FOCUSED ON

GROWTH AND

SUSTAINABILITY

THE UNITE GROUP PLC

Annual Report and Accounts 2021

The Unite Group PLC Annual Report & Accounts 2021

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

CREATING

A HOME FOR

SUCCESS FOR

STUDENTS

A safe and welcoming home enables students to

engage, learn and thrive. That’s the philosophy that

underpins the core of our purpose, which is to create

a Home for Success for our students.

It’s fundamental to everything we do.

View our 2021 Annual Report &

Accounts online at: unite-group.co.uk/

investors/reports-and-presentations

Page references are shown throughout

for links to important content

CONTENTS

STRATEGIC REPORT

01 Highlights

02 Our Annual Report at a glance

04 Being purpose-led

06 Why invest in Unite

08 Our business model

08 Who we are

10 How we operate

12 The value we create

15 Section 172 statement

18 Chair’s statement

20 Chief Executive’s review

27 Market overview

30 Our strategy

32 Key performance indicators

34 Sustainability report

50 TCFD

56 Operations review

62 Property review

70 Financial review

74 Risk management

76 Principal risks and uncertainties

CORPORATE GOVERNANCE

90 Chair’s introduction to

Governance

92 Board of Directors

96 Board statements

99 Board leadership and purpose

106 Division of responsibilities

109 Board activities

117 Nomination Committee

120 Audit Committee

126 Sustainability Committee

130 Health & Safety Committee

134 Remuneration Committee

136 Directors’ Remuneration policy

153 Annual Report on Remuneration

168 Directors’ Report

171 Statement of Directors’

Responsibilities

FINANCIAL STATEMENTS

174 Independent auditor’s report

184 Consolidated income statement

184 Consolidated statement of

comprehensive income

185 Consolidated balance sheet

186 Company balance sheet

187 Consolidated statement of

changes inshareholders’ equity

188 Company statement of changes

inshareholders’ equity

189 Statements of cash flows

190 Notes to the financial

statements

OTHER INFORMATION

249 Financial record

250 Glossary

253 Company information

818p

790p

882p

847p

720p

20192017 20202018 2021

2020

2018

86p

2019

2017 -32p

95p

-32p

91p

2021

34%

29%

37%

31%

20192017 20202018 2021

13.2%

-3.4%

14.4%

11.7%

2017 20192018

2020

10.2%

2021

24.0p

34.1p

27.6p

37.1p

30.3p

20192017 20202018 2021

29.0p

12.75p

22.7p

10.25p

2017 20192018 2020

22.1p

2021

ADJUSTED EARNINGS PER SHARE

1, 2

(P)

27.6p

IFRS BASIC EARNINGS PER SHARE (P)

86p

DIVIDEND PER SHARE (P)

22.1p

EPRA NTA PER SHARE

1, 3

(P)

882p

TOTAL ACCOUNTING RETURN

(%)

10.2%

LOAN-TO-VALUE RATIO

(%)

29%

FINANCIAL HIGHLIGHTS

OPERATIONAL HIGHLIGHTS

• Recovery in 2021/22 and strong student

demandfor2022/23

• Record development pipeline, funded

throughactivecapital recycling

• Best-in-class platform supporting

attractivefinancialreturns

• Balance sheet positioned for growth

• Committed to being a responsible

andresilientbusiness

1. The financial statements are prepared in accordance with International Financial Reporting Standards (IFRS). The Group uses alternative performance measures (APMs),

which are not defined or specified under IFRS. These APMs, which are not considered to be a substitute for IFRS measures, provide additional helpful information and

are based on the European Public Real Estate Association (EPRA) best practice recommendations. The metrics are also used internally to measure and manage the

business and to align to the performance related conditions for Directors’ remuneration. See glossary for definitions and note 8 for calculations and reconciliations.

2. Adjustment made to EPRA EPS to remove the impact of the LSAV performance fee. Further details are provided in notes 2 and 8.

3. 2017 & 2018 based on EPRA NAV as previously reported.

4. With effect from 1 January 2022, the Audit Committee will be renamed the Audit & Risk Committee. See the Audit Committee report for more information.

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

OUR ANNUAL REPORT AT A GLANCE

Our purpose,

Home for Success,

provides the right

environment for

students living with

us to engage, learn

and thrive.

