC ratings
− Two-year holding period will
apply to all vested shares
•
Reviewed from time to time,
with reference to salary levels
for similar roles at comparable
companies, to individual
contribution to performance;
and to the experience of each
Executive.
•
For existing Executive Directors:
commitment to phase down
contributions (or equivalent cash
allowance) to the workforce rate
by 1 January 2023.
•
For new Executive Director
appointees: company pension
contributions aligned with
thebroader workforce (currently
11% ofsalary).
•
Benefits typically consist of the
provision of a company car or a
car allowance, and private health
care insurance.
•
Maximum annual bonus
opportunity for all Executive
Directors of 140% of salary.
•
Performance measures typically
include both financial and
non-financial metrics, as well as
the achievement of individual
objectives.
•
50% of any bonus earned is
deferred in shares for two years.
•
Malus and clawback provisions
apply.
•
Maximum award size for all
Executive Directors of 200% of
salary in normal circumstances
(up to 300% of salary in
exceptional circumstances).
•
Awards vest subject to
performance over a three-
year period. Vested shares are
typically subject to an additional
two-year holding period.
•
Malus and clawback provisions
apply.
REMUNERATION IN RESPECT OF 2022 OVERVIEW OF REMUNERATION POLICY IMPLEMENTATION OF POLICY IN 2023
See page 150
See page 150
See page 152
See page 153
See page 159
See page 159
See page 159
See page 159
See page 141
See page 141
See page 142
See page 143
Overview of Unite remuneration policy and implementation
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REMUNERATION COMMITTEE continued
2022 Remuneration at a glance
2022 Single total figure of remuneration for current Executive Directors
Salary
(£)
Taxable
benefits
(£)
Pension
(£)
Annual
bonus
(£)
LTIP
(£)
Other
(£)
Total
(£)
Richard Smith 522,500 16,123 59,550 263,340 0 4,498 866,011
Joe Lister 411, 250 16,854 46,918 207,270 0 0 682,292
2022 Annual bonus outcomes
Measure Weight
Threshold On-target Maximum
Actual
Outcome
(% of max)30% of max 50% of max 100% of max
Adjusted EPS 25.0% 40.5p 42.5p 44.5p 40.9p 34%
TAR per share 25.0% 75.2p 83.6p 96.1p 71.2p 0%
Loan to Value 20.0% 35.0% 34.1% 32.0% 31.0% 100%
Customer satisfaction 7.5% 36 37 38 38 100%
University reputation 7.5% 21 22 23 7 0%
GRESB rating 7.5% 85 86 88 84 0%
Employee engagement 7.5% 73 75 77 65 0%
Executive
Max opportunity
(% of salary)
Overall outcome
(% of maximum)
Overall outcome
(% of salary)
Overall outcome
(£)
Richard Smith 140.0% 36.0% 50.4% 263,340
Joe Lister 140.0% 36.0% 50.4% 207,270
2020–2022 LTIP outcomes
Measure Weight
Threshold Stretch
Actual
Vesting
(% of max)25% vest 100% vest
2022 Adjusted EPS 1/3 51.1p 58.7p 40.9p 0.0%
Relative TSR performance
1/3
Median
-17.4%
Upper quartile
-2.7%
Just below median
-19.8%
0.0%
Relative TAR performance
1/3
Median Upper quartile
Current estimate*:
Just below median
0.0%
Executive
Estimated*
overall vesting
(% of maximum)
Estimated*
interests
vesting Date vesting*
Estimated*
value (incl.
dividends)
Richard Smith
0.0%
0
23 April 2023 (holding period
applies until 23 April 2025)
£0
Joe Lister 0 £0
* Vesting of the relative TAR element will be finalised following the publication of March year-end comparator results over the coming months, with Unite’s TAR
currently estimated to rank just below median (based on performance after two full financial years). Details of the final vesting outcome will be provided in next
year’s report.
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ELIGIBILITY ELEMENT OF PAY ELEMENT OF PAY
Overview of remuneration across the Group
Employees at alllevels
Executive Directors
and other senior
leaders
Executive Directors
only
Salary
Benefits
Pension
SAYE
Annual bonus – cash
Long-term incentive
Annual bonus – deferred
Shareholding guidelines
Salaries are generally reviewed annually, taking into account Company and
individual performance, experience and responsibilities. As an accredited
Living Wage employer, all of Unite’s employees receive at least the voluntary
living wage rate.
Employees across all levels of the business are eligible for the Company-
funded Health Cash Plan and an enhanced Company sick pay scheme. All
employees have free 24/7 access to our employee assistance programme
which provides counselling and support to employees with everyday
situations and more serious concerns including up to 12 face-to-face
sessions per issue per year. Life assurance cover is provided for all eligible
employees at 4 x annual salary and employees can access a range of deals
and discounts through our discount providers. We offer employees 25 days
annual leave a year plus bank holidays and also operate a holiday purchase
scheme to allow employees to purchase up to an extra week of annual leave
each year. Employees can support their chosen charities by participating
in our charity match or give-as-you-earn schemes. We also offer financial
support to our employees through season ticket loans, student rental
discounts and the bike to work scheme and employee service is recognised
with long-service awards.
All employees can participate in the Unite Group Personal Pension
scheme, with an alternative cash pension allowance available in certain
circumstances. Our pension offering was reviewed and improved with
effect from 1 January 2020, with all employees eligible to receive a Company
contribution of up to 11% of salary, subject to their own contribution level.
We encourage all employees to become shareholders in Unite by participating
in the SAYE scheme, under which participants save monthly over 3 years with
the option to acquire shares at a discount at the end of the savings period.
Currently c.15% of eligible employees participate in the SAYE.
All employees are eligible to participate in the annual bonus scheme,
withoutcomes based on both Company performance and personal
contribution. Maximum opportunities, performance measures and
weightings vary by grade; metrics are similar across all levels to support
delivery of our strategy.
Executive Directors and other senior leaders may be invited to participate
in the LTIP each year. Performance conditions are consistent for all
participants, but award sizes vary.
Currently only Executive Directors are required to defer a proportion of
their bonus into Unite shares, which supports shareholder alignment.
While all employees are strongly encouraged to become shareholders
toallow them to share in the success of the Group, currently only Executive
Directors are subject to formal shareholding guidelines (both in-post
andpost-exit).
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REMUNERATION COMMITTEE continued
Engaging with our employees on executive remuneration
In November 2022, our Designated Non-Executive Director for Workforce Engagement, the Group People Director and
the Committee’s independent advisor facilitated a discussion at the Culture Matters employee forum on the topic of
remuneration. The session touched on the structure, role and remit of the Remuneration Committee at Unite and how
current performance measures and overall pay policy help to support our strategy and values. Additionally, the forum was
given an introduction to how pay practices for Executive Directors are aligned with those across the broader employee
population (with reference to the table on page 137), with a subsequent discussion around some of the main differences –
for example, the weighting on short- vs. long-term performance and the balance of financial and non-financial measures at
different levels of the organisation. Throughout the session, forum members were invited to provide comments, questions
and input, and there followed a constructive conversation around the role of remuneration at Unite.
The Remuneration Committee was apprised of the session at its December meeting, and discussed some of the main
themes arising and possible follow-on actions. As an example, forum members had queried why there are currently no
explicit measures in either the short- or long-term incentive around the value of “Keeping us safe”. Given the importance
of health, safety and wellbeing to the Group, the Committee continues to believe that such metrics should form part of
its discretionary assessment of overall performance, and inform whether any downwards discretion should be applied to
formulaic outcomes. Taking on board the feedback from the employee forum, we have included some commentary in the
section on the 2022 annual bonus (see page 152) around how the Committee has considered this matter in confirming bonus
outcomes this year.
The Committee is pleased with the feedback received from the employee forum and the insights gained from the session.
We are keen to build further on this engagement during the forthcoming year, and have committed to reviewing relevant
sections of the Directors’ Remuneration Report with the forum at a meeting later in 2023.
How remuneration supports our strategy
2023 incentive measures
Captured in… Strategic objectives supported
Annual bonus LTIP
Delivering for our
customers and
universities
Attractive returns
for shareholders
A responsible and
resilient business
Earnings Per Share (EPS)
Total Accounting Return (TAR)  Absolute  Relative
Loan To Value (LTV)
Total Shareholder Return (TSR)  Relative
Customer satisfaction
University reputation
Employee engagement
GRESB rating
EPC Ratings
Operational energy intensity
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This report has been prepared in accordance with the provisions of the Companies Act 2006 and Schedule 8 of the Large
and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended). It also meets the
requirements of the UK Listing Authority’s Listing Rules and the Disclosure and Transparency Rules.
In accordance with the Regulations, the following sections of the Remuneration Report are subject to audit: the Single
total figure of remuneration for Directors and accompanying notes (pages 150–151), Scheme interests awarded during the
financial year (page 158), Payments to past directors (page 158), Payments for loss of office (page 158) and the statement of
Directors’ shareholdings and share interests (pages 161–162). The remaining sections of the report are not subject toaudit.
The 2018 UK Corporate Governance Code sets out principles against which the Committee should determine the policy for
executives. A summary of the principles and how Unite’s Remuneration Policy reflects these is set out below:
PRINCIPLE APPROACH
Clarity – Remuneration arrangements should be
transparent and promote effective engagement
with shareholders and the workforce.
The Committee operates a consistent remuneration approach that is well-understood
internally and externally. The Committee regularly engages with major shareholders
on executive remuneration and undertook a detailed consultation during the design of
the current policy.
Simplicity – Remuneration structures should
avoid complexity, and their rationale and
operation should be easy to understand.
The Group operates a market-standard remuneration structure consisting of fixed pay,
an annual bonus and a single long-term incentive. The annual bonus scheme has been
further simplified as part of the most recent policy review through the standardisation
of the deferral requirement regardless of existing shareholdings.
Risk – Remuneration arrangements should ensure
reputational and other risks from excessive
rewards, and behavioural risks that can arise from
target-based incentive plans, are identified and
mitigated.
Each year, incentive targets will be set which the Committee believes are stretching
and achievable within the risk-appetite set by the Board. The Committee retains full
discretion to override formulaic incentive outcomes under both the annual bonus and
long-term incentive in the event that this would produce a result inconsistent with the
Company’s remuneration principles.
All variable incentives incorporate recovery provisions (malus and clawback) that
allow the Committee to reduce the outcomes, potentially down to zero, in specified
cases. The Committee believes that these triggers are appropriately wide-ranging and
enforceable.
Alignment to culture – Incentive schemes
should drive behaviours consistent with company
purpose, values and strategy.
All permanent employees participate in the annual bonus, and share similar corporate
performance metrics to ensure cultural alignment across the Group. We believe that
aligning remuneration across the business is a key element of aligning our culture,
fulfilling our values and being a strong driver of business performance.
Predictability – The range of possible values of
rewards to individual directors and any other
limits or discretions should be identified and
explained at the time of approving the policy.
The Committee maintains clear caps on incentive opportunities and will use its
available discretion if necessary.
Proportionality – The link between individual
awards, the delivery of strategy and the long-term
performance of the company should be clear.
Outcomes should not reward poor performance.
The Committee ensures performance metrics are clearly aligned with the Group’s
strategy each year, maintaining an appropriate balance between fixed pay, short- and
long-term incentive opportunities. Targets are set to be stretching but achievable,
within the Board’s risk appetite. Details of our approach to measure selection and
target setting is included as a note to the policy table.
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REMUNERATION COMMITTEE continued
In addition to the above, the Remuneration Policy for the
Executive Directors and other senior executives is based on
the following key principles:
•
A significant proportion of remuneration should be
tied to the achievement of specific and stretching
performance conditions that align remuneration with
the creation of shareholder value and the delivery of the
Group’s strategic plans, taking care to consider the needs
of all stakeholders;
•
There should be a focus on sustained long-term
performance, with performance measured over clearly
specified timescales, encouraging executives to take
action in line with the Group’s strategic plan, using
good business management principles and taking well-
considered risks;
•
Individuals should be rewarded for success, but steps
should be taken, within contractual obligations, to
prevent rewards for failure – whether financial or
operational; and
•
Above all, executive remuneration should support
the values and culture of the Group. Pay should be
simple and easy to understand, with all aspects clear
and openly communicated to stakeholders and with
alignment with pay philosophies across the Group.
This section of the report sets out the policy which the
Company asked shareholders to approve at the 2022 AGM
and which came into effect from that date.
Unite’s Remuneration Policy was approved by shareholders
at the 2022 AGM on 12 May 2022. The report below, save
for the minor changes identified, is as disclosed in the
2021 Directors’ Remuneration Report, which is available to
download from the Company’s website at www.unitegroup.
com/investors/reports-and-presentations:
•
References to financial years have been updated where
appropriate;
•
References to changes to the 2019 Remuneration Policy
have been removed;
•
Legacy wording around the requirement to defer a % of
annual bonus only if shareholding guidelines have not
been met has been removed from the “Shareholding
guidelines” section;
•
Pay-for-performance charts have been updated to
reflect 2023 salaries and pension contributions; and
•
New Non-Executive Director service contract dates have
been added.
The Group aims to balance the need to attract, retain and
motivate Executive Directors and other senior executives
of an appropriate calibre with the need to be cost
effective, whilst at the same time rewarding exceptional
performance. The Committee has designed a Remuneration
Policy that balances those factors, taking account of
prevailing best practice, investor expectations and the
level of remuneration and pay awards made generally to
employees of the Group.
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Policy table
Function Operation Opportunity Performance metrics
Base salary
To recognise the
individual’s skills
and experience
and toprovide
a competitive
basereward.
Base salaries are reviewed
from time to time, with
reference to salary levels for
similar roles at comparable
companies, to individual
contribution to performance;
and to the experience of
eachExecutive.
Any base salary increases are applied
in line with the outcome of the review
as part of which the Committee also
considers average increases across
theGroup.
In respect of existing Executive Directors,
it is anticipated that salary increases will
generally be in line with those of salaried
employees as a whole. In exceptional
circumstances (including, but not limited
to, a material increase in job size or
complexity) the Committee has discretion
to make appropriate adjustments to
salary levels to ensure that they remain
market competitive.
None
Pension
To provide an
opportunity for
executives to build
up income upon
retirement.
All Executives are either
members of The Unite Group
Personal Pension scheme
or receive a cash pension
allowance.
Salary is the only element
of remuneration that is
pensionable.
Existing Executive Directors receive a
Company pension contribution or an
equivalent cash allowance. Company
contribution levels will be reduced from
1 January 2022 and 1 January 2023 to
an equivalent of up to 14% and 11% of
salary respectively.
For future Executive Director
appointees, the maximum Company
pension contribution will be aligned to
that offered to a majority of employees
across the Group in percentage of salary
terms (currently 11% of salary).
None
Benefits
To provide non-cash
benefits which are
competitive in the
market in which the
executive is employed.
Executives receive benefits
which consist primarily of
the provision of a company
car or a car allowance, and
private health care insurance,
although can include any such
benefits that the Committee
deems appropriate.
Benefits vary by role and individual
circumstances; eligibility and cost is
reviewedperiodically.
The Committee retains the discretion
to approve a highercost in certain
circumstances (e.g. relocation) or in
circumstances where factors outside
the Company’s control have changed
materially (e.g. increases in insurance
premiums).
None
SAYE
To encourage the
ownership ofshares
in Unite.
An HMRC approved scheme
whereby employees (including
Executive Directors) may save
up to the maximum monthly
savings limit (as determined
by prevailing HMRC guidelines)
over a period of three years.
Options granted at up to a
20%discount.
Savings are capped at the prevailing
HMRC limit at the time employees are
invited toparticipate.
None
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REMUNERATION COMMITTEE continued
Function Operation Opportunity Performance metrics
Annual bonus
To incentivise and
reward strong
performance
against financial
and non-financial
annual targets, thus
delivering value to
shareholders and
being consistent with
the delivery of the
strategic plan.
Performance measures,
targets and weightings are set
at the start of the year.
At the end of the year, the
Remuneration Committee
determines the extent to which
targets have been achieved.
From the 2022 annual bonus
onwards, 50% of any bonus
payable will be deferred for
two years.
Deferral is generally by an
allocation of shares in the
Company, which are generally
held in the Employee Share
Ownership Trust.
Awards under the Performance
Related Annual Bonus are
subject to malus and clawback
provisions, further details of
which are included as a note to
the policy table.
For Executive Directors, the maximum
annual bonus opportunity is 140% of
base salary.
Up to 30% of maximum will be paid for
Threshold performance under each
measure and up to 50% of maximum will
be paid for on-target performance.
A payment equal to the value of
dividends which would have accrued on
vested deferred bonus shares will be
made following the release of awards
to participants, either in the form of
cash or as additional shares. It is the
Committee’s current intention to make
any dividends payments in the form
ofshares.
Performance is assessed
on an annual basis, as
measured against specific
objectives set at the start
ofeach year.
Financial measures will
make up at least 70% of
the total annual bonus
opportunity in any given
year. The remainder will be
split between non-financial
metrics and personal/
team objectives according
to business priorities, with
the weighting on the latter
being no more than 20%
of the total annual bonus
opportunity.
The Committee has
discretion to adjust the
formulaic bonus outcomes
both upwards (within the
plan limits) and downwards
(including down to zero) to
ensure alignment of pay
with performance, e.g.,
in the event of one of the
targets under the bonus
being significantly missed or
unforeseen circumstances
outside management
control. The Committee also
considers measures outside
the bonus framework (e.g.
Health & Safety) to ensure
there is no reward for failure.
For 2023, financial metrics
and non-financial metrics
will make up 70% and 30%
of the total annual bonus
opportunity respectively.
Further details of the
measures, weightings
and targets applicable are
provided on page 159.
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Function Operation Opportunity Performance metrics
LTIP
To drive sustained
long-term
performance that
supports the creation
of shareholder value.
The LTIP comprises a
Performance Share Plan (PSP)
and an Approved Employee
Share Option Scheme (ESOS).
The ESOS is used to deliver a
proportion of the LTIP in a tax-
efficient manner, and is subject
to the same performance
conditions as awards made
under the PSP.
Award levels and performance
conditions are reviewed before
each award cycle to ensure
they remain appropriate and
no less stretching than the
firstcycle.
Awards under the LTIP are
subject to malus and clawback
provisions, further details of
which are included as a note to
the policy table.
The LTIP provides for an award up to a
normal aggregate limit of 200% of salary
for Executive Directors, with an overall
limit of 300% of salary in exceptional
circumstances. The current intention is
to grant each Executive Director awards
equivalent to 200% of salary.
Awards may include a grant of HMRC
approved options not exceeding £6k per
annum, valued on a fair value exchange.
A payment equal to the value of
dividends which would have accrued on
vested shares will be made following the
release of awards to participants, either
in the form of cash or as additional
shares. It is the Committee’s current
intention to make any future dividends
payments in the form of shares.
Vesting of LTIP awards
is subject to continued
employment and
performance against
relevant metrics measured
over a period of at least
three years. The Committee
will select performance
measures ahead of each
cycle to ensure that they
continue to be linked to the
delivery of the Company
strategy.
Under each measure,
threshold performance
will result in up to 25%
of maximum vesting for
that element, rising on a
straight-line to full vesting.
If no entitlement has been
earned at the end of the
relevant performance
period, awards will lapse. A
proportion of vested awards
may, at the discretion of the
Committee, be subject to a
holding period following the
end of a three-year vesting
period. The Committee’s
current intention is that all
awards will be required to be
held for an additional two-
year period post-vesting.
As under the Performance
Related Annual Bonus,
the Committee has
discretion to adjust the
formulaic LTIP outcomes
to ensure alignment of
pay with performance, i.e.
to ensure the outcome
is a true reflection of
the performance of
theCompany.
Details of the measures and
targets to be used for 2023
LTIP awards are included
in the Annual Report on
Remuneration on page 160.
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Notes to the policy table
The Committee is satisfied that the above Remuneration
Policy is in the best interests of shareholders and does not
promote excessive risk-taking.
For the avoidance of doubt, in approving this Directors’
Remuneration Policy, authority is given to the Company
to honour any commitments entered into with current or
former Directors (such as the vesting or exercise of past
share awards).
Performance measure selection
and approach to target setting
Measures used under the Annual bonus and LTIP are
selected annually to reflect the Group’s main short- and
long-term objectives and reflect both financial and non-
financial priorities, as appropriate.
The Committee considers that EPS (currently used in both
the short- and long-term incentive) is an objective and well-
accepted measure of the Company’s performance which
reinforces the strategic objective of achieving profitable
growth, whilst a focus on Total Accounting Return (also
currently used in both the short- and long-term incentive)
is consistent with one of our stated objectives and a key
indicator of Company performance in the real estate sector.
The use of relative TSR is strongly aligned with shareholders
and ensures that executives are rewarded only if they
exceed the returns which an investor could achieve
elsewhere in our sector. Finally, from 2022, the Committee
has increased the overall weighting on sustainability metrics
across variable incentives in order to support and reinforce
the Group’s strategy in this area.
Targets applying to the Performance Related Annual Bonus
and LTIP are reviewed annually, based on a number of
internal and external reference points. Performance targets
are set to be stretching but achievable, with regard to the
particular strategic priorities and economic environment in
a given year. Under the bonus, target performance typically
requires meaningful improvement on the previous year’s
outturn, and, for financial measures, targets are typically
set with reference to market consensus.
Remuneration Policy for other employees
Unite’s approach to annual salary reviews is consistent
across the Group, with consideration given to the level of
experience, responsibility, individual performance and
salary levels in comparable companies. The Company is a
fully accredited Living Wage employer.
In terms of variable incentives, all employees are eligible
to participate in an annual bonus scheme with business
area-specific metrics incorporated where appropriate.
Senior managers are eligible to participate in the LTIP with
annual awards currently up to 100% of salary. Performance
conditions are consistent for all participants, while award
sizes vary by level. Specific cash incentives are also in place
to motivate, reward and retain staff below Board level.
All employees are eligible to participate in the Company’s
SAYE scheme on the same terms.
Shareholding guidelines
The Committee continues to recognise the importance
of Executive Directors aligning their interests with
shareholders through building up a significant shareholding
in the Company. Shareholding guidelines are in place that
require Executive Directors to acquire a holding (excluding
shares that remain subject to performance conditions)
equivalent to 250% of base salary for the Chief Executive
and 200% of base salary for each of the other Executive
Directors. Details of the Executive Directors’ current
shareholdings are provided in the Annual Report on
Remuneration.
In order to provide further long-term alignment with
shareholders and ensure a focus on successful succession
planning, Executive Directors will normally be expected
to maintain a holding of Unite shares for a period after
their employment as a Director of the Group. This “post-
exit” shareholding guideline will be equal to the lower of a
Directors’ actual shareholding at the time of their departure
and the shareholding requirement in effect at the date of
their departure, with such shares to be held for a period of
at least two years from the date of ceasing to be a Director.
The specific application of this shareholding guideline will
be at the Committee’s discretion.
In order to monitor and enforce the post-exit shareholding
requirement, the Committee has established an internal
policy document detailing which shares are covered,
the valuation methodology, the holding mechanism and
any discretions available. In summary, this post-exit
requirement will apply to any LTIP awards or deferred
bonus share awards granted on or after 9 May 2019
(being the date of approval of the 2019 Policy), with shares
deposited into a Nominee Account until such time that the
required post-exit shareholding level has been achieved
(calculated annually). Shares held in the Nominee Account
will generally be held for a period of not less than 2 years
from the date an individual ceases employment as a
Director of the Group.
Malus and clawback
Awards under the Performance Related Annual Bonus and
the LTIP are subject to malus and clawback provisions which
can be applied to both vested and unvested awards. Malus
and clawback provisions will apply for a period of at least
two years post-vesting. Circumstances in which malus and
clawback may be applied include a material misstatement
of the Company’s financial accounts, gross misconduct on
the part of the award-holder, error in calculating the award
vesting outcome and, from 2019 awards onwards, corporate
failure as determined by the Remuneration Committee.
REMUNERATION COMMITTEE continued
14 4
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Non-Executive Director remuneration
Subject to annual re-election by shareholders, Non-Executive Directors are appointed for an initial term of approximately
three years. Subsequent terms of three years may be awarded. The appointment, re-appointment and the remuneration of
Non-Executive Directors are matters reserved for the full Board.
The Non-Executive Directors are not eligible to participate in the Company’s performance-related bonus plan, long-term
incentive plans or pension arrangements.
Details of the policy on fees paid to our Non-Executive Directors are set out in the table below:
NED Date of service contract
E McMeikan 13 November 2013
R Paterson 21 September 2017
I Beato 20 July 2018
S Pearce 14 October 2019
T Jackson 29 November 2019
S Smith 14 October 2019
R Huntingford 26 October 2020
N Dulieu 5 August 2022
Function Operation Opportunity Performance metrics
Fees
To attract and retain Non-
Executive Directors of the
highest calibre with broad
commercial and other
experience relevant to
theCompany.
Fee levels are reviewed
annually, with any
adjustments typically
effective 1 January in the
yearfollowingreview.
The fees paid to the Chair are
determined by the Committee,
whilst the fees of the Non-
Executive Directors are
determined by the Board.
Additional fees are payable for
acting as Senior Independent
Director and as Chair of any
of the Board’s Committees
(Audit & Risk, Remuneration,
Nomination, Health & Safety,
Sustainability).
Fee levels are benchmarked
against sector comparators
and FTSE-listed companies of
similar size and complexity.
Time commitment and
responsibility are taken
intoaccount when reviewing
fee levels.
Expenses incurred by
the Chair and the Non-
Executive Directors in the
performance of their duties
(including taxable travel and
accommodation benefits)
may be reimbursed or paid
for directly by the Company,
asappropriate.
Non-Executive Director fee
increases are applied in line
with the outcome of the
annual fee review. Fees for the
year commencing 1 January
2023 are set out in the Annual
Report on Remuneration.
It is expected that increases
to Non-Executive Director
fee levels will be in line with
salaried employees over the
life of the policy. However,
in the event that there is a
material misalignment with
the market or a change in the
complexity, responsibility or
time commitment required to
fulfil a Non-Executive Director
role, the Board has discretion
to make an appropriate
adjustment to the fee level.
None
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Pay for performance scenarios
The charts below provide an illustration of the potential future reward opportunities for the Executive Directors, and the
potential split between the different elements of remuneration under four different performance scenarios: “Minimum”,
“On-target”, “Maximum” and “Maximum including the impact of a 50% share price appreciation on LTIP awards”.
Potential reward opportunities are based on Unite’s Remuneration Policy, applied to the base salaries effective 1 January
2023. Pension contributions reflect the agreed reduction to a maximum of 11% of salary effective 1 January 2023. The annual
bonus and LTIP are based on the maximum opportunities set out under the Remuneration Policy, being 140% of salary
under the annual bonus and a 2023 LTIP grant of 200% of salary. Note that the LTIP awards granted in a year do not normally
vest until the third anniversary of the date of grant, and the projected value is based on the face value at award rather than
vesting (i.e. the scenarios exclude the impact of any share price movement over the period). The exception to this is the
last scenario which, in line with the requirements of the UK Corporate Governance Code, illustrates the maximum outcome
assuming 50% share price appreciation for the purpose of LTIP value.
REMUNERATION COMMITTEE continued
Remuneration (£000)
0
500
1,000
1,500
2,000
2,500
3,000
Salary, pension, benefits Annual bonus LTIP
Joe ListerRichard Smith
Minimum On-target Maximum Maximum + 50%
share price inc.
for LTIP
Minimum On-target Maximum Maximum + 50%
share price inc.
for LTIP
£613
100.0% 48.7%
29.9%
21.4%
25.1%
30.8%
44.1%
20.6%
25.3%
54.2%
100.0% 48.9%
29.8%
21.3%
25.3% 20.7%
30.8% 25.2%
44.0%
54.1%
£1,259
£2,443
£2,981
£487
£995
£1,927
£2,351
The “minimum” scenario reflects base salary, pension and benefits (i.e. fixed remuneration) which are the only elements of
the Executive’s remuneration packages not linked to performance.
The “on-target” scenario reflects fixed remuneration as above, plus bonus payout of 70% of salary and LTIP threshold vesting
at 25% of maximum award (50% of salary).
The “maximum” scenario is shown on two bases: excluding and including the impact of share price appreciation on the
value of LTIP outcomes. In both cases, the scenario includes fixed remuneration and full payout of all incentives (140% of
salary under the annual bonus and 200% of salary under the LTIP), with the final scenario also including the impact of a 50%
increase in Unite’s share price on the value of the LTIP (in effect valuing this element of pay at 300% of salary).
Salary
Benefits
(based on FY22) Pension
2023 maximum
annual bonus
2023 LTIP award
face value
CEO £538,175 £16,123 11% of salary 140% of salary 200% of salary
CFO £423,588 £16,854 11% of salary 140% of salary 200% of salary
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Approach to recruitment remuneration
External appointment to the Board
In the cases of hiring or appointing a new Executive Director from outside the Company, the Remuneration Committee may
make use of all the existing components of remuneration, as follows:
Component Approach Maximum annual grant value
Base salary The base salaries of new appointees will be determined by reference
to relevant market data, experience and skills of the individual, internal
relativities and their current basic salary. Where new appointees have
initial basic salaries set below market, any shortfall may be managed
with phased increases over a period of two to three years subject to the
individual’s development in the role.
Pension New appointees will receive Company pension contributions or an
equivalent cash supplement aligned to that offered to a majority of
employees across the Group at the time of appointment (currently 11%
ofsalary).
Benefits New appointees will be eligible to receive benefits which may include
(but are not limited to) the provision of a company car or cash alternative,
private medical insurance and any necessary relocation expenses.
Newappointees will also be eligible to participate in all-employee
shareschemes.
SAYE
Performance Related
Annual Bonus
The structure described in the policy table will apply to new appointees
with the relevant maximum being pro-rated to reflect the proportion
of employment over the year. Targets for the individual element will be
tailored to each executive.
140% of salary
LTIP New appointees will be granted awards under the LTIP on the same
terms as other executives, as described in the policy table. The normal
aggregate limit of 200% of salary will apply, save in exceptional
circumstances where up to 300% of salary may be awarded.
300% of salary
In determining appropriate remuneration, the Remuneration Committee will take into consideration all relevant factors
(including quantum, nature of remuneration and the jurisdiction from which the candidate was recruited) to ensure that
arrangements are in the best interests of both Unite and its shareholders. The Committee may make an award in respect
of a new appointment to “buy out” incentive arrangements forfeited on leaving a previous employer on a like-for-like basis,
which may be awarded in addition to the remuneration structure outlined in the table above. In doing so, the Committee
will consider relevant factors including time to vesting, any performance conditions attached to these awards and the
likelihood of those conditions being met. Any such “buy-out” awards will typically be made under the existing annual bonus
and LTIP schemes, although in exceptional circumstances the Committee may exercise the discretion available under Listing
Rule 9.4.2 R to make awards using a different structure. Any “buy-out” awards would have a fair value no higher than the
awardsforfeited.
Internal promotion to the Board
In cases of appointing a new Executive Director by way of internal promotion, the Remuneration Committee and Board will
be consistent with the policy for external appointees detailed above. Where an individual has contractual commitments
made prior to their promotion to Executive Director level, the Company will continue to honour these arrangements. With
regards to pension contributions, as above, this would be aligned to that offered to a majority of employees across the
Group at the time of promotion to the Board. The Remuneration Policy for other employees is set out on page 144. Incentive
opportunities for below Board employees are typically no higher than Executive Directors, but measures may vary to provide
better line-of-sight.
Non-Executive Directors
In recruiting a new Non-Executive Director, the Remuneration Committee will utilise the policy as set out in the table on page
145. A base fee in line with the prevailing fee schedule would be payable for Board membership, with additional fees payable
for acting as Senior Independent Director and/or as Chairman of the Board’s Committees.
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Service contracts and treatment for leavers and change of control
Executive Director service contracts, including arrangements for early termination, are carefully considered by the
Committee. In accordance with general market practice, each of the Executive Directors has a rolling service contract
requiring 12 months’ notice of termination on either side. Such contracts contain no specific provision for compensation for
loss of office, other than an obligation to pay for any notice period waived by the Company, where pay is defined as salary,
benefits and any other statutory payments only. Where a payment is made in equal monthly instalments, the Committee
will expect the Director to mitigate his/her losses by undertaking to seek and take up, as soon as reasonably practicable,
any suitable/similar opportunity to earn alternative income over the period in which the instalments are to be made. The
instalment payments will be reduced (including to zero) by the amount of such income that the employee earns and/or
is entitled to earn over the applicable period. Executive Director service contracts are available to view at the Company’s
registered office.
Executive
Date of service
contract
J Lister 28 March 2002
R Smith 28 September 2011
The Remuneration Committee will exercise discretion in making appropriate payments in the context of outplacement,
settling legal claims or potential legal claims by a departing Executive Director, including any other amounts reasonably
due to the Executive Director, for example to meet the legal fees incurred by them in connection with the termination of
employment, where the Company wishes to enter into a settlement agreement and the individual must seek independent
legal advice.
When considering exit payments, the Committee reviews all potential incentive outcomes to ensure they are fair to both
shareholders and participants. The table below summarises how the awards under the annual bonus and LTIP are typically
treated in specific circumstances, with the final treatment remaining subject to the Committee’s discretion:
Calculation of vesting/payment
Annual bonus
Cash element In the event of retirement, ill health, death, disability, redundancy or any other circumstance at
the discretion of the Remuneration Committee, or in the event of a change of control, Executive
Directors may receive a bonus payment for the year in which they cease employment. This
payment will normally be pro-rated for time and will only be paid to the extent that financial and
individual objectives set at the beginning of the plan year have been met.
Otherwise, Executive Directors must be employed at the date of payment to receive a bonus.
Deferred element Deferred bonus shares will normally be retained and will be released in full following completion
of the applicable deferral period.
