REG - Unite Group PLC - Final Results
23/02/2022 07:00
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RNS Number : 5048C Unite Group PLC (The) 23 February 2022
PRESS RELEASE
23 February 2022
THE UNITE GROUP PLC
('Unite Students', 'Unite', the 'Group', or the 'Company
(http://www.investegate.co.uk/unite-group-plc--utg-/rns/outcome-of-usaf-fund-raising/201403310700235435D/)
')
RESULTS FOR THE YEAR ENDED 31 DECEMBER 2021
Richard Smith, Chief Executive of Unite Students, commented:
"The business has seen a strong recovery in performance in 2021 and is well
positioned for further growth due to our alignment to the strongest
universities, an enhanced reputation thanks to our supportive actions during
the pandemic and our best-in-class operating platform. We have ambitious goals
for our environmental and social impact, as underlined by the recent
publication of our pathway to net zero carbon by 2030.
"The outlook for the business and the UK Higher Education sector is strong,
driven by rising participation rates, increased demand for our product from
returning students, significant and sustained demographic growth and
Government support for growth in international student numbers.
"We have our biggest ever development pipeline and the balance sheet capacity
to pursue new growth opportunities through university partnerships and
targeted acquisitions. We are confident in our ability to attract more of the
students currently living in the HMO sector and also see potential to extend
our platform to cater to the growing number of young professional renters
living in major UK cities. Together this underpins significant future earnings
growth and attractive total returns for shareholders."
Year ended 31 December 2021 31 December 2020 Change
Adjusted earnings(1,3) £110.1m £91.6m 20%
Adjusted EPS(1,3) 27.6p 24.0p 15%
IFRS profit/(loss) before tax £343.1m £(120.1)m n/m
IFRS basic EPS 85.9p (31.8)p n/m
Dividend per share 22.1p 12.8p 73%
Total accounting return(1) 10.2% (3.4)%
As at 31 December 2021 31 December 2020 Change
EPRA NTA per share(1) 882p 818p 8%
IFRS net assets per share 880p 809p 9%
See-through net debt(2) £1,522m £1,742m (13)%
Loan to value(2) 29% 34% (5)%
MSCI ESG AA rating AA rating
GRESB score 85/100 81/100 +4
HIGHLIGHTS
Return to earnings growth
· Adjusted earnings of £110.1 million, up 20% (2020: £91.6
million) and adjusted EPS of 27.6p, up 15% (2020: 24.0p)(3)
· IFRS profit before tax of £343.1 million (2020: loss of £120.1
million), driven by a valuation gain of £182.2 million (2020: £178.8 million
loss)
· EPRA NTA up 8% to 882p (31 December 2020: 818p)
· IFRS NAV up 9% to 880p (31 December 2020: 809p)
· Total accounting return of 10.2% for the year (2020: (3.4)%)
· Dividend of 22.1p (2020: 12.8p), reflecting a payout ratio of 80%
of adjusted EPS (2020: 53%)
Recovery in 2021/22 and strong student demand for 2022/23
· 94% occupancy and 2.3% rental growth for 2021/22 (2020/21: 88%
and (0.6)%, 2019/20: 98% and 3.4%)
· Reservations at 67% for 2022/23, with increased customer
retention (2020/21: 60%, 2019/20: 73%)
· University applications for 2022/23 up 7% on pre-pandemic levels
· Inflation protection through multi-year nomination agreements and
annual sales cycle
Record development pipeline, funded through active capital recycling
· Secured development and university partnerships pipeline of £967
million (c.6,000 beds) for delivery over the next four years, delivering 10p
of upside to EPRA EPS
· Acquisition of £177 million development in East London,
providing 700 beds
· £261 million of disposals, improving portfolio quality
· Further opportunities to add to university partnerships and
development pipeline
Best-in-class platform supporting attractive financial returns
· Anticipate total accounting returns of c.10% in 2022, excluding
any impact from yield movements
· Return to 97% occupancy and rental growth of 3.0-3.5% for 2022/23
· EPRA EPS guidance of 41-43p for 2022
· Targeting adjusted EBIT margin of above 72% over the medium term
(2021: 62.3%)
Balance sheet positioned for growth
· LTV reduced to 29% (2020: 34%), demonstrating ongoing capital
discipline
· LSAV joint venture extended by 10 years to 2032 and receipt of
£53 million performance fee
Committed to being a responsible and resilient business
· Publication of net zero carbon pathway and SBTi validated carbon
reduction targets
· Proactive improvements in fire safety, demonstrating leadership
on removal of HPL cladding
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 7 for calculations and reconciliations.
2. Excludes IFRS 16 related balances recognised in respect of leased
properties. See glossary for definitions.
3. Adjusted earnings and adjusted EPS remove the impact of the LSAV
performance fee and integration costs in relation to Liberty Living from EPRA
earnings and EPRA EPS. See glossary for definitions and note 7 for
calculations and reconciliations.
PRESENTATION
There will be a presentation for analysts this morning at 08:30 GMT. A live
webcast will be available via this link
(https://webcasting.brrmedia.co.uk/broadcast/61a62ec07aad4f60e33f6620) . To
register for the event or to receive dial-in details, please contact
unite@powerscourt-group.com (mailto:unite@powerscourt-group.com) .
For further information, please contact:
Unite Students
Richard Smith / Joe Lister / Michael
Burt Tel:
+44 117 302 7005
Unite press
office
Tel: +44 117 450 6300
Powerscourt
Justin Griffiths / Victoria
Heslop Tel:
+44 20 7250 1446
CHIEF EXECUTIVE'S REVIEW
The business has delivered a strong performance in 2021, despite the ongoing
challenges presented by the Covid-19 pandemic. We have once again proven the
quality and resilience of our operating platform, with all properties
remaining open during national lockdowns at the start of the year, as they did
throughout 2020. This reflects the commitment of our teams, as well as the
value of our best-in-class operating platform, PRISM, which allowed us to
quickly adapt to the changing circumstances.
As a business, we are committed to acting responsibly and 'doing what's
right'. This principle has shaped our response to the pandemic and led to the
further rental discounts and complimentary tenancy extensions offered to
students unable to use their accommodation at the start of 2021. We have also
increased the support offered to students and our employees to ensure their
health, safety and wellbeing. We believe these actions have enhanced our
reputation with students, parents, universities and Government and will create
further opportunities in the future.
Return to growth
The business delivered a strong recovery in financial performance in 2021,
with adjusted earnings of £110.1 million and adjusted EPS of 27.6p, up 15%
year-on-year. This reflects an increase in occupancy to 94% for the 2021/22
academic year (2020/21: 88%) and a lower impact from rental discounts when
compared to 2020. The profit before tax of £343.1 million also reflects the
valuation growth of our property portfolio during the year. We have proposed a
dividend of 22.1p for the full year, which represents a payout ratio of 80% of
adjusted EPS, underlining our confidence in future business performance.
Total accounting returns for the year improved to 10.2%, reflecting an 8%
increase in EPRA NTA to 882p. Our LTV ratio reduced to 29% during the year
through revaluation gains, disposal proceeds and receipt of our LSAV
performance fee. This provides the financial headroom to deliver our secured
development pipeline and pursue new growth opportunities.
Our key financial performance indicators are set out below:
Financial highlights(4) 2021 2020
Adjusted earnings £110.1m £91.6m
Adjusted EPS 27.6p 24.0p
IFRS profit/(loss) before tax £343.1m £(120.1)m
IFRS basic EPS 85.9p (31.8)p
Dividend per share 22.1p 12.75p
Adjusted EPS yield 3.4% 2.8%
Total accounting return 10.2% (3.4)%
EPRA NTA per share 882p 818p
IFRS net assets per share 880p 809p
Loan to value 29% 34%
4. See glossary for definitions and note 7 for alternative performance measure
calculations and reconciliations. A reconciliation of profit/loss before tax
to EPRA earnings and adjusted earnings is set out in note 7 of the financial
statements.
Continued support for students and universities
Since the outbreak of Covid-19, we have strived to play our part and do the
right thing for our students and university partners in a fair and
proportionate way. In response to the national lockdown announced in January
2021, students not living in their accommodation were able to apply for a
ten-week rental discount and four-week complimentary tenancy extension.
We have now provided over £100 million in financial support to students
during the Covid-19 pandemic through a combination of rent waivers and
flexibility offered to students. We believe this is the largest package of
financial support offered in the Higher Education (HE) sector and reflects our
commitment to show leadership in the sector, as well as encouraging others to
act accordingly.
All our properties remained, and continue to remain, open and operational,
employing a range of measures to reduce transmission of Covid-19 where
possible. With the removal of the remaining Government restrictions during
the first quarter of 2022, students will be able to enjoy the full experience
of university life.
Positive outlook for 2022/23
We see strong demand for accommodation this autumn, with UCAS applications up
7% on pre-pandemic levels. Reservations for the 2022/23 academic year are
encouraging at 67%, which is ahead of the prior year level of 60%. This is
underpinned by the 50% of beds secured under nomination agreements for an
average term of seven years.
We expect bookings under nomination agreements to grow as a percentage of
bookings by the end of the current annual sales cycle and to increase to 55%
of total beds over the next two academic years. This reflects the opportunity
to deepen relationships with our existing university partners. We have
recently secured new multi-year agreements to let 1,000 beds to two Russell
Group universities from the 2022/23 academic year.
We expect strong student demand for 2022/23 from both domestic and
international students. We have maintained our focus on retaining existing
direct-let customers, which has led to an increased share of sales to
re-bookers. The attractiveness of PBSA over HMO is being clearly proven.
This supports our anticipated return to 97% occupancy and 3.0-3.5% rental
growth for the 2022/23 academic year.
Strategic overview
Having shown real resilience during the pandemic, the business is now well
positioned for growth. 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 - Our purpose is to
deliver a Home for Success for our customers by delivering a highly valued
experience during their time with us. We will also support our university
partners to deliver their accommodation needs and future growth ambitions
· Attractive returns for shareholders - Delivered through a
combination of growing recurring income, rental growth and value-add through
our development activities, supported by a robust and flexible balance sheet
· A responsible and resilient business - We are committed to doing
what's right by raising standards for our customers, investors and employees
to ensure we build on our sector-leading position in the student housing
sector
Delivering for our customers and universities
We have a best-in-class operating platform in the student accommodation
sector, underpinned by our PRISM technology platform, passionate front-line
teams and sector-leading welfare and support. However, we recognise that
student expectations are evolving, with higher expectations for rooms, social
spaces, amenities and technology. In response, we are investing in the next
generation of our PRISM technology platform to enable the seamless digital
experience expected by students and to further improve our sector-leading
efficiency.
We also see an opportunity to tailor our customer offer to better meet the
needs of different segments in the student market. We are already successful
in catering to undergraduate 1(st) year students, as reflected in the large
number of beds let to universities under nomination agreements. We also see
opportunities to tailor our customer proposition to better meet the needs of
non-1(st) year students seeking greater independence, as well as postgraduate
and international students who may be willing to pay a premium for a higher
level of service. In 2021, we conducted successful trials of a
postgraduate-focused customer offer at seven properties, which delivered
increases in rental income and net promoter scores. As a result, we have
increased our product and service segmentation for postgraduates for the
2022/23 sales cycle.
These initiatives will enhance student experience, increase customer retention
and support higher operating margins over time. Improving our hassle-free,
value-for-money offer will also help us capture market share from the one
million students currently living in houses of multiple occupancy (HMOs). We
are already seeing success in this area, with direct-let sales to UK students
for 2021/22 up 33% on pre-pandemic levels and a meaningful increase in
re-booking activity for 2022/23.
We remain convinced in the opportunity for strategic partnerships with
universities to meet their long-term accommodation needs. The 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. This is reflected in over 80% of our development pipeline by
value being underpinned by university partnerships. For developments
completing in 2022, 78% are let under nomination agreements for an average of
nine years. We also see further opportunities to capitalise on our brand and
the goodwill created by our response to Covid-19 to accelerate and enhance our
pipeline of university partnerships through traditional off-campus
development, on-campus development or stock transfer.
Attractive returns for shareholders
The quality, location and scale of our portfolio is a key component of our
business model and long-term strategy. We are focused on growing our alignment
to the strongest universities seeing the greatest student number growth,
reflected in 90% of our rental portfolio and 100% of our development pipeline
being located in Russell Group university cities. We expect our portfolio to
become more concentrated towards the strongest markets over time, with our
weighting to London increasing from 35% to 44% on a Unite share basis through
delivery of our development pipeline.
Over the past 12 months, we have sold £261 million of assets to enhance our
overall portfolio quality and fund reinvestment into the improvement of our
estate. These proactive sales have reduced our footprint from 27 to 25 markets
and largely completes the disposals of non-strategic assets identified
following our acquisition of Liberty Living in 2019.
Our development capability and track record is a major differentiator in the
student accommodation sector. This, combined with our strong reputation and
relationships with universities, supports our future growth through
development and new university partnerships. Our new investments are focused
on 8-10 cities, including London and prime regional markets with the strongest
demand outlook. Our development pipeline is now at a record level, totalling
c.6,000 beds and £967 million in total development cost. This is expected to
deliver 10p of upside to EPRA EPS and generate an NTA uplift of 78p on
completion. We continue to see a positive flow of development opportunities
and expect to add further schemes to the pipeline during 2022.
Our portfolio activity supports our target to deliver sustainable rental
growth of 3.0-3.5% p.a. and significant future growth in recurring earnings.
Together with the combination made by our development activities, this
underpins our target for total accounting returns of 8.5-10% p.a.
A responsible and resilient business
Our new sustainability strategy was launched in March 2021, building on our
existing work to reduce our environmental impact and improve student outcomes.
Reflecting the expectations of our stakeholders, our targets are now more
ambitious, as reflected in our commitment to become a net zero carbon business
by 2030. We recently published our net zero carbon pathway, including targets
validated by the SBTi, which sets out the activities and investment required
to reach net zero for both our operations and development activities.
We are increasing our investment in energy initiatives to reduce consumption,
save carbon and ensure ongoing compliance with regulations, such as energy
performance certificates. We invested £3 million in these initiatives in
2021, taking our total investment to over £30 million since 2014. We have
identified a further c.£100 million of opportunities for capital investment
to help us achieve our environmental targets, which equates to an annual
investment of c.£10 million from 2022 onwards (£5-7 million p.a. at Unite
share). As well as being the right thing to do, there is also a strong
business case for this investment, with a payback of under 10 years through
operating cost savings.
We have a strong track record in delivering positive social impact at Unite,
with a clear link to our purpose of providing a Home for Success. Our
initiatives are focused on helping young people to succeed through supporting
the transition from school to university and helping to widen access to Higher
Education. The Unite Foundation celebrates its 10(th) anniversary this year
and, to date, our support has helped provide accommodation scholarships for
over 500 care leavers and students who are estranged from their family. We are
committed to delivering positive social impact for our students and
communities over the long term, which is reflected in our investment of 1% of
profits into these initiatives each year.
Fire safety
Fire safety is a critical part of our health and safety strategy and how we
operate as a responsible business. We are committed 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. All our buildings are independently confirmed as safe to operate and
occupy by fire safety experts.
We have undertaken a thorough review of the use of high-pressure laminate
(HPL) cladding on our properties. During the period, we completed remedial
works on four buildings and are now on site at a further eight, spending a
total of £38 million (Unite share: £18 million) in the year. Our year-end
balance sheet includes provisions and accruals for cladding remediation costs
across our estate at a cost of £107 million (Unite share: £55 million),
which will be incurred over the next 12-36 months.