WHY INVEST

IN UNITE

We provide high-quality

student accommodation

that we own, operate and

manage. We continually

enhance our portfolio and

work alongside universities

to deliver their long-term

accommodation strategies.

BUSINESS

MODEL

We are the UK’s largest owner,

manager and developer of purpose-

built student accommodation,

servingthe UK’s world-leading

HigherEducation sector.

OUR

PURPOSE

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

The Board is focused on

delivering a long-term

sustainable and resilient

strategy for the Group.

TheBoard’s composition

brings a range of broad

skills, balance and

experience to our business.

CORPORATE

GOVERNANCE

We have seen positive recovery

in our performance in 2021 and

are positioned for growth. The

outlook for the business and

UK Higher Education sector

is strong, driven by rising

participation rates, demographic

growth and increasing numbers

of international students.

Wehave arecord development

pipeline and balance sheet

capacity to pursue new

growthopportunities.

CHIEF

EXECUTIVE’S

REVIEW

We are a responsible

andsustainable business.

OurSustainability

Strategy helps us prioritise

areas offocus and our

stakeholder materiality

review, undertaken in

2020,continues to inform

our actions.

SUSTAINABILITY

REPORT

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

BEING PURPOSE-LED

Home for Success provides the right home environment for the students who

come to live with us each year from across the globe, to enable them to achieve

whatever goals and ambitions they aspire to. Home for Success is also about

being the right partner for universities to work with as well as providing our

people with the opportunity to grow, develop and succeed.

Our corporate strategy is underpinned by our strategic objectives,

sustainability strategy, brand promises and values.

HOME FOR SUCCESS

Brand Promises

Provide a space to

grow and thrive

Provide a place

to belong

Be there when

you need us

Values

Keeping

ussafe

Creating room

for everyone

Doing what’s

right

Raising the

bar together

Strategic Objectives

Delivering for our

customers and

universities

Attractive

returns for

shareholders

A responsible

and resilient

business

Sustainability Strategy

Net zero

carbon

Resource

efficient

Health &

wellbeing

Opportunities

for all

Raising

standards

Read more about our Sustainability Strategy on pages 34–49

Read more about our three strategic objectives on pages 30–31

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

OUR PURPOSE IN ACTION DURING COVID-19

Student

Wellbeing

The Covid pandemic amplified

the need to support students,

particularly those who were far

away from home or were unable

to travel home due to distance or

personal circumstances.

We have invested in our city

teams ensuring they are there

for students when needed.

Our student support teams are

available in all cities and, working

together with our Resident

Ambassadors, provide a valuable

support network for all students

living with us.

• Over £100m in financial

support to students during

Covid-19 pandemic

• All properties remained

open and operational

during Covid-19 providing

support for students

• Six dedicated student

support teams across

theUK

• Over 190 Resident

Ambassadors recruited

inyear

University

Partnerships

We work closely with our

University partners. During the

pandemic this relationship was

strengthened by the actions we

took to support students.

In addition, we regularly provide

research and insight to the

higher education sector about

student trends and sentiment

which informs their thinking

and planning. Our Class of 2021

research highlighted student

concerns about the 2021/22

academic year. Concerns primarily

related to being ready, leaving

the safety of sixth form and their

mental health whilst being away

from home. In response to this,

we have enhanced our focus on

creating supportive communities

inour properties with people on

hand to support.

• Over 60 partnerships

with Higher Education

institutions

• Over half of beds sold under

nomination agreements

• Four student and

parentresearch reports

published during 2020/21

academic year

Employee

Inclusion

We are committed to providing

opportunities for all our team

members, whatever their

background, gender or ethnicity.

With the Covid pandemic creating

extra pressures for our teams, we

focused on keeping employees

safe through the provision of PPE,

providing regular operational

Covid-19 updates and providing

flexibility for those employees

who needed to work from home.

Throughout the pandemic we

have engaged with our teams

through a range of tools and

channels, surveyed how they are

feeling and provided forums by

which tohear their feedback.

• Weekly Covid updates

toteams throughout

theCovid pandemic

• Recruitment of EDI &

Wellbeing lead

• Launch of new employee

engagement forum,

CultureMatters

• Employee engagement

scoreof 75 (2020: 74)

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

HIGH-QUALITY

PORTFOLIO

Aligned to the strongest

universities

Our portfolio is increasingly

focused on the UK’s leading

universities, where we see the

strongest prospects for student

number growth, through our new

investmentactivity and disciplined

capital recycling.