LTIP
Leavers before the end of
theperformance period
In the event of retirement, ill health, death, disability, redundancy or any other circumstance
at the discretion of the Remuneration Committee, or in the event of a change of control, the
Committee determines whether and to what extent outstanding awards vest based on the extent
to which performance conditions have been achieved and the proportion of the vesting period
worked. This determination will be made as soon as reasonably practical following the end of the
performance period or such earlier date as the Committee may agree (within 12 months in the
event of death).
In the event of a change of control, awards may alternatively be exchanged for new equivalent
awards in the acquirer where appropriate.
If participants leave for any other reason before the end of the performance period, their award
will normally lapse.
Leavers after the end of
theperformance period
Any awards in a holding period will normally vest following completion of the holding period.
REMUNERATION COMMITTEE continued
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External appointments
With the approval of the Board in each case, and subject
to the overriding requirements of the Group, Executive
Directors may accept external appointments as Non-
Executive Directors of other companies and retain any
fees received. Joe Lister was appointed as a Non-Executive
Director on the Board of Helical Plc effective 1 September
2018 and received a fee of c.£61k in respect of his service
for 2022. Richard Smith was appointed as a Non-Executive
Director on the Board of Industrials REIT (formerly Stenprop
Limited) effective 4 November 2020 and received a fee of
c.£45k in respect of his service for 2022.
Consideration of conditions elsewhere
in the Company
When making decisions on Executive Director
remuneration, the Committee considers pay and conditions
across Unite and reflects on available data such as the
Gender Pay Gap reporting and the CEO pay ratio analyses.
Prior to the annual salary review, the Group People
Director provides the Committee with a summary of the
proposed level of increase for overall employee pay. The
Remuneration Committee did not formally consult with
employees in designing the above executive Remuneration
Policy. The Culture Matters forum, launched in October
2021 and attended by the employee engagement NED,
will, in future, provide the Board and Committee with a
greater opportunity to solicit the views of employees on
remuneration structures and processes across the Group.
Specifically, this forum will include as part of its agenda
an opportunity to discuss remuneration issues, answer
any questions around pay practices, and to explain to the
workforce how executive pay arrangements align with the
wider pay policy.
Consideration of shareholder views
In designing the current policy, the Remuneration
Committee consulted with Unite’s top 20 investors and with
proxy advisors (Glass Lewis, the Investment Association
and ISS) to seek their views on proposed changes, as well
as remuneration at Unite more broadly. The Committee
thanks investors for taking the time to participate in
the consultation and we welcomed the positive and
constructive feedback received. The Committee used this
feedback, along with updates to investor body principles
published around the time of the review, to refine and
further develop the final proposals. The Committee will
continue to monitor trends and developments in corporate
governance and market practice to ensure the structure of
the executive remuneration remains appropriate.
Annual Report on Remuneration
The following section provides details of how Unite’s
Remuneration Policy was implemented during the
financial year ended 31 December 2022 and how it will be
implemented in 2023.
Remuneration Committee membership in 2022
The primary role of the Committee is to:
•
Review, recommend and monitor the level and structure
of remuneration for the Executive Directors and other
senior executives;
•
Approve the remuneration packages for the Executive
Directors and ensure that pay outcomes reflect the
performance of the Company; and
•
Determine the balance between base pay and
performance-related elements of the package so as to
align Directors’ interests to those of shareholders.
The Committee’s terms of reference are set out on
the Company’s website. As of 31 December 2022, the
Remuneration Committee comprised five independent
Non-Executive Directors.
•
Elizabeth McMeikan (Committee Chair)
•
Ross Paterson
•
Dame Shirley Pearce
•
Professor Sir Steve Smith
•
Nicky Dulieu
Certain Executives, including Richard Smith (Chief Executive)
and Helene Murphy (Group People Director), are invited
to attend meetings of the Committee, and the Company
Secretary, Christopher Szpojnarowicz, acts as secretary to
the Committee. Richard Huntingford and Thomas Jackson
are also invited to attend meetings. No individuals are
involved in decisions relating to their own remuneration.
The Remuneration Committee convened three times during
the year and details of members’ attendance at meetings
are provided in the Corporate Governance section on
page107.
Key activities of the Remuneration Committee in 2022 included:
•
Reviewed and approved the Executive Directors’
performance against 2019 LTIP targets and approved
vesting;
•
Approved the Directors’ Remuneration Report for 2021;
•
Determined the Executive Directors’ bonus and LTIP
performance targets for 2022 in line with the strategic
plan and approved grant of awards under the LTIP in
April 2022;
•
Considered remuneration market trends and corporate
governance developments;
•
Reviewed the CEO pay ratio and gender pay data and
disclosures;
•
Reviewed the principles for, and implementation of,
group-wide pay awards and approved the delay of
planned salary increases for Executive Directors;
•
Considered feedback from the Culture Matters forum;
and
•
Commenced preparation of the 2022 Directors’
Remuneration Report.
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Advisors
Ellason LLP was appointed as the independent remuneration advisor to the Committee effective 1 January 2021 and retained
during the year. The Committee undertakes due diligence periodically to ensure that Ellason is independent and that the
advice provided is impartial and objective. During 2022, Ellason provided independent advice including updates on the
external remuneration environment, performance testing for long-term incentive plans and Directors’ Remuneration Report
drafting support. Ellason reports directly to the Chair of the Remuneration Committee and does not advise the Company on
any other issues. Their total fees for the provision of remuneration services to the Committee in 2022 were £37,050 (2021:
£43,113) on the basis of time and materials.
Ellason is a member and signatory of the Code of Conduct for Remuneration Consultants, details of which can be found at
www.remunerationconsultantsgroup.com. None of the individual Directors have a personal connection with Ellason.
Summary of shareholder voting at AGMs
The following table shows the results of the advisory vote on the 2021 Annual Report on Remuneration and the binding vote
on the Directors’ Remuneration Policy at the 2022 AGM:
Single total figure of remuneration for Executive Directors (audited)
The table below sets out a single figure for the total remuneration received for 2021 and 2022 by each Executive Director
who served in the year ended 31 December 2022:
REMUNERATION COMMITTEE continued
2021 Annual Report on Remuneration Directors’ Remuneration Policy
For (including discretionary) 354,173,687 97.05% 357,032,859 97.83%
Against 10,765,117 2.95% 7,905,945 2.17%
Total votes cast (excluding withheld votes) 364,938,804 364,938,804
Votes withheld 1,761,682 1,761,682
Total votes cast (including withheld votes) 366,700,486 366,700,486
£
Salary
Taxable
benefits Pension
Annual
bonus LTIP Other
Total single
figure
Total
fixed
Total
variable
Note 1 Note 2 Note 3 Note 4 Note 5
R Smith 2022 522,500 16,123 59,550 263,340 0 4,498 866,011 598,173 267,838
2021 472,313 17, 242 65,613 484,688 387, 898 0 1,427,75 4 555,168 872,586
J Lister 2022 411,250 16,854 46,918 207,270 0 0 682,292 475,022 207,720
2021 384,441 17,269 53,406 394,513 315,748 2,483 1,167,860 455,117 712,744
1. Taxable benefits for 2022 consist primarily of company car or car allowance and private health care insurance. The figures above include car benefits of £15,000
for Messrs. Smith and Lister.
2. Pension figures include contributions to the UNITE Group Personal Pension Scheme and cash allowances, where applicable. Pension contributions were reduced
to a maximum of 14% of salary with effect from 1 January 2022.
3. Annual bonus figures reflect the full amount earned in respect of the relevant financial year, including any amounts which are required to be deferred.
4. 2021 figures: Vesting of 2019 awards was confirmed as 36.8% of maximum following the publication of comparator full-year results. The LTIP figures shown are
based on the market price on the date of vesting (24 July 2022) of 1,207.0p. These amounts have been revised from last year’s report to reflect the actual vesting
outcome and share price on the date of vesting.
2022 figures: For the 2020 awards, vesting of the relative TAR element will be finalised following the publication of comparator results over the coming months,
with Unite currently estimated to rank below median. Overall anticipated vesting of the 2020 awards used in this single figure is therefore 0% of maximum. See
following sections for further details.
2021 LTIP figures include the value of dividends for vested awards which will be paid as additional shares. Awards in the form of HMRC-approved options are
valued based on the embedded gain at vesting (i.e. subtracting the applicable exercise price) and attract no dividends.
5. “Other” includes the embedded value of SAYE options at grant.
15 0
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Single total figure of remuneration for Non-Executive Directors (audited)
The table below sets out a single figure for the total remuneration received for 2021 and 2022 by each Non-Executive
Director who served in the year ended 31 December 2022:
£ Base fee
Committee
Chair/SID fees
Taxable
benefits
2
Total
single figure
Note 1 Note 2
R Huntingford
(i)
2022 231,750 – – 231,750
2021 181,110 – 74 181,184
E McMeikan 2022 50,925 16,595 269 67,789
2021 49,440 16,120 39 65,599
R Paterson 2022 50,925 10,600 39 61,564
2021 49,440 10,300 3 59,743
I Beato 2022 50,925 – 45 50,970
2021 49,440 – 3 49,443
S Pearce
(ii)
2022 50,925 10,600 45 61,570
2021 49,440 8,279 3 57,722
T Jackson
(iii)
2022 – – – –
2021 – – 17 17
S Smith 2022 50,925 10,600 50 61,575
2021 49,440 10,300 49 59,789
N Dulieu
(iv)
2022 20,508 – 0 20,508
2021 – – – –
1. Relevant changes in Non-Executive Directors and responsibilities as follows:
i. Richard Huntingford joined the Board as Chair Designate on 1 December 2020 and assumed the role of Chair on 1 April 2021.
ii. Dame Shirley Pearce became Chair of the Sustainability Committee with effect from 12 March 2021.
iii. Reflecting the Relationship Agreement with CPPIB Holdco, Thomas Jackson does not receive any fees in respect of his Non-Executive Director position with Unite.
iv. Nicky Dulieu joined the Board on 1 September 2022. An administrative error, which resulted in an overpayment of fees in 2022, has since been corrected and
will be reflected as a deduction to the single figure for 2023.
2. Taxable benefits relate primarily to certain travel expenses.
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Incentive outcomes for the year ended 31 December 2022 (audited)
Annual bonus in respect of 2022 performance
The maximum bonus opportunity for each Executive Director in 2022 was 140% of base salary, with Threshold and On-target
performance paying 30% and 50% of maximum respectively under each performance measure. The 2022 annual bonus
was based on an additive combination of financial (weighted 70%) and non-financial (30%) metrics, with a new measure,
employee engagement, added to coincide with the rollout of a new People strategy across the Group, and to reflect the
increasing importance of engaging the workforce to help deliver against an ambitious strategy. Further details, including the
targets set and performance against each of the metrics, are provided in the tables below:
Measure Weight
Threshold On-target Maximum
Actual
Outcome
(% of max)
30% of
max
50% of
max
100% of
max
Financial
(70%)
Adjusted EPS 25.0% 40.5p 42.5p 44.5p 40.9p 34%
TAR per share 25.0% 75.2p 83.6p 96.1p 71.2p 0%
Loan to Value 20.0% 35.0% 34.1% 32.0% 31.0% 100%
Non-financial
(30%)
Customer satisfaction 7.5% 36 37 38 38 100%
University reputation 7. 5% 21 22 23 7 0%
GRESB rating 7.5% 85 86 88 84 0%
Employee engagement 7.5% 73 75 77 65 0%
Executive
Overall outcome
(% of maximum)
Overall outcome
(% of salary)
Overall outcome
(£)
Richard Smith 36.0% 50.4% £263,340
Joe Lister 36.0% 50.4% £207, 270
The Committee notes that Unite’s GRESB rating was just below the Threshold target set for the financial year despite ranking
2nd out of 9 companies in the European Listed Residential Property peer-group and with positive progress made in a
number of areas. In finalising the outcome under this element, the Committee considered the findings of an independent
review of the GRESB rating by Longevity Partners which illustrated that the impact of the return to near pre-pandemic
occupancy levels on energy consumption had more than offset the gains made elsewhere in the GRESB assessment. With
input from the Sustainability Committee, the Committee considered whether an adjustment to targets was justified in this
instance but concluded, on balance, that the original target range should stand and that there should be no payout under
this element.
There will likewise be no payout under either the University reputation or the employee engagement metrics, with results
coming in below the Threshold targets set at the start of the financial year. The Committee reviewed the reasons for the
movement in scores, and noted that the implementation of a new operating model and above average employee turnover
had, amongst other factors, contributed to these outcomes. The Committee is satisfied that the overall bonus outcome for
2022 reflects these challenges and is confident in the executive team’s plans for improvement going forward.
Prior to finalising the annual bonus outcome, the Committee received a report from Professor Sir Steve Smith, Chair of the
Health and Safety Committee, detailing the Group’s 2022 operational incident and fire safety performance, providing an
update on the cladding remediation programme and associated safety metrics, as well as details on changes to the Safe and
Secure team and the launch of the Group’s Support to Stay Framework. The Committee’s conclusion aligned with that in the
report, namely that the executive team has continued to work proactively to address any challenges faced and to ensure that
health and safety remains Unite’s number one priority.
Having taken the above into account, the Committee is satisfied that the overall bonus outcome of 50.4% of salary (cf. a
maximum of 140% of salary) in respect of 2022 is appropriate. In line with the new policy, 50% of the annual bonuses earned
by Executive Directors will be satisfied in Unite shares, deferred for 2 years.
Vesting of deferred bonus shares granted in respect of the 2019 annual bonus
In accordance with the Remuneration Policy at the time, Richard Smith and Joe Lister were each awarded shares, deferred for
2 years, in respect of the portion of their bonus earned for the 2019 financial year in excess of 100% of salary. The mandatory
2-year deferral period for these awards ended on 27 February 2022. The value of these deferred bonuses was captured in
the 2019 single figure of remuneration.
REMUNERATION COMMITTEE continued
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Executive Interests held Interests vesting End of deferral period
Richard Smith 5,067 5,067
27 February 2022
Joe Lister
4,124 4,124
Confirmation of 2019 LTIP vesting (vested on performance to 31 December 2021)
In last year’s report, the Committee provided an estimate for the vesting of the 2019 LTIP awards. Following the publication
of TAR results by comparators with March 2022 year-ends, the Committee was able to assess this element of the LTIP, with
Unite’s TAR of 17.8% coming in between median (12.4%) and upper quartile (28.7%) over the 3-year performance period. The
resulting vesting outcome was 49.9% of maximum for the relative TAR element which, when combined with the outcomes for
the relative TSR (60.5% of maximum) and EPS (0% of maximum) elements, resulted in an overall vesting outcome for the 2019
LTIP of 36.8% of maximum.
Values included in the 2021 single figure of remuneration table for both Richard Smith and Joe Lister have been updated to
reflect the revised number of shares vesting, as well as the actual share price on 24 July 2022 of 1,207.0p.
Executive Interests held Confirmed vesting % Interests vesting Date vesting
Richard Smith 85,747
36.8%
31,553
24 July 2022
Joe Lister
69,890 25,718
2020 LTIP vesting (vested on performance to 31 December 2022)
Awards in 2020 were made under the LTIP, consisting of the Unite Group Performance Share Plan (PSP) and the Unite
Group Approved Employee Share Option Scheme (ESOS). Vesting of the awards was dependent on three equally-weighted
measures over a three-year performance period: absolute EPS, relative TSR and relative TAR, with Unite’s performance for
both the TSR and TAR elements compared to the constituents of the FTSE350 Real Estate Supersector Index. There was no
retest provision. Further details, including vesting schedules and performance against each of the metrics, are provided in
the table below:
Measure Weight Targets Outcome Vest %
2022 Adjusted EPS
1/3
0% vesting below 51.1 pence
25% vesting for 51.1 pence
100% vesting for 58.7 pence or more;
Straight-line vesting between these points
40.9 pence 0.0%
TSR ranking vs. constituents
of theFTSE350 Real Estate
SupersectorIndex
1/3
0% vesting below median
25% vesting for performance in line with median
100% vesting for performance in line with upper
quartile or above;
Straight-line vesting between these points
-19.8%: below
median (-17.4%)
0.0%
TAR ranking vs. constituents
of theFTSE350 Real Estate
SupersectorIndex
1/3
0% vesting below median
25% vesting for performance in line with median
100% vesting for performance in line with upper
quartile or above;
Straight-line vesting between these points
Estimated:
below median
Estimated:
0.0%
Total estimated LTIP vesting (sum product of weighting and vest %) 0.0%
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Vesting of the relative TAR element will be finalised following the publication of comparator results over the coming months,
with Unite currently estimated to rank below median, equating to 0% vesting under this element, and overall. No discretion
has been exercised in respect of the 2020 LTIP to-date; the Committee will confirm this position once final vesting of the
relative TAR element has been approved later in 2023.
Executive
Interests
held
Estimated
vesting %
Estimated
interests
vesting
Date
vesting
Assumed
market
price
Estimated
value...
...of which,
value due
to share
price
growth
Note 1
Richard Smith 118,129
0.0%
0
After TAR
assessment
(June/July)
n/a
£0 n/a
Joe Lister 96,256 0 £0 n/a
1. In each case, interests held includes 746 HMRC-approved options under the ESOS.
Percentage change in remuneration of Directors and employees
This table is voluntarily produced in accordance with the Companies (Directors’ Remuneration Policy and Directors’
Remuneration Report) Regulations 2019 and shows the change in remuneration of Unite Directors and employees over time.
Executive Director remuneration includes base salary, taxable benefits and annual bonus (where eligible). Non-Executive
Director remuneration includes base fee and any additional fees paid, and taxable benefits. In 2022, we have transitioned to
presenting pay for all employees using the increase in the earnings of employees on a full-time equivalent basis. Previously
the analysis excluded part-time employees. Growth rates are based on a consistent set of employees, i.e. the same
individuals appear in the 2022 and 2021 populations for the 2022 analysis and so on.
Director
1
Basic salary/total fee Taxable benefits
2
Annual bonus
3
Note 1 2021–22 2020–21 2019–20 2021–22 2020–21 2019–20 2021–22 2020–21 2019–20
R Smith 10.6% 11.1% (6.9)% (6.5)% 6.4% 0.0% (45.7)% n/m (100.0)%
J Lister 7.0% 11.1% (6.9)% (2.4)% (1.3)% 3.4% (47.5)% n/m (100.0)%
R Huntingford 28.0% 266.3% n/a (100.0)% n/m n/a n/a n/a n/a
E McMeikan 3.0% 11.1% (7. 3)% 589.6% (70.5)% (60.2)% n/a n/a n/a
R Paterson 3.0% 11.1% (7.3) % 1,190.0% (71.1)% 100.0% n/a n/a n/a
I Beato 3.0% 11.1% ( 7. 3)% 1,400.0% n/m (100.0)% n/a n/a n/a
S Pearce 6.6% 29.7% (7.3)% 1,400.0% (71.1)% 100.0% n/a n/a n/a
T Jackson n/a n/a n/a (100.0)% n/m n/a n/a n/a n/a
S Smith 3.0% 17.0% n/a 2.0% n/m n/a n/a n/a n/a
N Dulieu n/a n/a n/a n/a n/a n/a n/a n/a n/a
All employees 3.6% 2.9% 4.4% 3.2% 2.3% 2.3% (52.8)% 285.0% (67.8)%
1. Changes in Directors and responsibilities during the 2021 and 2022 financial years which are relevant to the calculations above are as follows:
− Richard Huntingford joined the Board as Chair Designate on 1 December 2020 and assumed the role of Chair on 1 April 2021.
− Dame Shirley Pearce became Chair of the new Sustainability Committee from 12 March 2021.
− Nicky Dulieu joined the Board with effect from 1 September 2022.
2. For Executive Directors, taxable benefits consist primarily of company car or car allowance and private health care insurance. For Non-Executive Directors,
taxable benefits relate primarily to certain travel expenses and accommodation which, given the relatively small numbers involved, can produce sizeable %
changes from year to year.
3. The figures shown are reflective of any bonus earned during the respective financial year. Non-Executive Directors are not eligible to participate in the annual
bonus scheme.
REMUNERATION COMMITTEE continued
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Relative importance of spend on pay
The table below shows shareholder distributions (i.e. dividends and share buybacks) and total employee pay expenditure for
the financial years ended 31 December 2021 and 31 December 2022, along with the percentage change in both.
2022
£m
2021
£m
% change
2021–22
Total employee pay expenditure 65.8 65.0 1.2%
Distributions to shareholders 96.4 68.0 41.8%
Distributions to shareholders reflects actual payments made during the relevant financial year. Employee remuneration
excludes social security costs.
Relationship between the remuneration of the CEO and all employees
There is strong alignment between the Company’s approach to remuneration for Executive Directors and other employees
(see page 137 for details).
Consistent with previous years, given the significant undertaking required to calculate the single figure of remuneration
for all UK employees, the Committee opted to use data already available from the gender pay reporting as the basis for
identifying employees at P25, P50 and P75 (“Option B”). We believe this provides a reasonable estimate for employees’ pay at
these levels within the organisation. Further details on the specific steps used in calculating the above ratios are as follows:
•
We used the most recent gender pay gap data from 5 April 2022 to rank the hourly rates of all UK employees. From this
initial ranking we identified those individuals positioned at P25, P50 and P75, as well as the immediate employees either
side of P25, P50 and P75.
•
Employees selected as P25, P50 and P75 were checked to confirm that they were employed for the whole of the 2022
financial year.
•
Total FTE remuneration for each of these individuals was then calculated to 31 December 2022 on the same basis as used
in the single figure table for our CEO. All figures are total amounts paid to full-time employees covering the whole 2022
financial year. Overtime pay, where received during the year, has been excluded so that the figures are comparable with
the Chief Executive.
•
In reviewing the employee pay data, the Committee is comfortable that the P25, P50 and P75 individuals identified
appropriately reflect the employee pay profile at those quartiles, and that the overall picture presented by the ratios is
consistent with our pay, reward and progression policies.
The Committee notes that the statutory CEO pay ratios have largely fallen in 2022 as compared to 2021, with the ratio of CEO
total remuneration to the median employee, for example, moving from 56:1 to 33:1. This change reflects both a c.39% fall in
the CEO’s single figure of remuneration – driven primarily by the lower bonus outcome for 2022 and the nil estimated vesting
under the 2020 LTIP – and a c.2% increase to the equivalent employee figure.
Reflecting that a significant proportion of the CEO’s remuneration is linked to Group performance and share price
movements over the longer-term – and as a result that changes in the headline ratios may be volatile – the Committee
also reviews ratios for salary and salary plus annual bonus. Participation in the Group’s long-term incentives is currently
limited to c.50 senior leaders, with none of the individuals identified as P25, P50 and P75 in this group. On the other hand,
the significant majority of our employees are eligible to participate in annual bonus arrangements – and so the Committee
considers this ratio, as well as the ratio comparing just salaries, to provide helpful additional context. Having reviewed these
additional data points, the Committee is satisfied that the fluctuation in the headline ratios this year reflects appropriate
differences in the structure of remuneration at different levels of seniority.
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CEO pay ratio 2022 2021 2020 2019
Note 1
Methodology used B B B B
Average number of employees 1,889 1,900 1,756 1,450
Ratio of CEO single figure total
remuneration:
– To employee at the 25th percentile
39:1 58:1 44:1 113:1
– To employee at the 50th percentile 33:1 56:1 38:1 96:1
– To employee at the 75th percentile 23:1 43:1 29:1 70:1
Ratio of CEO base salary plus annual
bonus figure:
– To employee at the 25th percentile 37:1 42:1 21:1 49:1
– To employee at the 50th percentile 32:1 40:1 18:1 41:1
– To employee at the 75th percentile 24:1 31:1 14:1 30:1
Ratio of CEO base salary figure:
– To employee at the 25th percentile 26:1 22:1 22:1 25:1
– To employee at the 50th percentile 23:1 22:1 19:1 21:1
– To employee at the 75th percentile 17:1 17:1 14:1 15:1
Additional details
CEO total single figure (£000)
866 1,428 934 2,336
CEO base salary (£’000) 523 472 425 457
Employees total pay and benefits (£000)
– at the 25th percentile 22.4 24.4 21.2 20.6
– at the 50th percentile 25.9 25.3 24.6 24.4
– at the 75th percentile 37.7 32.8 32.0 33.5
Employees base salary (£000)
– at the 25th percentile
20.0 21.1 19.6 18.1
– at the 50th percentile 23.2 21.8 22.6 21.7
– at the 75th percentile 30.4 28.5 29.4 29.6
1. 2021 CEO single figure of remuneration has been trued-up from last year’s report to reflect the final vesting outcome and actual market price on the date of
vesting for 2019 LTIP awards, with ratios updated accordingly.
REMUNERATION COMMITTEE continued
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£600
£500
£400
£300
£200
£100
£0
Dec 12 Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Dec 18 Dec 19 Dec 20 Dec 21 Dec 22
Unite FTSE 350 Real Estate Supersector Index
Review of past performance
The following graph charts the TSR of the Company and the FTSE350 Real Estate Supersector Index over the ten-year period
from 1 January 2013 to 31 December 2022. Whilst there is no comparator index or group of companies that truly reflects
the activities of the Group, the FTSE350 Real Estate Index (the constituent members of which are all property holding and/
or development companies or real estate investment trusts within the UK), was chosen as it reflects trends within the UK
property market generally and tends to be the index against which analysts judge the performance of the Company. The
table below details the Chief Executive’s single figure of remuneration over the same period.
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
M Allan M Allan M Allan
M Allan
R Smith R Smith R Smith R Smith R Smith R Smith R Smith
Note 1 Note 2 Note 3
CEO single figure
of remuneration
(£000) £1,944 £2,987 £2,382
£223
£1,239 £1,456 £2,131 £2,336 £934 £1,428 £866
Annual bonus
outcome
(% of maximum) 84.0% 89.4% 88.2%
n/a
43.4% 63.6% 74.3% 80.9% n/a 73.3% 36.0%
LTIP outcome
(% of maximum) 83.1% 95.2% 100.0%
n/a
100.0% 96.1% 81.9% 97.1% 33.33% 36.8% 0.0%
1. 2020 annual bonus scheme was cancelled for Executive Directors in April 2020.
2. 2021 CEO single figure of remuneration has been trued-up from last year’s report to reflect the final vesting outcome and market price on the date of vesting for
2019 LTIP awards.
3. 2022 CEO single figure and LTIP outcome are based on an estimate of the vesting of the TAR element, see pages 153–154 for further details.
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Scheme interests awarded in 2022 (audited)
LTIP
In April 2022, Executive Directors were granted awards under the LTIP with a face value of 200% of their respective salaries.
Any awards vesting for performance will be subject to an additional two-year holding period.
Executive Date of grant
Shares over which
awards granted
Market price at
date of award Face value
Note 1
Richard Smith
10 April 2022
93,672
1,121.0p
£1,050,063
Joe Lister 73,823 £827,556
1. Combination of HMRC-approved options under the ESOS (535) and nil cost options under the PSP calculated using a share price of 1,121.0p, being the closing mid-
market price on the day the awards were calculated.
Vesting of these awards is dependent on the achievement of three-year performance targets set out in the table below. In
addition to absolute Adjusted EPS, relative TAR and relative TSR, the Committee introduced two sustainability metrics linked
to the Group’s strategy for awards made in 2022, with the rationale set out in last year’s report.
Measure Weight Threshold (25% vesting) Stretch (100% vesting)
2024 Adjusted EPS
28.0%
48.5 pence 53.6 pence
TSR ranking vs. constituents of the FTSE350 Real Estate
Supersector Index (2022–2024)
28.0%
In line with median In line with
upper quartile
TAR per share ranking vs. constituents of the FTSE350 Real
Estate Supersector Index (2022–2024)
28.0%
In line with median In line with
upper quartile
Operational energy intensity: cumulative reduction; 2024
vs2019 baseline (kWh/m
2
)
8.0%
6.3% cumulative
reduction
12.6% cumulative
reduction
EPC ratings: % of floorspace A–C rated in 2024
8.0%
67% of floorspace 79% of floorspace
No vesting below Threshold; straight-line vesting between Threshold and Stretch.
The Committee retains overarching discretion under the Remuneration Policy to approve the vesting of these awards.
Any payout will be scrutinised by the Committee to ensure it reflects the underlying performance of the Company and the
experience of stakeholders over the period.
Deferred annual bonus
Reflecting the previous policy under which the 2021 annual bonus operated, and having already reached their respective
share ownership guidelines, Executive Directors each received the first 100% of salary of their 2021 bonus awards in cash,
with the remainder (2.6% of salary) deferred in shares for two years, as follows:
Executive Date of grant
Shares over which
awards granted
Market price at
date of award Date of vesting
Richard Smith
24 February 2022
1,235
97 7.0 p 24 February 2024
Joe Lister 1,005
SAYE
During 2022, Richard Smith entered into a new savings contract under the SAYE plan. Details of all outstanding awards under
this plan are included in the table on page 163.
Exit payments made in the year (audited)
There have been no exit payments during the year ended 31 December 2022.
Payments to past Directors (audited)
There have been no payments (2021: £nil) in excess of the de minimis threshold to former Directors during the year ended
31December 2022 in respect of their former roles as Directors. The Company has set a de minimis threshold of £5,000
under which it would not report such payments.
REMUNERATION COMMITTEE continued
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Implementation of Executive Director Remuneration Policy for 2023
Base salary
As detailed in the Annual Statement on page 133, Executive Directors will each receive a 3.0% salary increase with effect
from 1 January 2023, with implementation of the higher increases set out in last year’s report delayed until a more
appropriate time. This decision acknowledges the cost-of-living pressures facing both colleagues and customers, and means
that salary increases for Richard Smith and Joe Lister will be aligned with those awarded to other senior leaders.
Executive
Base salary from
1 January 2022
Base salary from
1 January 2023
Percentage
increase
Richard Smith £522,500 £538,500 3.0%
Joe Lister £411, 250 £423,588 3.0%
The average salary increase across the Group in 2023 will be 8.6%, with the available increase in salary budget targeted at
those colleagues most impacted by inflationary pressures, in particular our front-line employees. Unite remains committed
to being an accredited Real Living Wage employer and has implemented the rates set by the Living Wage Foundation (8.1% in
London and 10.1% across the rest of the UK), with tiered salary increases across the rest of the organisation.
Pension
Executive Directors will continue to receive a pension scheme contribution, a cash allowance of equivalent cost to the
company or a combination of both. With effect from 1 January 2023, total employer pension contributions will be further
reduced to an equivalent of up to 11% of salary for both Executive Directors. This represents the final planned reduction
in Executive Director pension contribution levels and brings both the CEO and CFO in line with the offering available to
thewider employee population.
Annual bonus
For 2023, the maximum bonus opportunity for each executive will be 140% of salary, with threshold and target performance
paying 30% and 50% of maximum respectively under each performance measure.
Corporate measures Weighting
Financial
70%
Adjusted EPS 25.0%
TAR per share 25.0%
Loan to Value (LTV) 20.0%
Non-financial
30%
Customer satisfaction
7.5%
Higher Education reputation 7.5%
Employee engagement 7.5%
GRESB rating 7.5%
The Committee is not proposing any changes to the performance metrics used under the annual bonus for 2023, and
remains satisfied that the current blend of financial and non-financial measures supports the Group’s strategy and
reinforces Unite values.
For both the financial and non-financial elements of the annual bonus, targets have been set to be challenging relative to
the business plan. Reflecting concerns around commercial sensitivity at this time, it is the Committee’s intention to disclose
all targets retrospectively in next year’s Directors’ Remuneration Report. This decision takes into account Unite’s status as
one of only two listed PBSA providers in the UK and the possible insight that prospective disclosure might provide to our
competitors as to our short-term financial and operational strategy.
In line with the Remuneration Policy, 50% of any bonus earned will be satisfied by an allocation of shares in the Company
deferred for two years. Clawback and malus provisions apply to all awards.
LTIP
During 2023, Executive Directors will each receive an award of up to 200% of salary delivered through a combination of the
PSP and ESOS, with vesting dependent on the achievement of three-year performance targets. Actual award levels will be
approved by the Committee closer to the date of grant and will take into account the share price at that time, as compared to
the share price used to determine awards over the last few LTIP cycles.
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The Committee is not proposing any changes to the performance metrics used for the 2023 LTIP, which will continue to
include the two sustainability metrics introduced last year. Targets for the relative TSR, TAR and operational energy intensity
measures are set out in the table below.
Targets for the EPS and EPC ratings measures will be disclosed in a market announcement no later than the date of grant
for these awards (expected to be in April 2023). The delay to target-setting for the EPS metric reflects the rapidly changing
macroeconomic environment and a revised timetable for the internal sign-off of a new 5-year plan. In respect of the EPC
metric, the Committee is keen to review recent changes to the underlying measurement methodology to ensure the target
range set is both appropriately stretching and reflects our longer-term sustainability ambitions.
Threshold Stretch
Measure Weight 25% vesting 100% vesting
2025 Adjusted EPS
28.0%
To be disclosed no later than the date of grant
TSR ranking vs. constituents of the FTSE350
RealEstate Supersector Index (2023–2025)
28.0%
In line with median In line with upper quartile
TAR per share ranking vs. constituents of the FTSE350
Real Estate Supersector Index (2023–2025)
28.0%
In line with median In line with upper quartile
Operational energy intensity: cumulative reduction;
2025 vs 2019 baseline (kWh/m
2
)
8.0%
9.4% cumulative reduction 15.7% cumulative reduction
EPC ratings: % of floorspace A–C rated in 2025
8.0%
To be disclosed no later than the date of grant
No vesting below Threshold; straight-line vesting between Threshold and Stretch.
Any awards vesting for performance will be subject to an additional two-year holding period, during which time clawback
provisions will also apply. Further details of the grant date and number of interests awarded will be disclosed in next year’s report.
Implementation of Non-Executive Director Remuneration Policy for 2023
Chair and Non-Executive Director Fees
During the final quarter of 2022, the Board undertook its annual review of Non-Executive Director fees. Following
consideration of salary increases across the Group and indicative fee increases at sector and FTSE comparators, the Board
determined that the basic fee should be increased by 3.0% from £50,925 to £52,453 and that additional fees should be
increased by a similar rate. The Committee, in considering similar factors, determined that the fee payable to the Chair of
the Board should be increased by a similar rate from £231,750 to £238,703. Each of these fee increases is in line with senior
management and below the average increase applied to the broader employee population.