The Government has proposed a Building Safety Bill, covering building
standards, which is likely to result in 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 are compliant and remain safe to occupy.
We are seeking to mitigate the costs of cladding replacement through claims
from contractors under build contracts, where appropriate. To date, we have
recovered £10 million from completed claims, representing 70% of the costs of
remediation on those buildings. We expect to recover 50-75% of total
replacement costs over time, but this is not reflected in our balance sheet.
Well protected against inflation
Like many businesses, rising inflation is resulting in cost pressures in parts
of our operations and development supply chains. Positively, 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. These multi-year agreements are expected to deliver contracted
rental increase of c.4% for the 2022/23 academic year, supporting rental
growth across the total portfolio of 3.0-3.5%. We remain focused on providing
value-for-money accommodation for students and recognise that affordability is
key to the sustainability of our rental growth over the long term.
Our cost base is also protected from some inflationary pressures through
hedging of utility costs, interest payments and fixed-price contracts for
committed development projects. At current energy prices, our utilities
hedging will save the Group £24 million in 2022, representing around 0.5% of
rental income. We remain confident in our ability to manage inflation in the
short term through efficiencies across the operations business and by
factoring higher build costs into our development appraisals.
Growing demand for Higher Education
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 22%
by 2030. Participation rates in the UK also continue to grow and 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.
The Government is targeting growth in international student numbers, aided by
the two-year post-study visa (three years for postgraduates). This ambition is
underpinned by the UK HE sector's global standing and the strength of its
universities. Given constraints on new supply of university-owned stock and
private-rented housing, the vast majority of this new demand will need to be
met by corporate PBSA providers.
Brexit has had a negative impact on EU student numbers due to the loss of home
fee status and access to a tuition fee loan, with student acceptances falling
from 32,000 to 16,000 in 2021/22. EU customers represent 5% of occupancy in
2021/22, down from 10% in 2019/20. We anticipate a more marginal reduction in
EU student numbers over the next two years, which we expect to be more than
offset through increasing demand from UK and non-EU students.
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 HE sector. Ahead of the
Government's final response to the Augar Report on post-18 education and
funding, the Office for Students (OfS) has launched a consultation on student
outcomes in the HE sector. It will consider the quality of HE provision and
value for money for students and the taxpayer and may lead to the introduction
of minimum standards for HE providers based on course completion rates and the
share of students going on to employment or further study.
We are confident that our strategic alignment to high and mid-ranked
universities positions us to successfully navigate future changes to the
Government's HE policy. Around half of our income comes from universities in
the top quartile of the OfS's quality metrics, with only 4% coming from
universities in the bottom quartile.
Opportunities to grow our platform
There remain significant opportunities to grow the business in the UK PBSA
sector through our secured development pipeline, targeted acquisitions and
partnerships with universities. We have also periodically considered
opportunities to expand our PBSA footprint outside of the UK. However, we
strongly believe that the core strengths of our best-in-class operating
platform, stakeholder relationships and development expertise are best
leveraged in growing the business within the UK.
Demand for student accommodation continues to grow due to rising student
numbers and the increasing awareness of the benefits of PBSA among non-1(st)
year students. The HMO sector, which provides homes to one million students,
is increasingly expensive and not fit-for-purpose in a backdrop of rising
environmental standards through EPC certification. The cost to HMO landlords
of addressing this issue is substantial, which we expect to result in
increased costs for students and a reduction in the availability of private
rented homes. Through our ambitious sustainability commitments and leadership
in the student accommodation sector, we are well positioned to attract more
students over time.
There is also a potentially significant 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. There is an acute shortage of
high-quality, professionally-managed and sustainable rental accommodation in
the UK. We believe our operating platform and development capability would
enable us to be successful in the young professional living market. We are
trialling a new product for the non-student element of our development at
Campbell House in Bristol and, more broadly, we are reviewing the relative
attractiveness and scale of opportunities in this sector.
Outlook
The outlook for the business remains strong, reflecting the underlying
strength of student demand, our alignment to the strongest universities, the
capabilities of our best-in-class operating platform and our track record of
delivering growth.
We are confident in our ability to deliver significant growth in earnings and
attractive total accounting returns for shareholders. We expect strong demand
for the 2022/23 academic year, with reduced disruption from travel
restrictions and grade inflation. This supports a return to 97% occupancy,
3.0-3.5% rental growth and the delivery of total accounting returns of c.10%
for 2022, excluding any impact from yield movements. We therefore remain
confident in the prospects for the business.
OPERATIONS REVIEW
Sales, rental growth and profitability
The key strengths of our operating business are our highly-committed people,
our PRISM operating platform, our brand and the strength of our relationships
with universities. These capabilities helped to deliver a recovery in
financial performance in 2021, despite the ongoing disruption created by
Covid-19, delivering adjusted EPS of 27.6p (2020: 24.0p). The 15% increase in
adjusted EPS reflects higher occupancy for the 2021/22 academic year (2020/21:
88%) and a lower impact from rental discounts offered to students in response
to the pandemic.
Based on a positive outlook for student demand and progress-to-date on
reservations, we anticipate an increase to 97% occupancy for the academic
year. This supports our guidance for EPRA EPS of 41-43p for the 2022 financial
year.
The Group continues to report on an IFRS basis and presents its performance in
line with best practices as recommended by EPRA. The Operations and Property
reviews focus on EPRA measures as these are our key internal measures and aid
comparability across the real estate sector.
Summary income statement 2021 2020
£m £m
Rental income 282.7 263.2
Property operating expenses (90.9) (82.9)
Net operating income (NOI) 191.8 180.3
NOI margin 67.8% 68.5%
Management fees 15.9 14.0
Overheads (31.5) (30.9)
Finance costs (63.3) (64.9)
Development and other costs (2.8) (6.9)
LSAV performance fee 41.9 5.7
EPRA earnings 152.0 97.3
LSAV performance fee (41.9) (5.7)
Adjusted earnings 110.1 91.6
Adjusted EPS 27.6p 24.0p
EPRA EPS 38.1p 25.5p
Adjusted EBIT margin 62.3% 62.1%
A reconciliation of profit/loss after tax to EPRA earnings and adjusted
earnings is set out in note 2.2b to the financial statements.
Rental income increased by £19.5 million to £282.7 million, up 7%, as a
result of higher occupancy and a reduced level of rental discounts. The total
value of discounts offered to students in 2021 was c.£10 million, reflecting
40% take-up of the 10-week rental discount offered to students not staying in
their accommodation between January and March 2021.
Net operating income increased by 6% to £191.8 million, reflecting the uplift
in rental income and a 10% year-on-year increase in property operating
expenses. The increase in property operating expenses reflects the resumption
of certain costs not incurred during 2020 due to one-off cost saving measures,
including summer cleaning costs and staff bonus payments, as well as increased
utilities costs as a result of higher occupancy over the year and underlying
price increases. In addition, increased investment was made into marketing to
drive sales for the 2021/22 academic year.
Our electricity costs are fully hedged in 2022 and 85% hedged for 2023, and
gas (which accounts for less than 0.5% of our rent) is hedged through 2023. We
are exploring opportunities to fix energy costs through further power purchase
agreements (PPAs) in support of new renewable energy capacity. PPAs provide
competitive pricing compared to wholesale energy markets as well as cost
certainty through multi-year contracts, while aligning to our commitment to
source 100% renewable electricity.
Property operating expenses breakdown 2021 2020 Change
£m £m
Staff costs (28.4) (26.6) (1.8)
Utilities (21.9) (19.8) (2.1)
Summer cleaning (3.3) (2.4) (0.9)
Marketing (5.8) (3.3) (2.5)
Central cost allocation (9.7) (7.9) (1.8)
Other (21.8) (22.9) 1.1
Property operating expenses (90.9) (82.9) (8.0)
Overheads increased by £0.6 million, principally reflecting increases in
staff costs. Recurring management fee income from joint ventures increased to
£15.9 million (2020: £14.0 million), driven by higher NOI and property
valuations in USAF and LSAV.
Our adjusted EBIT margin increased to 62.3% in 2021 (2020: 62.1%), reflecting
a reduction in overheads net of recurring management fees as a percentage of
rental income. Reflecting our cost discipline and the anticipated recovery in
rental income from 2021/22 onwards, we are targeting an improvement in our
adjusted EBIT margin to around 70% in 2022 and above 72% over the medium term.
This will be delivered through growth in occupancy and rents, development
completions and further efficiencies over time in areas such as staff costs,
procurement, utilities and the enhanced use of technology.
Finance costs reduced to £63.3 million (2020: £64.9 million), reflecting a
reduction in average borrowings during the year as cash balances reduced to
more typical levels on the back of an improved trading outlook. This impact
was partially offset by a higher average cost of finance in 2021 of 2.9%
(2020: 2.7%) as we repaid revolving credit facilities at lower average rates.
Interest capitalised into development schemes increased to £5.2 million
(2020: £4.6 million), driven by resumption of development activity at
Middlesex Street in London and Campbell House in Bristol, as well as a
development start at Derby Road in Nottingham. We expect capitalised interest
to increase to around £7-8 million in 2022 as development activity increases
ahead of deliveries in 2022, 2023 and 2024.
Development (pre-contract) and other costs were lower at £2.8 million (2020:
£6.9 million), reflecting the cost of development overheads, the earnings
impact of share-based incentives, deferred and current tax and our
contribution to the Unite Foundation. The year-on-year reduction reflects a
credit of £2.8 million for tax in 2021 (2020: £2.0 million expense).
EPRA earnings includes £41.9 million of performance fees in the year (2020:
£5.7 million) in relation to the performance fee received from LSAV as well
as the unwind of tax provided against the performance fee in previous years.
The fee became payable on extension of the joint venture and represents
out-performance compared to our expectation at the start of the year due to
the strong valuation performance of LSAV's London properties. Given the
quantum of the performance fee in the year, it has been excluded from adjusted
earnings to improve the comparability of results year-on-year.
Improved occupancy for 2021/22
We achieved occupancy of 94% across our total portfolio for the 2021/22
academic year (2020/21: 88%, 2019/20: 98%), reflecting a meaningful
improvement from the disrupted booking cycle in 2020/21. This represented
significant outperformance of our PBSA peers, who delivered average occupancy
of 83% for 2021/22 (JLL).
We continue to sell over half of our beds through nomination agreements with
universities. This represents a key differentiator for Unite in the PBSA
sector, with our nomination agreements accounting for around 40% of all beds
leased by universities across the UK. Occupancy through nomination agreements
has reduced slightly during the past two pandemic-affected leasing cycles,
reflecting understandable caution from universities over student demand.
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%
Student acceptances for 2021/22 were broadly stable at 562,000 (2020/21:
570,000), with a record share of UK school leavers entering universities and
the highest ever admissions for non-EU students but, as expected, this was
offset by a significant reduction in EU student numbers following Brexit.
The gap to pre-pandemic occupancy levels of 97-98% in 2021/22 could be
principally attributed to two reasons. The first is the disruption created by
higher grade attainment due to teacher-assessed grades, which has distorted
the distribution of students among our cities. More students attained the
entry requirements for their first-choice universities than in a normal year,
reflecting the 44% of students awarded A* or A grades in this year's A levels,
compared with 25% in 2019. We sold out in the majority of our markets, with
significant waiting lists in a number of key cities where students struggled
to find suitable accommodation. However, we have seen a concentration of voids
in a small number of cities where we expect universities to have lost market
share of students, or which are adjusting to new supply.
Our waiting lists for 2021/22 equated to an additional c.1-2% in potential
occupancy, which we would expect to be redistributed among our other cities as
disruption from higher grading unwinds. The Government has confirmed that
grade boundaries will return to pre-pandemic levels over the next two years,
and we do not expect the same level of disruption for the student intake in
2022. This year's strong undergraduate intake in higher-ranked cities will
also support student numbers and rental growth prospects in these markets over
the next three years.
The second factor is the ongoing impact of the pandemic on international
travel. Despite a record level of non-EU admissions in 2021/22, this did not
fully translate into bookings. In particular, we have continued to see an
effect on demand from China, accounting for a two percentage-point reduction
in occupancy compared to 2019/20. To mitigate the challenges posed by the
pandemic, we offered international students needing to isolate on arrival in
the UK the opportunity to arrive at their accommodation up to three weeks
early at no extra cost. We continue to monitor international travel closely
and expect an increase in the number of international students travelling to
the UK for the 2022/23 academic year.
Return to rental growth
Annual rents increased by 2.3% on a like-for-like basis for 2021/22 (2020/21:
(0.6)%), reflecting increases of 1.2% through nomination agreements and 3.3%
average increases in direct-let rents. Occupancy was broadly consistent across
our wholly owned portfolio, USAF and LSAV.
2020/21 rental growth and occupancy Rental growth(1) Occupancy(2)
Nomination agreements 1.2%
Direct let 3.3%
Total 2.3% 94%
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
37,359 beds sold (51% of total) for 2021/22 under nomination agreements
(2020/21: 39,250 and 53%). The slight reduction in the number of beds under
nomination agreements reflects the decision of some universities not to renew
rolling single-year agreements in light of uncertainty over student numbers
and occupancy created by Covid-19.
62% of our nomination agreements, by income, are multi-year and therefore
benefit from annual fixed or inflation-linked uplifts based on RPI or CPI.
These agreements are expected to secure average annual rental growth of 4% in
2022/23 based on current levels of inflation and contractual caps on
RPI/CPI-linked rental increases. The remaining agreements are single year, and
we achieved a renewal rate of 74% on these agreements for 2020/21 (2020/21:
76%).
Enhanced service levels and our extensive understanding of student needs have
resulted in longer-term and more robust partnerships with universities over
recent years. The unexpired term of our nomination agreements is 6.7 years, up
from 6.4 years in 2020/21. We expect the share of beds let under nomination
agreements to increase to around 55% over the next two years and have recently
secured new multi-year agreements to let 1,000 beds to two Russell Group
universities from the 2022/23 academic year.
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 re-bookers and postgraduates and determine market pricing on an annual
basis.
Agreement length Beds Beds % Income
2021/22 2020/21 2021/22
Single year 14,529 17,709 38%
2-5 years 7,754 5,748 22%
6-10 years 6,034 6,873 17%
11-20 years 6,608 6,724 17%
20+ years 2,434 2,196 6%
Total 37,359 39,250 100%
UK students account for 70% of our customers for 2021/22 (2020/21: 66%),
making up a large proportion of the beds under nomination agreements with
universities. In addition, 25% and 5% of our customers come from non-EU and EU
countries respectively (2020/21: 25% and 9%), reflecting the relative appeal
of our hassle-free product when compared with alternatives in the
private-rented sector. Our proactive decision to increase sales to UK
customers has offset a reduction in demand from EU customers following Brexit.
Re-bookers accounted for 20% of our direct-let bookings for the 2021/22 year
(2020/21: 25%) reducing our exposure to less predictable 1(st) year
undergraduate customers. Postgraduates now make up 25% of our direct-let
customer base, driven by strong growth in UK postgraduate numbers and
increasing awareness of the benefits of PBSA.
Positive outlook for 2022/23
Reservations for the 2022/23 academic year are progressing positively with 67%
of rooms now sold (2021/22: 60%, 2020/21: 73%). We expect strong student
demand for 2022/23 from both domestic and international students, but
anticipate a slightly later sales cycle for international students than in a
typical year due to uncertainty relating to Covid-19. As a result, we have
increased our focus on retaining existing direct-let customers, which has led
to an increased share of sales to re-bookers.