Investing to enhance our

operational estate

Multi-year asset management

opportunity to create value

byenhancing rents and

reducing operational costs

through investments in our

customerproposition.

% OF THE RENTAL PORTFOLIO BY

VALUE IN RUSSELL GROUP CITIES

90%

STRUCTURALLY

GROWING

SECTOR

Demographic growth

The UK’s 18-year-old population is set

to grow by 22% by 2030, supporting

demand for an additional c.200k

undergraduate places at current

participation rates.

Rising HE participation

2021/22 saw a record share of

18-year-olds accepting a place at

university, reflecting young people’s

recognition of the life experience that

university provides.

Growing international demand

The UK Government is targeting

further growth in International

student numbers with a particular

focus on attracting more students

from Africa, the Middle East and

Asian countries outside of China.

18-YEAR-OLD PARTICIPATION

RATE IN 2021/22

38.3%

BEST-IN-CLASS

OPERATING

PLATFORM

Over 60 University partnerships

We are the partner of choice for a

large number of the UK’s leading

universities, reflecting our track

record, focus on student welfare and

our high-quality, affordable products

and services.

Passionate frontline teams

Front-line service excellence

is monitored throughout the

year through the Net Promoter

Scorewhich drives greater

customeradvocacy.

Sector-leading operatingmargins

We drive cost efficiencies through

our scale using our PRISM

technology platform. Management

fees from joint ventures and

fundsalso cover c.67% of our

annualoverheads.

SHARE OF BEDS LET UNDER

NOMINATION AGREEMENTS

FOR2021/22

51%

WHY INVEST IN UNITE

SUSTAINABLE GROWTH

Sector leader in UK student accommodation

with strong returns

See pages 27–29 for more information See pages 62–69 for more information See pages 56–61 for more information

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

HIGH VISIBILITY

OVER RETURNS

SUBSTANTIAL

GROWTH

OPPORTUNITIES

LEADERSHIP IN

SUSTAINABILITY

Targeting attractive total

returnsof 8.5–10% p.a.

Achieved through recurring

earnings, rental growth and

development profits.

Sustainable rental growth

of3.0–3.5% p.a.

Underlying rental growth driven by

student demand and contracted

increases through multi-year

university nomination agreements,

supported by asset management

initiatives.

6,000-bed development pipeline

Secured pipeline of £967 million,

which is expected to add 78p to NTA

and 10p to EPRA EPS on delivery.

Market share gains

fromHMO sector

Almost one million students live

in houses of multiple occupancy,

providing a significant opportunity.

Development of 1,500–2,500

beds perannum

Investment focused on strongest

8–10 markets in the UK, with growing

opportunities in London and major

regional cities.

New University partnerships

Opportunities for new developments

on and off-campus as well as

partnerships for the transfer of

theirexisting accommodation stock

to unlock operating efficiencies

and help to fund investment in

newaccommodation.

Emerging young

professionalsmarket

Significant potential from expanding

our platform to cater for the growing

number of professional renters living

in major cities.

Net zero carbon

Becoming a net zero carbon for both

our operations and developments

by 2030.

Unite Foundation

Providing support for estranged

and care experienced students

throughout the course of

theirstudies.

Leapskills

Helping young people prepare

forindependent living.

Improved index rating

Maintained a GRESB 4-star rating

and improved score to 85.

TOTAL ACCOUNTING RETURNS OVER

THE PAST 10 YEARS

13.5% pa

FULL-TIME STUDENTS LIVING

IN UNIVERSITY-OWNED

ACCOMMODATION OR HMOS

1.4 million

TARGET REDUCTION IN

OPERATIONAL ENERGY

CONSUMPTION BY 2030

28%

See pages 70–73 for more information See pages 20–26 for more information See pages 34–55 for more information

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

BUSINESS MODEL

WHO WE ARE

We are the UK’s largest owner, manager

and developer of purpose-built student

accommodation

PROPERTIES

172

Operate in 25 cities and

towns across England,

Scotland and Wales

BEDS

74,000

In properties across the UK

UNIVERSITY PARTNERS

Work alongside University

partners to deliver their

accommodation needs

RANKED

No. 1

The largest provider of

student accommodation

inthe UK

We provide homes to 74,000 students across 172

properties in25 leading university cities and towns.