A summary of the fee increases, which are effective 1 January 2023, is set out in the table below:
Position 2022 fees 2023 fees
Base fees
Chair £231,750 £238,703
Non-Executive Director £50,925 £52,453
Additional fees
Senior Independent Director £5,995 £6,175
Audit & Risk Committee Chair £10,600 £10,900
Remuneration Committee Chair £10,600 £10,900
Nomination Committee Chair Note 1 n/a n/a
Health and Safety Committee Chair £10,600 £10,900
Sustainability Committee £10,600 £10,900
1. Role is undertaken by the Chair of the Board, with no additional fee payable in respect of chairing this Committee.
REMUNERATION COMMITTEE continued
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Directors’ interests (audited)
A table setting out the beneficial interests of the current Directors and their families in the share capital of the Company
as at 31 December 2022 is set out below. None of the Directors has a beneficial interest in the shares of any other Group
company. Since 31 December 2022, there have been no changes in the Directors’ interests in shares.
Ordinary shares
of 25p each at
31 December 2022
Ordinary shares
of 25p each at
31 December 2021
R Smith 372,959 295,586
J Lister 581,006 518,006
R Huntingford 10,350 10,135
E McMeikan 7,980 7,824
R Paterson 8,312 8,312
I Beato 1,724 1,724
S Pearce 1,186 1,163
T Jackson 0 0
S Smith 0 0
N Dulieu 0 n/a
Details of Executive Directors’ interests in share-based incentives are set out in the tables below.
Share price information
As at 31 December 2022 the middle market price for ordinary shares in the Company was 910.0p per share. During the
course of the year, the market price of the Company’s shares ranged from 791.5p to 1,207.0p per ordinary share.
Executive Directors’ shareholding requirements (audited)
The table below shows the shareholding of each Executive Director against their respective shareholding requirement as at
31 December 2022:
Interests
Shareholding
requirement
% of salary/
base fee
Current
shareholding
% of salary/
base fee
Requirement
met
Owned
outright
Subject to deferral/
holding period
Unvested and/or subject
to perf. conditions
Shares/
nil-cost
options
Options/
HMRC
options
Shares/
nil-cost
options
Options/
HMRC
options
Note 1 Note 2
R Smith 372,959 69,332 450 297,590 1,760 250% 714% Yes
J Lister 581,006 56,476 450 239,648 1,760 200% 1,352% Yes
R Huntingford 10,350 41%
E McMeikan 7,980 143%
R Paterson 8,312 149%
I Beato 1,724 31%
S Pearce 1,186 21%
T Jackson 0 n/a
S Smith 0 0%
N Dulieu 0 0%
1. Includes shares subject to a holding period under the LTIP and deferred bonus shares, where applicable. Excludes SAYE options.
2. Based on share price as at 31 December 2022 of 910.0p. Shares subject to deferral/holding periods are taken on a “net of tax” basis for the purposes of the
current shareholding calculation.
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0% 250% 500% 750% 1,000% 1,250% 1,500%
Shareholding requirement Current shareholding
Richard Smith
Joe Lister
250%
714%
200%
1,352%
Directors’ interests in shares and options under Unite incentives (audited)
Deferred bonus
Executive
Interests
held at
01.01.22
Granted
during
the year
Lapsed
during
the year
Vested
during
the year
Interests
held at
31.12 .22
End of
deferral
period
Richard Smith 5,067 – – 5,067 – 27.02.22
– 1,235 – – 1,235 24.02.24
Joe Lister 4,124 – – 4,124 – 27.02.22
– 1,055 – – 1,055 24.02.24
LTIP awards
Executive Plan
Interests
held at
01.01.22
Interests
awarded
during
the year
ESOS
exercise
price
Interests
vested during
the year
Interests
lapsed
during
the year
Interests
outstanding
at 31.12. 22
Period of
qualifying
conditions
Note 1
Richard Smith PSP 85,190 – – 31,349 53,841 –
24.07.19 –
24.07. 22ESOS 557 – 1,076.0p 204 353 –
PSP 117,383 – – – – 117, 383
23.04.20–
23.04.23ESOS 746 – 803.5p – – 746
PSP 87,070 – – – – 87,070
12.04.21–
12.04.24ESOS 479 – 1,083.5p – – 479
PSP – 93,137 – – – 93,137
10.04.22–
10.04.25ESOS – 535 1,121.0p – – 535
Joe Lister PSP 69,333 – – 25,514 43,819 –
24.07.19 –
24.07. 22ESOS 557 – 1,076.0p 204 353 –
PSP 95,510 – – – – 95,510
23.04.20–
23.04.23ESOS 746 – 803.5p – – 746
PSP 70,850 – – – – 70,850
12.04.21–
12.04.24ESOS 479 – 1,083.5p – – 479
PSP – 73,288 – – – 73,288
10.04.22–
10.04.25ESOS – 535 1,121.0p – – 535
1. All awards vesting for performance during the year are subject to an additional two-year holding period.
REMUNERATION COMMITTEE continued
162
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
Contents Generation – Page Contents Generation – Sub Page
Contents Generation - Section
SAYE
Executive
Options
held at
01.01.22
Granted
during
the year
Exercised
during
the year
Option
price per
share
Options
held at
31.12 .22
Maturity
date
Note 1
Richard Smith 2,122 – – 848.0p 2,122 01.12.22
– 2,098 – 857.6p 2,098 01.12. 25
Joe Lister 1,266 – 1,266 710.8p – 01.12.21
1,182 – – 760.8p 1,182 01.12.23
913 – – 985.2p 913 01.12.24
1. As at year-end, Richard Smith held 2,122 options under the 2019 scheme which had matured but not yet been exercised.
Details of the qualifying performance conditions in relation to the above referred-to awards made in prior years are set out
on previous pages or in earlier reports.
Awards made in prior years took the form of a combination of nil cost options under the PSP and HMRC-approved options
under the ESOS. No variations have been made to the terms or conditions of any awards.
The Directors’ Remuneration Report has been approved by the Remuneration Committee and signed on its behalf by:
Elizabeth McMeikan
Chair – Remuneration Committee
28 February 2023
163
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Contents Generation – Page Contents Generation – Sub Page
Contents Generation – Section
DIRECTORS’ REPORT
The Company is not aware of any agreements between
shareholders that may result in restrictions on the
transfers of securities and/or voting rights. No person
holds securities in the Company carrying special rights
with regard to control of the Company. Unless expressly
specified to the contrary, the Company’s Articles of
Association may be amended by special resolution of
theshareholders.
Authority to issue shares
The Directors may only issue shares if authorised to do so
by the Articles of Association or the shareholders in general
meeting. At the Company’s Annual General Meeting held
on 12 May 2022, shareholders granted an authority to
the Directors to allot ordinary shares up to an aggregate
nominal amount of £33,262,527 (which represented one-
third of the nominal value of the issued share capital of
the Company as at 23 March 2022). In accordance with
guidelines issued by the Investment Association, this
resolution also granted the Directors authority to allot
further equity securities up to the aggregate amount of
£33,262,527 (representing one-third of the nominal value
of the issued share capital of the Company as at 23 March
2022). This additional authority was only permitted for
fully pre-emptive rights issues. As at 31 December 2022,
the shares that had been allotted were to satisfy awards
under the Company’s share schemes and the scrip scheme
shares. As this authority is due to expire on 11 August
2023, shareholders will be asked to renew and extend the
authority, given to the Directors at the last Annual General
Meeting, to allot shares in the Company, or grant rights to
subscribe for, or to convert any security into, shares in the
Company for the purposes of Section 551 of the Companies
Act 2006. Further details on the resolution will be provided
in the Notice of this year’s Annual General Meeting and its
explanatory notes.
Disapplication of pre-emption rights
If the Directors wish to allot new shares and other equity
securities, or sell treasury shares, for cash (other than in
connection with an employee share scheme) company law
requires that these shares are offered first to shareholders
in proportion to their existing holdings. There may be
occasions, however, when the Directors need the flexibility
to finance business opportunities by the issue of shares
without a pre-emptive offer to existing shareholders. This
cannot be done under the Companies Act 2006 unless the
shareholders have first waived their pre-emption rights.
At the forthcoming Annual General Meeting, shareholders
will be asked to pass two special resolutions to grant the
Directors powers to disapply shareholders’ pre-emption
rights under certain circumstances. Further details on the
resolutions will be provided in the Notice of this year’s
Annual General Meeting.
As at 31 December 2022, the Company had received
notifications from the following companies and institutions
of themselves and their clients holding 3% or more of the
issued share capital of the Company. The Company has not
received any further notifications since that date through to
28 February 2023.
SHARE CAPITAL
Shareholder
Percentage
of share
capital
Canada Pension Plan Investment Board (CA) 18.26
BlackRock Inc 8.40
APG Asset Management NV (NL) 5.76
Norges Bank Investment Management 5.35
The Vanguard Group Inc 3.93
Royal London Asset Management Ltd (UK) 3.91
Share capital
At the date of this report, there are 400,293,418 ordinary
shares of 25p each in issue, all of which are fully paid-up
and quoted on the London Stock Exchange.
During the year and through to the date of this report, the
following numbers of ordinary shares of 25p each were
allotted and issued as follows:
•
865,069 – Unite share scrip scheme;
•
138,017 – pursuant to the exercise of options under
UniteGroup PLC Savings Related Share Option Scheme;
•
164,811 – pursuant to the exercise of options under
UniteGroup PLC Performance Share Plan; and
•
11,360 – pursuant to the exercise of options under
UniteGroup PLC Approved Scheme.
The rights attaching to the Company’s ordinary shares, as
well as the powers of the Company’s Directors, are set out
in the Company’s Articles of Association.
There are no restrictions on the transfer or voting rights of
ordinary shares in the capital of the Company (other than
those which may be imposed by law from time to time or as
set out in the Company’s Articles of Association).
The Directors have no authority to buy back the
Company’sshares.
In accordance with the Market Abuse Regulations, certain
employees are required to seek approval to deal in the
Company’s shares.
164
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
Change of control
All of the Company’s share schemes contain provisions
relating to a change of control. Outstanding rewards and
options would normally vest and become exercisable
on a change of control, subject to the satisfaction of
any performance conditions. Other than certain of the
Group’s banking facilities, there are no other significant
agreements to which the Company is a party that affect,
alter or terminate upon a change of control of the
Company following a takeover bid. Nor are there any
agreements between the Company and its Directors or
employees providing for compensation for loss of office or
employment that occurs because of a takeover bid.
Going concern and viability statement
The going concern statement and viability statement are
set out on pages 185–186 and page 81 respectively and are
incorporated into this Directors’ Report by reference.
Independent auditor and Disclosure
ofinformation to auditors
The Directors who held office at the date of approval of
the Directors’ Report confirm that, so far as they are each
aware, there is no relevant audit information of which the
Company’s auditor is unaware; and each Director has taken
all the steps that he/she ought to have taken as a Director
to make himself/herself aware of any relevant audit
information and to establish that the Company’s auditor is
aware of that information. This confirmation is given and
should be interpreted in accordance with the provisions
of section 418 of the Companies Act 2006. A resolution to
reappoint Deloitte as auditor of the Group will be put to
shareholders at the forthcoming Annual General Meeting.
Directors’ conflicts of interest
The Company has procedures in place for managing
conflicts of interest. A Director must notify the Chair (and
the Chair notifies the Chief Executive) if he/she becomes
aware that he/she, or any of his/her connected parties, may
have an interest in an existing or proposed transaction with
the Company or the Group. Directors have a continuing
duty to update any changes to these conflicts.
Political donations
No political donations, contributions or expenditure were
made during the year ended 31 December 2022.
Indemnities
There are no qualifying third-party indemnity provisions
or qualifying pension scheme indemnity provisions for the
benefit of any of the Directors.
Research and development
The Company is not currently carrying on any activities in
the field of research and development.
Branches outside the UK
The Company does not have any branches outside of the UK.
Appointment and replacement of Directors
The Company’s Articles of Association provide that
Directors may be appointed by the existing Directors or
by the shareholders in a general meeting. Any person
appointed by the Directors will hold office only until the
next general meeting, notice of which is first given after
their appointment and will then be eligible for re-election
by the shareholders. A Director may be removed by the
Company as provided for by applicable law and shall vacate
office in certain circumstances as set out in the Articles
of Association. In addition the Company may, by ordinary
resolution, remove a Director before the expiration of
his/her period of office and, subject to the Articles of
Association, may by ordinary resolution appoint another
person to be a Director instead. There is no requirement for
a Director to retire on reaching any age.
165
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Disclosures required under Listing Rule 9.8.4R
For the purposes of LR 9.8.4C, the information required to be disclosed by LR 9.8.4R can be found in the following locations
within the Annual Report:
Management Report
This Directors’ Report together with the Strategic Report
and other sections from the Annual Report forms the
Management Report for the purposes of DTR 4.1.8 R.
Annual General Meeting
The Annual General Meeting of the Company will be held
at the Company’s registered office at South Quay, Temple
Back, Bristol, BS1 6FL at 9.30am on 18 May 2023. We
request that shareholders who do wish to attend in person
preregister their intention to attend to help us manage
numbers. Shareholders are encouraged to monitor our
website at https://www.unitegroup.com/investors/agm and
London Stock Exchange announcements for any updates
regarding the Annual General Meeting arrangements.
Formal notice of the meeting is given separately and will be available on the
Company’s website at: unitegroup.com/investors
This report was approved by the Board on 28 February 2023
and signed on its behalf by
Christopher Szpojnarowicz
Company Secretary
28 February 2023
DIRECTORS’ REPORT continued
INFORMATION REQUIRED UNDER LR 9.8.4R REFERENCE
(1) Amount of interest capitalised and tax relief Note 3.1, page 201
(2) Publication of unaudited financial information N/A
(4) Details of long-term incentive schemes Pages 153 and 158–160
(5) Waiver of emoluments by a Director N/A
(6) Waiver of future emoluments by a Director N/A
(7) Non-pre-emptive issues of equity for cash N/A
(8) Item (7) in relation to major subsidiary undertakings N/A
(9) Parent participation in a placing by a listed subsidiary N/A
(10) Contracts of significance N/A
(11) Provision of services by a controller shareholder N/A
(12) Shareholder waiver of dividends N/A
(13) Shareholder waiver of future dividends N/A
(14) Agreements with controlling shareholders N/A
All the information referenced above is incorporated by reference into the Directors’ Report.
Other information incorporated by reference
The following information in the Strategic Report and
financial statements is incorporated into this Directors’
Report by reference:
•
Results and dividend on pages 40 and 224
•
Greenhouse Gas Emissions and Energy Consumption
Disclosures on pages 61–65
•
Financial instruments and financial risk management
on page 77 and Section 4 of the notes to the financial
statements on page 213
•
Future developments on pages 36–37
•
Employment of disabled persons/employee
involvement on page 50
•
Workforce engagement on page 103
•
Engagement with customers, partners, suppliers
andothers on pages 10–11
The Corporate Governance Report (which includes
details of Directors who served throughout the
year) on pages 88–166, the Statement of Directors’
responsibilities on page 167 and details of post balance
sheet events on page 232 are incorporated into this
Directors’ Report byreference.
166
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for preparing the Annual
Report and Accounts and the Group and Parent Company
financial statements in accordance with applicable law
and regulations.
Company law requires the Directors to prepare Group and
Parent Company financial statements for each financial
year. Under that law they are required to prepare the Group
financial statements in accordance with IFRS as adopted by
the UK (Adopted IFRS) and applicable law and have elected
to prepare the Parent Company financial statements in
accordance with United Kingdom Accounting Standards
including FRS 101 – Reduced Disclosure Framework (“United
Kingdom Generally Accepted Practice”).
Under company law, the Directors must not approve the
financial statements unless they are satisfied that they give
a true and fair view of the state of affairs of the Group and
Parent Company and of their profit or loss for that period.
In preparing each of the Group and Parent Company
financial statements, the Directors are required to:
•
select suitable accounting policies and then apply them
consistently;
•
make judgements and estimates that are reasonable and
prudent;
•
state whether they have been prepared in accordance
with IFRSs as adopted by the UK (or in accordance with
UK Generally Accepted Practice); and
•
prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Group and the Parent Company will continue in business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Parent Company’s transactions and disclose with
reasonable accuracy at any time the financial position of the
Parent Company and enable them to ensure that its financial
statements comply with the Companies Act 2006. They have
general responsibility for taking such steps as are reasonably
open to them to safeguard the assets of the Group and to
prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors
are also responsible for preparing a Directors’ Report,
Directors’ Remuneration Report and Corporate Governance
statement that comply with that law and those regulations.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the Company’s website. Legislation in the UK governing
the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
The Directors confirm that:
•
the financial statements, prepared in accordance with
the applicable set of accounting standards, give a true
and fair view of the assets, liabilities, financial position
and profit or loss of the Company and the undertakings
included in the consolidation taken as a whole; and
•
the Directors’ Report includes a fair review of the
development and performance of the business and the
position of the issuer and the undertakings included
in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that
they face.
R S Smith J J Lister
Director Director
28 February 2023
167
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
CONTENTS
169 Independent auditor’s Report
179 Consolidated income statement
179 Consolidated statement of
comprehensive income
180 Consolidated balance sheet
181 Company balance sheet
182 Consolidated statement of changes
inshareholders’ equity
183 Company statement of changes
inshareholders’ equity
184 Consolidated statement of cash flows
185 Notes to the financial statements
FINANCIAL
STATEMENTS
168
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
To the members of Unite Group PLC
INDEPENDENT AUDITOR’S REPORT
Report on the audit of the financial statements
1. Opinion
In our opinion:
• the financial statements of The Unite Group PLC (the “Parent Company”) and its subsidiaries (the “Group”) give a
true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 December 2022 and of the
Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in accordance with United Kingdom adopted
international accounting standards;
• the Parent Company financial statements have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice, including Financial Reporting Standard 101 “Reduced Disclosure
Framework”; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements which comprise:
• the consolidated income statement;
• the consolidated statement of comprehensive income;
• the consolidated and Parent Company balance sheets;
• the consolidated and Parent Company statements of changes in equity;
• the consolidated statement of cash flows; and
• the related sections 1 to 9.
The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable
law and United Kingdom adopted international accounting standards. The financial reporting framework that has been
applied in the preparation of the Parent Company financial statements is applicable law and United Kingdom Accounting
Standards, including FRS 101 “Reduced Disclosure Framework” (United Kingdom Generally Accepted Accounting Practice).
2. Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Ourresponsibilities under those standards are further described in the auditor’s responsibilities for the audit of the
financial statements section of our report.
We are independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant
to our audit of the financial statements in the UK, including the Financial Reporting Council’s (the FRC’s) Ethical Standard
as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these
requirements. The non-audit services provided to the Group and Parent Company for the year are disclosed in section 2.6
to the financial statements. We confirm that we have not provided any non-audit services prohibited by the FRC’s Ethical
Standard to the Group or the Parent Company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
169
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
3. Summary of our audit approach
Key audit matters
The key audit matters that we identified in the current year were:
• Investment property and development property valuation; and
• Accounting for Joint Ventures.
Within this report, key audit matters are identified as follows:
Newly identified    Increased level of risk    Similar level of risk
Decreased level of risk
Materiality
The materiality that we used for the Group financial statements was £38.0m which was
determined on the basis of net assets. However, we use a lower materiality threshold of
£8.1m for balances which impact EPRA earnings.
Scoping
Our Group audit scope comprises the audit of Unite Group Plc as well as the Group’s joint
ventures: The Unite UK Student Accommodation Fund (USAF) and The London Student
Accommodation Vehicle (LSAV). All audit work was completed by the Group audit team.
Significant changes in
our approach
There were no significant changes to our approach from the prior year.
4. Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting
inthe preparation of the financial statements is appropriate.
Our evaluation of the Directors’ assessment of the Group’s and Parent Company’s ability to continue to adopt the going
concern basis of accounting included:
• Obtaining an understanding of the relevant controls over the going concern process, including management’s process
to formulate the cashflow forecasts as well as the Board approval process;
• Understanding the financing facilities available to the Group and Parent Company, including the associated covenants;
• Assessing the outcome of the reverse stress testing performed by management;
• Challenging the revenue assumptions, for the outturn of the 2022/23 academic year and the assumptions for the
2023/24 academic year. For the 2023/24 academic year specifically, we assessed the Group’s current forward sales
bookings and UCAS application data to forecast occupancy assumptions for reasonableness;
• Challenging the cost assumptions within the forecasts, including consideration of previously incurred costs, the impact
of cost inflation, and assumptions made relating to expected future costs associated with climate change legislation;
• Challenging the likelihood of downside scenarios arising relative to reverse stress tests with reference to the income
and cost assumptions. This included reference to the occupancy rates achieved during the previous academic years
which were negatively impacted by lockdown requirements and restrictions in university in-person teaching;
• Determining the sufficiency of the Group’s liquidity and headroom positions with reference to borrowing facility
agreements, including the consideration of the availability of undrawn down facilities as well as facilities due to expire
within the going concern period of assessment;
• Testing the arithmetical accuracy of the models used to prepare the Group’s forecast and related scenarios; and
• Assessing the appropriateness of the Group’s disclosure concerning the going concern basis of preparation.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt on the Group’s and Parent Company’s ability to continue as a
going concern for a period of at least twelve months from when the financial statements are authorised for issue.
In relation to the reporting on how the Group has applied the UK Corporate Governance Code, we have nothing material
to add or draw attention to in relation to the Directors’ statement in the financial statements about whether the Directors
considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant
sections of this report.
To the members of Unite Group PLC
INDEPENDENT AUDITOR’S REPORT continued
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
170
5. Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
5.1. Investment property and investment property under development valuations
Key audit
matter
description
The Group’s principal assets are investment properties (2022: £3,713.7m; 2021: £3,192.8m) and investment
properties under development (2022: £202.7m; 2021: £324.1m). The Group also holds investments in its
joint ventures, USAF and LSAV, with their principal assets also being investment properties. The investment
properties are carried at fair value based on an appraisal by the Group’s external valuers. Valuations are
carried out at six-monthly intervals for the Group and quarterly for the joint ventures in accordance with
the Royal Institution of Chartered Surveyors (RICS) Valuation – Professional Standards (the Red Book),
taking into account transactional evidence during the year.
The valuation is underpinned by a number of estimates and assumptions as it requires the estimation of
property yields, occupancy and property management costs. A small change in these assumptions could
have a significant impact on the valuation of the properties and there is an associated fraud risk due to the
risk of management override of controls relating to the valuation process. With regards to the valuation of
the USAF and LSAV properties, small changes could also have a significant impact on a key input to the
calculation of a performance fee if the payout hurdle rate is achieved as this is based on the net asset values
of the funds. Valuations are also impacted by cladding remediation requirements and expectations relating
to climate change legislative requirements.
With regards to the investment properties under development, additional estimation is required to forecast
discounted cash flows with a deduction for construction costs to complete.
Refer to page 119 (Audit & Risk Committee Statement), section 3.1: Wholly owned property assets and
section 3.4: Investments in joint ventures. Critical accounting judgements and key sources of estimation
uncertainty disclosures relating to investment property and development property valuation are set out in
Sections 1 and 3.1.
How the scope
of our audit
responded to
the key audit
matter
We carried out the following audit procedures in response to the identified key audit matter:
Understanding the properties and relevant controls:
• Obtained an understanding of and tested the relevant controls over the investment property and
development property valuation processes.
• Met with key management to enhance our knowledge of the portfolio and to understand their internal
valuation process, the development appraisal process and to identify any key properties ofinterest.
Data provided to the valuer
• Challenged the accuracy, completeness and consistency of the information provided to the external
valuers; this work included testing a sample of income and tenancy data back to Group management
information which we had tested for accuracy and completeness.
• Tested on a sample basis the forecast cost to complete against budget and costs incurred to date.
External valuation
• Assessed the objectivity, competence and capability of the Group’s valuers and read their terms of
engagement with the Group to determine whether there were any matters that might have affected their
objectivity or may have imposed scope limitations on their work.
• We obtained the external valuation reports and, along with our valuation specialists within our Deloitte
Real Assets Advisory team, met with the external valuer to discuss the results of their work on a sample
of properties, as well as their views of the broader market.
• Understood and challenged the assumptions used in relation to key drivers such as rental income and
growth, occupancy, yields and property management costs including comparing them to the trends at the
end of the year and the following year’s budget.
• With the assistance of our valuation specialists, benchmarked the assumptions used against market data,
including relevant transactions.
• Specifically challenged the valuers as to whether any special assumptions had been made and how they
approach the impact of climate change in the valuations.
• Assessed the valuation methodology used and considered compliance with the Red Book guidance. We
also tested the integrity of the model used by the external valuer.
171
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
• Reconciled the external valuation reports to underlying financial records to test for completeness and
accuracy within the Group’s financial statements.
• Compared the property specific assumptions to assess whether there is consistency within the portfolio
as well as consistency with related assumptions used in other estimates.
Disclosures
• Assessed the appropriateness of the Group’s valuation disclosures, including the related sensitivities.
Key
observations
We are satisfied with the approach and methodology adopted in valuing the property portfolio and
consider the investment property and development property valuations to be suitable for inclusion in the
financial statements at 31 December 2022.
5.2. Accounting for Joint ventures
Key audit
matter
description
A significant proportion of the Group’s assets is held within USAF and LSAV, jointly owned entities that are
accounted for under the equity method as joint ventures (2022: £1,226.6m; 2021: £1,044.1m), on the basis
that Unite does not control the entities. At 31 December 2022 Unite had a 28% (2021: 22%) ownership of
USAF and 50% (2021: 50%) ownership of LSAV, and acts as manager of both joint venture vehicles.
Due to the complexity of the contractual arrangements, and the Group’s role as manager of the joint
venture vehicles, the assessment of control involves judgements around a number of significant factors,
particularly with regard to USAF. USAF is a multi-investor fund with an Advisory Committee and the Group’s
ownership stake is subject to change.
In accordance with the requirements of IFRS 10 Consolidated Financial Statements, there is a need to assess
control with regards to the ability to direct relevant activities, to have exposure to variable returns and the
ability to use power to affect returns at each reporting period. Management has assessed (in line with the
prior year) that the Group does not have control over USAF and LSAV, but has joint control. Consequently
management has accounted for the joint ventures under the equity method rather than consolidating them
within the Group’s financial statements.
Refer to page 119 (Audit & Risk Committee Statement) and section 3.4: Investments in joint ventures.
Thecritical accounting judgement disclosure relating to accounting for joint ventures is set out in Section 1.
How the scope
of our audit
responded to
the key audit
matter
Our audit procedures focused on assessing the activities of the businesses, understanding the contractual
agreements in place and identifying the methodology applied by management in reaching their business
decisions. This was done in order to consider the appropriateness of the classification of these
arrangements as joint ventures in accordance with the requirements of IFRS.
With regards to both USAF and LSAV (the funds), we have:
• Obtained an understanding of the relevant controls over the accounting for joint ventures;
• Assessed how the key activities of the fund impact returns to the Group and challenged management’s
own consideration of these vwfactors in their application of IFRS, including whether there was evidence
of contradictory evidence;
• Assessed the three key factors relating to control in accordance with the judgement required under IFRS
10. This included whether Unite had exercised control over the funds; and
• Reviewed the fund agreements in the year to confirm that there have been no changes to the USAF fund
agreement and to assess the changes to the LSAV fund agreement following the extension of the fund in
the year. For the changes to the LSAV fund agreement we considered whether these changes impacted
the key factors to assess control.
Given the particular focus on USAF, we have:
• Assessed the role of the USAF Advisory Committee including activities which it is responsible for as set
out by the fund agreement;
• Assessed whether the Group has the sole power to direct the activities that are likely to most significantly
affect the returns of USAF in the future, and therefore whether Unite does have control of USAF; and
• Evaluated the impact of changes to the percentage ownership of the fund and whether this impacts
Unite’s power and control.
Key
observations
We are satisfied with management’s conclusion that there have been no changes to the role played by the
Group as investor and asset/development manager, or to the USAF fund agreement and that the increase in
ownership does not impact control.
We are satisfied with management’s conclusion that the Group does not have control of the Joint Ventures.
Therefore, treatment as joint ventures is considered to be appropriate.
To the members of Unite Group PLC
INDEPENDENT AUDITOR’S REPORT continued
5.1. Investment property and investment property under development valuations continued
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
172
6. Our application of materiality
6.1. Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the
economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both
inplanning the scope of our audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group financial statements Parent Company financial statements
Materiality £38.0m (2021: £35.5m) £37.6m (2021: £31.2m)
Basis for determining
materiality
1% of net assets 1% of net assets
Rationale for the
benchmark applied
We consider net assets to be a critical financial
performance measure for the Group on the basis
that it is a key metric used by management,
investors, analysts and lenders.
As the parent holding company the principal
activity is to hold the investments in subsidiaries.
Therefore, the net assets balance is considered to
be the key driver of the Company’s performance
and the most relevant benchmark for materiality.
In addition to net assets, we consider the European Public Real Estate (EPRA) earnings to be a critical financial
performance measure for the Group and we applied a lower threshold of £8.1m (2021: £5.5m) based on 5% (2021: 5%)
ofthat measure for testing of all balances impacting this financial performance measure.
EPRA earnings impacting measures
Materiality
Net Assets
Group materiality
EPRA earnings
Account balance
specific materiality
Component
materiality range
£22.8m to £37.6m
Group materiality
£38.0m
Audit & Risk
Committee
reporting threshold
£1.9m
Component
materiality range
£4.8m to £7.7m
Account balance
specific materiality
£8.1m
Audit & Risk
Committee
reporting threshold
£1.9m
EPRA earnings
£161.9m
Net Assets
£3,818.5m
173
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected
and undetected misstatements exceed the materiality for the financial statements as a whole.
Group financial statements Parent Company financial statements
Performance
materiality
70% (2021: 70%) of Group materiality 70% (2021: 70%) of Parent Company materiality
Basis and rationale
for determining
performance
materiality
In determining performance materiality, we considered the following factors:
a. our risk assessment, including our assessment of the Group’s overall control environment, and
that we consider it appropriate to rely on controls over a number of business processes; and
b. our past experience of the audit, which has indicated a low number of corrected and uncorrected
misstatements identified in prior periods.
6.3. Error reporting threshold
We agreed with the Audit & Risk Committee that we would report to the Committee all audit differences in excess of
£1.9m(2021: £1.8m), as well as differences below that threshold that, in our view, warranted reporting on qualitative
grounds. We also report to the Audit & Risk Committee on disclosure matters that we identified when assessing the
overall presentation of the financial statements.
7. An overview of the scope of our audit
7.1. Identification and scoping of components
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including Group-wide
controls, and assessing the risks of material misstatement at the Group level.
The Group is audited by one audit team, led by the Senior Statutory Auditor. We engage with staff at the Group’s Bristol
head office, as the books and records for each entity within the Group are maintained at this location. The Group only
operates within the United Kingdom – this includes Unite Group plc and its related subsidiaries, as well as the two joint
ventures, USAF and LSAV.
We audit all of the results of the Group together with USAF and LSAV, for the purposes of our Group audit. We have also
tested the consolidation process to confirm our conclusion that there were no significant risks of material misstatement
ofthe aggregated financial information.
7.2. Our consideration of the control environment
From our understanding of the Group and after assessing relevant controls, we tested and relied on controls in
performing our audit of rental income recorded within the Group’s room booking system.
We also tested relevant controls relating to the valuation of investment and development property, given the significance
of this balance to the Group.
In addition, we have obtained an understanding of the relevant controls such as those relating to the financial reporting
cycle, and those in relation to our other key audit matters.
The Group uses the following application systems for the recording and reporting of its financial statements:
• Oracle EBS – general ledger and room booking system;
• Portal Agent Desktop (PAD) – room booking portal used by students and implemented on top of Oracle EBS and
therefore where revenue transactions are initiated; and
• HFM – used to prepare the Group consolidation at the Group’s Head Office.
We involved IT specialists to assess the relevant controls over the three systems set out above. Working with IT specialists
we identified and assessed relevant risks arising from each relevant IT system and the supporting infrastructure
technologies based on the role of application in the Group’s flow of transactions. We obtained an understanding of the
ITenvironment as part of these risk assessment procedures. We further performed the following procedures:
• Determined whether each general IT control, individually or in combination with other controls, was appropriately
designed to address the risk;
• Obtained sufficient evidence to assess the operating effectiveness of the controls across the full audit period; and
• Performed additional procedures where required if there were exceptions to the operation of those controls, including
relevant mitigating controls.
To the members of Unite Group PLC
INDEPENDENT AUDITOR’S REPORT continued
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
174
7.3. Our consideration of climate-related risks
We have made enquiries of management to understand the processes in place to assess the potential impact of climate
change on the business and the financial statements. Management consider climate change to be a principal risk which
particularly impacts the cost of retrofitting rental accommodation to improve their sustainability credentials and comply
with future regulations. These risks are consistent with those identified through our own risk assessment process.
As part of our identification of key audit matters, as detailed in section 5.1 above, we consider there to be a risk in relation
to climate change as part of the valuation of investment properties and investment properties under development.
There is a risk that the valuation does not include the relevant assumptions around climate change, principally, capital
expenditure required to bring the properties up to a certain environmental standard, to the extent assumed by a third
party when determining fair value.
We have reviewed the disclosures in the principal risk section of the Annual Report and consider that management has
appropriately disclosed the current risk that has been identified.
8. Other information
The other information comprises the information included in the Annual Report, other than the financial statements and
our auditor’s report thereon. The Directors are responsible for the other information contained within the Annual Report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to
be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether
this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed,
we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
9. Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement, the Directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as
the Directors determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s
ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going
concern basis of accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease
operations, or have no realistic alternative but to do so.
175
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
10. Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and
areconsidered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
11. Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line
with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud.