Applications data for the 2022/23 academic year is encouraging, with total
applications broadly in line with record levels in 2021/22 (-1%) and 7% ahead
of pre-pandemic demand in 2020/21. This reflects a 5% increase in applications
by UK school leavers, who represent one of our largest customer groups, driven
by a record application rate of 43.4% (2020/21: 42.6%) and demographic growth.
Demand is also strong from our other key customer demographic of non-EU
students. Non-EU applications are 5% higher year-on-year, reflecting strong
demand from China and India as well as less mature markets such as Nigeria,
offsetting a further reduction in demand from EU students following Brexit.
Current reservations under nomination agreements deliver 50% occupancy
(2021/22: 51%). Discussions are ongoing with universities over potential
additional demand once they have greater visibility on student numbers, which
we expect to increase occupancy from nomination agreements towards our target
of 55%. Direct-let reservations account for the remaining 17% of reserved
occupancy, which is significantly ahead of the same point last year, thanks to
an increase in UK re-bookers and international sales.
This is supportive of our guidance for full occupancy and rental growth of
3.0-3.5% for the 2022/23 academic year.
Delivering for our customers
Our best-in-class operating platform continues to drive both service
enhancements and operational efficiency. We are committed to investing in an
enhanced student experience that delivers value-for-money for students and
supports our purpose of creating a Home for Success. This includes a segmented
product offering, tailoring student activities and community building
alongside improvements to our MyUnite app, our Resident Ambassador programme
and the provision of student welfare services.
Enhancements to our student experience
During 2021, we have focused on using data and insight to deliver an enhanced
student experience across the academic year tailored to the communities in
each property. Insight was drawn from both an applicant survey of 1,000
prospective students to gauge the sentiment of the new cohort and from data
shared directly by our customers ahead of their arrival regarding their
preferences, interests, hopes and fears.
Key themes were both a desire for, and a fear of, meeting new people and
making friends, the need for support in finding part-time work, and advice and
support regarding wellbeing and life skills for independent living.
Peer-to-peer support and engagement was also a high priority. We responded by
increasing our Resident Ambassador programme through recruitment of over 190
paid student ambassadors, who have provided support and organised events based
on the community's needs.
A series of events was held for our city teams during the summer months to
ensure a great welcome and arrival experience for the class of 2021/22. The
teams generated over 1,900 ideas to tailor and improve the student experience
during the crucial first six weeks of the new term, leading to our highest
ever net promoter score in our autumn student survey (+39) and a significant
improvement in reviews on Trustpilot.
As part of our evolving approach to customer segmentation, trials were
conducted in seven properties to define our offer for postgraduate students
for the 2021/22 academic year. The look and feel, amenity spaces and student
experience were all enhanced, based on our student insight, which delivered
increased occupancy, rental income and some of the highest net promoter scores
in the portfolio. The postgraduate offer has been extended for the 2022/23
sales cycle, with further refinements included. Our refurbishment and
extension of Kincardine Court in Manchester, due for delivery this September,
is also being tailored to postgraduate students based on the smaller flat
sizes available.
A number of digital experience enhancements were delivered during 2021 aimed
at allowing students to increasingly self-serve and to allow our property
teams to deliver service in the moment. These included a new, multilingual,
dynamic FAQ tool, allowing customers to submit questions in any language.
In February 2021, we launched a new group booking tool and marketing campaign
to target groups of students who might otherwise look to house share in the
private-rented sector. This function generated £11 million of sales to
domestic returning students, further supporting our capture of market share
from the HMO sector.
Students often wish to book a specific room and we are in the process of
rolling out a room selector tool, which enables our students to browse the
available rooms in a property, review the details and select a specific room
which best meets their requirements. When room selector is used, there has
been a 35% increase in conversion rate compared to other web-based sales. We
have also enhanced our technology and processes to facilitate easier room
moves by students if they are not satisfied with their allocated rooms or
flats.
Health, safety and wellbeing
All our properties have remained open and operational throughout the pandemic,
and we continue to employ a range of measures in our buildings to reduce
transmission of Covid-19, where possible. This includes enhanced cleaning and
physical and social distancing measures, as well as offering support to those
students needing to self-isolate.
We have also increased provision and access to student wellbeing and mental
health support through enhanced student welfare services, including bespoke
support for students who are shielding, support for those self-isolating,
online welfare checks and a pilot peer-to-peer scheme. We have dedicated
welfare leads in each of our cities and also provide 24/7 support through our
Emergency Contact Centre and a partnership with Nightline. We also work
closely with universities' student welfare and wellbeing teams to ensure
students are signposted to available help and support.
PROPERTY REVIEW
EPRA NTA growth
EPRA NTA per share increased by 8% to 882p at 31 December 2021 (31 December
2020: 818p) with IFRS net assets per share up 9% to 880p (31 December 2020:
809p). In total, EPRA NTA were £3,532 million at 31 December 2021, up from
£3,266 million a year earlier.
Summary balance sheet (Unite share basis)
31 December 2021 31 December 2020
Wholly owned £m Share of Fund/JV £m Total £m Wholly owned £m Share of Fund/JV £m Total £m
Rental properties 3,323 1,542 4,865 3,615 1,278 4,893
Rental properties (leased) 98 - 98 102 - 102
Properties under development 324 - 324 187 - 187
Total property 3,745 1,542 5,287 3,904 1.278 5,182
Net debt (1,030) (492) (1,522) (1,326) (416) (1,742)
Lease liability (94) - (94) (96) - (96)
Other assets/(liabilities) (107) (32) (139) (40) (38) (78)
EPRA net tangible assets 2,514 1,018 3,532 2,442 824 3,266
IFRS NAV 2,510 1,018 3,528 2,412 823 3,235
LTV 29% 34%
The main drivers of the 64p per share increase in EPRA NTA per share were the
increase in the value of the Group's share of investment assets due to rental
growth, higher occupancy and modest yield compression. In addition, the EPRA
NTA movement reflects development surpluses, recognition of the remaining LSAV
performance fee and a further provision for the replacement of HPL cladding.
£m Diluted pence per share
EPRA NTA as at 31 Dec 2020 3,266 818
Rental growth 72 18
Yield movement 107 27
Cladding provision (23) (6)
Development surplus 50 13
LSAV performance fee 42 10
Swap cancellation and debt break fees (4) (1)
Disposals and associated transaction costs (21) (5)
Retained profits/other 43 8
EPRA NTA as at 31 Dec 2021 3,532 882
IFRS net assets increased by 9% in the year to £3,527.8 million (31 December
2020: £3,234.9 million), principally driven by positive revaluation
movements, further recognition of the LSAV performance fee and retained
profits. On a per share basis, IFRS NAV increased by 9% to 880p.
The movement in other assets and liabilities in 2021 was due to an increase in
deferred income, arising from higher occupancy, an increase in accruals and
provisions for cladding remediation works and settlement of the LSAV
performance fee.
Total accounting return
Growth in EPRA NTA was the key component of the 10.2% total accounting return
delivered in the year (2020: (3.4)%), alongside dividends paid of 19.25p
(2020: nil).
We are targeting delivery of attractive total accounting returns of 8.5-10%
through a balance of recurring income and capital growth. This includes
allowance for £1,000/bed p.a. of investment into protective capex for
lifecycle maintenance, improvements in environmental performance and cladding
remediation. Our balance sheet already provides for all committed spend on
fire safety improvements and we will make future investments, as required, to
ensure our buildings remain compliant and safe to occupy.
In 2022, we expect total accounting return to be at the top end of this range
due to growth in recurring earnings, rental growth and development surpluses
from a number of significant planning milestones. Our guidance does not
include any impact from movements in property yields in the year.
Property portfolio
The valuation of our property portfolio at 31 December 2021, including our
share of gross assets held in USAF and LSAV, was £5,287 million (31 December
2020: £5,182 million). The £105 million increase in portfolio value (Unite
share) was principally attributable to a valuation surplus of £211 million on
the investment and development portfolios, capital expenditure of £144
million and disposals of £246 million.
Our property portfolio saw a 5.2% increase in valuations on a like-for-like
basis during the year (Unite share: 4.6%). Just under half of the increase was
driven by yield compression, particularly in London and other prime regional
markets. The remaining increase was split broadly evenly between rental growth
and the unwinding of deductions relating to Covid-19 as occupancy recovered.
The see-through net initial yield of the portfolio was 4.9% at 31 December
2021 (December 2020: 5.0%). This reflected reductions in property yields for
the wholly-owned portfolio, USAF and LSAV of 9 basis points (11 basis points
and 23 basis points respectively).
LSAV's predominantly London-based portfolio saw the strongest valuation
performance in the year, reflecting more significant yield compression in
London and partial realisation of reversion potential on certain assets
approaching the end of nomination agreements.
Breakdown of like-for-like capital growth
£m 31 Dec 2021 valuation Yield compression Occupancy recovery Rental growth /other LfL capital growth
Wholly owned 3,323 49 39 22 110
LSAV 1,819 70 17 51 138
USAF 2,867 58 57 12 127
Total (Gross) 8,009 177 113 85 375
Total (Unite share) 4,865 207
% capital growth
Wholly owned 1.5% 1.2% 0.7% 3.4%
LSAV 5.2% 1.3% 3.9% 10.4%
USAF 2.1% 2.1% 0.4% 4.6%
Total (Gross) 2.4% 1.6% 1.2% 5.2%
Total (Unite share) 4.6%
The proportion of the property portfolio that is income generating is 94% by
value, down from 96% at 31 December 2020. Properties under development have
increased to 6% of our property portfolio by value (31 December 2020: 4%),
following resumption of development activity in the year and new commitments
to deliveries in 2023. Our development pipeline carries greater operational
risk than the income generating portfolio but delivers attractive
risk-adjusted returns, which we expect to materially contribute to the Group's
future earnings growth.
The investment portfolio is 35% weighted to London by value on a Unite share
basis, which will rise to 44% on a built-out basis following completion of our
secured development pipeline.
Unite investment portfolio analysis at 31 December 2021
Wholly owned USAF Lease Total Unite share
LSAV
London Value (£m) 849 425 1,545 16 2,835 1,733
Beds 2,882 1,863 6,649 260 11,654 35%
Properties 10 6 14 1 31
Prime regional Value (£m) 993 692 - 24 1,709 1,169
Beds 7,645 5,337 - 618 13,600 24%
Properties 17 18 - 2 37
Major regional Value (£m) 1,264 1,511 274 28 3,077 1,762
Beds 17,721 19,403 3,067 753 40,944 35%
Properties 36 47 1 2 86
Provincial Value (£m) 217 239 - 30 486 299
Beds 3,730 2,920 - 1,059 7,709 6%
Properties 8 7 - 3 18
Total Value (£m) 3,323 2,867 1,819 98 8,107 4,962
Beds 31,978 29,523 9,716 2,690 73,907 100%
Properties 71 78 15 8 172
Unite ownership share 100% 22% 50% 100%
Value (£m) 3,323 632 910 98 4,962
Development and university partnership activity
Development and university partnership activity continues to be a significant
driver of growth in future earnings and NTA and is aligned to our strategic
focus on high and mid-ranked universities. Our pipeline of traditional
development and university partnerships includes 5,956 beds, with a total
development cost of £967 million, of which 3,661 beds or 77% by development
cost will be delivered in central London.
We continue to identify new development and university partnership
opportunities that deliver our target returns in both London and the regions.
We expect to add to our pipeline during 2022 and maintain a run-rate of
c.1,500-2,000 new beds p.a.
The anticipated yield on cost of this secured pipeline is 6.2%. Prospective
returns on new direct-let schemes remain attractive at around 7.5-8.0% in
provincial markets. 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. The London Plan requires
student accommodation to secure a nomination agreement with one or more
universities for the majority of rooms, meaning we expect new London
developments to be delivered as university partnerships, with development
yields of around 6.0%. University partnerships make up around 83% by value of
our secured development pipeline.
2022 completions
We are due to complete £231 million of development, representing 1,351 new
beds, for the 2022/23 academic year at our schemes at Middlesex Street in
London and Campbell House in Bristol. Development is on track across both
sites from a programme, cost and letting perspective.
Campbell House is let to the University of Bristol under a 15-year nomination
agreement. We are in advanced negotiations with a high-tariff university
partner for a 5-year nomination agreement at our Middlesex Street scheme for
approximately two-thirds of the total beds. Middlesex Street will be a
landmark asset for the business, becoming our highest value property across
the Group.
2023 completions
During the year, we received planning consent for an enlarged 700-bed
development at Derby Road in Nottingham, due for completion for the 2023/24
academic year, which is located adjacent to the University
of Nottingham campus. We were successful in securing additional beds for the
scheme through the planning process, resulting in total development costs
of £58 million. The scheme will deliver a development yield of 8%.
The development will target a BREEAM Excellent rating and net zero carbon in
operations through optimised design, integration of solar panels at roof level
and an all-electric heating solution, including high efficiency air-source
heat pumps. The development will also deliver a substantial biodiversity
improvement through opening and improving access to the River Leen.
Development pipeline
There remains widespread acknowledgement from local authorities of the need
for new PBSA supply to address growing student numbers and relieve pressure on
housing supply. Universities also remain willing to support our planning
applications as a means of delivering the high-quality, affordable
accommodation required to deliver their growth ambitions. However, we have
experienced delays in the planning process as a result of the pandemic which
have put pressure on delivery timelines for some of the schemes in our
pipeline.
We continue to make progress on our London development pipeline, with two
significant new schemes secured over the past 12 months. Our total secured
London pipeline includes 3,661 beds and a total development cost of £740m. In
total, we expect these schemes to contribute 63p of development surplus by
completion and materially contribute to growing our quality of earnings once
let.
During the year, we submitted a planning application for our 768-bed scheme at
Paddington in central London, which we now expect to deliver for the 2024/25
academic year. We also exchanged contracts to acquire a c.1,000-bed
development site in Stratford, East London, on a subject-to-planning basis.
Total development costs are estimated to be c.£160 million, with the scheme
targeted for delivery for the 2025/26 academic year, subject to planning
approval. The development will be delivered as a university partnership,
delivering a development yield in line with our targets in London, and will
help to serve the growing cluster of universities with campuses in the area.
Both UCL and University of the Arts London are developing new campuses in
Stratford, which are due to bring a further 10,500 full-time students to the
area. The site adds to our two existing operational assets in Stratford,
providing opportunities to segment our customer base, including a more
tailored offer for postgraduates.
In January 2022, we added a further 270-bed scheme to our pipeline in
Nottingham city centre. The newly acquired site is located in a prime location
on Lower Parliament Street in the heart of the city centre, close to
Nottingham Trent University's campus as well as the University of Nottingham's
planned city centre campus development for final year and postgraduate
students.
In February 2022, we exchanged contracts to acquire a 700-bed development site
in East London on a subject-to-planning basis. The scheme is targeted for
delivery for the 2026/27 academic year, subject to vacant possession and
planning approval, and will target a long-term nomination agreement with one
of the Group's existing university partners in London. The development, which
is located in a prime location close to transport links and university
campuses, will increase the Group's operational scale in East London.
In addition to our secured pipeline, we continue to progress a number of
further development opportunities in London and prime regional markets at
attractive returns.
Development costs
We are seeing some upward pressure on build costs, which typically account for
50-70% of our total development costs, reflective of supply chain pressures in
securing materials and a reduced supply of EU labour post-Brexit. We
anticipate build cost inflation of 3-5% over the next 12 months.