We currently partner with over 60universities

across the UK.

Our accommodation is high quality and affordable

as well as safe and secure.

We are committed toraising standards in the

student accommodation sector for our customers,

investors andemployees.

Liverpool

Aberdeen

Edinburgh

Glasgow

Newcastle

Durham

Leeds

Sheffield

Manchester

Leicester

Nottingham

Loughborough

Coventry

Birmingham

London

Medway

Bournemouth

Southampton

Bath

Portsmouth

Cardiff

Bristol

Bedford

Oxford

Reading

CITY

COMPLETED

BEDS (21/22)

2021

rank

1 London 11,65 4

2 Liverpool 6,365

3 Birmingham 5,919

4 Manchester 5,620

5 Leeds 5,610

6 Sheffield 4,498

7 Newcastle 3,763

8 Bristol 3,753

9 Cardiff 3,481

10 Leicester 3,251

Top 10 53,914

Total 73,907

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

Earnings,

occupancy

and demand

We have high visibility over

our earnings, provide sector

leading margins and operate

in astructurally growing sector

withdemographic demand set

togrow by 22% by 2030.

Occupancy is driven by a mix

of nomination agreements

withUniversity partners and

direct-letsales.

Nomination agreements are

contracts between universities and

private accommodation providers

for the provision of beds for

students. These can range from

one year to multi-year contracts up

to 30 years providing a guaranteed

number of beds over a fixed period.

Over half of these agreements are

multi-year deals benefiting from

annual fixed or inflation-linked

rental uplifts.

In addition, we market directly

to students through our website

and agents enabling us to capture

market share from the houses

of multiple occupancy (HMO)

market, an area where we have

seen significant progress in the last

twoyears.

People,

culture and

relationships

We have 1,900 employees who are

committed to the delivery of our

purpose, Home for Success. Our

values underpin how they deliver

day-in, day-out and we encourage

open and honest conversations

with our employees about how

we can improve our offering to

students as well as ways to make

Unite Students a great place to

work. We are a Real Living Wage

employer and provide fair pay to

our employees. Our commitment

to training and developing provides

opportunities for progression

amongst our teams.

Our actions are driven by insights

from our employees and students

and this enables us to work

collaboratively with our University

partners across the range of topics

including sustainability, inclusion,

wellbeing and safety which form

part of student life at university.

Development

and University

partnerships

The quality, location and scale of

our portfolio is a key component

inour business model and long-

termstrategy.

We have a development pipeline

and balance sheet capacity to

provide new growth opportunities

through University partnerships and

targetedacquisitions

Our strategy is focused on optimising

our portfolio through capital

rotation by growing alignment to the

strongest universities and focusing

new investment in London and

prime regional cities.

We offer a flexible, collaborative

and mutually beneficial partnership

approach to meet the needs of

universities and students delivering

accommodation which meets

university and student needs.

Our aim is to provide universities

with a level of control over their

capital investment, ongoing costs

and student experience.

We aim to be a strategic partner to

the strongest universities to deliver

solutions which work for them and

support their growth ambitions.

NUMBER OF EMPLOYEES

1,900

AVERAGE LENGTH OF

NOMINATION AGREEMENTS

7 years

DEVELOPMENT PIPELINE

ALIGNED TO UNIVERSITY

PARTNERSHIPS

83%

OUR FOCUS

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

BUSINESS MODEL continued

HOW WE OPERATE

UNRIVALLED

INSIGHT

We have a 30-year track record in the UK student

accommodation sector, having pioneered its early

development and since created the largest portfolio

in the sector. This knowledge is complemented by

a range of data sources and forecasts, which drive

the evolution of our operating model and capital

allocation decisions.

The customer is at the heart of what we do and

we invest significant time into understanding the

wants and needs of our customers through regular

research and insight. In addition, we actively engage

with university leaders across the UK to ensure we

can best support their growth ambitions.

BEST-IN-CLASS

OPERATING

PLATFORM

We operate and manage 74,000 beds across 25

cities and towns in the UK. Our scale and PRISM

operating platform allow us to deliver the best all-

round customer experience for students, alongside

sector-leading operating margins.