Theextent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
11.1. Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance
with laws and regulations, we considered the following:
• the nature of the industry and sector, control environment and business performance including the design of the
Group’s remuneration policies, key drivers for Directors’ remuneration, bonus levels and performance targets;
• results of our enquiries of management, internal audit, the Group’s internal legal counsel, the Directors and the
Audit&Risk Committee about their own identification and assessment of the risks of irregularities;
• any matters we identified having obtained and reviewed the Group’s documentation of their policies and procedures
relating to:
• identifying, evaluating and complying with laws and regulations and whether they were aware of any instances
ofnon-compliance;
• detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or
allegedfraud;
• the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations; and
• the matters discussed among the audit engagement team and relevant internal specialists, including tax, valuations,
pensions, IT, forensic and industry specialists regarding how and where fraud might occur in the financial statements
and any potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation
for fraud and identified the greatest potential for fraud in the following areas: investment property and development
property valuation owing to the potential manipulation and override by management of the controls relating to the
valuation process. In common with all audits under ISAs (UK), we are also required to perform specific procedures to
respond to the risk of management override.
We also obtained an understanding of the legal and regulatory framework that the Group operates in, focusing on
provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures
in the financial statements. The key laws and regulations we considered in this context included the UK Companies Act,
Listing Rules, and tax legislation.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial
statements but compliance with which may be fundamental to the Group’s ability to operate or to avoid a material
penalty. These included the Group’s compliance with health and safety matters, including fire safety and fire cladding.
To the members of Unite Group PLC
INDEPENDENT AUDITOR’S REPORT continued
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
176
11.2. Audit response to risks identified
As a result of performing the above, we identified the valuation of investment property and development property as a
key audit matter related to the potential risk of fraud. The key audit matters section of our report explains the matter in
more detail and also describes the specific procedures we performed in response to that key audit matter.
In addition to the above, our procedures to respond to risks identified included the following:
• reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with
provisions of relevant laws and regulations described as having a direct effect on the financial statements;
• enquiring of management, the Audit and Risk Committee and in-house and external legal counsel concerning actual
and potential litigation and claims;
• performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of
material misstatement due to fraud;
• reading minutes of meetings of those charged with governance, reviewing internal audit reports and reviewing
correspondence with HMRC; and
• in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries
and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a
potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the
normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team
members including internal specialists and remained alert to any indications of fraud or non-compliance with laws
andregulations throughout the audit.
Report on other legal and regulatory requirements
12. Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance
with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
• the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the Parent Company and their environment
obtained in the course of the audit, we have not identified any material misstatements in the Strategic Report or the
Directors’Report.
13. Corporate Governance statement
The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and that
part of the Corporate Governance statement relating to the Group’s compliance with the provisions of the UK Corporate
Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
Corporate Governance statement is materially consistent with the financial statements and our knowledge obtained
during the audit:
• the Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting
andany material uncertainties identified set out on page 94;
• the Directors’ explanation as to its assessment of the Group’s prospects, the period this assessment covers and
whythe period is appropriate set out on page 81;
• the Directors’ statement on fair, balanced and understandable set out on page 95;
• the Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks
set out on page 95;
• the section of the Annual Report that describes the review of effectiveness of risk management and internal
controlsystems set out on page 77; and
• the section describing the work of the Audit & Risk Committee set out on pages 119–124.
177
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
14. Matters on which we are required to report by exception
14.1. Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have
notbeen received from branches not visited by us; or
• the Parent Company financial statements are not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
14.2. Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of Directors’
remuneration have not been made or the part of the Directors’ remuneration report to be audited is not in agreement
with the accounting records and returns.
We have nothing to report in respect of these matters.
15. Other matters which we are required to address
15.1. Auditor tenure
Following the recommendation of the Audit & Risk Committee, we were appointed by the Board on 10 June 2015 to audit
the financial statements for the year ending 31 December 2015 and subsequent financial periods. The period of total
uninterrupted engagement including previous renewals and reappointments of the firm is 8 years, covering the years
ending 31 December 2015 to 31 December 2022.
15.2. Consistency of the audit report with the additional report to the Audit & Risk Committee
Our audit opinion is consistent with the additional report to the Audit & Risk Committee we are required to provide
inaccordance with ISAs (UK).
16. Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a
body, for our audit work, for this report, or for the opinions we have formed.
As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule (DTR) 4.1.14R, these
financial statements form part of the European Single Electronic Format (ESEF) prepared Annual Financial Report filed
on the National Storage Mechanism of the UK FCA in accordance with the ESEF Regulatory Technical Standard (ESEF RTS).
This auditor’s report provides no assurance over whether the annual financial report has been prepared using the single
electronic format specified in the ESEF RTS.
Stephen Craig (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
28 February 2023
To the members of Unite Group PLC
INDEPENDENT AUDITOR’S REPORT continued
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
178
Note
2022
£m
2021
£m
Rental income 2.4 2 41.7 209. 0
Other income 2.4 1 7. 6 5 7. 9
Total revenue 25 9.3 26 6.9
Cost of sales (70. 3) (6 4 .4)
Expected credit losses (1.7) (3. 3)
Operating expenses (3 1.0) (36. 3)
Results from operating activities before gains/(losses) on property 156 . 3 16 2 .9
Loss on disposal of property (1 5.6) (12 . 0)
Net valuation gains/(losses) on property (owned and under development) 3.1 112 .7 11 6 . 9
Net valuation losses on property (leased) 3.1 (9. 3) (11 .1)
Profit before net financing gains/(costs) and share of joint venture profit 2 4 4 .1 256.7
Loan interest and similar charges 4.3 (29. 3) (3 4 .2)
Interest on lease liability 4.3 (8 .1) (8. 5)
Mark to market changes on interest rate swaps 4.3 70.7 10 . 9
Swap cancellation fair value settlements and loan break costs 4.3 – (4 . 2)
Finance gains/(costs) 33. 3 (36. 0)
Finance income 4.3 0.2 –
Net financing gains/(costs) 33.5 (3 6. 0)
Share of joint venture profit 3.4b 80. 4 12 2 . 4
Profit before tax 358 .0 3 4 3 .1
Current tax 2.5a (0 .7) 0 .9
Deferred tax 2.5a (0 .9) 0.5
Profit for the year 356.4 34 4.5
Profit for the year attributable to
Owners of the Parent Company 3 5 5 .1 3 42.4
Non-controlling interest 1. 3 2 .1
356.4 34 4.5
Earnings per share
Basic 2.2c 88 .9p 85.9p
Diluted 2.2c 8 8 .7p 85.7p
All results are derived from continuing activities.
Note
2022
£m
2021
£m
Profit for the year 356.4 34 4.5
Mark to market movements on hedging instruments 4.5a – 16 . 2
Hedges reclassified to profit or loss – (0 .9)
Share of joint venture mark to market movements on hedging instruments 3.4b 4 .7 0.6
Other comprehensive income for the year 4 .7 15. 9
Total comprehensive income for the year 3 6 1 .1 360. 4
Attributable to
Owners of the parent company 35 9.8 358.3
Non-controlling interest 1. 3 2 .1
3 6 1 .1 360.4
All other comprehensive income may be classified as profit and loss in the future.
There are no tax effects on items of other comprehensive income.
For the year ended 31 December 2022
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2022
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
179
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Note
2022
£m
2021
£m
Assets
Investment property (owned) 3.1 3,623.4 3,095.1
Investment property (leased) 3.1 90. 3 9 7. 7
Investment property (under development) 3.1 20 2 .7 3 2 4 .1
Investment in joint ventures 3.4b 1, 2 26 .6 1 , 0 4 4 .1
Other non-current assets 3.3b 21. 5 18 . 9
Interest rate swaps 4.2 7 3.2 –
Right of use assets 3.3a 2 .7 3.6
Deferred tax asset 2.5d 2 .1 3.0
Total non-current assets 5,242.5 4,58 6.5
Assets classified as held for sale 3.1 – 228.2
Interest rate swaps 4.2 – 6 .1
Inventories 3.2 12 . 8 12 .1
Trade and other receivables 5.2 10 5. 2 1 08.8
Cash and cash equivalents 5.1 38 .0 10 9 . 4
Total current assets 15 6. 0 4 64.6
Total assets 5,3 98.5 5 , 0 5 1 .1
Liabilities
Interest rate swaps 4.2 – (3.6)
Lease liabilities 4.6a (4.8) (4 .9)
Trade and other payables 5.4 (19 1. 5) (20 0 .7)
Current tax liability (0. 8) (0 .1)
Provisions 5.5 (2 9.5) (33.5)
Total current liabilities (226 .6) (242.8)
Borrowings 4.1 (1, 2 6 5. 9) (1,1 6 2 . 0)
Lease liabilities 4.6a (8 7. 5) (91. 9)
Total non-current liabilities (1,353.4) (1,253.9)
Total liabilities (1, 5 8 0. 0) (1, 4 9 6.7)
Net assets 3,81 8.5 3,554 .4
Equity
Issued share capital 4.8 1 0 0 .1 99.8
Share premium 4.8 2 ,1 6 2 . 0 2 ,161. 2
Merger reserve 40. 2 40. 2
Retained earnings 1, 4 83 . 6 1, 2 2 5 . 0
Hedging reserve 6.2 1. 6
Equity attributable to the owners of the Parent Company 3 , 7 9 2 .1 3 , 5 2 7. 8
Non-controlling interest 26.4 26.6
Total equity 3,818.5 3,554 .4
The financial statements of The Unite Group PLC, registered number 03199160, were approved and authorised for issue
by the Board of Directors on 28 February 2023 and were signed on its behalf by:
R S Smith J J Lister
Director Director
At 31 December 2022
CONSOLIDATED BALANCE SHEET
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
180
Note
2022
£m
2021
£m
Assets
Investments in subsidiaries 3.5 2,397.0 2,143.5
Loans to Group undertakings 5.2 2,076.9 1,928.3
Interest rate swaps 4.2 73.2 –
Total non-current assets 4,547.1 4,071.8
Interest rate swaps 4.2 – 6.0
Trade and other receivables 5.2 0.1 0.1
Cash and cash equivalents 0.7 0.2
Total current assets 0.8 6.3
Total assets 4,547.9 4,078.1
Current liabilities
Interest rate swaps 4.2 – (3.6)
Amounts due to Group undertakings 5.4 (70.3) (38.0)
Other payables 5.4 (9.5) (6.4)
Total current liabilities (79.8) (48.0)
Borrowings 4.1 (649.6) (542.2)
Interest rate swaps 4.2 – –
Total non-current liabilities (649.6) (542.2)
Total liabilities (729.4) (590.2)
Net assets 3,818.5 3,4 87.9
Equity
Issued share capital 4.8 100.1 99.8
Share premium 4.8 2,162 .0 2,161.2
Merger reserve 40.2 40.2
Hedging reserve 1.3 1.5
Retained earnings 1,514.9 1,185.2
Total equity 3,818.5 3,4 87.9
Total equity is wholly attributable to equity holders of Unite Group plc. The profit of Unite Group plc in 2022 was
£426.1million (2021: £419.5m).
The financial statements of The Unite Group PLC, registered number 03199160, were approved and authorised for issue
by the Board of Directors on 28 February 2023 and were signed on its behalf by:
R S Smith J J Lister
Director Director
At 31 December 2022
COMPANY BALANCE SHEET
181
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Note
Issued
share
capital
£m
Share
premium
£m
Merger
reserve
£m
Retained
earnings
£m
Hedging
reserve
£m
Attributable
to owners of
the Parent
£m
Non-
controlling
interest
£m
Total
£m
At 1 January 2022 99. 8 2 ,1 6 1 . 2 4 0.2 1, 2 25 .0 1. 6 3 , 5 2 7. 8 26 .6 3,55 4.4
Profit for the year – – – 3 5 5 .1 – 3 5 5 .1 1. 3 356.4
Other comprehensive income
for the year:
Share of joint venture mark
tomarket movements on
hedging instruments 3.4b – – – – 4 .7 4 .7 – 4 .7
Total comprehensive
income for the year – – – 3 5 5 .1 4 .7 359. 8 1. 3 3 6 1 .1
Shares issued 4.8 0.3 0.8 – – – 1 .1 – 1 .1
Deferred tax on share-based
payments – – – 0. 3 – 0. 3 – 0.3
Fair value of share-based
payments – – – 1. 3 – 1. 3 – 1. 3
Own shares acquired – – – (1.7) – (1.7) – (1.7)
Unwind of realised swap gain – – – – (0 .1) (0 .1) – (0 .1)
Dividends paid to owners
ofthe parent company 4.9 – – – (9 6. 4) – (96 .4) – (9 6. 4)
Dividends to non-controlling
interest – – – – – – (1. 5) (1. 5)
At 31 December 2022 1 0 0 .1 2 ,1 6 2 . 0 40. 2 1, 4 8 3. 6 6. 2 3 , 7 9 2 .1 26.4 3,818.5
Note
Issued
share
capital
£m
Share
premium
£m
Merger
reserve
£m
Retained
earnings
£m
Hedging
reserve
£m
Attributable
to owners of
the Parent
£m
Non-
controlling
interest
£m
Total
£m
At 1 January 2021 9 9. 5 2 ,1 6 0 . 3 4 0.2 9 49.0 (14 .1) 3, 2 3 4.9 2 5 .1 3, 260 .0
Profit for the year – – – 342 .4 – 342. 4 2 .1 34 4.5
Other comprehensive income
for the year:
Mark to market movements
on hedging instruments – – – – 16 . 2 16 . 2 – 16 . 2
Hedges reclassified to
profitor loss – – – – (0 .9) (0.9) – (0 .9)
Share of joint venture mark
tomarket movements on
hedging instruments 3.4b – – – – 0.6 0.6 – 0.6
Total comprehensive
income for the year – – – 3 42.4 15 . 9 35 8.3 2 .1 36 0.4
Shares issued 4.8 0. 3 0 .9 – – – 1. 2 – 1. 2
Deferred tax on share-based
payments – – – 0. 3 – 0. 3 – 0.3
Fair value of share-based
payments – – – 2. 4 – 2.4 – 2. 4
Own shares acquired – – – (1. 3) – (1. 3) – (1. 3)
Unwind of realised swap gain – – – – (0 .2) (0. 2) – (0. 2)
Dividends paid to owners
ofthe parent company 4.9 – – – (6 7. 8) – (6 7. 8) – (6 7. 8)
Dividends to non-controlling
interest – – – – – – (0 .6) (0.6)
At 31 December 2021 9 9.8 2 ,1 6 1 . 2 40. 2 1, 2 2 5. 0 1.6 3 , 5 2 7. 8 26 .6 3,554 .4
The notes on pages 185–242 form part of the financial statements.
For the year ended 31 December 2022
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
182
Note
Issued
share
capital
£m
Share
premium
£m
Merger
reserve
£m
Hedging
reserve
£m
Retained
earnings
£m
Total
£m
At 1 January 2022 99.8 2,161.2 40.2 1.5 1,185.2 3,487.9
Profit and total comprehensive
income for the year – – – – 426.1 426.1
Shares issued 4.8 0.3 0.8 – – – 1.1
Unwind of realised swap gain – – – (0.2) – (0.2)
Dividends to shareholders 4.9 – – – – (96.4) (96.4)
At 31 December 2022 100.1 2,162.0 40.2 1.3 1,514.9 3,818.5
Note
Issued
share
capital
£m
Share
premium
£m
Merger
reserve
£m
Hedging
reserve
£m
Retained
earnings
£m
Total
£m
At 1 January 2021 99.5 2,160.3 40.2 (13.3) 833.5 3,120.2
Profit and total comprehensive
income for the year – – – 15.0 419.5 434.5
Shares issued 4.8 0.3 0.9 – – – 1.2
Unwind of realised swap gain – – – (0.2) – (0.2)
Dividends to shareholders 4.9 – – – – (67.8) (67.8)
At 31 December 2021 99.8 2,161.2 40.2 1.5 1,185.2 3,487.9
The notes on pages 185–242 form part of the financial statements.
For the year ended 31 December 2022
COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
183
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Note
Group
2022
£m
2021
£m
Net cash flows from operating activities 5.1 160 . 2 17 1. 3
Investing activities
Investment in joint ventures (144.6) –
Capital expenditure on properties (3 16. 5) (95 .9)
Acquisition of intangible assets (8. 4) (3. 2)
Acquisition of plant and equipment (1. 3) (0 .4)
Proceeds from sale of investment property 2 3 4 .1 3 0 7. 3
Interest received 0.2 –
Dividends received 38.5 3 7. 1
Net cash flows from investing activities (19 8 .0) 2 44 .9
Financing activities
Proceeds from the issue of share capital 1 .1 1 .1
Payments to acquire own shares (1.7) (1. 3)
Interest paid in respect of financing activities (43.6) (4 7. 9)
Swap cancellation FV settlements and debt exit costs – (4. 2)
Proceeds from non-current borrowings 10 5.7 1 4 7. 0
Repayment of borrowings – (675 .0)
Dividends paid to the owners of the parent company (8 5 .1) (5 7. 2)
Withholding tax paid on distributions (8 .7) (7. 0)
Dividends paid to non-controlling interest (1. 3) (0.6)
Net cash flows from financing activities (33.6) (6 4 5 .1)
Net decrease in cash and cash equivalents (71. 4) (22 8 .9)
Cash and cash equivalents at start of year 10 9.4 338. 3
Cash and cash equivalents at end of year 38.0 10 9. 4
For the year ended 31 December 2022
CONSOLIDATED STATEMENT OF CASH FLOWS
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
184
Section 1: Basis of preparation
This section lays out the Group’s accounting policies that relate to the financial statements as a whole.
Where an accounting policy is specific to a particular note to the financial statements, the policy is
described in the note to which it relates and has been clearly identified in a box.
Basis of consolidation
The financial statements consolidate those of Unite Group PLC (the “Company”) and its subsidiaries (together referred to
as the “Group”) and include the Group’s interests in jointly controlled entities. The parent company financial statements
present information about the Company as a separate entity and not as a group.
Subsidiaries are those entities controlled by the Company. Control exists when the Company has an existing right that
gives it the current ability to direct the relevant activities of the subsidiary, has exposure or right to variable returns from
its involvement in the subsidiary and has the ability to use its power to affect its returns. The financial statements of
subsidiaries are included in the consolidated financial statements from the date that control commences until the date
that control ceases.
Intra-group balances and transactions, and any unrealised gains and losses arising from intra-group transactions, such as
property disposals and management fees, are eliminated in preparing the consolidated financial statements. Unrealised
gains arising from transactions with joint ventures are eliminated to the extent of the Group’s retained interest in the
entity. Unrealised losses are eliminated in the same way as unrealised gains except where the loss provides evidence of a
reduction in the net realisable value of current assets or an impairment in the value of non-current assets.
Non-controlling interests are shown as a line item within equity and comprise the non-controlling interests in subsidiaries
which are not directly or indirectly attributable to the Group. Non-controlling interests are assigned to one subsidiary as
at both 31 December 2022 and 2021 (see note 3.4).
The parent company financial statements have been prepared in accordance with Financial Reporting Standard 101
– Reduced disclosure framework (FRS 101), and the Group financial statements have been prepared in accordance
with International Financial Reporting Standards as adopted by the United Kingdom (Adopted IFRS), in conformity
with the Companies Act 2006, and approved by the Directors. On publishing the parent company financial statements
here together with the Group financial statements, the Company is taking advantage of the exemption in s408 of the
Companies Act 2006 not to present its individual income statement and related notes. The Company is also taking
advantage of the FRS 101 disclosure exemptions from requirements of IFRS 7, IFRS 13 and IAS 1 including presenting a
Company statement of cash flows.
The accounting policies have been applied consistently to all periods presented in these consolidated financial statements.
The Company is a public company limited by shares and is registered in England, United Kingdom, where it is also domiciled.
Measurement convention
The financial statements are prepared on the historical cost basis except for investment property (owned), investment
property (leased), investment property (under development), investments in subsidiaries and interest rate swaps all of
which are stated at their fair value.
Going concern
In determining the appropriate basis of preparation of the financial statements, the Directors are required to consider
whether the Group can continue in operational existence for the foreseeable future.
The Directors have considered a range of scenarios for future performance through the 2022/23 and 2023/24 academic
years. The impact of our ESG asset transition plans are included within the cash flows which have been modelled. The
assessment includes a base case assuming cash collection and performance for the 2022/23 academic year remains in line
with current expectations and sales performance for the 2023/24 academic year consistent with published guidance; and
a reasonable worst case scenario where income for the 2023/24 academic year is impacted by reduced sales, equivalent
to occupancy of around 90%. Under each of these scenarios, the Directors are satisfied that the Group has sufficient
liquidity and will maintain covenant compliance over the next 12 months. To further support the Directors’ going concern
assessment, a “Reverse Stress Test” was performed to determine the level of performance at which adopting the going
concern basis of preparation may not be appropriate. This involved assessing the minimum amount of income required
to ensure financial covenants would not be breached. Within the tightest covenant, occupancy could fall to approximately
70% before there would be a breach. The Group has capacity for property valuations to fall by 35% before there would be
a breach of the tightest LTV and gearing covenants. Were income or asset values to fall beyond these levels, the Group has
certain cure rights, such that an immediate default could be avoided.
NOTES TO THE FINANCIAL STATEMENTS
185
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Section 1: Basis of preparation continued
The Directors are satisfied that the possibility of such an outcome is sufficiently remote that adopting the going concern
basis of preparation is appropriate.
Accordingly, after making enquiries and having considered forecasts and appropriate sensitivities, the Directors have
formed a judgement, at the time of approving the financial statements, that there is a reasonable expectation that the
Group has adequate resources to continue in operational existence for the foreseeable future, being at least 12 months
from the date of these financial statements.
Standards and interpretations effective in the current period
During the year the following new and revised standards and interpretations have been adopted and have not had a
material impact on the amounts reported in these financial statements:
• IAS 16 Property, plant and equipment – proceeds before intended use
• IAS 37 (amendments) Onerous contracts – Cost of fulfilling a contract
• IFRS 3 (amendments) Business Combinations – Reference to the Conceptual Framework
Impact of accounting standards and interpretations in issue but not yet effective
At the date of approval of these financial statements there are a number of new standards and amendments to existing
standards in issue but not yet effective. The Group has not early adopted the new or amended standards in preparing
these consolidated financial statements.
The following new or amended standards and interpretations are not expected to have a significant impact on the Group’s
consolidated financial statements:
• IFRS 16 (amendments) Covid-19 related rent concessions beyond 30 June 2021
• IFRS 16 (amendments) Lease liability in a sale and leaseback
• IFRS 17 Insurance contracts
• IAS 8 Definition of accounting estimates
• IAS 12 Deferred tax related to assets and liabilities arising from a single transaction
• IFRS 4 Applying IFRS 9 Financial instruments with IFRS 4 Insurance contracts – Extension of the temporary exemption
from applying IFRS 9
• IAS 1 (amendments) Classification of liabilities as current or non-current
• IAS 1 (amendments) Non-current liabilities with Covenants
• IAS 1 (amendments) and IFRS Practice Statement 2 Disclosure of accounting policies
• IFRS Standards (annual improvements)
The impact of all other IFRS Standards not yet adopted is not expected to be material.
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
186
NOTES TO THE FINANCIAL STATEMENTS continued
Critical accounting estimates and judgements
The Group’s significant accounting polices are stated in the relevant notes to the Group financial statements.
The preparation of financial statements requires management to exercise judgement in applying the Group’s accounting
policies. It also requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities,
income and expenses.
Critical accounting judgements
The areas which involve a high degree of judgement or complexity in applying the accounting policies of the Group are
explained in more detail in the accounting policy descriptions in the related notes to the financial statements.
The areas where accounting judgements have the most significant impact on the financial statements of the Group are
as follows:
• classification of joint venture vehicles (note 3.4)
Key sources of estimation uncertainty
The estimates and associated assumptions are based on historical experience and various other factors that are believed
to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying
values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these
estimates.
Estimates and assumptions are reviewed on an ongoing basis with revisions recognised in the period in which the
estimates are revised and in any future periods affected.
The areas involving the most sensitive estimates and assumptions that are significant to the financial statements are set
out below and in more detail in the related notes:
• valuation of investment property and investment property under development (note 3.1)
• valuation of provisions for cladding remediation (note 5.5)
187
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Section 2: Results for the year
This section focuses on the results and performance of the Group and provides a reconciliation between
the primary statements and EPRA performance measures. On the following pages you will find disclosures
explaining the Group’s results for the year, segmental information, taxation, earnings and net tangible asset
value (NTA) per share.
The Group uses EPRA earnings, adjusted earnings and NTA movement as key comparable indicators across
other real estate companies in Europe. EPRA earnings, adjusted earnings and NTA movement are Alternative
Performance Measures (APMs), further details of which are set out in section 8.
IFRS performance measures
Note
2022
£m
2021
£m
2022
pps
2021
pps
Profit* 2.2b 355.1 342.4 88.9p 85.9p
Net assets* 2.3d 3,792 .1 3,527.8 945p 880p
* Profit after tax represents profit attributed to the owners of the parent company, and net assets represents equity attributable to the owners of the
parent company.
EPRA performance measures
Note
2022
£m
2021
£m
2022
pps
2021
pps
EPRA earnings 2.2c 161.9 152.0 40.5p 38.1p
Adjusted earnings** 2.2c 163.4 110.1 40.9p 27.6p
EPR A NTA 2.3d 3,715.2 3,532.2 927p 882p
** Adjusted earnings are calculated as EPRA earnings after adding back abortive costs (2021: less the LSAV performance fee), in order to reflect the comparable
performance of the Group’s underlying operating activities.
2.1 Segmental information
The Board of Directors monitors the business along two activity lines, Operations and Property. The reportable segments
for the years ended 31 December 2022 and 31 December 2021 are Operations and Property.
The Group undertakes its Operations and Property activities directly and through joint ventures with third parties.
The joint ventures are an integral part of each segment and are included in the information used by the Board to monitor
the business.
Detailed analysis of the performance of each of these reportable segments is provided in the following sections 2.2 to 2.3.
The Group’s properties are located exclusively in the United Kingdom. The Group therefore has one geographical segment.
2.2 Earnings
EPRA earnings and adjusted earnings amends IFRS measures by removing principally the unrealised investment property
valuation gains and losses such that users of the financials are able to see the extent to which dividend payments
(dividend per share) are underpinned by earnings arising from purely operational activity. In 2022, in consideration of
EPRA’s focus on presenting clear comparability in results from recurring operational activities, EPRA earnings excludes
abortive costs. In 2021, EPRA earnings was adjusted to remove the impact of the LSAV performance fee. Given the
quantum of the LSAV performance fee, it was excluded from adjusted earnings to improve the comparability of results
year-on-year. The reconciliation between profit attributable to owners of the parent company and EPRA earnings is
available in note 2.2b.
The Operations segment manages rental properties, owned directly by the Group or by joint ventures. Its revenues are
derived from rental income and asset management fees earned from joint ventures. The way in which the Operations
segment adds value to the business is set out in the Operations review on pages 32–34. The Operations segment is the
main contributor to adjusted earnings and adjusted EPS and these are therefore the key indicators which are used by the
Board to monitor the Operations business.
The Board does not manage or monitor the Operations segment through the balance sheet and therefore no segmental
information for assets and liabilities is provided for the Operations segment.
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
188
NOTES TO THE FINANCIAL STATEMENTS continued
2.2a) EPRA earnings
2022
Unite
£m
Share of joint ventures Group on
EPRA basis
Total
£m
USAF
£m
LSAV
£m
Rental income 241.7 48.8 49.2 339.7
Property operating expenses (72.0) (15.9) (10.8) (98.7)
Net operating income 169.7 32.9 38.4 241.0
Management fees 21.4 (4.0) – 17.4
Overheads (26.4) (0.7) (0.6) (27.7)
Interest on lease liabilities (8.1) – – (8.1)
Net financing costs (33.4) (7.7) (13.8) (54.9)
Operations segment result 123.2 20.5 24.0 167.7
Property segment result (1.2) – – (1.2)
Unallocated to segments (4.3) (0.2) (0.1) (4.6)
EPRA earnings 117.7 20.3 23.9 161.9
Abortive costs 1.5 – – 1.5
Adjusted earnings 119.2 20.3 23.9 163.4
Included in the above is rental income of £18.1 million and property operating expenses of (£9.7 million) relating to
sale and leaseback properties. Included in the above is rental income of £0.7 million and property operating expenses
of (£0.2 million), relating to a build-to-rent property. The unallocated to segments balance includes abortive costs
of (£1.5 million), the fair value of share-based payments of (£1.6 million), contributions to the Unite Foundation of
(£0.6 million), deferred tax charge of (£0.2 million) and current tax charge of (£0.7 million). Depreciation and amortisation
totalling (£7.8 million) is included within overheads.
2021
Unite
£m
Share of joint ventures Group on
EPRA basis
Total
£m
USAF
£m
LSAV
£m
Rental income 209.0 37.6 36.1 282.7
Property operating expenses (67.7 ) (13.0) (10.2) (90.9)
Net operating income 141.3 24.6 25.9 191.8
Management fees 19.1 (3.2) – 15.9
Overheads (30.7) (0.3) (0.5) (31.5)
Interest on lease liabilities (8.5) – – (8.5)
Net financing costs (38.5) (6.7) (9.6) (54.8)
Operations segment result 82.7 14.4 15.8 112.9
Property segment result (2.2) – – (2.2)
Unallocated to segments 83.9 (0.2) (42.4) 41.3
EPRA earnings 164.4 14.2 (26.6) 152.0
LSAV performance fee (84.1) – 42.2 (41.9)
Adjusted earnings 80.3 14.2 15.6 110.1
Included in the above is rental income of £16.3 million and property operating expenses of (£8.3 million) relating to sale
and leaseback properties. The unallocated to segments balance includes the fair value of share-based payments of
(£2.4 million), contributions to the Unite Foundation of (£1.0 million), LSAV performance fee of £41.9 million, deferred tax
credit of £0.8 million and current tax credit of £2.0 million. Depreciation and amortisation totalling (£7.8 million) is included
within overheads.
189
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Section 2: Results for the year continued
2.2 Earnings continued
2.2b) IFRS reconciliation to EPRA earnings and adjusted earnings
EPRA earnings excludes movements relating to changes in values of investment properties (owned, leased and under
development), profits/losses from the disposal of properties and swap/debt break costs which are included in the profit reported
under IFRS. EPRA earnings and adjusted earnings reconcile to the profit attributable to owners of the parent company as follows:
Note
2022
£m
2021
£m
Profit attributable to owners of the parent company 355.1 342.4
Net valuation (gains)/losses on investment property (owned) 3.1 (112.7) (116.9)
Property disposals (owned) 15.6 12.0
Net valuation losses on investment property (leased) 3.1 9.3 11.1
Amortisation of fair value of debt recognised on acquisition (4.3) (4.3)
Share of joint venture (gains)/losses on investment property 3.4b (32.3) (88.7)
Share of joint venture property disposals 3.4b 0.9 0.3
Swap cancellation fair value settlements and loan break costs 4.3 – 4.2
Mark to market changes on interest rate swaps 4.3 (70.7) (10.9)
Current tax relating to property disposals (0.2) 1.1
Deferred tax 2.5d 0.7 0.3
Non-controlling interest share of reconciling items* 0.5 1.4
EPRA earnings 2.2a 161.9 152.0
Net LSAV performance fee 2.4 – (41.9)
Abortive costs 1.5 –
Adjusted earnings 2.2a 163.4 110.1
* The non-controlling interest, arises as a result of the Company not owning 100% of the share capital of one of its subsidiaries, USAF
(Feeder) Guernsey Limited. More detail is provided in note 3.4.
2.2c) Earnings per share
Basic EPS calculation is based on the earnings attributable to the equity shareholders of The Unite Group PLC and the
weighted average number of shares which have been in issue during the year. Basic EPS is adjusted in line with EPRA
guidelines in order to allow users to compare the business performance of the Group with other listed real estate
companies in a consistent manner and to reflect how the business is managed on a day-to-day basis.
The calculations of basic and EPRA EPS and adjusted EPS for the year ended 31 December 2022 and 2021 are as follows:
Note
2022
£m
2021
£m
2022
pps
2021
pps
Earnings
Basic 355.1 342.4 88.9p 85.9p
Diluted 355.1 342.4 88.7p 85.7p
EPRA 2.2b 161.9 152.0 40.5p 38.1p
Diluted EPRA 40.5p 38.0p
Adjusted 2.2b 163.4 110.1 40.9p 27.6p
Diluted adjusted 40.8p 27.6p
2022 2021
Weighted average number of shares (thousands)
Basic 399,581 398,742
Dilutive potential ordinary shares (share options) 584 829
Diluted 400,165 399,571
Movements in the weighted average number of shares have resulted from the issue of shares arising from the employee
share-based payment schemes and the scrip dividend.
In 2022, there were 19,015 options excluded from the potential dilutive shares that did not affect the diluted weighted
average number of shares (2021: none).
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
190
NOTES TO THE FINANCIAL STATEMENTS continued
2.3 Net assets
2.3a) EPRA NTA
EPRA NTA makes adjustments to IFRS measures by removing the fair value of financial instruments and the carrying value
of intangibles. The reconciliation between IFRS NAV and EPRA NTA is available in note 2.3c.
The Group’s Property business undertakes the acquisition and development of properties. The way in which the Property
segment adds value to the business is set out in the Property review on pages 35–39.
2022
Unite
£m
Share of JVs
Group on
EPRA basis
£m
USAF
£m
LSAV
£m
Investment property (owned) 3,623.4 813.0 960.4 5,396.8
Investment property (leased) 90.3 – – 90.3
Investment property (under development) 202.7 – – 202.7
Total property portfolio 3,916.4 813.0 960.4 5,689.8
Debt on properties (1,247.8) (239.8) (385.2) (1,872.8)
Lease liabilities (90.4) – – (90.4)
Cash 38.0 35.6 65.6 139.2
Net debt (1,300.2) (204.2) (319.6) (1,824.0)
Other assets and (liabilities) (78.3) (33.6) (20.4) (132.3)
Intangibles per IFRS balance sheet (18.3) – – (18.3)
EPR A NTA 2,519.6 575.2 620.4 3,715.2
Loan to value* 32% 25% 33% 31%
Loan to value post IFRS 16 33% 25% 33% 32%
* LTV calculated excluding investment properties (leased) and the corresponding lease liabilities. LTV is an APM – see section 8.