As part of our commitment to become a net zero business, we are targeting a
48% reduction in the embodied carbon of our developments by 2030. Building to
a net zero standard is expected to result in small increases in construction
costs. However, we expect this cost increase to be reflected in reduced land
pricing over time and ultimately rewarded through a valuation premium for more
sustainable buildings.
Development costs are already fixed for our 2022 completions through design
and build contracts. We have recently procured the build contracts for our
2023 delivery at Derby Road in Nottingham, which reflects recent inflation in
materials and labour costs as well as incorporating low-carbon construction
methods where possible. We expect that the combination of inflation and
environmental enhancements will result in a reduction in our forecast yield on
cost of c.10-20 basis points on deliveries in 2024 and 2025 compared to
initial underwriting assumptions.
Despite current cost pressures, we continue to see opportunities to add to our
development pipeline at attractive returns and will factor this expected
inflation into our appraisal of future schemes.
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. Reflecting the financial and operational constraints faced by
universities, there is a growing appetite for partnerships. We see
opportunities to capitalise on our brand and the goodwill created by our
response to Covid-19 to accelerate and enhance our pipeline of university
partnerships.
We intend to deliver our three London schemes as university partnerships, in
line with requirements in the new London Plan for the majority of new beds to
be leased to a HE provider. The developments will help to meet the growing
need for high-quality, purpose-built student accommodation in London and will
incorporate a range of design features to reduce its embodied and operational
carbon. We have secured planning support for the schemes from university
partners and discussions are already underway with a view to agreeing a
long-term nomination agreement.
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. We also continue to make progress with a significant
further pipeline of medium-term opportunities.
Secured development and partnerships pipeline
Target delivery Secured beds Total completed value Total development costs Capex in period Capex remaining Forecast NAV remaining Forecast yield on cost
No. £m £m £m £m £m %
Direct-let development
Derby Road, Nottingham 2023 700 84 58 11 45 17 8.0%
Abbey Lane, Edinburgh 2024 298 33 24 1 21 9 8.3%
Wyvil Road, London(1) 2024 265 75 60 - 41 18 6.2%
Lower Parliament Street, Nottingham 2024 270 43 34 - 34 9 7.0%
Total Wholly Owned 1,533 235 176 12 141 53 7.2%
Long-term university agreements
Middlesex Street, London 2022 920 296 187 51 34 29 6.0%
Campbell House, Bristol 2022 431 63 44 12 7 8 6.2%
Temple Quarter, Bristol(1) 2024 596 85 67 1 64 18 6.2%
TP Paddington, London(1) 2024 768 203 156 3 151 48 6.0%
Stratford, East London(1) 2025 1,008 251 160 - 158 92 6.3%
East London(1) 2026 700 241 177 - 177 63 5.4%
Total university partnerships 4,423 1,139 791 67 591 258 6.0%
Total pipeline 5,956 1,374 967 79 732 311 6.2%
(1) Subject to obtaining planning consent
Asset management
In addition to our development activity, we see significant opportunities to
create value through asset management projects in our estate. Our customer
base is currently dominated by 1(st) year and international students, but we
see opportunities to segment our portfolio to better address the needs of
returning and postgraduate students. These opportunities will be particularly
focused on those cities where we have gained additional scale through our
acquisition of Liberty Living. This activity will consider upgrades to the
specification of our buildings and amenity spaces, as well as incorporating
investments to improve energy and carbon performance.
These asset management projects typically have shorter lead times than new
developments (often carried out over the summer period) and have the potential
to deliver attractive risk-adjusted returns. We intend to invest £35-50
million p.a. into such opportunities, delivering uplifts to rental income
equivalent to an additional 0.5-1.0% of annual rental growth across the Group
portfolio.
During 2021, we committed to three asset management schemes in Manchester.
Investment across the three projects is £42 million in aggregate, which is
expected to deliver a 7% yield on cost. The projects will deliver new
accommodation, refurbish existing rooms and enhance the environmental
performance of the underlying assets. The upgraded assets will support our
segmentation strategy, with new specification and service tailored to the
postgraduate market.
Disposal activity
We continue to manage the quality of the portfolio and our balance sheet
leverage by recycling capital through disposals and reinvesting into
developments and acquisitions of assets aligned to the best universities.
During the year, the Group contracted £261 million of disposals on a Unite
share basis. This included a £133 million (Unite share: £90 million)
portfolio of eight assets in Coventry, Wolverhampton, Birmingham, Exeter and
Manchester to Aventicum at a 6.5% yield and a 2% discount to book value.
Completion occurred during the year for seven of the assets, with the sale of
the remaining property in Manchester completing early in 2022. In June, we
completed the sale of two London assets in Whitechapel and Wembley to LSAV for
£342 million (Unite share: £171 million) at a 4.0% yield and in line with
book value.
As part of our ongoing portfolio optimisation, we are in negotiations to sell
a c.£235 million portfolio (Unite share) during the first half of 2022, which
has been treated as held for sale in our year-end balance sheet.
Following these disposals, we will have largely completed the disposal
programme set out at the time of our acquisition of Liberty Living in 2019.
These disposals have helped to increase the alignment of our portfolio to the
strongest university cities and our ability to sustain rental growth over a
longer time horizon. Following our planned portfolio sale in 2022, we expect
disposals to reduce to a lower level.
FINANCIAL PERFORMANCE
Income statement
The performance of the business has continued to be impacted by the Covid-19
pandemic during 2021 through lower occupancy, principally as a result of lower
demand from international students, and rental discounts offered to students
during national lockdowns.
A reconciliation of profit before tax to adjusted earnings and EPRA earnings
is set out in summary below and expanded in section 7 of the financial
statements.
2021 2020
£m £m
Adjusted earnings 110.1 91.6
LSAV performance fee 41.9 5.7
EPRA earnings 152.0 97.3
Valuation gains/(losses) and loss on disposal 182.2 (178.8)
Changes in valuation of interest rate swaps and debt break costs 6.7 (35.9)
Non-controlling interest and other items 2.2 (2.7)
IFRS profit/(loss) before tax 343.1 (120.1)
Adjusted earnings per share 27.6p 24.0p
IFRS basic earnings per share 85.9p (31.8)p
The profit before tax of £343.1 million (2020: £120.1 million loss) includes
adjusted earnings of £110.1 million (2020: £91.6 million) and the £41.9
million performance fee received in respect of LSAV performance (2020: £5.7
million). Valuation gains and losses on disposal of £182.2 million (2020:
£178.8 million loss), reflecting recovery of the income shortfall resulting
from Covid-19, as well as £6.7 million of gains associated with changes in
the valuation of interest rate swaps (2020: £35.9 million costs).
Cash flow and net debt
The Operations business generated £108.1 million of net cash in 2021 (2020:
£57.3 million) and see-through net debt reduced to £1,522 million (2020:
£1,742 million). The key components of the movement in see-through net debt
were:
· Disposal proceeds of £241 million
· Operational cash flow of £114 million on a see-through basis
· Receipt of the LSAV performance fee of £53 million
· Total capital expenditure of £101 million
· Dividends paid of £65 million
· A £22 million outflow for other items including lease payments
and swap cancellation fees
In 2022, 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
As at 31 December 2021, the wholly-owned Group had £421 million of cash and
debt headroom (31 December 2020: £379 million), comprising of £96 million of
drawn cash balances and £325 million of undrawn debt (2020: £329 million and
£50 million respectively).
The Group maintains a disciplined approach to managing leverage, with LTV
reducing to 29% at 31 December 2021 (31 December 2020: 34%). The reduction in
LTV during the year was primarily driven by proceeds from property disposals,
the impact of valuation gains and the receipt of the LSAV performance fee,
which more than offset the impact of capital expenditure in the period. We
intend to dispose of £200-250 million of assets in 2022 (Unite share basis)
to fund our development activity and manage our LTV target to 35% on a
built-out basis. The level of disposals going forward will be lower than
recent years, following delivery of asset sales planned following our
acquisition of Liberty Living.
With greater focus on the earnings profile of the business, we are continuing
to monitor our net debt to EBITDA ratio, which we target to return to 6-7x
over the medium term. The improvement in net debt to EBITDA in the year to
8.3x (2020: 10.1x) reflects the improved operational performance of the
business and the reduction in gearing during the year.
During the year, the Group refinanced and extended its £450 million revolving
credit facility (RCF) with HSBC, NatWest and Royal Bank of Canada. The
facility has an initial term of 3.5 years, which may be extended by a maximum
of a further two years at Unite's request, subject to lender consent. The RCF
incorporates three sustainability-linked performance targets linked to
reductions in scope 1 and 2 carbon emissions, improvements in EPC
certifications and investments in social impact initiatives.
The Group published its Sustainable Finance Framework during the year. The
framework sets up the criteria for financing projects through sustainable
bonds, loans and other debt products. Underlying projects have a positive
environmental and/or social impact, thereby contributing to the United Nations
Sustainable Development Goals, while supporting the company's business
strategy. These include green buildings, projects aimed at improving the
energy efficiency of our properties and renewable energy as well as social
initiatives including the provision of affordable housing, financial support
for students through the Covid-19 pandemic and projects aimed at widening
participation in post-18 education.
The Unite Group has maintained investment grade corporate ratings of BBB from
Standard & Poor's and Baa2 from Moody's, reflecting Unite's robust capital
position, cash flows and track record. During the year, Moody's upgraded the
Group's credit outlook from Stable to Positive, and Standard & Poor's
upgraded from Negative to Stable, following recovery from the impact of
Covid-19.
Interest rate hedging arrangements and cost of debt
Our average cost of debt based on current drawn amounts has reduced to 3.0%
(31 December 2020: 3.1%). The Group has 90% of investment debt subject to a
fixed or capped interest rates (31 December 2020: 75%), providing protection
against future changes in interest rates. The repayment of amounts drawn from
our RCF, as confidence in trading recovered from Covid-19, resulted in an
increase in the average term and hedge ratio on our investment debt.
Our average debt maturity is 5.0 years (31 December 2020: 4.2 years) and we
will continue to proactively manage our debt maturity profile, diversify our
lending base and seek to lock into longer-term debt at rates below our current
average cost of debt. Borrowings for the combined Group are well diversified
across lenders and maturities and we are in the process of refinancing LSAV
debt due to expire this year.
During the period, we published our Sustainable Finance Framework, aligned to
our new Sustainability Strategy, which will enable future sustainable debt
issuance and provide the opportunity to further diversify our sources of debt.
Key debt statistics (Unite share basis) 31 Dec 2021 31 Dec 2020
See-through net debt £1,522m £1,742m
LTV 29% 34%
Net debt:EBITDA ratio 8.3 10.1
Interest cover ratio 2.8 2.5
Average debt maturity 5.0 years 4.2 years
Average cost of debt 3.0% 3.1%
Proportion of investment debt at fixed rate 90% 75%
Dividend
We are proposing a final dividend payment of 15.6p per share (2020: 12.75p),
making 22.1p for the full year (2020: 12.75p). The final dividend will be
fully paid as a Property Income Distribution (PID) of 15.6p, which we expect
to fully satisfy our PID requirement for the 2021 financial year.
This represents a payout ratio of 80% of adjusted EPS for FY2021, which will
remain our target dividend payout ratio going forwards.
Subject to approval at Unite's Annual General Meeting on 12 May 2022, the
dividend will be paid in either cash or new ordinary shares (a "scrip dividend
alternative") on 20 May 2022 to shareholders on the register at close of
business on 19 April 2022. The last date for receipt of scrip elections will
be 4 May 2022.
During 2021, scrip elections were received for 17.8% and 2.4% of shares in
issue for the 2020 final dividend and 2021 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.
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 credit of £2.8 million
(2020: £2.0 million charge), relating primarily to a £2.3 million tax credit
in respect of prior years (2020: £0.3 million).
The Government has confirmed that it does not expect purpose-built student
accommodation to be subject to the Residential Property Developer Tax, aimed
at funding remediation of cladding defects.
Funds and joint ventures
The table below summarises the key financials at 31 December 2021 for our
co-investment vehicles.
Property Assets Net debt Other assets Net assets Unite share of NAV Total return Maturity Unite share
£m £m £m £m £m
USAF 2,867 (806) (105) 1,956 431 8.9% Infinite 22%
LSAV 1,819 (628) (18) 1,173 587 19.9% 2032 50%
USAF and LSAV have delivered a strong performance in the year, despite the
challenging environment resulting from Covid-19. USAF's total returns reflect
the payment of distributions retained from 2020 which, if excluded, decrease
the effective total return of the fund to 6.9%. LSAV's stronger underlying
total return reflects a greater increase in property valuations over the year,
due to yield compression in London.
USAF is a high-quality, large-scale portfolio of 29,500 beds in leading
university cities. The fund has positive future prospects through rental
growth and investment opportunities in asset management initiatives, forward
funds and targeted acquisitions. Unite is currently engaging with unitholders
in its role as fund manager to determine the best way to fund both USAF's
ongoing capital requirements and continued growth. Unite is currently
considering increasing its investment in USAF, either by way of a purchase of
secondary units or subscription to new equity, subject to availability of
units and pricing. This will provide an additional route for Unite to gain
access to high-quality income producing assets.
USAF reinstated distributions in April, having suspended them in 2020 to
preserve cash in response to Covid-19. The secondary market for USAF units
continues to operate effectively, with £52 million of units trading in 2021
at a 2% average discount to NAV.
During the year, Unite extended the LSAV joint venture with GIC for a further
10 years to 2032. Unite will be entitled to receive a performance fee from
LSAV equivalent to 12.5% of returns in excess of 8% p.a. in the period from
2021 to 2032. Unite will continue to act as property and asset manager for the
duration of the new joint venture on existing terms and fee levels.
Fees
During the year, the Group recognised net fees of £15.9 million from its fund
and asset management activities (2020: £14.0 million). The increase was
driven by the recovery in NOI and growth in asset valuations as a result of
yield compression and Covid-19 disruption unwinding.
Following the quarterly LSAV valuation at 30 September 2021, Unite received a
payment of £53 million from GIC in full settlement of the LSAV performance
fee due from 2012-2021, with £41.9 million being recognised in the year,
representing the balancing amount not previously recognised in 2019 and 2020.
The increase in the fee was due primarily to the strong performance of
valuations in LSAV in 2021 and the certainty created by the extension of the
joint venture.
2021 2020
£m £m
USAF asset management fee 12.0 10.7
LSAV asset and property management fee 3.9 3.3
LSAV performance fee 41.9 5.7
Total fees 57.8 19.7
Responsibility statement of the directors in respect of the annual financial
report
We confirm that to the best of our knowledge:
· 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
· The strategic 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
· We consider 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.
Richard
Smith
Joe Lister
Chief Executive Officer Chief
Financial Officer
23 February 2022
Forward-looking statements
The preceding preliminary statement has been prepared for the shareholders of
the Company, as a body, and for no other persons. Its purpose is to assist
shareholders of the Company to assess the strategies adopted by the Company
and the potential for those strategies to succeed and for no other purpose.
The preliminary statement contains forward-looking statements that are subject
to risk factors associated with, among other things, the economic, regulatory
and business circumstances occurring from time to time in the sectors and
markets in which the Group operates. It is believed that the expectations
reflected in these statements are reasonable, but they may be affected by a
wide range of variables that could cause actual results to differ materially
from those currently anticipated. No assurances can be given that the
forward-looking statements will be realised. The forward-looking statements
reflect the knowledge and information available at the date of preparation.
Nothing in the preliminary statement should be considered or construed as a
profit forecast for the Group. Except as required by law, the Group has no
obligation to update forward-looking statements or to correct any inaccuracies
therein.