Our teams are central to delivering our purpose of

providing a ‘Home for Success’ for students. Staff

training is focused on student welfare with welfare

leads in every city and peer support provided by

Resident Ambassadors.

We are leaders in sustainability, health, safety and

student welfare in the student accommodation sector.

Segmented

customer offer

We see opportunities to tailor our

customer offer to better address the needs

of different customers as they progress

through university and beyond. PBSA

has typically been a first-year orientated

product and, as a result, the majority

of non-first-year and UK postgraduate

students currently opt to live in the

HMOsector.

This presents a significant opportunity

to capture market share through more

tailored service and property propositions

targeted at students as they participate in

their higher education journey and seek

greater independence over the years.

Passionate

front-line teams

As well as overseeing the day-to-day

running of our properties, our front-line

teams are committed to support students

during their stay. This includes being

available when questions arise, supporting

their overall welfare and in the case of

international students providing cultural

orientation support. Our teams are a much-

valued connection between parents and

students which is key when students first

move away fromhome.

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

PORTFOLIO

ENHANCEMENT

We seek to continuously enhance our portfolio

through acquisition, asset management and

disposals to ensure we have the best buildings,

aligned to the strongest universities.

This is complemented by our significant and

growing development pipeline focused on high-

quality, well-located new buildings in the strongest

university cities in the UK. Opportunities are

sourced and delivered by our experienced in-house

development team. Development activity is funded

through capital recycling, debt facilities and equity

issuance for larger opportunities.

UNIVERSITY PARTNER

OFCHOICE

We partner with universities to deliver their long-

term accommodation strategies. We are proud

of our track record of aligning to the strongest

universities. Our track record and commitment

to students has helped us increase the share of

beds leased to universities over the long-term,

increasing visibility over income.

Our Higher Education Engagement team

work closely with universities to identify new

opportunities for University partnerships.

High-quality

pipeline

Our secured development pipeline totals

6,000 beds with a total development cost of

£967 million to be delivered in the period

to 2026. 100% ofthe pipeline is aligned to

Russell Group university cities, where we

see the strongest student demand.

We have significantly increased our London

pipeline since our 2020 equity issue and

development in London now accounts for

78%by value of our secured pipeline.

Visibility

of income

We lease over half of our beds to

universities through nomination

agreements which have an average

lengthof seven years.

Over half of these agreements are multi-

year deals benefiting from annual fixed

orinflation-linked rental uplifts. These

multi-year agreements are expected to

see rental increases of around 4% for

the2022/23 academic year.

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

BUSINESS MODEL continued

THE VALUE WE CREATE

Key issues

• Value-for-money

• Customer service

• Welfare support

How we engaged

Our front-line property teams engage

with students on a day-to-day basis,

supplemented by peer-to-peer

support provided by our Resident

Ambassadors. We also engage with

students using our MyUnite app and

social media channels.

This is complemented by our

customer research programme

whichincludes surveys on specific

issues, including student views on

climate change.

Value creation in 2021

• Provided 50% rental discounts for

10 weeks between Jan–Mar 2021

• Offered complimentary four-week

tenancy extensions for eligible

students in summer 2021

• Increased peer-to-peer support

for students through our Resident

Ambassador programme

• Helped to provide accommodation

scholarships to 166 students

through the Unite Foundation

Priorities for 2022

We continue to evolve our product

offering to reflect the range of

customers living with us, as has

been shown through our customer

segmentation work undertaken

during 2021.

We continue to engage with students

on a range of issues which impact

on their living habits and, during

2022, will be developing proposals to

address student concerns relating to

climate change which we know from

our student survey in 2021, is an

important issue for them.

Key issues

• Training and development

• Equality, diversity and inclusion

• Health, safety and wellbeing

How we engaged

We provide a range of channels for

our teams to feedback. We hold

regular ‘Unite Live’ sessions with

our CEO and key senior leaders to

provide business updates with the

opportunity to ask questions.

We conduct regular employee

engagement surveys with findings

shared with our teams to help jointly

develop action plans

We also launched our new employee

engagement forum, Culture Matters,

during the year attended by Non-

Executive Director, Ilaria del Beato.