2021
Unite
£m
Share of JVs
Group on
EPRA basis
£m
USAF
£m
LSAV
£m
Investment property (owned)* 3,323.3 632.0 909.5 4,864.8
Investment property (leased) 97.7 – – 97.7
Investment property (under development) 324.1 – – 324.1
Total property portfolio 3,745.1 632.0 909.5 5,286.6
Debt on properties (1,139.7) (201.0) (336.6) (1,677. 3)
Lease liabilities (93.8) – – (93.8)
Cash 109.4 23.4 22.7 155.5
Net debt (1,124.1) (177.6) (313.9) (1,615.6)
Other assets and (liabilities) (90.5) (23.2) (9.0) (122.8)
Intangibles per IFRS balance sheet (16.1) – – (16.1)
EPR A NTA 2,514.4 431.2 586.6 3,532.2
Loan to value** 28% 28% 35% 29%
Loan to value post IFRS 16 30% 28% 35% 31%
* Investment property (owned) includes assets classified as held for sale in the IFRS balance sheet.
** LTV calculated excluding investment properties (leased) and the corresponding lease liabilities. LTV is an APM – see section 8.
191
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Section 2: Results for the year continued
2.3 Net assets continued
2.3b) Movement in EPRA NTA during the year
Contributions to EPRA NTA by each segment during the year is as follows:
2022
Note
Unite
£m
Share of JVs Group on
EPRA basis
Total
£m
USAF
£m
LSAV
£m
Operations
Operations segment result 2.2a 123.2 20.5 24.0 167.7
Add back amortisation of intangibles 3.3b 5.9 – – 5.9
Total Operations 129.1 20.5 24.0 173.6
Property
Rental growth 117.1 0.5 32.6 150.2
Yield movement (11.0) 2.2 (3.0) (11.8)
Disposal losses (owned) (15.6) (0.9) – (16.5)
Investment property gains (owned)* 90.5 1.8 29.6 121.9
Investment property losses (leased) 3.1 (9.3) – – (9.3)
Investment property gains (under development) 3.1 6.6 – – 6.6
Pre-contract/other development costs 2.2a (1.2) – – (1.2)
Total Property 86.6 1.8 29.6 118.0
Unallocated
Shares issued 1.1 – – 1.1
Investment in joint ventures (102.4) 122.0 (19.6) –
Dividends paid (96.4) – – (96.4)
Abortive costs (1.5) – – (1.5)
Acquisition of intangibles 3.3b (8.0) – – (8.0)
Other (3.3) (0.3) (0.2) (3.8)
Total Unallocated (210.5) 121.7 (19.8) (108.6)
Total EPRA NTA movement in the year 5.2 144.0 33.8 183.0
Total EPRA NTA brought forward 2,514.4 431.2 586.6 3,532.2
Total EPRA NTA carried forward 2,519.6 575.2 620.4 3,715.2
The £3.3 million other balance within the unallocated segment includes the purchase of own shares of (£1.7 million),
contributions to the Unite Foundation of (£0.6 million) and tax charges of (£0.9 million).
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
192
NOTES TO THE FINANCIAL STATEMENTS continued
2021
Note
Unite
£m
Share of JVs Group on
EPRA basis
Total
£m
USAF
£m
LSAV
£m
Operations
Operations segment result 2.2a 82.7 14.4 15.8 112.9
Add back amortisation of intangibles 3.3b 6.1 – – 6.1
Total Operations 88.8 14.4 15.8 119.0
Property
Rental growth 17.4 4.5 25.8 47.7
Yield movement 49.2 12.7 44.6 106.5
Disposal losses (owned) (12.0) (0.3) – (12.3)
Investment property gains (owned)* 54.6 16.9 70.4 141.9
Investment property losses (leased) 3.1 (11.1) – – (11.1)
Investment property gains (under development) 3.1 50.3 – – 50.3
Pre-contract/other development costs 2.2a (2.2) – – (2.2)
Total Property 91.6 16.9 70.4 178.9
Unallocated
Shares issued 1.2 – – 1.2
Investment in joint ventures (118 .6) (17.7 ) 136.3 –
Dividends paid (67.8) – – (67.8)
LSAV performance fee 84.1 – (42.2) 41.9
Swap cancellation FV settlements and debt break costs 4.3 (4.2) – – (4.2)
Acquisition of intangibles 3.3b (3.3) – – (3.3)
Other 0.7 (0.2) (0.2) 0.3
Total Unallocated (107.9) (17.9) 93.9 (31.9)
Total EPRA NTA movement in the year 72.5 13.4 180.1 266.0
Total EPRA NTA brought forward 2,441.9 417. 8 406.5 3,266.2
Total EPRA NTA carried forward 2,514.4 431.2 586.6 3,532.2
* Investment property gains (owned) includes gains on assets classified as held for sale in the IFRS balance sheet.
The £0.3 million other balance within the unallocated segment includes a tax credit of £2.8 million, the purchase of own
shares of (£1.3 million) and contributions to the Unite Foundation of (£1.0 million).
193
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Section 2: Results for the year continued
2.3 Net assets continued
2.3c) Reconciliation to IFRS
To determine EPRA NTA, net assets reported under IFRS are amended to exclude the fair value of financial instruments,
associated tax and the carrying value of intangibles.
To determine EPRA NRV, net assets reported under IFRS are amended to exclude the fair value of financial instruments,
associated tax and real estate transfer tax.
To determine EPRA NDV, net assets reported under IFRS are amended to exclude the fair value of financial instruments,
but include the fair value of fixed interest rate debt and the carrying value of intangibles.
The net assets reported under IFRS reconcile to EPRA NTA, NRV and NDV as follows:
2022
NTA
£m
NRV
£m
NDV
£m
Net assets reported under IFRS 3,792.1 3,792.1 3,792 .1
Mark to market interest rate swaps (77.4) ( 77.4) –
Unamortised swap gain (1.4) (1.4) (1.4)
Mark to market of fixed rate debt – – 154.7
Unamortised fair value of debt recognised on acquisition 19.5 19.5 19.5
Current tax 0.7 0.7 –
Intangibles per IFRS balance sheet (18.3) – –
Real estate transfer tax – 300.7 –
EPRA reporting measure 3,715.2 4,034.2 3,964.9
2021
NTA
£m
NRV
£m
NDV
£m
Net assets reported under IFRS 3,527.8 3,527.8 3,527.8
Mark to market interest rate swaps (2.4) (2.4) –
Unamortised swap gain (1.5) (1.5) (1.5)
Mark to market of fixed rate debt – – (50.4)
Unamortised fair value of debt recognised on acquisition 23.7 23.7 23.8
Current tax 0.7 0.7 –
Intangibles per IFRS balance sheet (16.1) – –
Real estate transfer tax – 277.5 –
EPRA reporting measure 3,532.2 3,825.8 3,499.7
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
194
NOTES TO THE FINANCIAL STATEMENTS continued
2.3d) NTA, NRV and NDV per share
Basic NAV is based on the net assets attributable to the equity shareholders of Unite Group PLC and the number of shares
in issue at the end of the year. The Board uses EPRA NTA to monitor the performance of the Property segment on a day-
to-day basis.
Note
2022
£m
2021
£m
2022
pps
2021
pps
Net assets
Basic 3,792 .1 3,527.8 945p 880p
EPRA NTA 2.3a 3,715.2 3,532.2 928p 885p
EPRA NTA (diluted) 2.3a 3,718.3 3,536.1 927p 882p
EPRA NRV 2.3c 4,034.2 3,825.9 1,008p 959p
EPRA NRV (diluted) 4,037. 3 3,829.7 1,006p 955p
EPRA NDV 2.3c 3,964.9 3,499.7 991p 877p
EPRA NDV (diluted) 3,968.0 3,503.6 989p 874p
Number of shares (thousands) 2022 2021
Basic 400,292 399,140
Outstanding share options 895 1,687
Diluted 401,187 400,827
2.4 Revenue and costs
Accounting policies
The Group recognises revenue from the following major sources:
• Rental income
• Management and performance fees
• Acquisition fees
Revenue is measured based on the consideration to which the Group expects to be entitled in a contract with a
customer and excludes amounts collected on behalf of third parties. The Group recognises revenue when it transfers
control of its service to a customer.
Rental income
Rental income comprises direct-lets to students and leases to universities and commercial tenants. This revenue is
recognised in the income statement over the length of the tenancy period as the Group provides the services to its
customers. Included in the rental contract is the use of broadband facilities and room cleaning services. The Group
does not offer these services as stand-alone products. Under IFRS 15 the Group does not consider these services to be
individually material and has, consequently, bundled these obligations as a single contract. The transaction prices for
rental income are explicitly stated in each contract. A contract liability can result from payments received in advance,
until the date at which control is transferred to the customer and at that point the revenue begins to be recognised
over the tenancy period. Lease incentives are sometimes recognised on commercial units; these are recognised as an
integral part of the total rental income and spread over the term of the lease.
Rental income is derived from contracts which are less than 12 months in length and the Group accordingly recognises
this income in the Income Statement on a straight line basis in accordance with IFRS 16.
Management and performance fees
The Group acts as asset and property manager for USAF and LSAV and receives management fees in relation to these
services. Revenue from these fees is recognised on a straight line basis over time as the joint ventures simultaneously
receive and consume benefits as the Group performs its management obligations which are determined by the
services provided over the course of each academic year, and this reflects the profile of activities being performed.
Detailed calculations in order to determine the transaction prices for these revenue streams are held within the joint
venture agreements.
195
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Section 2: Results for the year continued
2.4 Revenue and costs continued
Management and performance fees continued
The Group is entitled to a USAF performance fee if the joint venture outperforms certain benchmarks. The Group
recognises a USAF performance fee at a point in time in the year to which the fee relates. The Group initially assesses
the probability of a fee being earned and its transaction price at half year and adjusts for any potential risks to
receiving this income at year-end, when the achieved outturn is known. The USAF performance fee is settled within
12 months of the year to which the fee relates and the Group receives an enhanced equity interest in USAF as
consideration for the performance fee.
The Group is entitled to an LSAV performance fee if the joint venture outperforms certain benchmarks over its life
ending in 2032. The Group recognises an LSAV performance fee at an amount which is considered “highly probable”
to become due based upon estimates of the future performance of the joint venture; such estimates include future
rental income and the discount rate (yield). Prior to the maturity of the joint venture, the Group pro-rates the total LSAV
performance fee over the life of the joint venture and recognises a cumulative catch-up to the currently completed
term where sufficient certainty over outperformance of the benchmark is determined to exist.
As per IFRS 15, the estimated amount of variable consideration is included in the transaction price only to the extent
that it is highly probable that a significant reversal in the amount of revenue recognised will not occur when the
uncertainty associated with the variable consideration is resolved. The performance fee is variable and dependent
on meeting specific performance targets. Accordingly where there is too much uncertainty over the cumulative
outperformance of the benchmarks, particularly in earlier periods of the performance fee period, which cover each 10
year term of the venture, then no amounts of performance fee can be recognised as it is not highly probable that the
performance fee will be earned.
Management and performance fees are presented in revenue net of the Group’s share of the corresponding expense
within the relevant fund.
At 31 December 2022, no amounts are deemed to meet the highly probable criteria and therefore we have not
disclosed any future fees receivable from these ongoing contracts.
Acquisition fees
The Group receives acquisition fees from its joint venture partners. This revenue is linked to the acquisition of land or
property and is therefore recognised at the point in time that control of the asset is transferred to the joint venture.
The transaction price for this revenue stream is stipulated in the joint venture agreement as a percentage of the value
of the acquisition. No such land or property acquisitions have occurred in 2022 or 2021.
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
196
NOTES TO THE FINANCIAL STATEMENTS continued
The Group earns revenue from the following activities:
Note
2022
£m
2021
£m
Rental income* Operations segment 2.2a 241.7 209.0
Management fees Operations segment 17.6 16.2
LSAV performance fee Unallocated – 41.9
259.3 267.1
Impact of non-controlling interest on management fees (0.2) (0.2)
Total revenue 259.1 266.9
* EPRA earnings includes £339.7 million (2021: £282.7 million) of rental income, which is comprised of £241.7 million (2021: £209.0 million)
recognised on wholly owned assets and a further £98.0 million (2021: £73.7 million) from joint ventures, which is included in share of
joint venture profit/(loss) in the consolidated income statement.
The LSAV and USAF performance fees are constrained this year due to an inability to meet the highly probable criteria
that the fees would be earned. In the year to 31 December 2021, the LSAV performance fee under the previous agreement
crystallised and a total fee of £41.9 million was recognised.
The cost of sales included in the consolidated income statement includes property operating expenses of £70.3 million
(2021: £64.4 million).
2.5 Tax
As a REIT, rental profits and gains on disposal of investment properties are exempt from corporation tax. The Group pays
UK corporation tax on the profits from its residual business, including management fees received from joint ventures,
together with UK income tax on rental income that arises from investments held by offshore subsidiaries in which the
Group holds a non-controlling interest.
Accounting policies
The tax charge for the year is recognised in the income statement and the statement of comprehensive income,
according to the accounting treatment of the related transaction. The tax charge comprises both current and
deferred tax.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to
tax payable in respect of previous years. The current tax charge is based on tax rates that are enacted or substantively
enacted at the year-end.
Deferred tax arises due to certain temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and those for taxation purposes. Temporary differences relating to investments in
subsidiaries and joint ventures are not provided for to the extent that they will probably not reverse in the foreseeable
future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the
carrying amount of assets and liabilities.
As a REIT, rental profits and gains on disposal of investment properties and property rich investments are exempt
from corporation tax. As a result, no deferred tax provision has been recognised at the balance sheet date in respect of
property assets or units in USAF and LSAV held by members of the REIT group.
197
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Section 2: Results for the year continued
2.5 Tax continued
2.5a) Tax – income statement
The total taxation charge/(credit) in the income statement is analysed as follows:
2022
£m
2021
£m
Corporation tax on residual business income arising in UK companies 0.5 1.0
Income tax on UK rental income arising in non-UK companies 0.4 0.3
Adjustments in respect of prior periods (0.2) (2.2)
Current tax charge/(credit) 0.7 (0.9)
Origination and reversal of temporary differences 0.5 (0.2)
Effect of change in tax rate – (0.2)
Adjustments in respect of prior periods 0.4 (0.1)
Deferred tax charge/(credit) 0.9 (0.5)
Total tax charge/(credit) in income statement 1.6 (1.4)
The movement in deferred tax provided is shown in more detail in note 2.5d.
In the income statement, a tax charge of £1.6 million arises on a profit before tax of £358.0 million. The taxation charge
that would arise at the standard rate of UK corporation tax is reconciled to the actual tax charge as follows:
2022
£m
2021
£m
Profit before tax 358.0 3 43.1
Income tax using the UK corporation tax rate of 19% (2021: 19%) 67.2 65.2
Property rental business profits exempt from tax in the REIT Group (27.5) (18.4)
Property revaluations not subject to tax (25.8) (43.3)
Mark to market changes in interest rate swaps not subject to tax (13.4) (2.9)
Effect of indexation on investments 0.1 –
Effect of other permanent differences 0.5 0.2
Effect of tax deduction transferred to equity on share schemes 0.3 0.3
Rate difference on deferred tax – (0.2)
Prior year adjustments 0.2 (2.3)
Total tax charge/(credit) in income statement 1.6 (1.4)
As a UK REIT, the Group is exempt from UK corporation tax on the profits from its property rental business. Accordingly,
the element of the Group’s profit before tax relating to its property rental business has been separately identified in the
reconciliation above.
No deferred tax asset has been recognised in respect of the Group’s accumulated tax losses on the basis that they are not
expected to be utilised in future periods. At 31 December 2022 these losses totalled £15.3 million (2021: £14.6 million).
Although the Group does not pay UK corporation tax on the profits from its property rental business, it is required to
distribute 90% of the profits from its property rental business after accounting for tax adjustments as a Property Income
Distribution (PID). PIDs are charged to tax in the same way as property income in the hands of the recipient. For the year
ended 31 December 2022 the required PID is expected to be fully paid by the end of 2023.
2.5b) Tax – other comprehensive income
Within other comprehensive income a tax charge totalling £nil (2021: £nil) has been recognised representing deferred tax.
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
198
NOTES TO THE FINANCIAL STATEMENTS continued
2.5c) Tax – statement of changes in equity
Within the statement of changes in equity a tax charge totalling £0.2 million (2021: £0.6 million credit) has been recognised
representing deferred tax. An analysis of this is included below in the deferred tax movement table.
2.5d) Tax – balance sheet
The table below outlines the deferred tax (assets)/liabilities that are recognised in the balance sheet, together with their
movements in the year:
2022
At 31
December
2021
£m
Charged/
(credited)
in income
£m
Charged/
(credited)
in equity
£m
At 31
December
2022
£m
Investments – 0.4 – 0.4
Property, plant and machinery and provisions (1.2) (0.1) – (1.3)
Share schemes (1.8) 0.3 0.3 (1.2)
Tax value of carried forward losses recognised – 0.3 (0.3) –
Net tax assets (3.0) 0.9* – (2.1)
* The £0.9 million balance above includes tax movements totalling £0.2 million in respect of property, plant and machinery, share
schemes and losses which are included in EPRA earnings and therefore not shown as a reconciling item in the IFRS reconciliation in note
2.2b. Removing them results in the £0.7 million movement shown in note 2.2b.
2021
At 31
December
2020
£m
Charged/
(credited)
in income
£m
Charged/
(credited)
in equity
£m
At 31
December
2021
£m
Investments – – – –
Property, plant and machinery and provisions (0.6) (0.6) – (1.2)
Share schemes (1.3) (0.2) (0.3) (1.8)
Tax value of carried forward losses recognised – 0.3 (0.3) –
Net tax assets (1.9) (0.5)* (0.6) (3.0)
* The £0.5 million balance above includes tax movements totalling £0.2 million in respect of property, plant and machinery, share
schemes and losses which are included in EPRA earnings and therefore not shown as a reconciling item in the IFRS reconciliation in note
2.2b. Removing them results in the £0.3 million movement shown in note 2.2b.
The deferred tax asset at 31 December 2022 has been calculated based on the rate at which it is expected to reverse.
On 24 May 2021, Finance Act 2021 was substantively enacted which contains provisions to increase the corporation
tax rate to 25% from 1 April 2023. This rate change increases the deferred tax assets recognised at the year-end by
£0.2 million.
As a REIT, disposals of investment property and property rich investments are exempt from tax and as a result no
deferred tax liability has been recognised in relation to these assets.
Company
Deferred tax has not been recognised on temporary differences of £1.7 million (2021: £3.1 million) in respect of revaluation
of subsidiaries and investment in joint ventures as it is considered unlikely that these investments will be divested.
199
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Section 2: Results for the year continued
2.6 Audit fees
During the year, the Group obtained the following services from the Company’s auditor and its associates:
2022
£m
2021
£m
Fees payable to the Group’s auditors for the audit of the parent company and
consolidated financial statements 0.5 0.4
Fees payable to the Group’s auditors for other services to the Group:
– Audit of the financial statements of subsidiaries 0.1 0.1
Total audit fees payable to the Group’s auditors 0.6 0.5
Audit-related assurance services 0.1 0.1
Other services – –
Total non-audit fees 0.1 0.1
Non-audit fees in both 2022 and 2021 relate entirely to services provided in respect of the half year review.
Details on the Company’s policy on the use of the auditor for non-audit services is also set out in the Audit & Risk
Committee Statement on pages 119–124.
No services were provided pursuant to contingent fee arrangements.
Section 3: Asset management
The Group holds its property portfolio directly and through its joint ventures. The performance of the
property portfolio, whether wholly owned or in joint ventures, is the key factor that drives net asset value
(NAV), one of the Group’s key performance indicators. The following pages provide disclosures about the
Group’s investments in property assets and joint ventures and their performance over the year.
3.1 Wholly owned property assets
The Group’s wholly owned property portfolio is held in four groups on the balance sheet at the carrying values detailed below.
In the Group’s EPRA NTA all these groups are shown at market value, except where otherwise stated.
i) Investment property (owned)
These are assets that the Group intends to hold for a long period to earn rental income or capital appreciation. The assets
are measured at fair value in the balance sheet with changes in fair value taken to the income statement.
ii) Investment property (leased)
These are assets the Group sold to institutional investors and simultaneously leased back. These right-of-use assets are
measured at fair value in the balance sheet with changes in fair value taken to the income statement.
iii) Investment property (under development)
These are assets which are currently in the course of construction and which will be transferred to Investment property
on completion. The assets are initially recognised at cost and are subsequently measured at fair value in the balance sheet
with changes in fair value taken to the income statement.
iv) Investment property classified as held for sale
These are assets whose carrying amount will be recovered through a sale transaction rather than to hold for long-term
rental income or capital appreciation. This condition is regarded as met only when the sale is highly probable and the
investment property is available for immediate sale in its present condition. Management must be committed to the sale
which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
The assets are measured at fair value in the balance sheet, with changes in fair value taken to the income statement.
They are presented as current assets in the IFRS balance sheet.
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
200
NOTES TO THE FINANCIAL STATEMENTS continued
Accounting policies
Investment property (owned) and investment property (under development)
Investment property (owned) and investment property (under development) are held at fair value.
The external valuation of property assets involves significant judgement and changes to the core assumptions: rental
income, occupancy and property management costs, as well as estimated future costs, could have a significant impact
on the carrying value of these assets. Further details of the valuation process are included below.
Construction and borrowing costs are capitalised if they are directly attributable to the acquisition and construction of
a property asset. Capitalisation of borrowing costs commences when the activities to prepare the asset are in progress
and expenditures and borrowing costs are being incurred. Capitalisation of borrowing costs continues until the assets
are substantially ready for their intended use but stops if development activities are suspended. If the resulting
carrying amount of the asset exceeds its recoverable amount, an impairment loss is recognised. The capitalisation
rate is arrived at by reference to the actual rate payable on borrowings for development purposes or, with regard to
that part of the development cost financed out of general borrowings, to the average rate. During the year the average
capitalisation rate used was 3.1% (2021: 3.1%).
The recognition of acquisitions of investment property and land occurs at the date when control passes to Unite.
The recognition of disposals of investment property occurs on legal completion when control passes from Unite. In
accordance with IFRS 15, gains/(losses) from the disposal of investment property are recognised at a point in time.
Contingent consideration receivables are recognised on disposals where the amount of additional consideration
is readily identifiable. It is recognised at the constrained value determined by the amount that is highly probable to
be receivable at the time of the disposal, and any subsequent change in value is recognised in profit or loss in the
later period.
Investment property (leased)
The Group holds certain investment property under historic sale and leaseback arrangements, acting as an
intermediate lessor and subleasing its right-of-use assets. For each leased property, the Group assesses whether
a contract is or contains a lease, at inception of the contract. The Group recognises a right-of-use asset and a
corresponding lease liability (see note 4.6a) with respect to all lease arrangements in which it is the lessee. The right-of-
use assets are initially measured at cost in accordance with IFRS 16 and subsequently at fair value in the balance sheet
with changes in fair value taken to the income statement in accordance with IAS 40.
Valuation process
The valuations of the properties are performed twice a year on the basis of valuation reports prepared by external,
independent valuers, having an appropriate recognised professional qualification. The fair values are based on market
values as defined in the RICS Appraisal and Valuation Manual, issued by the Royal Institution of Chartered Surveyors.
CB Richard Ellis Ltd, Jones Lang LaSalle Ltd and Messrs Knight Frank LLP, Chartered Surveyors were the valuers in the years
ended 31 December 2022 and 2021.
The valuations are based on:
• Information provided by the Group such as current rents, occupancy, operating costs, terms and conditions of leases
and nomination agreements, capital expenditure, etc. This information is derived from the Group’s financial systems
and is subject to the Group’s overall control environment.
• Assumptions and valuation models used by the valuers – the assumptions are typically market related, such as yield
and discount rates. These are based on their professional judgement and market observation.
The information provided to the valuers – and the assumptions and the valuation models used by the valuers – are
reviewed by the Property Leadership Team and the CFO. This includes a review of the fair value movements over the year.
201
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Section 3: Asset management continued
3.1 Wholly owned property assets continued
The fair value of the Group’s wholly owned properties and the movements in the carrying value of the Group’s wholly
owned property portfolio during the year ended 31 December 2022 are shown in the table below.
2022
Investment
property
(owned)
£m
Investment
property
(leased)
£m
Investment
property
(under
development)
£m
Total
£m
At 1 January 2022 3,095.1 97.7 324.1 3,516.9
Additions 71.1 – – 71.1
Cost capitalised 38.6 1.9 187.7 228.2
Interest capitalised 0.5 – 5.9 6.4
Transfer from investment property under development 326.5 – (326.5) –
Transfer from work in progress – – 4.9 4.9
Disposals (14.5) – – (14.5)
Valuation gains 168.6 – 19.4 188.0
Valuation losses (62.5) (9.3) (12.8) (84.6)
Net valuation gains/(losses) 106.1 (9.3) 6.6 103.4
Carrying and market value at 31 December 2022 3,623.4 90.3 202.7 3,916.4
The fair value of the Group’s wholly owned properties and the movements in the carrying value of the Group’s wholly
owned property portfolio during the year ended 31 December 2021 are shown in the table below.
2021
Investment
property
(owned)
£m
Investment
property
(leased)
£m
Investment
property
(under
development)
£m
Total
£m
At 1 January 2021 3,614.7 101.8 187.2 3,903.7
Cost capitalised 43.1 7.0 79.3 129.4
Interest capitalised – – 5.2 5.2
Transfer from work in progress – – 2.1 2.1
Transfer to assets classified as held for sale (228.2) – – (228.2)
Disposals (401.1) – – (401.1)
Valuation gains 125.6 – 52.3 177.9
Valuation losses (59.0) (11.1) (2.0) (72.1)
Net valuation gains/(losses) 66.6 (11.1) 50.3 105.8
Carrying and market value at 31 December 2021 3,095.1 97.7 324.1 3,516.9
Total assets classified as held for sale at 31 December 2021 of £228.2 million are comprised entirely of investment
property (owned). Assets classified as held for sale are reported within the operations segment, and represents a
portfolio of properties intended to be sold within the next 12 months.
Included within investment properties at 31 December 2022 are £28.4 million (2021: £28.8 million) of assets held under
a long leasehold and £0.1 million (2021: £0.1 million) of assets held under short leasehold.
Total interest capitalised in investment properties (owned) and investment properties under development at
31 December 2022 was £63.5 million (2021: £57.4 million) on a cumulative basis. Total internal costs capitalised in
investment properties (owned) and investment properties under development was £81.7 million at 31 December 2022
(2021: £74.3 million) on a cumulative basis.
Investment property (under development) includes interests in land not currently under construction totalling
£136.3 million (2021: £18.0 million).
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
202
NOTES TO THE FINANCIAL STATEMENTS continued
Recurring fair value measurement
All investment and development properties are classified as Level 3 in the fair value hierarchy.
Class of asset
2022
£m
2021
£m
London – rental properties 1,212.8 849.8
Prime regional – rental properties 1,105.6 992.9
Major regional – rental properties 1,130.0 1,263.5
Provincial – rental properties 103.9 217.1
London – development properties 91.9 249.9
Prime regional – development properties 32.4 48.4
Major regional – development properties 64.1 25.8
London build-to-rent – rental properties 71.1 –
Prime regional build-to-rent – development properties 14.3 –
Investment property (owned) 3,826.1 3,6 47.4
Investment property (leased) 90.3 97.7
Market value (including assets classified as held for sale) 3,916.4 3,745.1
Investment property (classified as held for sale) – (228.2)
Market value 3,916.4 3,516.9
The valuations have been prepared in accordance with the latest version of the RICS Valuation – Global Standards
(incorporating the International Valuation Standards) and the UK national supplement (the “Red Book”) based on net
rental income, estimated future costs, occupancy, property management costs and the net initial yield or discount rate.
Where the asset is leased to a university, the valuations also reflect the length of the lease, the allocation of maintenance
and insurance responsibilities between the Group and the lessee, and the market’s general perception of the lessee’s
creditworthiness.
The resulting valuations are cross-checked against comparable market transactions.
For development properties, the fair value is usually calculated by estimating the fair value of the completed property
(using the discounted cash flow method) less estimated costs to completion.
Fair value using unobservable inputs (Level 3)
2022
£m
2021
£m
Opening fair value 3,516.9 3,903.7
Gains and (losses) recognised in income statement 103.4 105.8
Transfer to current assets classified as held for sale – (228.2)
Capital expenditure 310.6 136.7
Disposals (14.5) (401.1)
Closing fair value 3,916.4 3,516.9
Investment property (classified as held for sale) – 228.2
Closing fair value (including assets classified as held for sale) 3,916.4 3,745.1
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Section 3: Asset management continued
3.1 Wholly owned property assets continued
Quantitative information about fair value measurements using unobservable inputs (Level 3)
2022
Fair
value
£m
Valuation
technique Unobservable inputs Range
Weighted
average
London –
rental properties
1,212.8 RICS Red Book Net rental income (£ per week)
Estimated future rent increase (% p.a.)
Net initial yield/Discount rate (%)
£208–£392
2.0%–4.0%
3.7%–4.5%
£308
3.0%
3.9%
Prime regional –
rental properties
1,105.6 RICS Red Book Net rental income (£ per week)
Estimated future rent increase (% p.a.)
Net initial yield/Discount rate (%)
£148–£243
2.0%–5.0%
4.1%– 6.2%
£163
3.0%
4.7%
Major regional –
rental properties
1,130.0 RICS Red Book Net rental income (£ per week)
Estimated future rent increase (% p.a.)
Net initial yield/Discount rate (%)
£99–£178
2.0%–3.0%
4.5%–7%
£128
3.0%
5.7%
Provincial –
rental properties
103.9 RICS Red Book Net rental income (£ per week)
Estimated future rent increase (% p.a.)
Net initial yield/Discount rate (%)
£107–£156
2.0%–3.0%
6.8%–21.5%
£123
3.0%
8.6%
London –
development properties
91.9 RICS Red Book Estimated cost to complete (£m)
Net rental income (£ per week)
Estimated future rent increase (% p.a.)
Net initial yield/Discount rate (%)
£111.4m– £177.1m
£183–£366
3.0%
3.7%
£150.2m
£248
3.0%
3.7%
Prime regional –
development properties
32.4 RICS Red Book Estimated cost to complete (£m)
Net rental income (£ per week)
Estimated future rent increase (% p.a.)
Net initial yield/Discount rate (%)
£17.5m – £58.3m
£171–£235
2.5%–3.0%
4.3%–5.0%
£44.7m
£184
3.0%
4.5%
Major regional –
development properties
64.1 RICS Red Book Estimated cost to complete (£m)
Net rental income (£ per week)
Estimated future rent increase (% p.a.)
Net initial yield/Discount rate (%)
£18.2m–£28.4m
£185–£287
3.0%
4.9%–5.0%
£21.1m
£198
3.0%
4.9%
3,740.7
Investment property –
build-to-rent
71.1 RICS Red Book Net
rental income (£ per week)
Estimated future rent increase (% p.a.)
Net initial yield/Discount rate (%)
£359
3.0%
3.9%
£359
3.0%
3.9%
Development property –
build-to-rent
14.3 RICS Red Book Estimated cost to complete (£m)
Net rental income (£ per week)
Estimated future rent increase (% p.a.)
Net initial yield/Discount rate (%)
£12.8m–£20.4m
£170–£614
3.0%
3.9%–4.3%
£15.6m
£312
3.0%
4.03%
3,826.1
Investment property –
leased
90.3 Discounted
cash flows
Net rental income (£ per week)
Estimated future rent increase (% p.a.)
Discount rate (%)
£99–£191
1%–3%
6.3%
£154
2%
6.3%
Fair value at
31 December 2022 3,916.4
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
204
NOTES TO THE FINANCIAL STATEMENTS continued
2021
Fair value
£m
Valuation
technique Unobservable inputs Range
Weighted
average
London –
rental properties
849.8 RICS Red Book Net rental income (£ per week)
Estimated future rent increase (% p.a.)
Net initial yield/Discount rate (%)
£191–£373
3%–4%
3.7%–4.9%
£291
4%
3.9%
Prime regional –
rental properties
992.9 RICS Red Book Net rental income (£ per week)
Estimated future rent increase (% p.a.)
Net initial yield/Discount rate (%)
£144–£235
1%–4%
4.0%–6.3%
£191
3%
4.7%
Major regional –
rental properties
1,263.6 RICS Red Book Net rental income (£ per week)
Estimated future rent increase (% p.a.)
Net initial yield/Discount rate (%)
£62–£173
0%–4%
4.7%–7.0%
£131
2%
5.7%
Provincial –
rental properties
217.1 RICS Red Book Net rental income (£ per week)
Estimated future rent increase (% p.a.)
Net initial yield/Discount rate (%)
£109–£188
1%–4%
5.1%–14. 2%
£135
3%
7%
London –
development properties
249.9 RICS Red Book Estimated cost to complete (£m)
Net rental income (£ per week)
Estimated future rent increase (% p.a.)
Net initial yield/Discount rate (%)
£3 4.0m – £17 7. 3m
£185–£382
3%
3.6%
£126.5m
£289
3%
3.6%
Prime regional –
development properties
48.4 RICS Red Book Estimated cost to complete (£m)
Net rental income (£ per week)
Estimated future rent increase (% p.a.)
Net initial yield/Discount rate (%)
£7.1m– £64 .3m
£176–£258
3%
4.0%
£35.9m
£181
3%
4%
Major regional –
development properties
25.8 RICS Red Book Estimated cost to complete (£m)
Net rental income (£ per week)
Estimated future rent increase (% p.a.)