INTRODUCTION AND TABLE OF CONTENTS
These financial statements are prepared in accordance with IFRS. The Board of
Directors also present the Group's performance on the basis recommended for
real estate companies by the European Public Real Estate Association (EPRA).
The reconciliation between IFRS performance measures and EPRA performance
measures can be found in section 2.2b for EPRA earnings and 2.3c for EPRA net
tangible assets (NTA). The adjustments to the IFRS results are intended to
help users in the comparability of these results across other listed real
estate companies in Europe and reflect how the Directors monitor the business.
Primary statements
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in shareholders' equity
Statement of cash flows
Section 1: Basis of preparation
Section 2: Results for the year
2.1 Segmental information
2.2 Earnings
2.3 Net assets
2.4 Revenue and costs
2.5 Tax
Section 3: Asset management
3.1 Wholly owned property assets
3.2 Inventories
3.3 Investments in joint ventures
Section 4: Funding
4.1 Borrowings
4.2 Interest rate swaps
4.3 Net financing costs
4.4 Gearing
4.5 Covenant compliance
4.6 Equity
4.7 Dividends
Section 5: Working capital
5.1 Cash and cash equivalents
5.2 Credit risk
5.3 Provisions
Section 6: Post balance sheet events
Section 7: Alternative performance measures
Glossary
Company information
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2021
2021 2020
Note £m £m
Rental income 2.4 209.0 196.1
Other income 2.4 57.9 19.5
Total revenue 266.9 215.6
Cost of sales (64.4) (53.3)
Expected credit losses (3.3) (8.6)
Operating expenses (36.3) (34.7)
Results from operating activities 162.9 119.0
Loss on disposal of property (12.0) (1.9)
Net valuation gains/(losses) on property (owned and under development) 3.1 116.9 (124.2)
Net valuation losses on property (leased) 3.1 (11.1) (11.2)
Integration costs - (9.2)
Profit/(loss) before net financing costs and share of joint venture 256.7 (27.5)
profit/(loss)
Loan interest and similar charges 4.3 (34.2) (41.9)
Interest on lease liability 4.3 (8.5) (8.8)
Mark to market changes on interest rate swaps 4.3 10.9 (5.8)
Swap cancellation fair value settlements and loan break costs 4.3 (4.2) (30.1)
Finance costs (36.0) (86.6)
Finance income 4.3 - 5.6
Net financing costs (36.0) (81.0)
Share of joint venture profit/(loss) 3.3b 122.4 (11.6)
Profit/(loss) before tax 343.1 (120.1)
Current tax 2.5a 0.9 (1.2)
Deferred tax 2.5a 0.5 (0.9)
Profit/(loss) for the year 344.5 (122.2)
Profit/(loss) for the year attributable to
Owners of the parent company 342.4 (121.0)
Non-controlling interest 2.1 (1.2)
344.5 (122.2)
Profit/(loss) per share
Basic 2.2c 85.9p (31.8p)
Diluted 2.2c 85.7p (31.8p)
All results are derived from continuing activities.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2021
Note 2021 2020
£m £m
Profit/(loss) for the year 344.5 (122.2)
Mark to market movements on hedged instruments 16.2 (12.8)
Hedges reclassified to profit or loss (0.9) 2.5
Share of joint venture mark to market movements on hedged instruments 3.3b 0.6 (0.1)
Other comprehensive income/(loss) for the year 15.9 (10.4)
Total comprehensive income/(loss) for the year 360.4 (132.6)
Attributable to
Owners of the parent company 358.3 (131.4)
Non-controlling interest 2.1 (1.2)
360.4 (132.6)
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.
CONSOLIDATED BALANCE SHEET
At 31 December 2021 Note 2021 2020
£m £m
Assets
Investment property (owned) 3.1 3,095.1 3,614.7
Investment property (leased) 3.1 97.7 101.8
Investment property (under development) 3.1 324.1 187.2
Investment in joint ventures 3.3b 1,044.1 849.0
Other non-current assets 18.9 21.9
Right of use assets 3.6 4.3
Deferred tax asset 2.5d 3.0 1.9
Total non-current assets 4,586.5 4,780.8
Assets classified as held for sale 3.1 228.2 -
Interest rate swaps 4.2 6.1 -
Inventories 3.2 12.1 8.8
Trade and other receivables 108.8 104.0
Cash and cash equivalents 5.1 109.4 338.3
Total current assets 464.6 451.1
Total assets 5,051.1 5,231.9
Liabilities
Interest rate swaps 4.2 (3.6) (5.8)
Lease liabilities (4.9) (4.4)
Trade and other payables (200.7) (141.3)
Current tax liability (0.1) (0.3)
Provisions 5.3 (33.5) (15.7)
Total current liabilities (242.8) (167.5)
Borrowings 4.1 (1,162.0) (1,689.9)
Lease liabilities (91.9) (96.7)
Interest rate swaps 4.2 - (17.8)
Total non-current liabilities (1,253.9) (1,804.4)
Total liabilities (1,496.7) (1,971.9)
Net assets 3,554.4 3,260.0
Equity
Issued share capital 4.6 99.8 99.5
Share premium 4.6 2,161.2 2,160.3
Merger reserve 40.2 40.2
Retained earnings 1,225.0 949.0
Hedging reserve 1.6 (14.1)
Equity attributable to the owners of the parent company 3,527.8 3,234.9
Non-controlling interest 26.6 25.1
Total equity 3,554.4 3,260.0
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the year ended 31 December 2021
Note Attributable to owners of the
Issued share Share premium Merger reserve Retained earnings Hedging reserve parent Non-controlling interest
capital £m £m £m £m £m £m Total
£m £m
At 1 January 2021 99.5 2,160.3 40.2 949.0 (14.1) 3,234.9 25.1 3,260.0
Profit for the year - - - 342.4 - 342.4 2.1 344.5
Other comprehensive income
for the year:
Mark to market movements on - - - - 16.2 16.2 - 16.2
hedged instruments
Hedges reclassified to profit or loss - - - - (0.9) (0.9) - (0.9)
Share of joint venture mark to market movements on hedged instruments 3.3b - - - - 0.6 0.6 - 0.6
Total comprehensive income for the year - - - 342.4 15.9 358.3 2.1 360.4
Shares issued 4.6 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 4.7 - - - (67.8) - (67.8) - (67.8)
of the parent company
Dividends to non-controlling interest - - - - - - (0.6) (0.6)
At 31 December 2021 99.8 2,161.2 40.2 1,225.0 1.6 3,527.8 26.6 3,554.4
Note Attributable to owners of the Non-controlling interest
Issued share Share premium Merger reserve Retained earnings Hedging reserve parent £m
capital £m £m £m £m £m Total
£m £m
At 1 January 2020 90.9 1,874.9 40.2 1,069.0 (3.5) 3,071.5 26.5 3,098.0
Loss for the year - - - (121.0) - (121.0) (1.2) (122.2)
Other comprehensive loss for the year:
Mark to market movements on - - - - (12.8) (12.8) - (12.8)
hedged instruments
Hedges reclassified to profit or loss - - - - 2.5 2.5 - 2.5
Share of joint venture mark to market movements on hedged instruments 3.3b - - - - (0.1) (0.1) - (0.1)
Total comprehensive loss for the year - - - (121.0) (10.4) (131.4) (1.2) (132.6)
Shares issued 4.6 8.6 285.4 - - - 294.0 - 294.0
Deferred tax on share-based payments - - - 0.1 - 0.1 - 0.1
Fair value of share-based payments - - - 1.6 - 1.6 - 1.6
Own shares acquired - - - (0.7) - (0.7) - (0.7)
Unwind of realised swap gain - - - - (0.2) (0.2) - (0.2)
Dividends paid to owners 4.7 - - - - - - - -
of the parent company
Dividends to non-controlling interest - - - - - - (0.2) (0.2)
At 31 December 2020 99.5 2,160.3 40.2 949.0 (14.1) 3,234.9 25.1 3,260.0
STATEMENT OF CASH FLOWS
For the year ended 31 December 2021
Note 2021 2020
£m £m
Net cash flows from operating activities 5.1 171.3 73.3
Investing activities
Investment in joint ventures - (7.5)
Capital expenditure on properties (95.9) (148.5)
Acquisition of intangible assets (3.2) (2.7)
Acquisition of plant and equipment (0.4) (0.7)
Proceeds from sale of investment property 307.3 -
Interest received - 0.1
Dividends received 37.1 10.2
Net cash flows from investing activities 244.9 (149.1)
Financing activities
Proceeds from the issue of share capital 1.1 294.0
Payments to acquire own shares (1.3) (0.7)
Interest paid in respect of financing activities (47.9) (54.2)
Swap cancellation fair value settlements and debt exit costs (4.2) (30.1)
Proceeds from non-current borrowings 147.0 355.1
Repayment of borrowings (675.0) (233.3)
Dividends paid to the owners of the parent company (57.2) -
Withholding tax paid on distributions (7.0) (3.4)
Dividends paid to non-controlling interest (0.6) (0.2)
Net cash flows from financing activities (645.1) 327.2
Net (decrease)/increase in cash and cash equivalents (228.9) 251.4
Cash and cash equivalents at start of year 338.3 86.9
Cash and cash equivalents at end of year 109.4 338.3
NOTES TO THE FINANCIAL STATEMENTS
Section 1: Basis of preparation
The financial information set out above does not constitute the company's
statutory accounts for the years ended 31 December 2021 or 2020 but is derived
from those accounts. Statutory accounts for 2020 have been delivered to the
Registrar of Companies, and those for 2021 will be delivered in due
course. The auditors have reported on those accounts; their reports were (i)
unqualified (ii) did not include a reference to any matters to which the
auditors drew attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under section 498 (2) or (3) of the
Companies Act 2006 in respect of the accounts for 2020 or 2021.
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 remainder of the 2021/22 and 2022/23 academic years, with a focus
on forecast liquidity and ICR covenant performance. This included a base case
assuming cash collection and performance for the 2021/22 academic year remains
in line with current trends and a return to 97% occupancy for the 2022/23
academic year; and a reasonable worst case scenario where income for the
2022/23 academic year was impacted by reduced sales broadly equivalent to the
2020/21 academic year where occupancy was 88%. 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 60% before
there would be a breach.
As at the date of this report, whilst the global outlook as a result of
Covid-19 is improving, it continues to be uncertain and the range of potential
outcomes is significant. In particular, should the impact on trading
conditions be more prolonged or severe than currently forecast by the
Directors, namely if there is a further sustained national lockdown that
results in Universities not opening physically and students either not
arriving at University or returning home, the Group's going concern status may
be dependent on its ability to seek interest cover covenant waivers from its
lenders. 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
authorisation of these financial statements.
Section 2: Results for the year
IFRS performance measures
2021 2020 2021 2020
£m
£m
pps
pps
Note
Profit/(loss) after tax 2.2c 342.4 (121.0) 85.9p (31.8p)
Net assets 2.3d 3,527.8 3,234.9 880p 809p
EPRA performance measures
2021 2020 2021 2020
£m
£m
pps
pps
Note
EPRA earnings 2.2c 152.0 97.3 38.1p 25.5p
Adjusted earnings (*) 2.2c 110.1 91.6 27.6p 24.0p
EPRA NTA 2.3d 3,532.2 3,266.2 882p 818p
* See glossary for definition and note 2.2b for reconciliation to IFRS
measure.
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 2021 and 31 December 2020 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 amend 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 2021, an alternative performance measure based on
EPRA earnings, adjusted to remove the impact of the LSAV performance fee has
been presented. Given the quantum of the LSAV performance fee in the year, it
has been excluded from adjusted earnings to improve the comparability of
results year-on-year. In 2020, in consideration of EPRA's focus on presenting
clear comparability in results from recurring operational activities, EPRA
earnings excludes integration costs. The reconciliation between profit/(loss)
attributable to owners of the parent company and EPRA earnings and adjusted
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 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.
2.2a) EPRA earnings
2021
Unite Share of joint ventures Group on
EPRA basis
£m
Total
£m
USAF LSAV
£m £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.
2020
Unite Share of joint ventures Group on
EPRA basis
£m
Total
£m
USAF LSAV
£m £m
Rental income 196.1 34.2 32.9 263.2
Property operating expenses (61.9) (12.8) (8.2) (82.9)
Net operating income 134.2 21.4 24.7 180.3
Management fees 20.1 (2.8) (3.3) 14.0
Overheads (30.1) (0.3) (0.5) (30.9)
Interest on lease liabilities (8.8) - - (8.8)
Net financing costs (40.6) (6.6) (8.9) (56.1)
Operations segment result 74.8 11.7 12.0 98.5
Property segment result (2.2) - - (2.2)
Unallocated to segments 7.1 (0.3) (5.8) 1.0
EPRA earnings 79.7 11.4 6.2 97.3
LSAV performance fee (11.4) - 5.7 (5.7)
Adjusted earnings 68.3 11.4 11.9 91.6
Included in the above is rental income of £14.6 million and property
operating expenses of £7.3 million relating to sale and leaseback properties.
The unallocated to segments balance includes the fair value of share-based
payments of (£1.7 million), contributions to the Unite Foundation of (£1.0
million), LSAV performance fee of £5.7 million, deferred tax charge of (£0.8
million) and current tax charge of (£1.2 million).
Depreciation and amortisation totalling £9.2 million is included within
overheads. EPRA earnings excludes integrations costs following the acquisition
of Liberty Living, which total £9.2 million in the year.
2.2b) IFRS reconciliation to EPRA 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, swap/debt break costs, impairment of goodwill and
integration costs, which are included in the profit/loss reported under IFRS.
EPRA earnings and adjusted earnings reconcile to the profit/(loss)
attributable to owners of the parent company as follows:
Note 2021 2020
£m £m
Profit/(loss) attributable to owners of the parent company 342.4 (121.0)
Net valuation (gains)/losses on investment property (owned) 3.1 (116.9) 124.2
Property disposals (owned) 12.0 1.9
Net valuation losses on investment property (leased) 3.1 11.1 11.2
Integration costs - 9.2
Amortisation of fair value of debt recognised on acquisition (4.3) (4.3)
Share of joint venture (gains)/losses on investment property 3.3b (88.7) 41.5
Share of joint venture property disposals 3.3b 0.3 -
Swap cancellation fair value settlements and loan break costs 4.3 4.2 30.1
Mark to market changes on interest rate swaps 4.3 (10.9) 5.8
Current tax relating to property disposals 1.1 -
Deferred tax 2.5d 0.3 0.1
Non-controlling interest share of reconciling items * 1.4 (1.4)
EPRA earnings 2.2a 152.0 97.3
LSAV performance fee (41.9) (5.7)
Adjusted earnings 2.2a 110.1 91.6
* 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 3.3.
2.2c) Earnings per share
Basic EPS is calculated using earnings/loss 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, EPRA EPS and adjusted EPS for the year ended 31
December 2021 and 2020 are as follows:
2021 2020 2021 2020
£m
£m
pps
pps
Note
Earnings/(loss)
Basic 342.4 (121.0) 85.9p (31.8p)
Diluted 342.4 (121.0) 85.7p (31.8p)
EPRA 2.2b 152.0 97.3 38.1p 25.5p
Adjusted 2.2b 110.1 91.6 27.6p 24.0p
2021 2020
Weighted average number of shares (thousands)
Basic 398,742 381,379
Dilutive potential ordinary shares (share options) 829 872
Diluted 399,571 382,251
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
full year impact of the 2020 equity raise. In 2021, there were no (2020:
11,278) options excluded from the potential dilutive shares that did not
affect the diluted weighted average number of shares.