Value creation in 2021

• Flexible working policy

implemented

• Safety enhancements for property

teams including solo protect and

bodycam cameras

• EDI training programme provided

to senior leaders

• Investment in the Learning and

Development team and resources

to support our teams

Priorities for 2022

Our focus is to provide our

employees with a great place to work.

Our EDI strategy will be launched

this year and a new training academy

providing support will be operational

during 2022.

Key issues

• Student welfare

• Operational performance

• Health and safety

How we engaged

Through our Higher Education

Engagement team, we meet

regularlywith leaders across

the UK university sector.

We engage at various levels in

institutions for discussions ranging

from strategic planning to day-to-day

operational requirements.

In addition, we engage actively in

the wider higher education sector,

presenting at conferences and

contributing to higher education

research.

Value creation in 2021

• Provided 37,359 beds to

universities for the 2021/22

academic year

• Progressed University partnership

developments with University of

Bristol and King’s College London

• Secured two new development

sites in London, providing

new affordable housing under

nomination agreements

• Enhanced student welfare

services, including support for

students shielding or self-isolating

during Covid-19

Priorities for 2022

We continue to explore opportunities

for new University partnerships,

where we can work with universities

to unlock operational efficiencies

alongside new accommodation.

We are also set to deliver 1,351

beds in new accommodation for

the2022/23 academic year.

STUDENTS OUR PEOPLE UNIVERSITIES

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

Key issues

• Trust and transparency

• Land use

• Local investment and job creation

How we engaged

Our operational teams are active

intheir communities through

our Company-wide volunteering

programme.

We are relaunching our Positive

Impact programme in 2022, which

includes awards for projects

undertaken by employees aimed

atdelivering measurable benefits

intheir local communities.

We also engage actively with local

stakeholders for our development

projects to ensure the design

ofour buildings, public spaces

andcommunity facilities meets

theirneeds.

Value creation in 2021

• Employment for 1,500 people in

local communities

• Committed to build c.2,000 beds

of new student accommodation

inour communities

• Invested £3 million in initiatives to

reduce our environmental impact

• 296 hours of employee

volunteering in the year

Priorities for 2022

In 2022, we are developing a

long-term community engagement

strategy, which ensures greater

ongoing engagement with local

stakeholders from the development

stage through to operations. This

will focus on promoting healthy and

economically viable communities,

while increasing transparency over

our community impact.

Key issues

• Risk management

• Human rights

• Responsible supply chain

How we engaged

With support from an independent

procurement consultancy, we

undertook a thorough review of our

supplier relationships during 2021.

We continued to ensure our buildings

meet existing and emerging safety

regulations, including planned work

for the remediation of cladding

whererequired.

Value creation in 2021

• Spent £130 million with suppliers

across development activity,

cladding remediation and

refurbishments

• Entered into build contracts for

our development at Derby Road,

Nottingham

• Supported new renewable

power generation through our

first corporate PPA for a Scottish

windfarm

Priorities for 2022

Having conducted a review of our

strategic suppliers during 2021,

we will continue to formalise our

approach with our next tier of

suppliers and introduce a new

Codeof Conduct.

Key issues

• Financial performance

• Strategic direction

• Sustainability and risk management

How we engaged

We engaged regularly with investors

around our financial results as well as

through ad hoc events. In addition,

we hosted a Capital Markets Day in

Manchester to update analysts and

investors on our Group strategy.

Value creation in 2021

• Delivered increased occupancy

of94% and 2.3% rental growth

• 15% growth in adjusted EPS

• Total accounting return of 10.2%

• Receipt of £53 million LSAV

performance fee

• Dividend payout ratio increased

to 80%

• Added c.2,000 new beds to the

secured development pipeline

Priorities for 2022

We are focused on a return to

fulloccupancy and 3.0–3.5% p.a.

rental growth from 2022/23, as

well as delivery of our secured

development pipeline.

Investors are also keen to

understandour long-term

approachto sustainability,

and in particular ourstrategy

toaddress climate-related risks.

See our s172 statement on page 15

COMMUNITIES SUPPLIERS INVESTORS

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

CREATING VALUE

PROVIDING

OPPORTUNITIES

FOR ALL

Government Kickstart Scheme

The Kickstart Scheme is open to people aged 16–24 that are currently

claiming Universal Credit and are at risk of long-term unemployment.