Net initial yield/Discount rate (%)
£33.9m–£45.2m
£171–£213
3%
5.0%
£42.1m
£172
3%
5%
Fair value at
31 December 2021
3,647.4
Investment property
(leased)
97.7 Discounted
cash flows
Net rental income (£ per week)
Estimated future rent increase (% p.a.)
Discount rate (%)
£95–£185
3%
6.8%
£144
3%
6.8%
Fair value at
31 December 2021 3,745.1
205
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Section 3: Asset management continued
3.1 Wholly owned property assets continued
Fair value sensitivity analysis
A decrease in net rental income or occupancy will result in a decrease in the fair value, whereas a decrease in the discount
rate (yield) will result in an increase in fair value. There are inter-relationships between these rates as they are partially
determined by market rate conditions. These two key sources of estimation uncertainty are considered to represent those
most likely to have a material impact on the valuation of the Group’s investment property within the next 12 months as a
result of reasonably possible changes in assumptions used. The potential effect of such reasonably possible changes has
been assessed by the Group and is set out below:
Class of assets
Fair value at
31 December
2022
£m
+5%
change in
estimated
net rental
income
£m
-5%
change in
estimated
net rental
income
£m
+25 bps
change in
nominal
equivalent
yield
£m
-25 bps
change in
nominal
equivalent
yield
£m
Rental properties
London 1,212.8 1,272.9 1,152.7 1,138.9 1,297.1
Prime regional 1,105.6 1,160.5 1,051.2 1,049.4 1,168.9
Major regional 1,130.0 1,186.6 1,073.7 1,081.7 1,183.1
Provincial 103.9 109.2 98.7 100.9 107.2
Development properties
London 91.9 95.9 86.6 85.6 97.6
Prime regional 32.4 38.5 35.1 35.0 38.8
Major regional 64.1 67.2 61.0 61.0 67.3
Build-to-rent
London 71.1
76.0 68.8 68.1 77. 3
Prime regional 14.3 15.1 13.7 13.6 15.4
Market value 3,826.1 4,021.9 3,641.5 3,634.2 4,052.7
3.2 Inventories
Accounting policies
Inventories are shown at the lower of cost and net realisable value. Net realisable value is the estimated selling price
in the ordinary course of business less the estimated costs of completion and selling expenses. All costs directly
associated with the purchase of land, and all subsequent qualifying expenditure is capitalised.
2022
£m
2021
£m
Interests in land 11.4 10.8
Other stocks 1.4 1.3
Inventories 12.8 12.1
At 31 December 2022, the Group had interests in two pieces of land (2021: two pieces of land).
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
206
NOTES TO THE FINANCIAL STATEMENTS continued
3.3 Right of use assets and other non-current assets
Accounting policies
Leased assets
The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a
right of use asset and a corresponding lease liability (see note 4.6a) with respect to all lease arrangements in which it
is the lessee. Right of use assets are initially measured at cost, which comprises a value set equal to the lease liability,
adjusted for prepaid or accrued lease payments and lease incentives. They are subsequently measured at this initial
value less accumulated depreciation and impairment losses.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Property,
plant and equipment mainly comprise leasehold improvements at the Group’s head office and London office as well
as computer hardware at these sites.
Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives. Freehold land
is not depreciated. The estimated useful lives are as follows:
• Right of use assets Shorter of lease and economic life
• Property, plant and equipment 4–7 years
Intangible assets
Intangible assets predominantly comprise computer software which allows customers to book online and processes
transactions within the sales cycle. The expenditure capitalised includes the cost of materials, direct labour and an
appropriate proportion of overheads. The assets are amortised on a straight-line basis over four to seven years, being
the estimated useful lives of the intangible assets, from the date they are available for use. Amortisation is charged to
the income statement within operating expenses.
3.3a) Right of use assets
2022 2021
Buildings
£m
Other
£m
Total
£m
Buildings
£m
Other
£m
Total
£m
Cost
At 1 January 5.8 1.3 7.1 5.8 1.4 7. 2
Additions – 0.4 0.4 – 0.4 0.4
Disposals (0.8) (0.4) (1.2) – (0.5) (0.5)
At 31 December 5.0 1.3 6.3 5.8 1.3 7.1
Amortisation
At 1 January (2.9) (0.6) (3.5) (2.2) (0.7) (2.9)
Amortisation charge for the year (0.8) (0.5) (1.3) (0.7) (0.4) (1.1)
Disposal 0.8 0.4 1.2 – 0.5 0.5
At 31 December (2.9) (0.7) (3.6) (2.9) (0.6) (3.5)
Carrying value at 1 January 2.9 0.7 3.6 3.6 0.7 4.3
Carrying value at 31 December 2.1 0.6 2.7 2.9 0.7 3.6
The Group leases several assets including office equipment and vehicles. The average lease term is three years.
207
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Section 3: Asset management continued
3.3 Right of use assets and other non-current assets continued
Approximately 44% of the leases expired in the current financial year (2021: 11%). The expired contracts were replaced
by new leases for identical underlying assets. This resulted in additions to right of use assets of £0.4 million in 2022
(2021: £0.4 million).
The maturity analysis of lease liabilities is presented in note 4.6a.
Details of interest on lease liabilities and total cash outflows for leases are presented in notes 4.3 and 5.1.
3.3b) Other non-current assets
The Group’s other non-current assets can be analysed as follows:
2022 2021
Property,
plant and
equipment
£m
Intangible
assets
£m
Total
£m
Property,
plant and
equipment
£m
Intangible
assets
£m
Total
£m
Cost
At 1 January 12.6 65.1 77.7 12.1 61.8 73.9
Additions 1.0 8.0 9.0 0.5 3.3 3.8
At 31 December 13.6 73.1 86.7 12.6 65.1 77.7
Depreciation and amortisation
At 1 January (9.8) (48.9) (58.7) (9.2) (42.8) (52.0)
Depreciation/amortisation charge
for the year (0.6) (5.9) (6.5) (0.6) (6.1) (6.7)
At 31 December (10.4) (54.8) (65.2) (9.8) (48.9) (58.7)
Carrying value at 1 January 2.8 16.2 19.0 2.9 19.0 21.9
Carrying amount at 31 December 3.2 18.3 21.5 2.8 16.2 18.9
Intangible assets include £7.0 million (2021: £0.8 million) of assets not being amortised as they are not yet ready for use.
Property, plant and equipment assets include £nil (2021: £nil) of assets not being depreciated as they are not ready for
use. At 31 December 2022 the Group had capital commitments of £nil (2021: £nil) relating to intangible assets and £nil
(2021: £nil million) relating to property, plant and equipment.
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
208
NOTES TO THE FINANCIAL STATEMENTS continued
3.4 Investments in joint ventures (Group)
Accounting policies
Joint ventures are those entities over whose activities the Group has joint control, established by contractual
agreement. The consolidated financial statements include joint ventures initially at cost subsequently, increased or
decreased by the Group’s share of total gains and losses of joint ventures on an equity basis. Interest free joint venture
investment loans are initially recorded at fair value – the difference between the nominal amount and fair value
being treated as an investment in the joint venture. The implied discount is amortised over the contracted life of the
investment loan.
The Directors consider that the agreements integral to its joint ventures result in the Group having joint control
over the key matters required to operate the joint ventures. A significant degree of judgement is exercised in this
assessment due to the complexity of the contractual arrangements.
USAF and LSAV are jointly owned entities that are accounted for as joint ventures. Due to the complexity of the
contractual arrangements and Unite’s role as manager of the joint venture vehicles, the assessment of joint control
involves judgements around a number of significant factors. These factors include how Unite as fund manager has the
ability to direct relevant activities such as acquisitions, disposals, capital expenditure for refurbishments and funding
whether through debt or equity. This assessment for USAF is complex because of the number of unit holders and how
their rights are represented through an Advisory Committee. For some of the activities it is not clear who has definitive
control of the activities: in some scenarios the Group can control, in others the Advisory Committee. However, for the
activities which are considered to have the greatest impact on the returns of USAF, acquisitions and equity financing, it
has been determined that the Group and the Advisory Committee has joint control in directing these activities and that
on balance, it is appropriate to account for USAF as a joint venture. The assessment for LSAV is more straightforward
because the Group and GIC each own 50% of the joint venture and there is therefore much clearer evidence that
control over the key activities is shared by the two parties.
The Group has two joint ventures:
Joint venture
Group’s share of
assets/results
2022 (2021) Objective Partner
Legal entity in which
Group has interest
The UNITE UK Student
Accommodation Fund
(USAF)
29.5%*
(23.4%)*
Invest and operate
student accommodation
throughout the UK
Consortium of
investors
UNITE UK Student
Accommodation Fund,
a Jersey Unit Trust
London Student
Accommodation
Venture (LSAV)
50%
(50%)
Operate student
accommodation
in London and
Birmingham
GIC Real Estate Pte,
Ltd Real estate
investment vehicle
of the Government
of Singapore
LSAV Unit Trust, a Jersey Unit
Trust and LSAV (Holdings) Ltd,
incorporated in Jersey
* Part of the Group’s interest is held through a subsidiary, USAF (Feeder) Guernsey Limited, in which there is an external investor. A non-
controlling interest therefore occurs on consolidation of the Group’s results representing the external investor’s share of profits and
assets relating to its investment in USAF. The ordinary shareholders of Unite Group PLC are beneficially interested in 28.15% (2021:
22.0%) of USAF.
209
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Section 3: Asset management continued
3.4 Investments in joint ventures (Group) continued
3.4a) Net assets and results of the joint ventures
The summarised balance sheets and results for the year, and the Group’s share of these joint ventures are as follows:
2022
USAF
£m
LSAV
£m
Total
£m
Gross MI Share Gross Share Gross Share
Investment property 2,888.1 38.0 813.0 1,920.8 960.4 4,808.9 1,811.4
Cash 126.5 1.7 35.6 131.2 65.6 257.7 102.9
Debt (851.9) (11.2) (239.8) (770.4) (385.2) (1,622.3) (636.2)
Swap assets/(liabilities) 3.2 – 0.9 6.6 3.3 9.8 4.2
Other current assets 126.5 1.7 35.6 16.4 8.2 142.9 45.5
Other current liabilities (245.8) (3.4) (69.2) (57.2) (28.6) (303.0) (101.2)
Net assets 2,046.6 26.8 576.1 1,247.4 623.7 3,294.0 1,226.6
Non-controlling interest – (26.8) – – – – (26.8)
Swap (liabilities)/assets (3.2) – (0.9) (6.6) (3.3) (9.8) (4.2)
EPR A NTA 2,043.4 – 575.2 1,240.8 620.4 3,284.2 1,195.6
Profit for the year 124.2 1.3 26.1 106.0 53.0 230.2 80.4
2021
USAF
£m
LSAV
£m
Total
£m
Gross MI Share Gross Share Gross Share
Investment property 2,867.4 39.3 631.9 1,819.0 909.5 4,686.4 1,580.7
Cash 106.2 1.5 23.4 45.4 22.7 151.6 47.6
Debt (912.1) (12.5) (201.0) (673.0) (336.5) (1,585.1) (550.0)
Swap assets/(liabilities) 0.5 – 0.1 (0.2) (0.1) 0.3 –
Other current assets 106.6 1.5 23.5 22.0 11.0 128.6 36.0
Other current liabilities (211.5) (3.5) (46.6) (40.2) (20.1) (251.7) (70.2)
Net assets 1,957.1 26.3 431.3 1,173.0 586.5 3,130.1 1,0 44.1
Non-controlling interest – (26.3) – – – – (26.3)
Swap (liabilities)/assets (0.5) – (0.1) 0.2 0.1 (0.3) –
EPR A NTA 1,956.6 – 431.2 1,173.2 586.6 3,129.8 1,017.8
Profit for the year 146.9 2.1 34.2 172.2 86.1 319.1 122.4
Net assets and profit/(loss) for the year above include the non-controlling interest, whereas EPRA NTA excludes the non-
controlling interest.
USAF and LSAV use derivatives to hedge their borrowings. These derivatives are designated in cash flow hedge
relationships which are considered to be fully effective. The share of joint venture mark to market movements on hedging
instruments is recognised in the Group’s Other Comprehensive Income within the share of joint venture mark to market
movements on hedging instruments. The total notional value of borrowings in hedge relationships at 31 December 2022
is £415.0 million (2021: £225.0 million). See note 4.5 for further details.
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
210
NOTES TO THE FINANCIAL STATEMENTS continued
3.4b) Movement in carrying value of the Group’s investments in joint ventures
The carrying value of the Group’s investment in joint ventures increased by £182.5 million during the year ended
31 December 2022 (2021: £195.1 million increase), resulting in an overall carrying value of £1,226.6 million (2021:
£1,044.1 million).
The following table shows how the increase has arisen:
2022
£m
2021
£m
Recognised in the income statement:
Operations segment result 44.5 30.2
Non-controlling interest share of Operations segment result 1.3 1.1
Management fee adjustment related to trading with joint venture 4.0 3.0
Net valuation gains/(losses) on investment property 32.3 88.7
Property disposals (0.9) (0.3 )
Other (0.8) (0.3)
80.4 122.4
Recognised in equity:
Movement in effective hedges 4.7 0.6
Other adjustments to the carrying value:
Profit adjustment related to trading with joint venture (4.0) (3.4)
Profit adjustment related sale of property to LSAV – (1.9)
Additional capital invested in LSAV – 157.6
Additional capital invested in USAF 140.9 –
LSAV performance fee – (42.2)
USAF distributions received (19.8) (18.6)
LSAV distributions received (19.7) (19.4)
Increase in carrying value 182.5 195.1
Carrying value at 1 January 1,0 44.1 849.0
Carrying value at 31 December 1,226.6 1,04 4.1
3.4c) Transactions with joint ventures
The Group acts as asset and property manager for the joint ventures and receives management fees in relation to
these services.
In addition, the Group is entitled to performance fees from USAF and LSAV if the joint ventures outperform certain
benchmarks. The Group receives either cash or an enhanced equity interest in the joint ventures as consideration for
the performance fee. The Group has recognised the following gross fees in its results for the year.
2022
£m
2021
£m
USAF 16.6 15.2
LSAV 4.8 3.9
Asset and property management fees 21.4 19.1
LSAV performance fee – 41.9
Investment management fees – 41.9
Total fees 21.4 61.0
On an EPRA basis, fees from joint ventures are shown net of the Group’s share of the cost to the joint ventures.
211
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Section 3: Asset management continued
3.4 Investments in joint ventures (Group) continued
The Group’s share of the cost to the joint ventures is £4.0 million (2021: £3.2 million), which results in management fees
from joint ventures of £17.4 million being shown in the Operating segment result in note 2.2a (2021: £15.9 million).
During 2022, the Group did not sell any properties to LSAV or USAF (2021: two properties sold to LSAV for gross proceeds
of £341.9 million). The proceeds and carrying value of the property are therefore recognised in profit on disposal of
property and the cash flows in investing activities. The loss relating to the sales, associated disposal costs and related
cash flows are set out below:
Profit and loss
2022
£m
2021
£m
Included in loss on disposal of property (net of joint venture trading adjustment) – 6.6
Loss on disposal of property – 6.6
Cash flow
2022
£m
2021
£m
Gross proceeds – 341.9
Less amounts settled by transfer of property – (99.4)
Net cash flows included in cash flows from investing activities – 242.5
As part of the disposal of properties to LSAV in 2021, the Group received an additional investment in the joint venture as
non-cash consideration totalling £104.0 million (before costs of £4.6 million), and the settlement of the LSAV performance
fee also resulted in a non-cash increase in its investment value of £53.6 million. The Group’s relative interest in the joint
venture remained unchanged.
3.5 Investments in subsidiaries (Company)
Accounting policies
In the financial statements of the Company, investments in subsidiaries are held at fair value. Changes in fair value are
recognised in profit or loss and presented in retained earnings in equity.
Carrying value of investment in subsidiaries
The movements in the Company’s interest in unlisted subsidiaries and joint ventures during the year are as follows:
Investment in subsidiaries
2022
£m
2021
£m
At 1 January 2,143. 5 1,826.7
Additions – –
Revaluation 253.5 316.8
At 31 December 2,397.0 2 ,143.5
The carrying value of investment in subsidiaries has been calculated using the equity attributable to the owners of
the parent company from the consolidated balance sheet adjusted for the fair value of fixed rate loans. This includes
investment property, investment property under development and swaps at a fair value calculated by a third party expert.
All investment properties and investment properties under development are classified as Level 3 in the IFRS 13 fair value
hierarchy and have been discussed on page 214. The fixed rate loans range between Level 1 and Level 2 in the IFRS 13 fair
value hierarchy and have been discussed further on page 214.
Significant assumptions underlying the valuation of investment in subsidiaries are valuation of investment property and
investment property under development, together with the value of borrowings and inter-company debt. A full list of the
Company’s subsidiaries and joint ventures can be found in note 9.
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
212
NOTES TO THE FINANCIAL STATEMENTS continued
Section 4: Funding
The Group finances its development and investment activities through a mixture of retained earnings,
borrowings and equity. The Group continuously monitors its financing arrangements to manage its gearing.
Interest rate swaps are used to manage the Group’s risk to fluctuations in interest rate movements.
The following pages provide disclosures about the Group’s funding position, including borrowings, gearing and
hedging instruments; its exposure to market risks; and its capital management policies.
Accounting policies
Financial instruments
Financial assets and financial liabilities are recognised in the Group’s balance sheet when the Group becomes
a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value, less any attributable transaction costs,
and subsequently at amortised cost.
With the exception of investments in subsidiaries and derivative financial instruments, no other financial assets or
liabilities have been classified as either fair value through profit or loss or fair value through other comprehensive income.
The accounting policies applicable to specific financial assets and liabilities, and financing costs, are set out in
the relevant notes.
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses on trade receivables.
The Accounting Policy is set out in full in note 5.2.
Derivative financial instruments
The Group enters into derivative financial instruments to manage its exposure to interest rate risk. Further details
of derivative financial instruments, including the relevant accounting policies, are disclosed in notes 4.2 and 4.5.
4.1 Borrowings
Accounting policies
Interest bearing borrowings are recognised initially at fair value, less attributable transaction costs. Subsequent to initial
recognition, interest bearing borrowings are stated at amortised cost with any difference between cost and redemption
value being recognised in the income statement over the period of the borrowings on an effective interest basis.
The table below analyses the Group’s borrowings which comprise bank and other loans by when they fall due for payment:
Group – Carrying value Company – Carrying value
2022
£m
2021
£m
2022
£m
2021
£m
Current
In one year or less – – – –
Non-current
In more than one year but not more than two years 298.7 – – –
In more than two years but not more than five years 228.0 419.2 228.0 121.3
In more than five years 721.1 719.0 421.6 420.9
1,2 47.8 1,138.2 649.6 542.2
Unamortised fair value of debt recognised on acquisition 18.1 23.8 – –
Total borrowings 1,265.9 1,162 .0 649.6 542.2
In addition to the borrowings currently drawn as shown above, the Group has available undrawn facilities of £368.0 million
(2021: £325.0 million). A further overdraft facility of £10.0 million (2021: £10.0 million) is also available.
The Group repaid only unsecured borrowing at 31 December 2022 and 31 December 2021.
213
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Section 4: Funding continued
4.1 Borrowings continued
The carrying value and fair value of the Group’s borrowings is analysed below:
Group
2022 2021
Carrying
value
£m
Fair value
£m
Carrying
value
£m
Fair value
£m
Level 1 IFRS fair value hierarchy 875.0 759.3 898.8 936.7
Other loans and unamortised arrangement fees 372.8 333.8 263.2 263.2
Total borrowings 1,247.8 1,093.1 1,162 .0 1,199.9
Company
2022 2021
Carrying
value
£m
Fair value
£m
Carrying
value
£m
Fair value
£m
Level 1 IFRS fair value hierarchy 275.0 344.5 425.0 439.0
Other loans and unamortised arrangement fees 374.6 333.8 117.2 117.2
Total borrowings 649.6 678.3 542.2 556.2
The fair value of loans classified as Level 1 in the IFRS fair value hierarchy is determined using quoted prices in active
markets for identical liabilities.
The following table shows the changes in liabilities arising from financing activities:
2022
Group
At 1
January
2022
Financing
cash flows
Fair value
adjustments
Other
changes
At 31
December
2022
Borrowings 1,162.0 107.0 (4.3) 1.2 1,265.9
Lease liabilities 96.8 (4.8) – 0.3 92.3
Interest rate swaps (2.5) – (70.7) – (73.2)
Total liabilities from financing activities 1,256.3 102.2 (75.0) 1.5 1,285.0
Company
Borrowings 542.2 107.0 0.4 – 649.6
Interest rate swaps (2.5) – (70.7) – (73.2)
Total liabilities from financing activities 539.7 107.0 (70.3) – 576.4
2021
Group
At 1
January
2021
Financing
cash flows
Fair value
adjustments
Other
changes
At 31
December
2021
Borrowings 1,689.9 (563.8) (4.3) 40.2 1,162.0
Lease liabilities 101.1 (13.2) – 8.9 96.8
Interest rate swaps 23.6 (3.1) (23.9) 0.9 (2.5)
Total liabilities from financing activities 1,814.6 (580.1) (28.2) 50.0 1,256.3
Company
Borrowings 1,066.6 (550.8) (0.8) 27.2 542.2
Interest rate swaps 23.6 (3.1) (23.9) 0.9 (2.5)
Total liabilities from financing activities 1,090.2 (553.9) (24.7) 2 8.1 539.7
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
214
NOTES TO THE FINANCIAL STATEMENTS continued
4.2 Interest rate swaps
The Group uses interest rate swaps to manage the Group’s exposure to interest rate fluctuations. In accordance with the
Group’s Treasury Policy, the Group does not hold or issue interest rate swaps for trading purposes and only holds swaps
which are considered to be commercially effective. The derivatives of the Company are the same as those of the Group,
and the hedge accounting disclosures in note 4.5a are also relevant for the Company.
Accounting policies
Interest rate swaps are recognised initially and subsequently at fair value, with mark to market movements recognised
in the income statement unless cash flow hedge accounting is applied.
The Group designates certain interest rate derivatives as hedging instruments. The interest rate swap is designated
as the hedging instrument in a hedge of the variability in cash flows attributable to the interest risk of borrowings. At
inception the Group documents the relationship between the hedging instrument and the hedged item, along with the
risk management objectives and its strategy for undertaking various hedge transactions.
Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the hedging
instrument is effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged
risk, which is when the hedging relationships meet all of the following hedge effectiveness requirements:
• there is an economic relationship between the hedged item and the hedging instrument;
• the effect of credit risk does not dominate the value changes that result from that economic relationship; and
• the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that
the Group actually hedges and the quantity of the hedging instrument that the Group actually uses to hedge that
quantity of hedged item.
The effective portion of changes in fair value of the interest rate swap is recognised in Other Comprehensive Income
and presented under the heading of Hedging reserve in equity, limited to the cumulative change in fair value of the
hedged item from inception of the hedge. Any ineffective portion of changes in the fair value of the interest rate
swap is recognised immediately in profit or loss. Amounts previously recognised in other comprehensive income and
accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss, in the
same line as the recognised hedged item. If the Group expects that some or all of the loss accumulated in the hedging
reserve will not be recovered in the future, that amount is immediately reclassified to profit or loss.
The Group discontinues hedge accounting only when the hedging relationship (or a part thereof) ceases to meet the
qualifying criteria. This includes instances when the hedging instrument expires or is sold, terminated or exercised.
The discontinuation is accounted for prospectively. Any gain or loss recognised in Other Comprehensive Income and
accumulated in the hedging reserve at that time remains in equity and is reclassified to profit or loss when the forecast
transaction occurs. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in the
hedging reserve is reclassified immediately to profit or loss.
The fair value of interest rate swaps is the estimated amount that the Group would receive or pay to terminate the
swap at the balance sheet date, taking into account current interest rates and the current creditworthiness of the
swap counterparties.
The following table shows the fair value of interest rate swaps which at 31 December 2022 are not designated in
accounting hedge relationships:
2022
£m
2021
£m
Current – (2.5)
Non-current (73.2) –
Fair value of interest rate swaps (73.2) (2.5)
The fair value of interest rate swaps (a debit balance in 2022 and 2021) have been calculated by a third party expert,
discounting estimated future cash flows on the basis of market expectations of future interest rates, representing Level
2 in the IFRS 13 fair value hierarchy. At 31 December 2022 the net asset fair value above comprises non-current assets of
£73.2 million (2021: assets of £6.1 million and liabilities of £3.6 million).
215
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Section 4: Funding continued
4.3 Net financing (gains)/costs
Accounting policies
Net financing costs comprise interest payable on borrowings and interest on lease liabilities, less interest receivable on
funds invested (both calculated using the effective interest rate method) and gains and losses on hedging instruments
that are recognised in the income statement.
Recognised in the income statement:
2022
£m
2021
£m
Interest income (0.2) –
Finance income (0.2) –
Gross interest expense on loans 39.5 43.7
Interest capitalised (4.3) (5.2)
Amortisation of fair value of debt recognised on acquisition (5.9) (4.3)
Loan interest and similar charges 29.3 34.2
Interest on lease liabilities 8.1 8.5
Mark to market gains on interest rate swaps (70.7) (10.9)
Swap cancellation fair value settlements and loan break costs – 4.2
Finance (gains)/costs (33.3) 36.0
Net financing (gains)/costs (33.5) 36.0
The average cost of the Group’s wholly owned investment debt at 31 December 2022 is 3.3% (2021: 3.0%). The overall
average cost of investment debt on an EPRA basis is 3.4% (2021: 3.0%).
4.4 Gearing
LTV is a key indicator that the Group uses to manage its indebtedness. The Group also monitors gearing, which is
calculated using EPRA net tangible assets (NTA) and adjusted net debt. Adjusted net debt excludes IFRS 16 lease liabilities,
the unamortised fair value of debt recognised on acquisition and mark to market of interest rate swaps as shown below.
The Group’s gearing ratios are calculated as follows:
Note
2022
£m
2021
£m
Cash and cash equivalents 5.1 38.0 109.4
Non-current borrowings 4.1 (1,265.9) (1,162.0)
Lease liabilities 4.6a (92.3) (96.8)
Interest rate swaps 4.3 73.2 2.5
Net debt per balance sheet (1,247.0) (1,146.9)
Lease liabilities 4.6a 92.3 96.8
Unamortised fair value of debt recognised on acquisition 2.3c 19.5 23.8
Adjusted net debt (1,135.2) (1,026.3)
Reported net asset value 2.3c 3,792 .1 3,527.8
EPR A NTA 2.3c 3,715.2 3,532.2
Gearing
Basic (net debt/reported net asset value) 33% 33%
Adjusted gearing (adjusted net debt/EPRA NTA) 31% 29%
Loan to value 2.3a 31% 29%
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
216
NOTES TO THE FINANCIAL STATEMENTS continued
4.5 Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risks (primarily interest rate risk), credit risk and
liquidity risk. The Group’s Treasury Policy focuses on the unpredictability of financial markets and seeks to minimise
potential adverse effects on the Group’s financial performance. Details on credit risk can be found in note 5.3.
4.5a) Interest rate risk
The Group is exposed to interest rate risk because entities in the Group borrow funds at both fixed and floating interest
rates. The risk is managed by the Group by maintaining an appropriate mix between fixed and floating rate borrowings,
and by the use of interest rate swap contracts and forward interest rate contracts. Hedging activities are evaluated
regularly to align with interest rate views and defined risk appetite; ensuring the most cost-effective hedging strategies
are applied.
The Group’s exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk
management section of this note.
The Group holds its debt finance under both floating and fixed rate arrangements. The majority of floating debt is hedged
through the use of interest rate swap agreements. The Group’s Policy guideline has been to hedge 75%-95% of the Group’s
exposure for terms of approximately two to ten years.
At 31 December 2022, after taking account of interest rate swaps, 97% (2021: 89%) of the Group’s borrowing was held at
fixed rates. Excluding the £200 million (2021: £nil million) of swaps the fixed investment borrowing is at an average rate of
3.1% (2021: 3.1%) for an average period of 5.3 years (2021: 6.4 years), including all debt with current swaps the average rate
is 3.3% (2021: 3.0%). In addition, Unite Group Plc has £300m forward starting interest rate swaps at rates meaningfully
below prevailing market levels with weighted average maturity of 10.8 years.
Under interest rate swap contracts, the Group agrees to exchange the difference between fixed and floating rate interest
amounts calculated on agreed notional principal amounts. Such contracts enable the Group to mitigate the risk of
changing interest rates upon the issuance of forecast fixed rate debt held and the cash flow exposures on the issued
variable rate debt held. The fair value of interest rate swaps at the reporting date is determined by discounting the
future cash flows using the curves at the reporting date and is disclosed below. The average interest rate is based on the
outstanding balances at the end of the financial year.
As the critical terms of the hedge contracts and their corresponding hedged items are the same, the Group performs a
qualitative assessment of effectiveness and it is expected that the value of the interest rate swap contracts and the value
of the corresponding hedged items will systematically change in opposite direction in response to movements in the
underlying interest rates. The main source of hedge ineffectiveness in these hedge relationships has historically been the
effect of the counterparty and the Group’s own credit risk on the fair value of the hedge contracts, which is not reflected
in the fair value of the hedged item attributable to the change in interest rates. No other sources of ineffectiveness
emerged from these hedging relationships. However, changes in anticipated draw down of debt in 2022 as a result of
planned property disposals have meant that the hedged items were no longer expected to occur. As a result the hedge
relationships were discontinued from 1 July 2021. Subsequent changes in fair value of the derivatives of £10.0 million
were recognised directly in profit and loss. The amount accumulated in cash flow hedge reserve was reclassified to profit
and loss.
The Group holds interest rate swaps and caps at 31 December 2022 against £nil (2021: £nil) of the Group’s borrowings,
designated in effective hedge relationships. The fair value of these instruments is net assets of £73.2 million (2021:
£2.5 million) with £nil million maturing in 12 months.
Hedging instruments
Applicable
interest rates Nominal amount Carrying amount Change in fair value
2022
%
2021
%
2022
£m
2021
£m
2022
£m
2021
£m
2022
£m
2021
£m
Within one year – – – – – – – 5.0
Between one and two years – – – – – – – 2.5
Between two and five years – – – – – – – –
More than five years – – – – – – – 8.6
217
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Section 4: Funding continued
4.5 Financial risk factors continued
Hedged items
Nominal amount Change in value
Hedging reserve –
continuing
Hedging reserve –
discontinued*
2022
£m
2021
£m
2022
£m
2021
£m
2022
£m
2021
£m
2022
£m
2021
£m
Variable rate borrowings – – – (16.2) – – – 1.6
* Balance in cash flow hedging reserve representing the unamortised value of the realised swap gain from hedging relationship for which
hedge accounting is no longer applied.
The following table details the effectiveness of the hedging relationship and the amounts reclassified from hedging
reserve to profit or loss:
Changes in OCI
Hedge
ineffectiveness
Line item in
P&L
Reclassified
to P&L –
discontinued
Reclassified
to P&L –
continuing
Line item in
P&L
2022
£m
2021
£m
2022
£m
2021
£m
2022
£m
2021
£m
2022
£m
2021
£m
Variable rate
borrowings
– 16.2 – –
Mark to market
movements on
interest rate
swaps
– (1.1) – –
Mark to market
movements on
interest rate
swaps
The interest rate swaps settle on a monthly basis. The floating rate on the interest rate swaps is one-month SONIA (2021:
SONIA). The Group will settle the difference between the fixed and floating interest rate on a net basis.
At the end of the current year and the previous year, the Group had no cash flow hedges in hedge relationships.
The sensitivity analyses below have been determined based on the exposure to interest rates for both derivative and
non-derivative instruments as at 31 December 2022. For floating rate liabilities, the analysis is prepared assuming the
amount of liability outstanding at the reporting date was outstanding for the whole year. A 1% increase or decrease is
used when reporting interest rate risk internally to key management personnel and represents management’s assessment
of the reasonably possible change in interest rates.
If interest rates had been 1% higher and all other variables were held constant the Group’s loss for the year ended
31 December 2022 would increase by £1.4 million (2021: £4.0 million). The Group’s sensitivity to interest rates has
decreased mainly due to the lower amount of unhedged floating rate debt in place during the year.
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
218
NOTES TO THE FINANCIAL STATEMENTS continued
4.5b) Credit risk on financial instruments
In order to minimise credit risk, the Group has adopted a policy of only dealing with creditworthy counterparties and
obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults.
The Group only transacts with entities that are rated the equivalent of investment grade and investments in these
instruments, where the counterparties have minimum A- credit rating, are considered to have low credit risk for the
purpose of impairment assessment. The credit rating information is supplied by independent rating agencies where
available and, if not available, the Group uses other publicly available financial information including CDS price and its
own trading records to rate its major customers. The Group’s exposure and the credit ratings of its counterparties are
continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties
in line with Board Policy.
Before accepting any new customer, the finance team uses external credit ratings to assess the potential customer’s credit
quality and defines credit limits by customer. Monitoring procedures are also in place to ensure that follow-up action is
taken when ratings deteriorate. The Group does not hold any credit enhancements to cover its credit risks associated with
its financial assets.
The Group considers the following as constituting an event of default for internal credit risk management purposes as
historical experience indicates that financial assets that meet either of the following criteria are generally not recoverable;
• when there is a breach of financial covenants by the debtor; or
• information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its
creditors, including the Group, in full (without taking into account collateral held by the Group).
Details of the credit quality of the Group’s financial assets as well as the Group’s maximum exposure to credit risk by
credit risk rating grades are set out on note 5.3.
4.5c) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has established an
appropriate liquidity risk management framework for the management of the Group’s short, medium and long-term
funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves,
banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by
matching the maturity profiles of financial assets and liabilities. Details of additional undrawn facilities that the Group
has at its disposal to further reduce liquidity risk are set out below.
For development activities, the Group has a policy of raising substantially the full amount of equity required for each
development before drawing debt against the development. The funding requirements of developments are therefore
secured at the outset of works.