2.3 Net assets
2.3a) EPRA NAV and 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.
2021 Unite Share of JVs Group on
EPRA basis
£m
£m
USAF LSAV
£m £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)
EPRA 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.
2020 Unite Share of JVs Group on
EPRA basis
£m
£m
USAF LSAV
£m £m
Investment property (owned) 3,614.7 616.7 661.8 4,893.2
Investment property (leased) 101.8 - - 101.8
Investment property (under development) 187.2 - - 187.2
Total property portfolio 3,903.7 616.7 661.8 5,182.2
Debt on properties (1,663.5) (201.1) (268.2) (2,132.8)
Lease liabilities (96.3) - - (96.3)
Cash 338.3 15.4 37.3 391.0
Net debt (1,421.5) (185.7) (230.9) (1,838.1)
Other assets and (liabilities) (21.3) (13.2) (24.4) (58.9)
Intangibles per IFRS balance sheet (19.0) - - (19.0)
EPRA NTA 2,441.9 417.8 406.5 3,266.2
Loan to value * 35% 30% 35% 34%
Loan to value post IFRS 16 36% 30% 35% 35%
* LTV calculated excluding investment properties (leased) and the
corresponding lease liabilities.
2.3b) Movement in EPRA NTA during the year
Contributions to EPRA NTA by each segment during the year is as follows:
2021
Note Unite Share of joint ventures Group on
EPRA basis
£m
Total
£m
USAF LSAV
£m £m
Operations
Operations segment result 2.2a 82.7 14.4 15.8 112.9
Add back amortisation of intangibles 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) 3.1a (11.1) - - (11.1)
Investment property gains (under development) 3.1a 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 (3.3) - - (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).
2020
Note Unite Share of joint ventures Group on
EPRA basis
£m
Total
£m
USAF LSAV
£m £m
Operations
Operations segment result 2.2a 74.8 11.7 12.0 98.5
Add back amortisation of intangibles 6.4 - - 6.4
Total Operations 81.2 11.7 12.0 104.9
Property
Rental growth (102.4) (24.0) (15.0) (141.4)
Yield movement (17.6) (1.1) 0.1 (18.6)
Disposal losses (owned) (1.9) - - (1.9)
Investment property losses (owned) (121.9) (25.1) (14.9) (161.9)
Investment property losses (leased) 3.1a (11.2) - - (11.2)
Investment property losses (under development) 3.1a (4.2) - - (4.2)
Pre-contract/other development costs 2.2a (2.2) - - (2.2)
Total Property (139.5) (25.1) (14.9) (179.5)
Unallocated
Shares issued 294.0 - - 294.0
Investment in joint ventures 2.3 (5.7) 3.4 -
Acquisition of Liberty Living - - - -
Dividends paid - - - -
LSAV performance fee 11.4 - (5.7) 5.7
Joint venture property acquisition fee (30.1) - - (30.1)
Swap cancellation FV settlements and debt break costs 4.3 (2.7) - - (2.7)
Acquisition of intangibles (9.2) - - (9.2)
Other (3.4) (0.4) (0.1) (3.9)
Total Unallocated 262.3 (6.1) (2.4) 253.8
Total EPRA NTA movement in the year 204.0 (19.5) (5.3) 179.2
Total EPRA NTA brought forward 2,237.9 437.3 411.8 3,087.0
Total EPRA NTA carried forward 2,441.9 417.8 406.5 3,266.2
The £3.9 million other balance within the unallocated segment includes a tax
charge of (£2.1 million), the purchase of own shares of (£0.7 million) and
contributions to the Unite Foundation of (£1.0 million).
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:
2021
NTA NRV NDV
£m
£m
£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 - - (50.3)
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
2020
NTA NRV NDV
£m
£m
£m
Net assets reported under IFRS 3,234.9 3,234.9 3,234.9
Mark to market interest rate swaps 24.4 24.4 -
Unamortised swap gain (1.8) (1.8) (1.8)
Mark to market of fixed rate debt - - (85.2)
Unamortised fair value of debt recognised on acquisition 28.1 28.1 28.1
Current tax (0.4) (0.4) -
Intangibles per IFRS balance sheet (19.0) - -
Real estate transfer tax - 312.0 -
EPRA reporting measure 3,266.2 3,597.2 3,176.0
2.3d) NAV, NTA, NRV and NDV per share
Basic NAV is based on the net assets attributable to the equity shareholders
of The 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 2021 2020 2021 2020
£m
£m
pps
pps
Basic 3,527.8 3,234.9 880p 809p
EPRA NTA 2.3a 3,532.2 3,266.2 885p 820p
EPRA NTA (diluted) 3,536.1 3,271.0 882p 818p
EPRA NRV 2.3c 3,825.9 3,597.2 959p 903p
EPRA NRV (diluted) 3,829.7 3,601.9 955p 901p
EPRA NDV 3,499.7 3,176.0 877p 798p
EPRA NDV (diluted) 3,503.6 3,180.7 874p 796p
Number of shares (thousands) 2021 2020
Basic 399,140 398,226
Outstanding share options 1,687 1,484
Diluted 400,827 399,710
2.4 Revenue and costs
The Group earns revenue from the following activities:
Note 2021 2020
£m £m
Rental income * Operations segment 2.2a 209.0 196.1
Management fees Operations segment 16.2 14.0
LSAV performance fee Unallocated 41.9 5.7
USAF acquisition fee Unallocated - -
267.1 215.8
Impact of non-controlling interest on management fees (0.2) (0.2)
Total revenue 266.9 215.6
* EPRA earnings includes £282.7 million (2020: £263.2 million) of rental
income, which is comprised of £209.0 million (2020: £196.1 million)
recognised on wholly owned assets and a further £73.7 million (2020: £67.1
million) from joint ventures, which is included in share of joint venture
(loss)/profit in the consolidated income statement.
The LSAV performance fee was constrained in earlier years due to an inability
to meet the highly probable criteria that the fee would be earned. In the year
to 31 December 2021, the catch-up recognised in respect of the release of this
constraint represents £36.0 million of the total £41.9 million fee
recognised.
The cost of sales included in the consolidated income statement includes
property operating expenses of £64.4 million (2020: £53.3 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.
2.5a) Tax - income statement
The total taxation (credit)/charge in the income statement is analysed as
follows:
2021 2020
£m £m
Corporation tax on residual business income arising in UK companies 1.0 1.2
Income tax on UK rental income arising in non-UK companies 0.3 0.3
Adjustments in respect of prior periods (2.2) (0.3)
Current tax (credit)/charge (0.9) 1.2
Origination and reversal of temporary differences (0.2) 0.9
Effect of change in tax rate (0.2) (0.1)
Adjustments in respect of prior periods (0.1) 0.1
Deferred tax (credit)/charge (0.5) 0.9
Total tax (credit)/charge in income statement (1.4) 2.1
The movement in deferred tax provided is shown in more detail in note 2.5d.
In the income statement, a tax credit of £1.4 million arises on a profit
before tax of £343.1 million. The taxation credit that would arise at the
standard rate of UK corporation tax is reconciled to the actual tax charge as
follows:
2021 2020
£m £m
Profit/(loss) before tax 343.1 (120.1)
Income tax using the UK corporation tax rate of 19% (2020: 19%) 65.2 (22.8)
Property rental business profits exempt from tax in the REIT Group (18.4) (7.4)
Release of deferred tax liability due to legislative change - 0.1
Non-taxable items relating to the acquisition of Liberty Living - (0.8)
Property revaluations not subject to tax (43.3) 31.2
Mark to market changes in interest rate swaps not subject to tax (2.9) 1.1
Effect of indexation on investments - 0.7
Effect of other permanent differences 0.2 0.1
Effect of tax deduction transferred to equity on share schemes 0.3 -
Rate difference on deferred tax (0.2) -
Prior year adjustments (2.3) (0.1)
Total tax (credit)/charge in income statement (1.4) 2.1
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 2021 these losses totalled £14.6 million
(2020: £24.3 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
2021 the required PID is expected to be fully paid by the end of 2022.
2.5b) Tax - other comprehensive income
Within other comprehensive income a tax charge totalling £nil (2020: £nil)
has been recognised representing deferred tax.
2.5c) Tax - statement of changes in equity
Within the statement of changes in equity a tax credit totalling £0.6 million
(2020: £0.1 million charge) 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:
2021
At 31 December 2020 Charged/(credited) Charged/(credited) At 31 December 2021
in income
in equity
£m
£m
£m £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)/liabilities (1.9) (0.5)* (0.6) (3.0)
* The £0.5 million balance above includes tax movements totalling £0.2m 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.
2020
At 31 December 2019 Charged/(credited) Charged/(credited) At 31 December 2020
in income
in equity
£m
£m
£m £m
Investments - - - -
Property, plant and machinery and provisions (0.9) 0.3 - (0.6)
Share schemes (1.3) (0.2) 0.2 (1.3)
Tax value of carried forward losses recognised (0.7) 0.8 (0.1) -
Net tax liabilities/(assets) (2.9) 0.9* 0.1 (1.9)
* The £0.9 million balance above includes tax movements totalling £0.8m 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 £0.1 million
movement shown in note 2.2b.
Section 3: Asset management
3.1 Wholly owned property assets
The Group's wholly owned property portfolio is held in three 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.
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 held 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.
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 2021 and 2020.
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 Board and
the CFO. This includes a review of the fair value movements over the year.
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 Investment Investment property (under development) Total
property property £m £m
(owned) (leased)
£m £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 gain/(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 (2020: £nil) comprised entirely 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.
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 2020 are shown in the table below.
2020
Investment Investment Investment property (under development) Total
property property £m £m
(owned) (leased)
£m £m
At 1 January 2020 3,406.9 110.4 411.8 3,929.1
Cost capitalised 25.0 2.6 87.6 115.2
Interest capitalised - - 4.6 4.6
Transfer from investment property under development 312.6 - (312.6) -
Transfer from work in progress - - - -
Disposals (9.8) - - (9.8)
Valuation gains 56.5 - 6.4 62.9
Valuation losses (176.5) (11.2) (10.6) (198.3)
Net valuation losses (120.0) (11.2) (4.2) (135.4)
Carrying and market value at 31 December 2020 3,614.7 101.8 187.2 3,903.7
Included within investment properties at 31 December 2021 are £28.8 million
(2020: £29.7 million) of assets held under a long leasehold and £0.1 million
(2020: £0.1 million) of assets held under short leasehold.
Total interest capitalised in investment properties (owned) and investment
properties under development at 31 December 2021 was £57.4 million (2020:
£52.2 million) on a cumulative basis. Total internal costs capitalised in
investment properties (owned) and investment properties under development was
£74.3 million at 31 December 2021 (2020: £66.8 million) on a cumulative
basis.
Recurring fair value measurement
All investment and development properties are classified as Level 3 in the
fair value hierarchy.
Class of asset 2021 2020
£m £m
London - rental properties 849.8 1,137.0
Prime regional - rental properties 992.9 949.3
Major regional - rental properties 1,263.5 1,255.8
Provincial - rental properties 217.1 272.6
London - development properties 249.9 158.8
Prime regional - development properties 48.4 25.6
Major regional - development properties 25.8 2.8
Investment property (owned) 3,647.4 3,801.9
Investment property (leased) 97.7 101.8
Market value (including assets classified as held for sale) 3,745.1 3,903.7
Investment property (classified as held for sale) (228.2) -
Market value 3,516.9 3,903.7
The valuation technique for investment properties is a discounted cash flow
using the following inputs: net rental income, estimated future costs,
occupancy and property management costs.
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 the initial yields and the
capital value per bed derived from actual 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)
2021 2020
£m £m
Opening fair value 3,903.7 3,929.1
Gains and (losses) recognised in income statement 105.8 (135.4)
Transfer to current assets classified as held for sale (228.2) -
Capital expenditure 136.7 119.8
Disposals (401.1) (9.8)
Closing fair value 3,516.9 3,903.7
Investment property (classified as held for sale) 228.2 -
Closing fair value (including assets classified as held for sale) 3,745.1 3,903.7
Quantitative information about fair value measurements using unobservable
inputs (Level 3)
2021
Fair value Valuation Unobservable inputs Range Weighted average
technique
£m
London - 849.8 Discounted Net rental income (£ per week) £191-£373 £291
rental properties
cash flows
Estimated future rent increase (%)
3%-4%
4%
Discount rate (yield) (%)
3.7%-4.9%
3.9%
Prime regional - 992.9 Discounted Net rental income (£ per week) £144-£235 £191
rental properties
cash flows
Estimated future rent increase (%)
1%-4%
3%
Discount rate (yield) (%)
4.0%-6.3%
4.7%
Major regional - 1,263.6 Discounted Net rental income (£ per week) £62-£173 £131
rental properties
cash flows
Estimated future rent increase (%)
0%-4%
2%
Discount rate (yield) (%)
4.7%-7.0%
5.7%
Provincial - 217.1 Discounted Net rental income (£ per week) £109-£188 £135
rental properties
cash flows
Estimated future rent increase (%)
1%-4%
3%
Discount rate (yield) (%)
5.1%-14.2%
7.0%
London - 249.9 Discounted Estimated cost to complete (£m) £34.0m-£177.3m £126.5m
development properties
cash flows
Net rental income (£ per week)
£185-£382
£289
Estimated future rent increase (%) 3% 3%
Discount rate (yield) (%)
3.6%
3.6%
Prime regional - 48.4 Discounted Estimated cost to complete (£m) £7.1m-£64.3m £35.9m
development properties
cash flows
Net rental income (£ per week)
£176-£258
£181
Estimated future rent increase (%) 3% 3%
Discount rate (yield) (%)
4.0%
4.0%
Major regional - 25.8 Discounted Estimated cost to complete (£m) £33.9m-£45.2m £42.1m
development properties
cash flows
Net rental income (£ per week)
£171-£213
£172
Estimated future rent increase (%) 3% 3%
Discount rate (yield) (%)
5.0%
5.0%
3,647.4
Investment property 97.7 Discounted Net rental income (£ per week) £95-£185 £144
(leased)
cash flows
Estimated future rent increase (%)
3%
3%
Discount rate (yield) (%)
6.8%
6.8%
Fair value at 31 December 2021 3,745.1
2020
Fair value Valuation Unobservable inputs Range Weighted average
technique
£m
London - 1,137.0 Discounted Net rental income (£ per week) £164-£370 £267
rental properties
cash flows
Estimated future rent increase (%)
2%-3%
3%
Discount rate (yield) (%)
3.9%-5.0%
4.0%
Prime regional - 949.3 Discounted Net rental income (£ per week) £140-£229 £169
rental properties
cash flows
Estimated future rent increase (%)
2%-3%
3%
Discount rate (yield) (%)
4.0%-6.2%
4.8%
Major regional - 1,255.8 Discounted Net rental income (£ per week) £82-£167 £132
rental properties
cash flows
Estimated future rent increase (%)
1%-3%
2%
Discount rate (yield) (%)
4.7%-7.0%
5.7%
Provincial - 272.6 Discounted Net rental income (£ per week) £87-£188 £136
rental properties
cash flows
Estimated future rent increase (%)
1%-3%
2%
Discount rate (yield) (%)
5.0%-13.8%
6.8%
London - 158.8 Discounted Estimated cost to complete (£m) £84.9m-£147.9m £114.9m
development properties
cash flows
Estimated future rent increase (%)
3%
3%
Discount rate (yield) (%)
4.0%
4.0%
Prime regional - 25.6 Discounted Estimated cost to complete (£m) £19.1m-£65.3m £40.8m
development properties
cash flows
Estimated future rent increase (%)
3%
3%
Discount rate (yield) (%)
4.3%
4.3%
Major regional - 2.8 Discounted Estimated cost to complete (£m) £45.5m £45.5m
development properties
cash flows
Estimated future rent increase (%)
3%
3%
Discount rate (yield) (%)
-
-
3,801.9
Investment property 101.8 Discounted Net rental income (£ per week) £129-£185 £147
(leased)
cash flows
Estimated future rent increase (%)
3%
3%
Discount rate (yield) (%)
6.8%
6.8%
Fair value at 31 December 2020 3,903.7
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.