The Group has the following financial instruments which impact the liquidity risk of the Group either now or in the future:
• Financial assets including interest rate swaps, trade receivables, amounts due from joint ventures, other receivables
and cash.
• Financial liabilities including borrowings, lease liabilities, interest rates swaps, trade payables, retentions on
construction contracts for properties, other payables and accrued expenses.
The following tables detail the Group’s remaining contractual maturity for its non-derivative financial liabilities with
agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities
based on the earliest date on which the Group can be required to pay.
The contractual maturity is based on the earliest date on which the Group may be required to pay.
219
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Section 4: Funding continued
4.5 Financial risk factors continued
2022
Weighted
average
effective
interest
rate
%
Less than
1 month
£m
1–3
months
£m
3 months
– 1 year
£m
1–5
years
£m
5+
years
£m
Total
£m
Carrying
amount
£m
Variable interest rate
instruments 5.0 1.0 1.9 8.7 258.2 – 269.9 228.0
Fixed interest rate
instruments 3.1 1.1 2.2 28.8 399.4 766.2 1,197.7 1,037.9
Lease liabilities 4.2 0.5 0.9 4.2 28.3 58.8 92.7 92.3
Trade and other payables N/a – 118.2 – – – 118.2 118.2
Total 2.6 123.2 41.7 685.9 825.0 1,678.5 1,476.4
2021
Weighted
average
effective
interest
rate
%
Less than
1 month
£m
1–3
months
£m
3 months
– 1 year
£m
1–5
years
£m
5+
years
£m
Total
£m
Carrying
amount
£m
Variable interest rate
instruments 2.0% 0.2 0.4 1.9 130.6 – 133.1 121.3
Fixed interest rate
instruments 3.1% 1.1 2.2 28.5 415.5 786.4 1,233.7 1,040.7
Lease liabilities 4.2% – 3.2 9.8 53.9 94.2 161.1 96.8
Trade and other payables n/a – 130.6 – – – 130.6 130.6
Total 1.3 136.4 40.2 600.0 880.6 1,658.5 1,389.4
The Company has £269.9 million of variable rate borrowings with a weighted average rate of 5.0% and £1,197.7 million
of fixed rate borrowings with a weighted average rate of 3.1%. The maturity of the Company’s borrowings is disclosed
in note 4.1.
The Group has access to financing facilities as described below, of which £378.0 million were unused at the reporting
date (2021: £335.0 million). The Group expects to meet its other obligations from operating cash flows.
2022
£m
2021
£m
Unsecured bank overdraft facility, reviewed annually and payable at call:
– amount used – –
– amount unused 10.0 10.0
10.0 10.0
Unsecured committed bank loan facilities which may be extended by mutual agreement:
– amount used 232.0 125.0
– amount unused 368.0 325.0
600.0 450.0
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
220
NOTES TO THE FINANCIAL STATEMENTS continued
4.5d) Covenant compliance
The Group monitors its covenant position and the forecast headroom available on a monthly basis. At 31 December 2022,
the Group was in full compliance with all of its borrowing covenants.
The Group’s unsecured borrowings carry several covenants. The covenant regime is IFRS based and gives the Group
substantial operational flexibility, allowing property acquisitions, disposals and developments to occur with relative freedom.
2022 2021
Covenant Actual Covenant Actual
Gearing <1.50 0.34 <1.50 0.30
Unencumbered assets ratio >1.70 3.12 >1.70 3.25
Secured gearing <0.25 0.0 <0.25 0.0
Development assets ratio <30% 4% <30% 7%
Joint venture ratio <55% 24% <55% 23%
Interest cover >2.00 6.71 >2.00 5.49
The Group also has bonds which carry several covenants which the Group was also in full compliance with as set
out below.
2022 2021
Weighted
covenant
Weighted
actual
Weighted
covenant
Weighted
actual
Net gearing <60% 34% <60% 30%
Secured gearing <25% 0% <25% 0%
Unsecured gearing >1.67 2.89 >1.67 2.79
Interest cover >1.75 3.50 >1.75 3.31
221
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Section 4: Funding continued
4.6 Leases
4.6a) Lease liabilities
Accounting policies
The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a
right of use asset (see note 3.1a) and a corresponding lease liability with respect to all lease arrangements in which
it is the lessee.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted by using the Group’s incremental borrowing rate (since the rate implicit in the leases
cannot be readily determined) of 4.17%.
The lease liability is presented as a separate line in the consolidated balance sheet.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability
(using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.
The Group remeasures the lease liability whenever:
• The lease term has changed, in which case the lease liability is remeasured by discounting the revised lease
payments using a revised discount rate.
• The lease payments change due to changes in an index, in which cases the lease liability is remeasured by
discounting the revised lease payments using an unchanged discount rate (unless the lease payments change is
due to a change in a floating interest rate, in which case a revised discount rate is used).
• A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case
the lease liability is remeasured based on the lease term of the modified lease by discounting the revised lease
payments using a revised discount rate at the effective date of the modification.
The Group did not make any such adjustments during the period presented.
Lease liabilities
Undiscounted cash flows Carrying value
2022
£m
2021
£m
2022
£m
2021
£m
Analysed as:
Non-current 87.5 91.9
Current 4.8 4.9
Total lease liability 92.3 96.8
Lease liability maturity analysis
Year 1 10.5 13.0 4.8 4.9
Year 2 10.9 13.3 6.7 5.4
Year 3 11.8 13.5 6.7 6.2
Year 4 12.4 13.4 7.4 6.7
Year 5 13.3 13.7 7.9 7.4
Onwards 80.6 94.2 58.8 66.2
Total 139.5 161.1 92.3 96.8
The Group does not face a significant liquidity risk with regard to its lease liabilities. Lease liabilities are monitored within
the Group’s treasury function.
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
222
NOTES TO THE FINANCIAL STATEMENTS continued
4.6b) Lease receivables
The Group accounts for its tenancy contracts offered to commercial and individual tenants as operating leases.
Operating lease contracts with universities contain RPI uplifts and market review clauses.
The lessee does not have an option to purchase the property at the expiry of the lease period.
Maturity analysis of operating lease receivables
The future minimum lease payments receivable under non-cancellable operating leases are as follows:
2022
£m
2021
£m
Year 1 218.7 19 4.1
Year 2 112.8 78.8
Year 3 73.8 57.9
Year 4 66.8 52.0
Year 5 58.5 46.2
Onwards 311.0 239.0
Total 841.6 668.0
4.7 Capital management
The capital structure of the Group consists of shareholders’ equity and adjusted net debt, including cash held on deposit.
The Group’s equity is analysed into its various components in the Statement of Changes in Equity. The components and
calculation of adjusted net debt is set out in note 4.4. Capital is managed so as to continue as a going concern and to promote
the long-term success of the business and to maintain sustainable returns for shareholders and joint venture partners.
The Group uses a number of key metrics to manage its capital structure:
• net debt (note 4.4)
• gearing (note 4.4)
• LTV (note 2.3a)
• weighted average cost of investment debt (note 4.5a)
In order to manage levels of adjusted gearing over the medium term, the Group seeks to deliver NAV growth and to
recycle capital invested in lower performing assets into new assets and property developments. £339.0 million of
property assets were sold in 2022 and we plan to sell £100-£150 million of property during 2023. The Group only commits
to schemes where there is a meaningful spread between development yields and funding costs, on investments in its
development and university partnerships pipeline. The Group does not commit to developing new sites until sufficient
equity and funding to fulfil the full cost of the development is secure.
The Board monitors the ability of the Group to pay dividends out of available cash and distributable profits. Based on the
assumption that no shareholders take up the scrip dividend, the full year dividend will be covered by operating cash flows.
The full year dividend is expected to be £130.7 million compared to operating cash flow of £160.2 million.
2 23
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Section 4: Funding continued
4.8 Equity
Accounting policies
Ordinary shares are classified as equity. External costs directly attributable to the issue of new shares, other than on
a business combination, are shown as a deduction, net of tax, in equity from the proceeds. Share issue costs incurred
directly in connection with a business combination are deducted from the proceeds of the issue.
The Company’s issued share capital has increased during the year as follows:
Called up, allotted and fully paid
ordinary shares of £0.25p each
2022 2021
No. of
shares
Ordinary
shares
£m
Share
premium
£m
No. of
shares
Ordinary
shares
£m
Share
premium
£m
At 1 January 399,139,636 99.8 2 ,161.2 398,170,432 99.5 2,160.3
Shares issued (placing) – – – – – –
Shares issued (scrip dividend) 865,069 0.2 (0.2) 789,927 0.2 (0.2)
Shares issued (options exercised) 312,520 0.1 1.0 179,277 0.1 1.1
At 31 December 400,317,225 10 0.1 2 ,162 .0 399,139,636 99.8 2,161.2
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote
per share at meetings of the Company. All shares rank equally with regard to the Company’s residual assets.
The Company’s reserves are as follows:
• Called up share capital reserves contain the nominal value of the shares issued;
• Share premium reserves contain the excess consideration received above the nominal value of the shares issued;
• Merger reserves contain the excess in the value of shares issued by the Company in exchange for the value of shares
acquired in respect of subsidiaries acquired (specifically on the acquisition of the Unilodge portfolio in June 2001);
• Hedging reserves contain the cumulative gains and losses on hedging instruments deemed effective; and
• Retained earnings contain the cumulative profits and losses of the Company net of dividends paid and
other adjustments.
4.9 Dividends
Accounting policies
Dividends are recognised through equity on the earlier of their approval by the Company’s shareholders or
their payment.
During the year, the Company paid the final 2021 dividend of £62.3 million – 15.6p per share – and an interim 2022
dividend of £43.9 million – 11.0p per share (2021: final 2020 dividend 12.75p and an interim dividend 6.5p).
After the year-end, the Directors proposed a final dividend per share of 21.7p – totalling £86.8 million (2021: 15.6p),
bringing the total dividend per share for the year to 32.7p (2021: 22.1p). No provision has been made in relation to
this dividend.
The Group has modelled tax adjusted property business profits for 2022 and 2023 and the PID requirement in respect
of the year ended 31 December 2022 is expected to be satisfied by the end of 2023.
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
224
NOTES TO THE FINANCIAL STATEMENTS continued
Section 5: Working capital
This section focuses on how the Group generates its operating cash flows. Careful management of working
capital is vital to ensure that the Group can meet its trading and financing obligations within its ordinary
operating cycle.
On the following pages you will find disclosures around the Group’s cash position and how cash is generated
from the Group’s trading activities, and disclosures around trade receivables and payables.
Accounting policies
Cash and cash equivalents comprise cash balances and call deposits. Cash equivalents are short-term, highly liquid
investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of
changes in value. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash
management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.
5.1 Cash and cash equivalents
The Group’s cash position at 31 December 2022 was £38.0 million (2021: £109.4 million).
The Group’s cash balances include £1.1 million (2021: £2.0 million) whose use at the balance sheet date is restricted
by funding agreements to pay operating costs.
The Group generates cash from its operating activities as follows:
Note
Group
2022
£m
2021
£m
Profit for the year 356.4 344.6
Adjustments for:
Depreciation and amortisation 7.8 7.8
Fair value of share-based payments 6.1 1.6 2.4
Change in value of investment property (owned and under development) 3.1 (112.7) (116.8)
Change in value of investment property (leased) 3.1 9.3 11.1
Net finance costs 4.3 29.1 34.2
Interest payments for leased assets 4.3 8.1 8.5
Mark to market changes in interest rate swaps 4.3 (70.7) (10.9)
Swap break and debt exit costs 4.3 – 4.2
Loss on disposal of investment property (owned) 15.6 12.0
Share of joint venture profit 3.4b (80.4) (122.2)
Trading with joint venture adjustment 4.0 19.1
Tax charge/(credit) 2.5a 1.6 (1.5)
Cash flows from operating activities before changes in working capital 169.7 192.5
Decrease/(increase) in trade and other receivables 3.6 (52.5)
(Increase) in inventories (1.0) (2.9)
(Decrease)/increase in trade and other payables (10.7) 34.2
Cash flows from operating activities 161.6 171.3
Tax paid (1.4) –
Net cash flows from operating activities 160.2 171.3
225
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Section 5: Working capital continued
5.1 Cash and cash equivalents continued
Cash flows consist of the following segmental cash inflows/(outflows): operations £134.1 million (2021: £108.1 million),
property £29.6 million (2021: (£324.8 million)) and unallocated (£235.1 million) (2021: (£12.2 million)).
The unallocated amount includes a net cash outflow of dividends paid of £96.4 million (2021: £64.8 million), an outflow
of £141.0 million due to the acquisition of units in USAF (2021: £nil) and £2.3 million of inflows from other items.
Dividends received by the Company from its subsidiary undertakings totalling £130.0 million (2021: £125.0 million) are
non-cash distributions of reserves.
5.2 Trade and other receivables
Accounting policies
On the basis that trade receivables meet the business model and cash flow characteristics tests, they are initially
recognised at transaction price and then subsequently measured at amortised cost.
The Group applies the IFRS 9 simplified model of recognising lifetime expected credit losses for all trade receivables
as these items do not have a significant financing component.
In measuring the expected credit losses, the trade receivables have been assessed on a collective basis as they possess
shared credit risk characteristics. They have been grouped based on the days past due and also according to whether
the tenant is a commercial organisation (including universities) or an individual student.
The expected loss rates are based on the payment profile for sales by academic year as well as the corresponding
historical credit losses during the period. The historical rates are adjusted to reflect any current and forward-looking
macroeconomic factors affecting the customer’s ability to settle the amount outstanding, however given the short
period exposed to credit risk, the impact of macroeconomic factors has not been considered significant within the
reporting period.
Trade receivables are written off (i.e. derecognised) when there is no reasonable expectation of recovery. Failure to
make payments within a reasonable period from the invoice date and failure to engage with the Group on alternative
payment arrangements, amongst others are considered indicators of no reasonable expectation of recovery.
Other financial asset balances are assessed for expected credit losses based on the underlying nature of the asset,
including maturity and age of the asset such as whether a longer term asset or a short term working capital balance
is subject to regular settlement arrangements, using the 12 month ECL model. No credit losses have been recognised
in respect of these balances.
Financial assets written off may still be subject to enforcement activities under the Group’s recovery procedures,
taking into account legal advice where appropriate. Any recoveries made are recognised in profit or loss.
The Company’s impairment policies in relation to financial assets are consistent with those of the Group, with
additional consideration given to loans to Group undertakings. In this respect, the Company recognises lifetime ECL
when there has been a significant increase in credit risk (such as changes to credit ratings) since initial recognition.
However, if the credit risk on the loans have not increased significantly since initial recognition, the Company measures
the loss allowance for that financial instrument at an amount equal to 12-month ECL.
The Company expects that the loans to Group undertakings will be repaid in full at maturity or when called. If the
Group undertakings were unable to repay loan balances, the Company expects that in such circumstances the
counterparty would negotiate extended credit terms with the Company. As such, the expected credit loss is considered
immaterial. No change in credit risk is deemed to have occurred since initial recognition and therefore a 12-month
expected credit loss has been calculated based on the assessed probability of default.
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
226
NOTES TO THE FINANCIAL STATEMENTS continued
Trade and other receivables can be analysed as follows:
Note
Group Company
2022
£m
2021
£m
2022
£m
2021
£m
Trade receivables 31.8 27.9 – –
Amounts due from joint ventures 46.9 56.8 – –
Prepayments and accrued income 20.6 15.3 – –
Other receivables 5.9 8.8 0.1 0.1
Trade and other receivables (current) 105.2 108.8 0.1 0.1
Loans to Group undertakings (non-current) 5.6 – – 2,076.9 1,928.3
Trade and other receivables (non-current) – – 2,076.9 1,928.3
The Group offers tenancy contracts to commercial (universities and retail unit tenants) and individual tenants based on
the academic year. The Group monitors and manages the recoverability of its receivables based on the academic year to
which the amounts relate. Rental income is payable immediately, therefore all receivables relating to tenants are past the
payment due date.
We do not anticipate there to be any expected credit loss on amounts receivable from joint ventures as these remain
highly profitable. Details of amounts due from Group undertakings to the Company are disclosed in note 5.6.
2022
Ageing by academic year
Total
£m
2022/23
£m
2021/22
£m
Prior years
£m
Rental debtors
Commercial tenants (past due) 1.5 0.8 0.4 0.3
Individual tenants (past due) 45.9 33.9 2.8 9.2
Expected credit loss carried (15.6) (2.9) (3.2) (9.5)
Trade receivables 31.8 31.8 – –
2021
Ageing by academic year
Total
£m
2021/22
£m
2020/21
£m
Prior years
£m
Rental debtors
Commercial tenants (past due) 0.9 0.5 0.3 0.1
Individual tenants (past due) 41.9 31.3 3.7 6.9
Expected credit loss carried (14.9) (4.3) (3.6) (7.0)
Trade receivables 27.9 27. 5 0.4 –
227
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Section 5: Working capital continued
5.2 Trade and other receivables continued
Movements in the Group’s expected credit losses of trade receivables can be shown as follows:
2022
£m
2021
£m
At 1 January 14.9 12.2
Expected credit loss charged to the income statement in the year 1.7 3.3
Receivables written off during the year (utilisation of expected credit loss) (1.0) (0.6)
At 31 December 15.6 14.9
The loss allowance for trade receivables is estimated as an amount equal to the lifetime expected credit loss (ECL).
This loss has been estimated using the Group’s history of loss for similar assets and takes into account current and
forecast conditions.
The impact of credit losses is not considered significant in respect of the financial statements.
5.3 Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations. It arises principally from the Group’s cash balances, the Group’s receivables from customers and
joint ventures and loans provided to the Group’s joint ventures.
At the year-end, the Group’s maximum exposure to credit risk was as follows:
Note
2022
£m
2021
£m
Cash 5.1 38.0 109.4
Trade receivables 5.2 31.8 27.9
Amounts due from joint ventures 5.2 46.9 56.8
116.7 194.1
5.3a) Cash
The Group operates investment guidelines with respect to surplus cash. Counterparty limits for cash deposits are largely
based upon long-term ratings published by credit rating agencies and credit default swap rates. Deposits were placed with
financial institutions with A- or better credit ratings.
5.3b) Trade receivables
The Group’s customers can be split into two groups – (i) students (individuals) and (ii) commercial organisations including
universities. The Group’s exposure to credit risk is influenced by the characteristics of each customer.
5.3c) Joint ventures
Amounts receivable from joint ventures fall into two categories – working capital balances and investment loans. The
Group has strong working relationships with its joint venture partners, and the joint ventures themselves have strong
financial performance, retain net asset positions and are cash generative, and therefore the Group views this as a low
credit risk balance. No impairment has therefore been recognised in 2022 or 2021.
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
228
NOTES TO THE FINANCIAL STATEMENTS continued
5.4 Trade and other payables
Accounting policies
Trade payables are initially recognised at the value of the invoice received from a supplier (fair value) and subsequently
at amortised cost. The carrying value of trade payables is considered approximate to fair value.
Trade and other payables due within one year can be analysed as follows:
Group Company
2022
£m
2021
£m
2022
£m
2021
£m
Trade payables 33.2 35.3 – –
Retentions on construction contracts for properties 5.4 4.2 – –
Amounts due to Group undertakings – – 70.3 38.0
Other payables and accrued expenses 84.9 96.6 9.5 6.4
Deferred income 68.0 64.6 – –
Trade and other payables 191.5 200.7 79.8 44.4
Deferred income relates to rental income that has been collected in advance of it being recognised as income.
Included within accrued expenses is £nil of capital commitments, relating to investment properties under development
(2021: £nil million).
5.5 Provisions
Accounting policies
Provisions are recognised when the Group has a present obligation as a result of a past event, it is probable that the
Group will be required to settle that obligation, and a reliable estimate can be made of the amount of that obligation.
Provisions are measured at the Directors’ best estimate of the expenditure required to settle the obligation and are
discounted to present value where the effect is material.
During 2020, and in accordance with the Government’s Building Safety Advice of 20 January 2020, we undertook a
thorough review of the use of High-Pressure Laminate (HPL) cladding on our properties. We have identified 27 properties
with cladding that needs replacing across our estate, due to legal or contractual obligations. We are continuing to carry out
replacement works for properties with HPL cladding, with activity prioritised according to our risk assessments, starting
with those over 18 metres in height. The remaining cost of replacing the cladding is expected to be £113.3 million (Unite
Share: £59.2 million), of which £29.4 million is in respect of wholly owned properties. Whilst the overall timetable for these
works is uncertain, we anticipate this will be incurred over the next 12-24 months. The regulations continue to evolve in
this area and we will ensure that our buildings are safe for occupation and compliant with laws and regulations.
The Government’s Building Safety Bill, covering building standards, was passed in April and has introduced more stringent
fire safety regulations. We will ensure we remain aligned to fire safety regulations as they evolve and will continue to
make any required investment to ensure our buildings remain safe to occupy. We have provided for the costs of remedial
work where we have a legal obligation to do so. The amounts provided reflect the current best estimate of the extent and
future cost of the remedial works required and are based on known costs and quotations where possible, and reflect
the most likely outcome. However, these estimates may be updated as work progresses or if Government legislation and
regulation changes.
We have not recognised any assets in respect of future claims.
229
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Section 5: Working capital continued
5.5 Provisions continued
Management have performed a sensitivity analysis to assess the impact of a change in their estimate of total costs. A 20%
increase in the estimated remaining costs would affect net valuation gains/losses on property in the IFRS P&L and would
reduce the Group’s NTA by 3.0 pence on a Unite share basis. Whilst provisions are expected to be utilised within two years,
there is uncertainty over this timing.
The Group has recognised provisions for the cost of these cladding works as follows:
Gross
£m
Unite Share
£m
Wholly
owned USAF LSAV Total
Wholly
owned USAF LSAV Total
At 31 December 2020 15.7 50.0 14.2 79.9 15.7 11.0 7.1 33.8
Additions 18.0 23.4 0.5 41.9 18.0 5.1 0.3 23.4
Utilisation (0.2) (17.1) (12.5) (29.8) (0.2) (3.8) (6.3) (10.3)
At 31 December 2021 33.5 56.3 2.2 92.0 33.5 12.3 1.1 46.9
Additions 1.9 40.1 29.8 71.8 1.9 11.4 14.9 28.2
Utilisation (5.9) (40.8) (3.8) (50.5) (65.9) (11.5) (1.9) (19.4)
Changes in ownership % – – – – – 3.5 – 3.5
At 31 December 2022 29.5 55.6 28.2 113.3 29.5 15.6 14.1 59.2
5.6 Transactions with other Group companies
During the year, the Company entered into various interest-free, repayable on demand loans with its subsidiaries, the
aggregate of which are disclosed in the cash flow statement. In addition, the Company was charged by Unite Integrated
Solutions plc for corporate costs of £4.5 million (2021: £4.1 million). As a result of these intercompany transactions, the
following amounts were due from/to the Company’s subsidiaries at the year-end.
2022
£m
2021
£m
Unite Holdings Limited 131.1 135.1
LDC (Holdings) Limited 1,072.3 937.7
Liberty Living Group plc 873.5 855.5
Amounts due from Group undertakings 2,076.9 1,928.3
Unite Integrated Solutions plc 70.3 38.0
Amounts due to Group undertakings 70.3 38.0
The Company has had a number of transactions with its joint ventures, which are disclosed in note 3.4c.
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
230
NOTES TO THE FINANCIAL STATEMENTS continued
Section 6: Key management and employee benefits
The Group’s greatest resource is its staff and it works hard to develop and retain its people. The remuneration
policies in place are aimed to help recognise the contribution that Unite’s people make to the performance of
the Group.
On the following pages you will find disclosures around wages and salaries and share option schemes which
allow employees of the Group to take an equity interest in the Group.
Accounting policies
The Group operates a defined contribution pension scheme. Obligations for contributions to defined contribution
pension plans are recognised as an expense in the income statement as incurred.
6.1 Staff numbers and costs
The average number of persons employed by the Group (including Directors) during the year (calculated on a monthly
basis), analysed by category, was as follows:
Number of employees
2022 2021
Managerial and administrative 569 509
Site operatives 1,206 1,288
1,775 1,797
The aggregate payroll costs of these persons were as follows:
2022
£m
2021
£m
Wages and salaries 64.2 62.6
Social security costs 6.5 6.1
Pension costs 2.7 2.4
Fair value of share-based payments 1.6 2.4
75.0 73.5
The wages and salaries costs include redundancy costs of £0.8 million (2021: £0.5 million).
The total number of persons employed by the Group (including Directors) as at 31 December 2022 was 589 managerial
and administrative and 1,175 site operatives.
6.2 Key management personnel
The remuneration of the Directors, including Non-Executive Directors, who are the key management personnel of the
Group and Company, is set out below in aggregate for each of the applicable categories specified in IAS 24 Related Party
Disclosures. Further information about the remuneration of individual Directors is provided in the audited part of the
Directors’ Remuneration Report on pages 145–163 which covers the requirements of schedule 5 of the relevant legislation.
2022
£m
2021
£m
Short-term employee benefits 2.0 2.3
Post employment benefits 0.1 0.1
Share-based payment benefits – 0.6
2.1 3.0
231
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Section 6: Key management and employee benefits continued
6.3 Share-based compensation
A transaction is classified as a share-based transaction where the Group receives services from employees and pays
for these in shares or similar equity instruments. The Group operates a number of share-based compensation schemes
allowing employees to acquire shares in the Company.
6.3a) Share schemes
The Group operates the following schemes:
Long-Term Incentive Plan (LTIP), comprising the:
– Performance Share Plan (PSP); and
– HMRC Approved Employee Share Option Scheme (ESOS)
Details can be found in the Directors’ Remuneration Report
Save As You Earn Scheme (SAYE) Open to employees, vesting periods of three years,
service condition
6.3b) Outstanding share options
The table below summarises the movements in the number of share options outstanding for the Group and their average
exercise price:
Weighted
average
exercise
price
2022
Number
of options
(thousands)
2022
Weighted
average
exercise
price
2021
Number
of options
(thousands)
2021
Outstanding at 1 January £0.57 2,372 £0.83 2,672
Forfeited during the year £3.09 (538) £1.77 (604)
Exercised during the year £2.52 (428) £2.37 (354)
Granted during the year £2.65 677 £0.69 657
Outstanding at 31 December £0.19 2,083 £0.57 2,371
Exercisable at 31 December £8.42 63 £5.45 99
For those options exercised in the year, the average share price during 2022 was £10.34 (2021: £10.94).
For those options still outstanding, the range of exercise prices at the year-end was 0p to 1,121p (2021: 0p to 1,084p)
and the weighted average remaining contractual life of these options was 3.8 years (2021: 2.2 years).
The Group funds the purchase of its own shares by the Employee Share Ownership Trust to meet the obligations
of the LTIP and executive bonus scheme. The purchases are shown as “Own shares acquired” in retained earnings.
As at 31 December 2022 the number of shares held by the ESOT was 205,084 (2021: 209,954).
The accounting is in accordance with the relevant standards. No further information is given as the amounts for
share-based payments are immaterial.
Section 7: Post balance sheet events
There were no post balance sheet events.
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
232
NOTES TO THE FINANCIAL STATEMENTS continued
Section 8: Alternative performance measures
The Group uses alternative performance measures (“APMs”), which are not defined or specified under IFRS. These
APMs, which are not considered to be a substitute for IFRS measures, provide additional helpful information. APMs are
consistent with how business performance is planned, reported and assessed internally by management and the Board,
and provide comparable information across the Group. The APMs below have been calculated on a see through/Unite
share basis, as referenced to the notes to the financial statements. Reconciliations to equivalent IFRS measures are
included in notes 2.2b and 2.2c. Definitions can also be found in the glossary.
Adjusted earnings reflects a more meaningful measure of the underlying earnings of the Group, excluding the non-
recurring impact of one-off transactions, and therefore improve comparability.
Non-EPRA measures may not have comparable calculation bases between companies and therefore may not provide
meaningful industry-wide comparability.
Note
2022
£m
2021
£m
EBIT
Net operating income 2.2a 241.0 191.8
Management fees 2.2a 17.4 15.9
Overheads 2.2a (27.7) (31.5)
230.7 176.2
EBIT margin %
Rental income 2.2a 339.7 282.7
EBIT 8 230.7 176.2
67.9% 62.3%
EBITDA
Net operating income 2.2a 241.0 191.8
Management fees 2.2a 17.4 15.9
Overheads 2.2a (27.7) (31.5)
Depreciation and amortisation 7.8 7.8
238.5 184.0
Net debt
Cash 2.3a 139.2 155.5
Debt on properties 2.3a (1,872.8) (1,677. 3)
(1,733.6) (1,521.8)
EBITDA: Net debt
EBITDA 8 238.5 184.0
Net debt 8 (1,733.6) (1,521.8)
Ratio 7.3 8.3
Interest cover (Unite share)
EBIT 8 230.7 176.2
Net financing costs 2.2a (54.9) (54.8)
Interest on lease liabilities 2.2a (8.1) (8.5)
Total interest (63.0) (63.3)
Ratio 3.7 2.8
233
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Section 8: Alternative performance measures continued
Reconciliation: IFRS profit before tax to EPRA earnings and adjusted earnings
Note
2022
£m
2021
£m
IFRS profit before tax 358.0 343.1
Net valuation (gains)/losses on investment property (owned) 2.2b (145.0) (205.6)
Property disposals (owned) 2.2b 16.5 12.3
Net valuation losses on investment property (leased) 2.2b 9.3 11.1
Amortisation of fair value of debt recognised on acquisition 2.2b (4.3) (4.3)
Changes in valuation of interest rate swaps 2.2b (70.7) (10.9)
Swap cancellation fair value settlements and loan break costs 2.2b – 4.2
Non-controlling interest, tax and other items (1.9) 2.1
EPRA earnings 161.9 152.0
Net LSAV performance fee – (41.9)
Abortive costs 1.5 –
Adjusted earnings 163.4 110.1
Adjusted EPS yield
2022 2021
Adjusted earnings (A) 40.9p 27.6p
EPRA NTA at 1 January (B) 882p 818p
Adjusted EPS yield (A/B) 4.6% 3.4%
Total accounting return
Note 2022 2021
Opening EPRA NTA (A) 2.3d 882.2p 818.0p
Closing EPRA NTA 2.3d 926.8p 882.2p
Movement 44.6p 64.2p
H1 dividend paid 4.9 15.6p 12.8p
H2 dividend paid 4.9 11.0p 6.5p
Total movement in NTA (B) 71.2p 83.5p
Total accounting return (B/A) 8.1% 10.2%
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
234
NOTES TO THE FINANCIAL STATEMENTS continued
EPRA Performance Measures
Summary of EPRA performance measures
Note
2022
£m
2021
£m
2022 2021
EPRA earnings 161.9 152.0 40.5p 38.1p
Adjusted earnings (*) 163.4 110.1 40.9p 27.6p
EPRA NTA (diluted) 3,718.3 3,536.1 927p 882p
EPRA NRV (diluted) 4,037.3 3,829.7 1,006p 955p
EPRA NDV (diluted) 3,968.0 3,503.6 989p 874p
EPRA net initial yield 4.6% 4.0%
EPRA topped up net initial yield 4.6% 4.0%
EPRA like-for-like gross rental income 23.0% 4.7%
EPRA vacancy rate 0.8% 5.6%
EPRA cost ratio (including vacancy costs) 33.4% 38.8%
EPRA Cost ratio (excluding vacancy costs) 32.3% 36.8%
* Adjusted earnings calculated as EPRA earnings less LSAV performance fee income recognised and abortive costs.
EPRA like-for-like rental income (calculated based on total portfolio value of £8.5 billion)
£m
Properties
owned
throughout
the period
Development
property
Acquisitions
and disposals
Total EPRA
Earnings
2022
Rental income 310.9 5.3 23.5 339.7
Property operating expenses (90.6) (1.1) (7.0) (98.7)
Net rental income 220.3 4.2 16.5 241.0
2021
Rental income 252.8 – 29.9 282.7
Property operating expenses (79.7) – (11.2) (90.9)
Net rental income 173.1 – 18.7 191.8
Like-for-like net rental income (£m) 47. 2
Like-for-like net rental income (%) 27.3%
Like-for-like gross rental income (£m) 58.1
Like-for-like gross rental income (%) 23.0%
235
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Section 8: Alternative performance measures continued
EPRA vacancy rate
2022
£m
2021
£m
Estimated rental value of vacant space 2.0 13.8
Estimated rental value of the whole portfolio 262.9 246.5
EPRA vacancy rate 0.8% 5.6%
EPRA net initial yield
2022 2021
Annualised net operating income (£m) 256.9 205.1
Property market value (£m) 5,325.6 4,864.8
Notional acquisition costs (£m) 285.7 254.3
5,611.3 5,119.1
EPRA net initial yield (%)* 4.6% 4.0%
Difference in projected versus historical GOI 0.1%
Unite net initial yield (%) 4.7%
* No lease incentives are provided by the Group and accordingly the Topped Up Net Initial Yield measure is also 4.6% (2021: 4.0%).
EPRA cost ratio
2022
£m
2021
£m
Property operating expenses 72.0 67.7
Overheads 26.4 30.7
Development/pre contract costs 1.2 2.2
Unallocated expenses* 2.8 0.5
102.4 101.1
Share of JV property operating expenses 26.7 23.2
Share of JV overheads 1.3 0.8
Share of JV unallocated expenses* 0.3 0.4
130.7 125.5
Less: Joint venture management fees (17.4) (15.9)
Total costs (A) 113.3 109.6
Group vacant property costs** (2.5) (4.1)
Share of JV vacant property costs** (0.9) (1.4)
Total costs excluding vacant property costs (B) 109.9 104.1
Rental income 241.7 209.0
Share of JV rental income 98.0 73.7
Total gross rental income (C) 339.7 282.7
Total EPRA cost ratio (including vacant property costs) (A)/(C) 33.4% 39%
Total EPRA cost ratio (excluding vacant property costs) (B)/(C) 32.4% 37%
* 2022 excludes amounts in respect of abortive costs and 2021 excludes amounts in respect of the LSAV performance fee.