Class of assets Fair value at +5% -5% +25 bps -25 bps
31 December 2021
change in estimated net rental income
change in estimated net rental income
change in nominal equivalent yield
change in nominal equivalent yield
£m
£m
£m
£m
£m
Rental properties
London 849.8 892.0 807.9 798.9 908.0
Prime regional 992.9 1,046.7 949.7 948.4 1,053.8
Major regional 1,263.5 1,335.1 1,208.8 1,218.3 1,330.7
Provincial 217.1 228.4 206.7 209.5 226.2
Development properties
London 249.9 265.0 226.8 233.0 273.1
Prime regional 48.4 53.6 44.5 44.8 53.9
Major regional 25.8 26.9 23.9 24.7 27.0
Market value 3,647.4 3,847.8 3,468.3 3,477.7 3,872.7
3.2 Inventories
2021 2020
£m £m
Interests in land 10.8 6.7
Other stocks 1.3 2.1
Inventories 12.1 8.8
At 31 December 2021, the Group had interests in two pieces of land (2020: four
pieces of land).
3.3 Investments in joint ventures
The Group has two joint ventures:
Joint venture Group's share of assets/results 2021 (2020) Objective Partner Legal entity in which
Group has interest
The UNITE UK Student Accommodation Fund (USAF) 23.4%* (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 50% (50%) Operate student accommodation GIC Real Estate Pte, Ltd Real estate investment vehicle of LSAV Unit Trust, a Jersey Unit Trust and LSAV (Holdings) Ltd, incorporated in
Venture (LSAV)
in London and Birmingham
the Government of Singapore 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 The Unite Group PLC are beneficially
interested in 22.0% (2020: 22.0%) of USAF.
3.3a) 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:
2021
USAF LSAV Total
£m £m £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 1,044.1
Non-controlling interest - (26.3) - - - - (26.3)
Swap (liabilities)/assets (0.5) - (0.1) 0.2 0.1 (0.3) -
EPRA 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
2020
USAF LSAV Total
£m £m £m
Gross MI Share Gross Share Gross Share
Investment property 2,798.3 38.3 616.7 1,323.6 661.8 4,121.9 1,316.8
Cash 69.7 1.0 15.4 74.6 37.3 144.3 53.7
Debt (912.7) (12.5) (201.1) (536.4) (268.2) (1,449.1) (481.8)
Swap liabilities - - - (1.2) (0.6) (1.2) (0.6)
Other current assets 1.0 - 0.2 0.4 0.2 1.4 0.4
Other current liabilities (61.0) (1.5) (13.4) (49.2) (24.6) (110.2) (39.5)
Net assets 1,895.3 25.3 417.8 811.8 405.9 2,707.1 849.0
Non-controlling interest - (25.3) - - - - (25.3)
Swap liabilities - - - 1.2 0.6 1.2 0.6
EPRA NTA 1,895.3 - 417.8 813.0 406.5 2,708.3 824.3
Profit/(loss) for the year (42.6) (0.8) (11.1) 0.6 0.3 (42.0) (11.6)
Net assets and profit/(loss) for the year above include the non-controlling
interest, whereas EPRA NTA excludes the non-controlling interest.
3.3b) 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
£195.1 million during the year ended 31 December 2021 (2020: £26.2 million
decrease), resulting in an overall carrying value of £1,044.1 million (2020:
£849.0 million).
The following table shows how the increase has arisen.
2021 2020
£m £m
Recognised in the income statement:
Operations segment result 30.2 23.7
Non-controlling interest share of Operations segment result 1.1 0.6
Management fee adjustment related to trading with joint venture 3.0 6.3
Net valuation gains/(losses) on investment property 88.7 (41.5)
Property disposals (0.3) -
Other (0.3) (0.7)
122.4 (11.6)
Recognised in equity:
Movement in effective hedges 0.6 (0.1)
Other adjustments to the carrying value:
Profit adjustment related to trading with joint venture (3.4) (6.3)
Profit adjustment related to sale of property with LSAV (1.9) -
Additional capital invested in LSAV 157.6 7.5
LSAV performance fee (42.2) (5.7)
USAF distributions received (18.6) -
LSAV distributions received (19.4) (10.0)
Increase/(decrease) in carrying value 195.1 (26.2)
Carrying value at 1 January 849.0 875.2
Carrying value at 31 December 1,044.1 849.0
3.3c) 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.
2021 2020
£m £m
USAF 15.2 13.5
LSAV 3.9 6.6
Asset and property management fees 19.1 20.1
LSAV performance fee 41.9 11.4
USAF acquisition fee - -
Investment management fees 41.9 11.4
Total fees 61.0 31.5
On an EPRA basis, fees from joint ventures are shown net of the Group's share
of the cost to the joint ventures.
The Group's share of the cost to the joint ventures is £3.2 million (2020:
£6.1 million), which results in management fees from joint ventures of £15.9
million being shown in the Operating segment result in note 2.2a (2020: £14.0
million).
Investment management fees are included within the unallocated to segments
section in note 2.2a.
During 2021, the Group sold two properties to LSAV for gross proceeds of
£341.9 million. Both properties had been held on balance sheet as investment
property within non-current assets. 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 profits relating to the sales,
associated disposal costs and related cash flows are set out below:
Profit and loss
2021 2020
£m £m
Included in loss on disposal of property (net of joint venture trading 6.6 -
adjustment)
Loss on disposal of property 6.6 -
Cash flow
2021 2020
£m £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 -
Section 4: Funding
4.1 Borrowings
The table below analyses the Group's borrowings which comprise bank and other
loans by when they fall due for payment:
Group - Carrying value
2021 2020
£m £m
Current
In one year or less, or on demand - -
Non-current
In more than one year but not more than two years - 795.9
In more than two years but not more than five years 419.2 297.3
In more than five years 719.0 568.6
1,138.2 1,661.8
Unamortised fair value of debt recognised on acquisition 23.8 28.1
Total borrowings 1,162.0 1,689.9
In addition to the borrowings currently drawn as shown above, the Group has
available undrawn facilities of £325.0 million (2020: £50.0 million). A
further overdraft facility of £10.0 million (2020: £10.0 million) is also
available.
The carrying value and fair value of the Group's borrowings is analysed below:
2021 2020
Carrying value Fair value Carrying value Fair value
£m £m £m £m
Level 1 IFRS fair value hierarchy 898.8 936.7 903.1 932.2
Other loans and unamortised arrangement fees 263.2 263.2 786.8 786.8
Total borrowings 1,162.0 1,199.9 1,689.9 1,719.0
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:
2021
at 1 January Financing cash flows Fair Value adjustments Other at 31 December 2021
changes
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
2020
at 31 December 2019 Financing cash flows Fair Value adjustments Other at 31 December 2020
changes
Borrowings 1,567.6 52.1 (4.3) 74.5 1,689.9
Lease liabilities 104.8 (13.1) - 9.4 101.1
Interest rate swaps 7.6 (1.5) 17.5 - 23.6
Total liabilities from financing activities 1,680.0 117.4 11.7 5.5 1,814.6
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 following table shows the fair value of interest rate swaps:
2021 2020
£m £m
Current (2.5) 5.8
Non-current - 17.8
Fair value of interest rate swaps (2.5) 23.6
The fair value of interest rate swaps (a debit balance in 2021 and a credit
balance in 2020) 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 2021 the net current asset fair value above comprises assets of
£6.1 million offset by liabilities of £3.6 million (2020: all liabilities).
4.3 Net financing costs
2021 2020
Recognised in the income statement: £m £m
Interest income - (5.6)
Finance income - (5.6)
Gross interest expense on loans 43.7 50.8
Interest capitalised (5.2) (4.6)
Amortisation of fair value of debt recognised on acquisition (4.3) (4.3)
Loan interest and similar charges 34.2 41.9
Interest on lease liabilities 8.5 8.8
Mark to market changes on interest rate swaps (10.9) 5.8
Swap cancellation fair value settlements and loan break costs 4.2 30.1
Finance costs 36.0 86.6
Net financing costs 36.0 81.0
The average cost of the Group's wholly owned investment debt for the year
ended 31 December 2021 is 3.0% (2020: 3.2%). The overall average cost of
investment debt on an EPRA basis is 3.0% (2020: 3.2%).
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 2021 2020
£m £m
Cash and cash equivalents 5.1 109.4 338.3
Current borrowings 4.1 - -
Non-current borrowings 4.1 (1,162.0) (1,689.9)
Lease liabilities 4.6a (96.8) (101.1)
Interest rate swaps 4.2 2.5 (23.6)
Net debt per balance sheet (1,146.9) (1,476.3)
Lease liabilities 4.6a 96.8 101.1
Unamortised fair value of debt recognised on acquisition 2.3c 23.8 28.1
Adjusted net debt (1,026.3) (1,347.1)
Reported net asset value 2.3c 3,527.8 3,234.9
EPRA NTA 2.3c 3,532.2 3,266.2
Gearing
Basic (net debt/reported net asset value) 33% 46%
Adjusted gearing (adjusted net debt/EPRA NTA) 29% 41%
Loan to value 2.3a 29% 34%
4.5 Covenant compliance
The Group monitors its covenant position and the forecast headroom available
on a monthly basis. At 31 December 2021, 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.
2021 2020
Covenant Actual Covenant Actual
Gearing < 1.50 0.30 < 1.50 0.42
Unencumbered assets ratio > 1.70 3.25 > 1.70 2.81
Secured gearing < 0.25 0.0 < 0.25 0.0
Development assets ratio < 30% 7% < 30% 4%
Joint venture ratio < 55% 23% < 55% 18%
Interest cover > 2.00 5.49 > 2.00 3.9
The Group also has bonds which carry several covenants which the Group was
also in full compliance with as set out below.
2021 2020
Weighted covenant Weighted actual Weighted covenant Weighted actual
Net gearing < 60% 30% < 60% 35%
Secured gearing < 25% 0% < 25% 0%
Unsecured gearing > 1.67 3.31 > 1.67 2.87
Interest cover > 1.75 2.79 > 1.75 2.67
4.6 Equity
The Company's issued share capital has increased during the year as follows:
Called up, allotted and fully paid 2021 2020
ordinary shares of £0.25p each
No. of Ordinary shares Share Premium No. of Ordinary shares Share Premium
shares
shares
£m £m £m £m
At 1 January 398,170,432 99.5 2,160.3 363,591,882 90.9 1,874.9
Shares issued (placing) - - - 34,502,872 8.6 285.1
Shares issued (scrip dividend) 789,927 0.2 (0.2) - - -
Shares issued (options exercised) 179,277 0.1 1.1 75,678 - 0.3
At 31 December 399,139,636 99.8 2,161.2 398,170,432 99.5 2,160.3
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.
4.7 Dividends
During the year, the Company paid the final 2020 dividend of £42.4m - 12.75p
per share - and an interim 2021 dividend of £25.4 million - 6.5p per share
(2020: cancelled the proposed final 2019 dividend and paid no interim
dividend).
After the year-end, the Directors proposed a final dividend per share of 15.6p
- totalling £62.3 million (2020: 12.75p), bringing the total dividend per
share for the year to 22.1p (2020: 12.75p). No provision has been made in
relation to this dividend.
The Group has modelled tax adjusted property business profits for 2021 and
2022 and the PID requirement in respect of the year ended 31 December 2021 is
expected to be satisfied by the end of 2022.
Section 5: Working capital
5.1 Cash and cash equivalents
The Group's cash position at 31 December 2021 was £109.4 million (2020:
£338.3 million).
The Group's cash balances include £2.0 million (2020: £1.2 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
2021 2020
£m £m
Profit/(loss) for the year 344.6 (122.2)
Adjustments for:
Depreciation and amortization 7.8 9.2
Fair value of share-based payments 2.4 1.7
Change in value of investment property (owned and under development) 3.1 (116.8) 124.2
Change in value of investment property (leased) 3.1 11.1 11.2
Net finance costs excluding interest on lease liabilities 4.3 34.2 36.3
Interest payments for leased assets 4.3 8.5 8.8
Mark to market changes in interest rate swaps 4.3 (10.9) 5.8
Swap break fair value settlements and debt exit costs 4.3 4.2 30.1
Loss on disposal of investment property (owned) 12.0 1.9
Share of joint venture (profit)/loss 3.3b (122.2) 11.6
Trading with joint venture adjustment 19.1 12.0
Tax (credit)/charge 2.5a (1.5) 2.1
Cash flows from operating activities before changes in working capital 192.5 132.7
(Increase) in trade and other receivables (52.5) (0.3)
(Increase) in inventories (2.9) (4.5)
Increase/(decrease) in trade and other payables 34.2 (53.3)
Cash flows from operating activities 171.3 74.6
Tax paid - (1.3)
Net cash flows from operating activities 171.3 73.3
Cash flows consist of the following segmental cash inflows/(outflows):
operations £108.1 million (2020: £57.3 million), property (£324.8 million)
(2020: £78.2 million) and unallocated (£12.2 million) (2020: £272.3
million).
The unallocated net cash outflow is comprised of dividends paid totalling
£64.8 million (2020: £nil), amounts received from shares issued of £nil
(2020: £294.0 million), LSAV performance fee received of £53.3 million
(2020: £nil), tax paid of £nil (2020: £1.3 million) and investment in joint
venture of £nil (2020: £7.5 million).
During the year the Group acquired an additional investment in its LSAV joint
venture as a non-cash transaction as part of the disposal of property to the
joint venture.
5.2 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:
2021 2020
Note £m £m
Cash 5.1 109.4 338.3
Trade receivables 27.9 16.4
Amounts due from joint ventures 56.8 48.0
194.1 402.7
5.2a) 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.
5.2b) 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. The Group holds customer deposits of £0.8 million (2020: £0.8
million) as collateral against individual customers.
5.2c) 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 therefore views this as a
low credit risk balance.
5.3 Provisions
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 24 properties
with HPL that needs replacing across our estate, seven of which are wholly
owned. We are currently carrying 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
HPL cladding is expected to be £92.0 million (Unite Share: £46.9 million),
of which £33.5 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 2 years.
The Government has proposed a Building Safety Bill, covering building
standards, which is likely to result in 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.
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 2.3 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 Unite Share
£m
£m
Wholly owned USAF LSAV Total Wholly owned USAF LSAV Total
At 31 December 2019 0.3 1.4 - 1.7 0.3 0.4 - 0.7
Additions 15.7 50.6 14.4 80.7 15.7 11.0 7.2 33.9
Utilisation (0.3) (2.0) (0.2) (2.5) (0.3) (0.4) (0.1) (0.8)
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
Section 6: Post balance sheet events
In February 2022 we exchanged contracts to acquire a development site in
East London on a subject to planning basis. This site is anticipated to
provide 700 beds, with a total development cost of £177 million.
Section 7: 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, as set out below, is a new APM reflecting a more meaningful
measure of the underlying earnings of the Group, excluding the non-recurring
impact of the LSAV performance fee, and therefore aiding comparability.
Non-EPRA measures may not have comparable calculation bases between companies
and therefore may not provide meaningful industry-wide comparability.
Note 2021 2020
£m
£m
Adjusted EBIT
Net operating income (NOI) 2.2a 191.8 180.3
Management fees 2.2a 15.9 14.0
Overheads 2.2a (31.5) (30.9)
176.2 163.4
Adjusted EBIT margin %
Rental income 2.2a 282.7 263.2
EBIT 7 176.2 163.4
62.3% 62.1%
EBITDA
Net operating income (NOI) 2.2a 191.8 180.3
Management fees 2.2a 15.9 14.0
Overheads 2.2a (31.5) (30.9)
Depreciation and amortisation 7.8 8.4
184.0 171.8
Net debt
Cash 2.3a 155.5 391.0
Debt on properties 2.3a (1,677.3) (2,132.8)
(1,521.8) (1,741.8)
EBITDA : Net debt
EBITDA 7 184.0 171.8
Net debt 7 (1,521.8) (1,741.8)
Ratio 8.3 10.1
Interest cover (Unite share)
Adjusted EBIT 7 176.2 163.4
Net financing costs 2.2a (54.8) (56.1)
Interest on lease liability/operating lease rentals 2.2a (8.5) (8.8)
Total interest (63.3) (64.9)
Ratio 2.8 2.5
Reconciliation: IFRS loss before tax to EPRA earnings and Adjusted earnings
Note 2021 2020
£m
£m
IFRS profit/(loss)loss before tax 343.1 (120.1)
Net valuation (gains)/losses on investment property (owned) 2.2b (205.6) 165.7
Property disposals (owned) 2.2b 12.3 1.9
Net valuation losses on investment property (leased) 2.2b 11.1 11.2
Integration costs 2.2b - 9.2
Amortisation of fair value of debt recognised on acquisition 2.2b (4.3) (4.3)
Changes in valuation of interest rate swaps 2.2b (10.9) 5.8
Swap cancellation fair value settlements and loan break costs 2.2b 4.2 30.1
Non-controlling interest and tax 2.1 (2.2)
EPRA earnings 152.0 97.3
LSAV performance fee (41.9) (5.7)
Adjusted earnings 110.1 91.6
Adjusted EPS yield
Note 2021 2020
Adjusted earnings (A) 2.2c 27.6p 24.0p
Opening EPRA NTA (B) 2.3d 818p 847p
Adjusted EPS yield (A/B) 3.4% 2.8%
Total accounting return
Note 2021 2020
Opening EPRA NTA (A) 2.3d 818p 847p
Closing EPRA NTA 2.3d 882p 818p
Movement 64p (29)p
H1 dividend paid 4.9 12.75p -
H2 dividend paid 4.9 6.5p -
Total movement in NTA (B) 83.25p (29)p
Total accounting return (B/A) 10.2% (3.4%)
EPRA Performance Measures
Summary of EPRA performance measures
2021 2020 2021 2020
£m
£m
EPRA earnings 152.0 97.3 38.1p 25.5p
Adjusted earnings 110.1 91.6 27.6p 24.0p
EPRA NTA (diluted) 3,536.1 3,271.0 882p 818p
EPRA NRV (diluted) 3,829.7 3,601.9 955p 901p
EPRA NDV (diluted) 3,503.6 3,180.7 874p 796p
EPRA Net initial yield 4.0% 3.8%
EPRA Topped-up Net initial yield 4.0% 3.8%
EPRA Like-for-like gross rental income 4.7% (12.9%)
EPRA Vacancy rate 5.6% 13.0%
EPRA Cost ratio (including vacancy costs) 38.8% 40.0%
EPRA Cost ratio (excluding vacancy costs) 36.8% 36.2%
EPRA like-for-like rental income (calculated based on total portfolio value of
£8 billion)
£m Properties owned throughout the period Development property Acquisitions and disposals Total EPRA
2021
Rental income 265.3 15.5 1.9 282.7
Property operating expenses (86.6) (3.4) (0.9) (90.9)
Net rental income 178.7 12.1 1.0 191.8
2020
Rental income 253.3 2.3 7.6 263.2
Property operating expenses (78.7) (0.8) (3.4) (82.9)
Net rental income 174.6 1.5 4.2 180.3
Like-for-like net rental income 4.1 10.6 (3.2) 11.5
Like-for-like gross rental income 4.7%
EPRA Vacancy Rate
2021 2020
£m £m
Estimated rental value of vacant space 13.8 31.5
Estimated rental value of the whole portfolio 246.5 241.8
EPRA Vacancy Rate 5.6% 13.0%
EPRA Net Initial Yield
2021 2020
Annualised net operating income (£m) 205.1 197.7
Property market value (£m) 4,864.8 4,893.2
Notional acquisition costs (£m) 254.3 256.0
5,119.1 5,149.2
Net initial yield (%) * 4.0% 3.8%
0%
Unite Net initial yield (%) ** 4.9% 5.0%
* No lease incentives are provided by the Group and accordingly EPRA Topped Up
Net Initial Yield is also 4.0% (2020: 3.8%).
** The Unite measure of Net Initial Yield assumes full occupancy on newly
developed properties.
EPRA Cost ratio
2021 2020
£m £m
Property operating expenses 67.7 61.9
Overheads 30.7 30.1
Development/pre contract costs 2.2 2.2
Unallocated expenses * 0.5 3.2
101.1 97.4
Share of JV property operating expenses 23.2 21.0
Share of JV overheads 0.8 0.8
Share of JV unallocated expenses * 0.4 0.4
125.5 119.6
Less: Joint venture management fees (15.9) (14.0)
Total costs (A) 109.6 105.6
Group vacant property costs ** (4.1) (7.4)
Share of JV vacant property costs ** (1.4) (2.5)
Total costs excluding vacant property costs (B) 104.1 95.7
Rental income 209.0 196.1
Share of JV rental income 73.7 67.1
Total gross rental income (C) 282.7 263.2
Total EPRA cost ratio (including vacant property costs) (A)/(C) 39% 40%
Total EPRA cost ratio (excluding vacant property costs) (B)/(C) 37% 36%
* 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.
EPRA Valuation movement (Unite share)
Valuation Change %
£m
£m
Wholly owned 3,323.3 109.8 3.4%
USAF 632.0 28.0 4.6%
LSAV 730.9 69.1 10.4%
Rental properties 4,686.2 206.9 4.6%
Leased properties 97.7
2021/22 development completions -
Properties under development 324.1
Properties held throughout the year 5,108.0
Disposals to LSAV 178.6
Total property portfolio 5,286.6
EPRA Yield movement
NOI yield Yield movement (bps)
% H1 H2 FY
Wholly owned 5.0% (2) (7) (9)
USAF 5.2% (1) (10) (11)
LSAV 4.1% (3) (20) (23)
Rental properties (Unite share) 4.9% (2) (10) (12)
Property related capital expenditure
2021 2020
Wholly owned Share of JVs Group share Wholly owned Share of JVs Group share
London 4.8 3.1 7.9 0.6 1.9 2.5
Prime regional 16.7 2.9 19.6 2.7 0.8 3.5
Major regional 8.1 10.8 18.9 5.3 2.2 7.5
Regional 2.8 0.6 3.4 2.7 0.2 2.9
Total rental properties 32.4 17.4 49.8 11.3 5.1 16.4
Increase in beds (lettable space) - - - - - -
Acquisitions - - - - - -
Developments 81.4 - 81.4 87.6 - 87.6
Capitalised interest 5.2 - 5.2 4.6 - 4.6
Total property related capex 119.0 17.4 136.4 103.5 5.1 108.6
Glossary
Adjusted earnings Diluted NTA/NAV EPRA Net Disposal Value (NDV)
An alternative performance measure based on EPRA earnings, adjusted to remove Where NTA/NAV per share is used, "basic" measures divide the NTA/NAV by the EPRA NDV includes all property at market value, excludes the mark to market of
the impact of the LSAV performance fee which was settled in the year. Given number of shares issued at the reporting date, whilst the diluted measure also financial instruments but includes the fair value of fixed interest rate debt
the quantum of the performance fee in the year, it has been excluded from takes into account the effect of share options which have been granted and and the carrying value of intangible assets. EPRA NDV represents the
adjusted earnings to improve the comparability of results year-on-year. which are expected to be converted into shares in the future (both for the shareholders' value in a disposal scenario.
additional number of shares that will be issued and the value of additional
consideration that will be received in issuing them).
Adjusted earnings per share (EPS) EPRA Net Initial Yield (NIY)
EPRA earnings per share, adjusted to remove the impact of the LSAV performance Direct let Annualised NOI generated by the Group's rental properties expressed as a
fee which was settled in the year. Given the quantum of the performance fee in
percentage of their fair value, taking into account notional acquisition
the year, it has been excluded from adjusted earnings to improve the Properties where short-hold tenancy agreements are made directly between Unite costs.
comparability of results year-on-year. and the student.
EPRA Topped Up Net Initial Yield (NIY)
Adjusted EBIT EBITDA
EPRA Net Initial Yield adjusted to include the effect of the expiration of
The Group's NOI plus management fees and less overheads. In the opinion of the The Group's adjusted EBIT, adding back depreciation and amortisation. rent free periods (or other unexpired lease incentives such as discounted rent
Directors, adjusted EBIT is a useful measure to monitor our cost discipline
periods or step rents).
and performance of the Group.
EPRA
EPRA Vacancy Rate
Adjusted EBIT margin The European Public Real Estate
The ratio of the estimated market rental value of vacant spaces against the
The Group's EBIT expressed as a percentage of rental income. In the opinion of Association, who produce best practice recommendations for financial estimated market rental value of the entire property portfolio (including
the Directors, adjusted EBIT margin is a useful measure to monitor our cost reporting. vacant spaces).
discipline and performance of the Group.
EPRA earnings EPRA Cost Ratio
Adjusted EPS yield
EPRA earnings exclude movements relating to changes in values of investment The ratio of property operating expenses, overheads and management fees,
Adjusted EPS as a percentage of opening EPRA NTA (diluted). properties, profits/losses from the disposal of properties, swap/debt break against rental income, calculated on an EPRA basis.
costs and integration costs.
Adjusted net debt
ESG
EPRA earnings per share
Net debt per the balance sheet, adjusted to remove IFRS 16 lease liabilities
Environmental, Social and Governance.
and the unamortised fair value of debt recognised on the acquisition of The earnings per share based on EPRA earnings.
Liberty Living.
GRESB
EPRA like-for-like rental growth
Basis points (BPS)
GRESB is a benchmark of the Environmental, Social and Governance (ESG)
The growth in rental income based on properties that have been in operation performance of real assets.
A basis point is a term used to describe a small percentage, usually in the throughout both the current and prior year, and not under development nor
context of change, and equates to 0.01%. subject to disposal.
Gross asset value (GAV)
Diluted earnings EPRA Net Tangible Assets (NTA) The fair value of rental properties, leased properties and development
properties.
Where earnings values per share are used "basic" measures divide the earnings EPRA NTA includes all property at market value but excludes the mark to market
by the weighted average number of issued shares in issue throughout the of financial instruments, deferred tax and intangible assets. EPRA NTA
period, whilst the diluted measure also takes into account the effect of share provides a consistent measure of NAV on a going concern basis.
options which have been granted and which are expected to be converted into
The Group
shares in the future.
Wholly owned balances plus Unite's interests relating to USAF and LSAV.
EPRA Net Tangible Assets per share
The diluted NTA per share figure based on EPRA NTA.
Group debt
Wholly owned borrowings plus Unite's share of borrowings attributable to USAF
EPRA Net Reinstatement Value (NRV) and LSAV.
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 HMO
rebuild the entity.
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 Net debt to EBITDA Resident ambassadors
IFRS equity attributable to the owners of the parent company from the Net debt as a proportion of EBITDA. Student representatives who engage with students living in the property to
consolidated balance sheet divided by the total number of shares of the Parent
create a community and sense of belonging.
Company in issue at the reporting date
Net financing costs (EPRA)
See-through (also Unite share)
Interest cover ratio (ICR) Interest payable on borrowings less interest capitalised into developments and
finance income. Wholly owned balances plus Unite's share of balances relating to USAF and
Calculated as adjusted EBIT divided by the sum of net financing costs and IFRS
LSAV.
16 lease liability interest costs.
Net operating income (NOI)
See-through net debt
Lease The Group's rental income less property operating expenses.
See-through borrowings net of cash. IFRS 16 lease liabilities are excluded
Properties which are leased to universities for a number of years. 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.
NOI margin
Like-for-like capital growth The Group's NOI expressed as a percentage of rental income.
TCFD
Like-for-like capital growth is the growth in Gross Asset Value on properties
owned throughout the current and prior year.
The Taskforce on Climate-related Financial Disclosures develops voluntary,
Nomination agreements consistent climate-related financial risk disclosures for use by companies in
providing information to investors, lenders, insurers and other stakeholders.
Agreements at properties where Universities have entered into a contract to
Loan to value (LTV) reserve rooms for their students, usually guaranteeing occupancy. The
Universities usually either nominate students to live in the building and
Net debt as a proportion of the value of the rental properties, excluding Unite enters into short-hold tenancies with the students or the University Total accounting return
balances in respect of leased properties under IFRS 16. Prepared on a enters into a contract with Unite and makes payment directly to Unite.
see-through basis. In the opinion of the Directors, this measure enables an
Growth in diluted EPRA NTA per share plus dividends paid, expressed as a
appraisal of the indebtedness of the business, which closely aligns with key percentage of diluted EPRA NTA per share at the beginning of the period. In
covenants in the Group's agreements.
the opinion of the Directors, this measure enables an appraisal of the return
Provincial generated by the business for shareholders during the year.
Properties located in Bedford, Bournemouth, Coventry, Loughborough, Medway,
Loan to value post IFRS 16 Portsmouth, Reading and Swindon.
Total shareholder return
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
The growth in value of a shareholding over a specified period, assuming
see-through basis. Prime regional dividends are reinvested to purchase additional shares.
Properties located in Bristol, Bath, Edinburgh, Manchester and Oxford.
LSAV USAF/the fund
The London Student Accommodation Joint Venture (LSAV) is a joint venture Property operating expenses The Unite UK Student Accommodation Fund (USAF) is Europe's largest fund
between Unite and GIC, in which both hold a 50% stake. LSAV has a maturity
focused purely on income-producing student accommodation investment assets.
date of September 2032. Operating costs directly related to rental properties, therefore excluding
central overheads 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.
Major regional
Rental growth
Properties located in Aberdeen, Birmingham, Cardiff, Durham, Glasgow, Leeds,
Leicester, Liverpool, Newcastle, Nottingham, Sheffield and Southampton. Calculated as the year-on-year change in the average annual price for sold WAULT
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. Weighted average unexpired lease term to expiry.
Net asset value (NAV)
The total of all assets less the value of all liabilities at each reporting Rental income Wholly owned
date.
Income generated by the Group from rental properties. Balances relating to properties that are 100% owned by The Unite Group PLC or
its 100% subsidiaries.
Net debt
Rental properties
Borrowings, net of cash. IFRS 16 lease liabilities are excluded.
Investment properties (owned and leased) whose construction has been completed
and are used by the Operations segment to generate NOI.
Net debt per balance sheet
Borrowings, IFRS 16 lease liabilities and the mark to market of interest rate Rental properties (leased) / Sale and leaseback
swaps, net of cash.
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.
Company information
Unite Group
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
Auditor
Deloitte LLP
1 New Street Square, London EC4 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
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