** Vacant property costs reflect the per bed share of operating expenses allocated to vacant beds.
Unite’s EBIT margin excludes non operational expenses which are included within the EPRA cost ratio above.
The Group capitalises costs in relation to staff costs and professional fees associated with property development activity.
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
236
NOTES TO THE FINANCIAL STATEMENTS continued
EPRA valuation movement (Unite share)
Valuation
£m
Change
£m %
Wholly owned 3,186.5 105.9 3.4
USAF 636.3 28.0 4.6
LSAV 960.4 50.8 5.6
Rental properties 4,783.2 184.7 4.0
Leased properties 90.3
Build-to-rent properties 71.1
Development completions for AY22/23 365.9
Properties under development 202.8
Properties held throughout the year 5,513.3
Acquisitions 176.5
Total property portfolio 5,689.8
EPRA yield movement
NOI yield Yield movement (bps)
% H1 H2 FY
Wholly owned 4.8 (14) 12 (2)
USAF 5.0 (20) 13 (7)
LSAV 4.1 (19) 19 0
Rental properties (Unite share) 4.7 (16) 14 (2)
Property related capital expenditure
2022 2021
Wholly
owned
Share of
JVs
Group
share
Wholly
owned
Share of
JVs
Group
share
London 3.3 10.5 13.8 4.8 3.1 7.9
Prime regional 31.6 7.3 38.9 16.7 2.9 19.6
Major regional 16.5 11.2 27.7 8.1 10.8 18.9
Provincial 8.1 1.0 9.1 2.8 0.6 3.4
Total rental properties 59.5 30.0 89.5 32.4 17. 4 49.8
Increase in beds 2.1 2.0 4.1 – – –
Acquisitions 1.3 – 1.3 – – –
Developments 193.0 – 193.0 81.4 – 81.4
Capitalised interest 6.3 – 6.3 5.2 – 5.2
Total property related capex 262.2 32.0 294.2 119.0 17.4 136.4
237
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Section 8: Alternative performance measures continued
EPRA loan to value
2022
£m
31 Dec
2021
£m
Investment property (owned) 5,396.8 4,864.8
Investment property (under development) 202.7 324.1
Intangibles 18.3 16.1
Total property value and other eligible assets 5,617.8 5,205.0
Cash at bank and in hand 139.2 155.5
Borrowings (1,872.8) (1,677. 3)
Net other payables (150.6) (138.9)
EPRA net debt (1,884.2) (1,660.7)
EPRA loan to value 33.5% 31.9%
Section 9: Company subsidiaries and joint ventures
In accordance with Section 409 of the Companies Act 2006, a full list of subsidiaries and equity accounted investments
as at 31 December 2022 is disclosed below. Unless otherwise stated, the Group’s ownership interest represents 100%
of the ordinary shares, units or partnership capital held indirectly by Unite Group PLC. No subsidiary undertakings have
been excluded from the consolidation. The Unite Foundation has a year-end of 30 September to facilitate academic year
reporting. All other subsidiaries have a year-end of 31 December.
Registered office and principal place of business: South Quay House, Temple Back, Bristol, United Kingdom, BS1 6FL
LDC (AIB Warehouse) Limited (04872419)** LDC (Portfolio Five) Limited (06079581)
LDC (Alscot Road) Limited (06176428)** LDC (Portfolio Four) Limited (04985603)**
LDC (Brunel House) Limited (09760628)** LDC (Portfolio One) Limited (03005262)**
LDC (Camden Court Leasehold) Limited (05140620) LDC (Portfolio) Limited (08419375)**
LDC (Camden Court) Limited (05082671) LDC (Project 110) Limited (05083580)**
LDC (Causewayend) Limited (08895966) LDC (Project 111) Limited (05791650)**
LDC (Chantry Court Leasehold) Limited (05140258)** LDC (Radmarsh Road) Limited (05435290)**
LDC (Chaucer House) Limited (09898020)** LDC (Skelhorne) Limited (09898132)**
LDC (Constitution Street) Limited (09210998)** LDC (Smithfield) Limited (03373096)
LDC (Construction Two) Limited (04847268) LDC (St Leonards) Limited (08895830)**
LDC (Euro Loan) Limited (06623603)** LDC (St Pancras Way) GP1 Limited (07359501)
LDC (Ferry Lane 2) GP3 Limited (07503842)** LDC (St Pancras Way) GP2 Limited (07359428)
LDC (Ferry Lane 2) GP4 Limited (07503913)** LDC (St Pancras Way) GP3 Limited (07503268)
LDC (Ferry Lane 2) Holdings Limited (07504099) (50.0%) LDC (St Pancras Way) GP4 Limited (07503251)
LDC (Finance) Limited (09760806)** LDC (St Pancras Way) Holdings Limited (07360734)
LDC (Greetham Street) Limited (08895825) LDC (St Pancras Way) Limited Partnership**
LDC (Gt Suffolk St) GP1 Limited (07274156) LDC (St Pancras Way) Management Limited Partnership**
LDC (Gt Suffolk St) GP2 Limited (07274000) LDC (St Vincent's) Limited (10218310)**
LDC (Gt Suffolk St) Holdings Limited (07353946) LDC (Swindon NHS) Limited (04207502)**
LDC (Gt Suffolk St) Limited Partnership** LDC (Tara House) Limited (09214177)
LDC (Gt Suffolk St) Management GP1 Limited (07354719) LDC (Thurso Street) GP1 Limited (07199022)
LDC (Gt Suffolk St) Management GP2 Limited (07354728) LDC (Thurso Street) GP2 Limited (07198979)
LDC (Gt Suffolk St) Management Limited Partnership** LDC (Thurso Street) GP3 Limited (07434001)
LDC (Hampton Street) Limited (06415998) LDC (Thurso Street) GP4 Limited (07434133)
LDC (Hillhead) Limited (06176554) LDC (Thurso Street) Limited Partnership**
LDC (Holdings) Limited (02625007)* LDC (Thurso Street) Management Limited Partnership**
LDC (Imperial Wharf) Limited (04541678)** LDC (Ventura) Limited (04444628)
LDC (International House) Limited (10131352)** LDC (Vernon Square) Limited (06444132)
* Held directly by the Company.
** Company is exempt from the requirements of the Companies Act relating to the audit of individual financial statements by virtue of
s479A for the financial year ended 31 December 2022.
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
238
NOTES TO THE FINANCIAL STATEMENTS continued
Registered office and principal place of business: South Quay House, Temple Back, Bristol, United Kingdom, BS1 6FL
LDC (Kelham Island) Limited (05152229) LDC (William Morris II) Limited (05999281)**
LDC (Leasehold A) Limited (04066933)** Liberty Atlantic Point (Liverpool) Limited (03885187)**
LDC (Leasehold B) Limited (05978242)** Liberty Heights (Manchester) Limited (07399622)**
LDC (Loughborough) Limited (04207522)** Liberty Living (HE) Holdings Limited (10977869)**
LDC (Magnet Court Leasehold) Limited (05140255) Liberty Living (LH Manchester) Limited (07120141)**
LDC (Millennium View) Limited (09890375) Liberty Living (Liberty AP) Limited (03633307)**
LDC (MTF Portfolio) Limited (05530557)** Liberty Living (Liberty PP) Limited (03991475)**
LDC (Nairn Street) GP3 Limited (07808933) Liberty Living (LP Bristol) Limited (07242607)**
LDC (Nairn Street) GP4 Limited (07808919) Liberty Living (LP Coventry) Limited (04330729)**
LDC (Nairn Street) Holdings Limited (07579402)** Liberty Living (LP Manchester) Limited (04314013)**
LDC (New Wakefield Street) Limited (10436455) Liberty Living (LQ Newcastle) Limited (04302869)**
LDC (Newgate) Limited (08895869)** Liberty Living (LQ2 Newcastle) Limited (07298853)**
LDC (Old Hospital) Limited (09702143)** Liberty Living Finance PLC (10979349)**
LDC (Oxford Road Bournemouth) Limited (04407309)** Liberty Living Group Limited (BR020813)*/**
LDC (Portfolio 100) Limited (07989369)** Liberty Living Investments 1 Limited Partnership**
LDC (Portfolio 20) Limited (08803996)** Liberty Living Investments 2 Limited Partnership**
Liberty Living Investments 3 Limited Partnership** Unite Finance One (Accommodation Services) Limited (04332937)
Liberty Living Investments GP1 Limited (09375866)** Unite Finance One (Holdings) Limited (04316207)**
Liberty Living Investments GP2 Limited (09375868)** Unite Finance One (Property) Limited (04303331)**
Liberty Living Investments GP3 Limited (10518849)** Unite FM Limited (06807562)
Liberty Living Investments II Holdco 2 Limited (09574059)** Unite For Success Limited (05157263)
Liberty Living Investments II Holdco Limited (08929431)** Unite Holdings Limited (03148468)*/**
Liberty Living Investments II Limited (09680931)** Unite Homes Limited (05140262)
Liberty Living Investments Limited (09375870)** Unite Integrated Solutions PLC (02402714)
Liberty Living Investments Nominee 1 Limited (09375846)** Unite Modular Solutions Limited (05140259)
Liberty Living Investments Nominee 2 Limited (09375849)** Unite Rent Collection Limited (05982935)**
Liberty Living Investments Nominee 3 Limited (10519085)** Unite Student Living Limited (06204135)
Liberty Living Limited (04055891)** USAF GP No 11 Management Limited (07351883)
Liberty Living SpareCo Limited (04616115)** USAF LP Limited (05860874)**
Liberty Living UK Limited (06064187)** USAF Management Limited (05862721)
Liberty Park (Bristol) Limited (07615601)** USAF Management 6 Limited (06225945)
Liberty Park (US Bristol) Limited (07615619)** USAF Management 8 Limited (06387597)
Liberty Plaza (London) Limited (07745097)** USAF Management 10 Limited (06714695)
Liberty Point (Coventry) Limited (04992358)** USAF Management 11 Limited (07082782)
Liberty Point (Manchester) Limited (04828083)** USAF Management 12 Limited (07365681)
Liberty Point Southampton (Block A) Limited (10314954)** USAF Management 14 Limited (09232206)
Liberty Prospect Point (Liverpool) Limited (04637570)** USAF Management 18 Limited (10219775)
Liberty Quay (Newcastle) Limited (05234174)** USAF Management GP No.14 Limited (09130985)**
Liberty Quay 2 (Newcastle) Limited (07376627)** USAF Management GP No.15 Limited (09749946)**
Liberty Severn Point (Cardiff) Limited (04313995)** USAF Management GP No.16 Limited (09750068)**
Liberty Village (Edinburgh) Limited (10323566)** USAF Management GP No.17 Limited (09750061)**
LL Midco 2 Limited (08998308)** USAF Management No.18 Limited Partnership (28.1%)
LSAV (Angel Lane) GP3 Limited (08646359)** LDC (Capital Cities Nominee No.1) Limited (05347228) (50.0%)
LSAV (Angel Lane) GP4 Limited (08646929)** LDC (Capital Cities Nominee No.2) Limited (05359457) (50.0%)
LSAV (Aston Student Village) GP3 Limited (10498217)** LDC (Capital Cities Nominee No.3) Limited (08792780) (50.0%)
LSAV (Aston Student Village) GP4 Limited (10498484)** LDC (Capital Cities Nominee No.4) Limited (08792688) (50.0%)
* Held directly by the Company.
** Company is exempt from the requirements of the Companies Act relating to the audit of individual financial statements by virtue of
s479A for the financial year ended 31 December 2022.
239
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Section 9: Company subsidiaries and joint ventures continued
Registered office and principal place of business: South Quay House, Temple Back, Bristol, United Kingdom, BS1 6FL
LSAV (Stapleton) GP3 Limited (08646819)** LDC (Capital Cities) Limited (05347220) (50.0%)
LSAV (Stapleton) GP4 Limited (08647019)** LDC (Ferry Lane 2) GP1 Limited (07359448) (50.0%)**
LSAV (Stratford) GP3 Limited (08751654)** LDC (Ferry Lane 2) GP2 Limited (07359481) (50.0%)**
LSAV (Stratford) GP4 Limited (08751629)** LDC (Ferry Lane 2) Limited Partnership (50.0%)**
LSAV (Wembley) GP3 Limited (08725127)** LDC (Ferry Lane 2) Management Limited Partnership (50.0%)**
LSAV (Wembley) GP4 Limited (08725235)** LDC (Stratford) GP1 Limited (07547911) (50.0%)**
LSAV Rent Collection Limited (08496230)** LDC (Stratford) GP2 Limited (07547994) (50.0%)**
Stardesert Limited (04437102) LDC (Stratford) Limited Partnership (50.0%)**
The Unite Foundation LDC Capital Cities Two (GP) Limited (08790742) (50.0%)
Unite Accommodation Management Limited (06190905)** LSAV (Angel Lane) GP1 Limited (08593689) (50.0%)**
Unite Accommodation Management 2 Limited (05193166) LSAV (Angel Lane) GP2 Limited (08593692) (50.0%)**
Unite Accommodation Management 6 Limited (05077346)** LSAV (Angel Lane) Limited Partnership (50.0%)**
Unite Accommodation Management 9 Limited (06190863)** LSAV (Angel Lane) Management Limited Partnership (50.0%)**
Unite Accommodation Management 16 Limited (07061314)** LSAV (Aston Student Village) GP1 Limited (10498478) (50.0%)
Unite Accommodation Management 18 Limited (08328484) LSAV (Aston Student Village) GP2 Limited (10498481) (50.0%)
Unite Accommodation Management 19 Limited (08790504) (50.0%) LSAV (Aston Student Village) Limited Partnership (50.0%)
Unite Accommodation Management 20 Limited (08790642) LSAV (Aston Student Village) Management Limited Partnership (50.0%)
Unite Accommodation Management One Hundred Limited (07989080)** LSAV (Stapleton) GP1 Limited (08593695) (50.0%)**
Unite Construction (Angel Lane) Limited (08792704) LSAV (Stapleton) GP2 Limited (08593699) (50.0%)**
Unite Construction (Stapleton) Limited (09023406) LSAV (Stapleton) Limited Partnership (50.0%)**
Unite Construction (Wembley) Limited (09023474) LSAV (Stapleton) Management Limited Partnership (50.0%)**
Unite Finance Limited (04353305)*/** LSAV (Stratford) Management Limited Partnership (50.0%)**
LSAV (Wembley) GP1 Limited (08635735) (50.0%)** USAF GP No 6 Limited (05897755) (20.2%)
LSAV (Wembley) GP2 Limited (08636051) (50.0%)** USAF GP No 8 Limited (06381914) (20.2%)
LSAV (Wembley) Limited Partnership (50.0%)** USAF GP No 10 Limited (06714734) (20.2%)
LSAV (Wembley) Management Limited Partnership (50.0%)** USAF GP No 11 Limited (07075210) (20.2%)
UNITE Capital Cities Holdings Limited (08801242) (50.0%) USAF GP No 12 Limited (07368735) (20.2%)
Unite Capital Cities Limited Partnership (50.0%) USAF GP No 14 Limited (09089977) (20.2%)
Unite Capital Cities Two Limited Partnership (50.0%) USAF GP No 15 Limited (09585201) (20.2%)
USAF Management 16 Limited (07735741) (28.1%)** USAF GP No.15A Limited (12644211) (28.1%)
USAF Management 17 Limited (05591986) (28.1%)** USAF GP No.16A Limited (12644210) (28.1%)
USAF Management No. 14 Limited Partnership (28.1%) USAF GP No.17A Limited (12644208) (28.1%)
USAF Management No. 15 Limited Partnership (28.1%) USAF GP No 18 Limited (10219336) (20.2%)
USAF Management No. 16 Limited Partnership (28.1%) USAF Holdings B Limited (06324325) (20.2%)
USAF Management No. 17 Limited Partnership (28.1%) USAF Holdings C Limited (06381882) (20.2%)
USAF No.1 Limited Partnership (28.1%) USAF Holdings H Limited (09089805) (20.2%)
USAF No.6 Limited Partnership (28.1%) USAF Holdings I Limited (09581882) (20.2%)
USAF No.8 Limited Partnership (28.1%) USAF Holdings J Limited (10215997) (20.2%)
USAF No.10 Limited Partnership (28.1%) USAF Holdings Limited (05870107) (20.2%)
USAF No.11 Limited Partnership (28.1%) USAF Nominee No.1 Limited (05855598) (20.2%)
USAF No.12 Limited Partnership (28.1%) USAF Nominee No.1A Limited (05835512) (20.2%)
USAF No.14 Limited Partnership (28.1%) USAF Nominee No.6 Limited (05855599) (20.2%)
USAF No.15 Limited Partnership (28.1%) USAF Nominee No.6A Limited (05885802) (20.2%)
USAF No.15A Limited Partnership (28.1%) USAF Nominee No.8 Limited (06381861) (20.2%)
* Held directly by the Company.
** Company is exempt from the requirements of the Companies Act relating to the audit of individual financial statements by virtue of
s479A for the financial year ended 31 December 2022.
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
240
NOTES TO THE FINANCIAL STATEMENTS continued
Registered office and principal place of business: South Quay House, Temple Back, Bristol, United Kingdom, BS1 6FL
USAF No.16A Limited Partnership (28.1%) USAF Nominee No.17 Limited (12644192) (20.2%)
USAF No.17A Limited Partnership (28.1%) USAF Nominee No.17A Limited (12644187) (20.2%)
USAF No.18 Limited Partnership (28.1%) USAF Nominee No.18 Limited (10218595) (20.2%)
USAF No.11 Management Limited Partnership (28.1%) USAF Nominee No.18A Limited (10219339) (20.2%)
Filbert Village Student Accommodation Limited Partnership (28.1%) USAF RCC Limited (05983554) (20.2%)
LDC (Nairn Street) Limited Partnership (28.1%) LSAV (No.1) Limited Partnership (50.0%)**
LDC (Nairn Street) Management Limited Partnership (28.1%) LSAV (No.1) GP1 Limited (013184531) (50.0%)**
Filbert Village GP Limited (06016554) (20.2%) LSAV (No.1) Nominee 1 Limited (013184589) (50.0%)**
LDC (Nairn Street) GP1 Limited (07580262) (20.2%) LSAV (No.1) Management Limited Partnership (50.0%)**
LDC (Nairn Street) GP2 Limited (07580257) (20.2%) LSAV (No.1) GP3 Limited (013184662)**
USAF Finance II Limited (08526474) (20.2%) LSAV (No.1) Nominee 3 Limited (013184656)**
USAF GP No 1 Limited (05897875) (20.2%) LSAV (Arch View) Limited Partnership (50.0%)**
USAF Nominee No.8A Limited (06381869) (20.2%) LSAV (Arch View) GP1 Limited (013210709) (50.0%)**
USAF Nominee No.10 Limited (06714690) (20.2%) LSAV (Arch View) Nominee 1 Limited (013210518) (50.0%)**
USAF Nominee No.10A Limited (06714615) (20.2%) LSAV (Arch View) Management Limited Partnership (50.0%)**
USAF Nominee No.11 Limited (07075251) (20.2%) LSAV (Arch View) GP3 Limited (013210526)**
USAF Nominee No.11A Limited(07075213) (20.2%) LSAV (Arch View) Nominee 3 Limited (013210553)**
USAF Nominee No.12 Limited (07368733) (20.2%) LSAV (Drapery Plaza) Limited Partnership (50.0%)**
USAF Nominee No.12A Limited (07368755) (20.2%) LSAV (Drapery Plaza) GP1 Limited (013209904) (50.0%)**
USAF Nominee No.14 Limited (09231609) (20.2%) LSAV (Drapery Plaza) Nominee 1 Limited (013209904) (50.0%)**
USAF Nominee No.14A Limited (09231604) (20.2%) LSAV (Drapery Plaza) Management Limited Partnership (50.0%)**
USAF Nominee No.15 Limited (12644205) (20.2%) LSAV (Drapery Plaza) GP3 Limited (013210206)**
USAF Nominee No.15A Limited (12644204) (20.2%) LSAV (Drapery Plaza) Nominee 3 Limited (013209979)**
USAF Nominee No.16 Limited (12644201) (20.2%) LSAV Management Holdings Limited (013305327)**
USAF Nominee No.16A Limited (12644197) (20.2%) USAF Management GP No.18 Limited
LDC (180 Stratford) Limited** LSAV Facility 1 Holdings Limited (50.0%)**
LSAV Facility 1 Management Holdings Limited** Unite Capital Cities 3 GP1 Limited (50.0%)**
Unite Capital Cities 3 Limited Partnership (50.0%)** Unite Capital Cities 3 Management Limited (50.0%)**
Unite Capital Cities 3 Nominee 1 Limited (50.0%)**
* Held directly by the Company.
** Company is exempt from the requirements of the Companies Act relating to the audit of individual financial statements by virtue of
s479A for the financial year ended 31 December 2022.
241
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Section 9: Company subsidiaries and joint ventures continued
Registered office and principal place of business: 13 Castle Street, St Helier, Jersey, JE4 5UT
LDC (Gt Suffolk St) Unit Trust LSAV (Aston Student Village) Unit Trust (50.0%)
LDC (St Pancras Way) Unit Trust LSAV (Holdings) Limited (50.0%)
LDC (Thurso Street) Unit Trust LSAV (Trustee) Limited (50.0%)
LSAV (Jersey Manager) Limited LSAV Unit Trust (50.0%)
Unite (Capital Cities) Jersey Limited Unite Capital Cities Unit Trust (50.0%)
USAF Jersey Investments Limited USAF Portfolio 18 Unit Trust (28.1%)
USAF Jersey Manager Limited LDC (Nairn Street) Unit Trust (28.1%)
LDC (Ferry Lane 2) Unit Trust (50.0%) Unite UK Student Accommodation Fund (20.2%)
LDC (Stratford) Unit Trust (50.0%) LSAV (Arch View) Unit Trust (50.0%)
LSAV (Drapery Plaza) Unit Trust (50.0%)
Registered office and principal place of business: Third Floor, La Plaiderie Chambers, St Peter Port, Guernsey, GY1 1WG
USAF Feeder Guernsey Limited (45.5%) USAF Portfolio 16 Unit Trust (28.1%)
USAF Portfolio 15 Unit Trust (28.1%) USAF Portfolio 17 Unit Trust (28.1%)
Registered office and principal place of business: Saltire Court, 20 Castle Terrace, Edinburgh, EH1 2 EN
LSAV (GP) Limited (SC431844) (50.0%) LSAV (Property Holdings) Limited Partnership (50.0%)
Registered office and principal place of business: Trident Chambers, Wickhams Cay, P.O. Box 146, Road Town, Tortola, British Virgin Islands
Liberty Park (Bedford) Limited Liberty Plaza (Newcastle) Limited
Registered office and principal place of business: Third Floor, Barclays House, Victoria Street, Douglas, Isle of Man, IM1 2LE
Filbert Street Student Accommodation Unit Trust (28.1%)
Registered office and principal place of business: Room 507, Floor 5, Block 1, Building No. 10, Jintong Road West, Chaoyang District, Beijing,
People’s Republic of China
Unite Students Accommodation (Beijing) Business Service Company Limited
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
24 2
NOTES TO THE FINANCIAL STATEMENTS continued
CONTENTS
244 Financial Record
245 Glossary
248 Company Information
OTHER
INFORMATION
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
243
2022 2021 2020 2019 2018
EPRA earnings (£m) 161 152 97 111 88
EPRA earnings per share (pence) 40 38 26 39 34
Adjusted earnings (£m) 163 110 93 105 88
Adjusted earnings per share (pence) 41 28 24 37 34
IFRS profit/(loss) before tax (£m) 355 342 (120) (101) 246
IFRS profit/(loss) per share (pence) 89 86 (32) (32) 91
EPRA net tangible assets (NTA)/net assets (NAV) (£m)
1
3,715 3,532 3,266 3,087 2,085
EPRA NTA/NAV per share (pence)
1
927 882 818 847 790
IFRS net assets (£m) 3,792 3,528 3,235 3,072 2,073
IFRS NAV per share (pence) 945 880 809 845 787
LTV (%) 31% 29% 34% 37% 29%
Managed portfolio value (£m) 8,522 8,108 7,838 7,702 4,994
Total accounting return (TAR) 8.1% 10.2% -3.4% 11.7% 13.2%
1. EPRA NTA for 2022, 2021, 2020 and 2019. EPRA NAV for 2018.
FINANCIAL RECORD
24 4
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
Adjusted earnings An alternative performance measure based on EPRA earnings, adjusted to remove the impact of
abortive acquisition costs and the LSAV performance fee which was settled in 2021. The items have
beenexcluded from adjusted earnings to improve the comparability of results year-on-year.
Adjusted earnings
pershare/EPS
The earnings per share based on adjusted earnings and weighted average number of shares
inissue(basic).
Adjusted EPS yield Adjusted EPS as a percentage of opening EPRA NTA (diluted).
Adjusted net debt Net debt per the balance sheet, adjusted to remove IFRS 16 lease liabilities and the unamortised
fairvalue of debt recognised on the acquisition of Liberty Living.
Basis points (BPS) A basis point is a term used to describe a small percentage, usually in the context of change,
andequatesto 0.01%.
Diluted earnings/EPS Where earnings values per share are used “basic” measures divide the earnings by the weighted average
number of issued shares in issue throughout the period, whilst the diluted measure also takes into
account the effect of share options which have been granted and which are expected to be converted
into shares in the future.
Diluted NTA/NAV Where NTA/NAV per share is used, ”basic” measures divide the NTA/NAV by the number of shares issued
at the reporting date, whilst the diluted measure also takes into account the effect of share options
which have been granted and which are expected to be converted into shares in the future (both for
the additional number of shares that will be issued and the value of additional consideration that will
bereceived in issuing them).
Direct-let Properties where short-hold tenancy agreements are made directly between Unite and the student.
EBITDA The Group’s adjusted EBIT, adding back depreciation and amortisation.
EPRA The European Public Real Estate Association, who produce best practice recommendations
forfinancialreporting.
EPRA cost ratio The ratio of property operating expenses, overheads and management fees, against rental income,
calculated on an EPRA basis.
EPRA earnings EPRA earnings exclude movements relating to changes in values of investment properties, profits/losses
from the disposal of properties, swap/debt break costs, interest rate swaps and the related tax effects.
EPRA earnings per
share/EPS
The earnings per share based on EPRA earnings and weighted average number of shares in issue (basic).
EPRA like-for-like
rentalgrowth
The growth in rental income measured by reference to the part of the portfolio of the Group that
has been consistently in operation, and not under development nor subject to disposal, and which
accordingly enables more meaningful comparison in underlying rental income levels.
EPRA net tangible
assets (NTA)
EPRA NTA includes all property at market value but excludes the mark to market of financial
instruments, deferred tax and intangible assets. EPRA NTA provides a consistent measure of NAV
onagoing concern basis.
EPRA net tangible
assets per share
The diluted NTA per share figure based on EPRA NTA.
EPRA net
reinstatement
value(NRV)
EPRA NRV includes all property at market value but excludes the mark to market of financial
instruments, deferred tax and real estate transfer tax. EPRA NRV assumes that entities never sell assets
and represents the value required to rebuild the entity.
EPRA net disposal
value(NDV)
EPRA NDV includes all property at market value, excludes the mark to market of financial instruments
but includes the fair value of fixed interest rate debt and the carrying value of intangible assets. EPRA
NDV represents the shareholders’ value in a disposal scenario.
GLOSSARY
245
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
GLOSSARY continued
EPRA net initial yield
(NIY)
Annualised NOI generated by the Group’s rental properties expressed as a percentage of their fair value,
taking into account notional acquisition costs.
EPRA topped up
netinitial yield (NIY)
EPRA Net Initial Yield adjusted to include the effect of the expiration of rent free periods (or other
unexpired lease incentives such as discounted rent periods or step rents).
EPRA vacancy rate The ratio of the estimated market rental value of vacant spaces against the estimated market rental
value of the entire property portfolio (including vacant spaces).
ESG Environmental, Social and Governance.
Full occupancy Fully occupancy is defined as occupancy in excess of 97%.
GRESB GRESB is a benchmark of the Environmental, Social and Governance (ESG) performance of real assets.
Gross asset
value (GAV)
The fair value of rental properties, leased properties and development properties.
The Group Wholly owned balances plus Unite’s interests relating to USAF and LSAV.
Group debt Wholly owned borrowings plus Unite’s share of borrowings attributable to USAF and LSAV.
HMO Houses in multiple occupation, where buildings or flats are shared by multiple tenants who rent their
own rooms and the property’s communal spaces on an individual basis.
IFRS NAV per share IFRS equity attributable to the owners of the parent company from the consolidated balance sheet
divided by the total number of shares of the Parent Company in issue at the reporting date.
Interest cover ratio
(ICR)
Calculated as EBIT divided by the sum of net financing costs and IFRS 16 lease liability interest costs.
Lease Properties which are leased to universities for a number of years.
Like-for-like metrics Like-for-like is the change in metric, on a gross basis, calculated using properties owned throughout
thecurrent and previous period.
Loan to value (LTV) Net debt as a proportion of the value of the rental properties, excluding balances in respect of leased
properties under IFRS 16. Prepared on a see-through basis. In the opinion of the Directors, this measure
enables an appraisal of the indebtedness of the business, which closely aligns with key covenants in
theGroup’s agreements.
Loan to value post
IFRS16
Net debt as a proportion of the value of the rental properties, including balances in respect of leased
properties under IFRS 16. Prepared on a see-through basis.
LTV (EPR A) Net debt as a proportion of the value of the rental properties including balances in respect of leased
properties and all other assets and liabilities.
LSAV The London Student Accommodation Joint Venture (LSAV) is a joint venture between Unite and GIC,
inwhich both hold a 50% stake. LSAV has a maturity date of September 2032.
Major regional Properties located in Aberdeen, Birmingham, Cardiff, Durham, Glasgow, Leeds, Leicester, Liverpool,
Newcastle, Nottingham, Sheffield and Southampton.
Net asset value (NAV) The total of all assets less the value of all liabilities at each reporting date.
Net debt (EPRA) Borrowings net of cash. IFRS 16 lease liabilities are excluded from net debt on an EPRA basis. In the
opinion of the Directors, net debt is a useful measure to monitor the overall cash position of the Group.
Net debt per
balancesheet
Borrowings, IFRS 16 lease liabilities and the mark to market of interest rate swaps, net of cash.
246
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
Net debt to EBITDA Net debt as a proportion of EBITDA.
Net financing costs
(EPRA)
Interest payable on borrowings less interest capitalised into developments and finance income.
Net operating income
(NOI)
The Group’s rental income less property operating expenses.
NOI margin The Group’s NOI expressed as a percentage of rental income.
Nomination
agreements
Agreements at properties where Universities have entered into a contract to reserve rooms for their
students, usually guaranteeing occupancy. The Universities usually either nominate students to live
inthe building and Unite enters into short-hold tenancies with the students or the University enters into
a contract with Unite and makes payment directly to Unite.
Provincial Properties located in Bournemouth, Coventry, Loughborough, Medway, Portsmouth and Swindon.
Prime regional Properties located in Bristol, Bath, Edinburgh, Manchester and Oxford.
Property operating
expenses
Operating costs directly related to rental properties, therefore excluding central overheads.
Rental growth Calculated as the year-on-year change in the average annual price for sold beds. In the opinion of
theDirectors, this measure enables a more meaningful comparison in rental income as it excludes
theimpact of changes in occupancy.
Rental income Income generated by the Group from rental properties.
Rental properties Investment properties (owned and leased) whose construction has been completed and are used
bytheOperations segment to generate NOI.
Rental properties
(leased)/Sale and
leaseback
Properties that have been sold to a third party investor then leased back to the Group.
Unite is also responsible for the management of these assets on behalf of the owner.
Resident ambassadors Student representatives who engage with students living in the property to create a community
andsense of belonging.
See-through
(also Unite share)
Wholly owned balances plus Unite’s share of balances relating to USAF and LSAV.
TCFD The Taskforce on Climate-related Financial Disclosures develops voluntary, consistent climate-related
financial risk disclosures for use by companies in providing information to investors, lenders, insurers
and other stakeholders.
Total accounting
return
Growth in diluted EPRA NTA per share plus dividends paid, expressed as a percentage of diluted EPRA
NTA per share at the beginning of the period. In the opinion of the Directors, this measure enables an
appraisal of the return generated by the business for shareholders during the year.
Total shareholder
return
The growth in value of a shareholding over a specified period, assuming dividends are reinvested
topurchase additional shares.
USAF/the fund The Unite UK Student Accommodation Fund (USAF) is Europe’s largest fund focused purely on income-
producing student accommodation investment assets.
The fund is an open-ended infinite life vehicle with unique access to Unite’s development pipeline.
Uniteacts as fund manager for the fund, as well as owning a significant minority stake.
WAULT Weighted average unexpired lease term to expiry.
Wholly owned Balances relating to properties that are 100% owned by The Unite Group PLC or its 100% subsidiaries.
247
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
The Unite Group PLC
Executive Team
Richard Smith
Chief Executive Officer
Joe Lister
Chief Financial Officer
Registered Office
South Quay House, Temple Back, Bristol BS1 6FL
Registered Number in England
03199160
Company Secretary
Christopher Szpojnarowicz
Auditor
Deloitte LLP
1 New Street Square, London EC4A 3HQ
Financial Advisers
J.P. Morgan Cazenove
25 Bank Street, London E14 5JP
Numis Securities
45 Gresham Street, London EC2V 7BF
Registrars
Computershare Investor Services plc
PO Box 82
The Pavilions
Bridgwater Road
Bristol
BS99 7NH
Financial PR Consultants
Powerscourt
1 Tudor Street, London EC4Y OAH
Find out more online at www.unitegroup.com
COMPANY INFORMATION
248
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
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The Unite Group PLC
South Quay House
Temple Back
Bristol BS1 6FL
+44 (0) 117 302 7000
info@unite-students.com
www.unitegroup.com
www.unitestudents.com