In2021, amongst a challenging recruitment period with a high

numberof vacancies in front line roles, we took part in the scheme.

Designed to help boost youth employment following the Covid-19

pandemic, these roles were required as additional headcount, as

opposed to replacing existing roles. We hired 83 individuals between

the ages of 18–24 who had been on Universal Credit, offering them

sixmonth job placements and training to develop key employment

skills, paid at the National Living Wage. We remain committed to the

Kickstart Scheme moving forward.

For more about this project, go online to: unite-group.co.uk/creatingvalue

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

SECTION 172

Meeting the needs and expectations

of our stakeholders is fundamental

to delivery of our purpose, Home

for Success. Acting in the long-term

interests of the business and all our

stakeholders, including students, our

people, universities, the communities

we operate in, our suppliers and our

investors, is central to the Board’s

decision-making process and shapes

the Group’s strategy. Our Board also

considers the impact of the Company’s

operations on the environment and the

risks posed by climate change.

In all decision making, the potential

impact on our stakeholders is taken

into account, together with the likely

consequences of these decisions in the

long term and also the desirability of

the Company maintaining a reputation

for high standards of business conduct

(see principal decision making as

further detailed on pages 110–114 and

stakeholder engagement on pages

12–13). These considerations are central

to delivering our Home for Success

purpose, which include, for example,

when we offered rental discounts

to students (as further detailed on

page 21) and the development of our

Net Zero Carbon Pathway (as further

detailed on page 26).

The Board maintains oversight of the

Company’s performance, and reserves

specific matters for approval, including

significant new strategic initiatives

and major decisions relating to capital

raising and allocation.

To help the Board understand our

wider stakeholder relationships and

inform the Board’s decision-making,

the Board receives regular updates

from the Executive team, as well as the

wider senior leadership team including

the Group People Director, the Group

Investment & Sustainability Director,

the Group Energy & Environmental

Manager, the Higher Education

Director, Head of Fund Management

and theGroup Legal Director and

CompanySecretary.

Statement by the Directors in accordance with

Section 172(1) of the Companies Act 2006

Through measurement against

long-term objectives, the Board

monitors how management is acting

in accordance with the Board’s agreed

strategy and the long-term interests of

our key stakeholders.

Our investors

The Board recognises that acting fairly

in the interests of all shareholders

increases investor confidence, reduces

our cost of capital and ensures good

governance. This also supports the

ability of the business to invest and

grow through access to capital when it is

required. We provide all investors with

equal access to information through

our public reporting for financial results

and trading statements, as well as

additional disclosures in areas such as

sustainability through our corporate

website. In addition, we engage

regularly with investors at conferences

and ad hoc meetings, which address

investor groups from a range of markets

and of differing sizes.

In 2021, the Remuneration Committee

conducted a consultation with the

Company’s twenty largest shareholders

regarding the renewal of the

Remuneration Policy, which will be

presented to shareholders for approval

at the 2022 AGM. The outcome of

shareholder feedback confirmed

that the current Remuneration

Policy in respect of salaries, pension

contributions and performance-linked

short and long-term incentives remains

appropriate and fit-for-purpose, with

suggested minor refinements to include

a simplified annual bonus deferral

approach. We proposed changing the

financial metrics of the annual bonus

from 70% to 60% allowing for an

increase in non-financial ESG metrics

from 30% to 40% however following

shareholder feedback, the current

70/30 split of financial and non-financial

metrics will remain. Further information

on the Remuneration Policy can be

found in the Remuneration Committee

Chair’s Introduction to the Director

Remuneration Policy on page136.

In 2021, we held a Capital Markets Day

in Manchester where we shared our

strategy and approach to longer term

sustainability, alongside tours of our

operations in the city with our local

teams. Reflecting requests from investors

for greater transparency around the

costs of environmental initiatives, the

presentation provided new disclosure

around planned investments and EPC

ratings across theportfolio.

Through engagement with investors

and conscious of our values, in

particular ‘Doing what’s right’, the

Board oversaw the renewal of the

Group’s revolving credit facility which

was converted into a sustainable loan

agreement with KPIs linked to our

environmental and social initiatives.

The interests of our employees

As a service business, providing homes

for 74,000 young people, often their

first time living away from home, the

Board recognises the importance of our

employees and the role they play in our

business. Engaging with our people has

been especially important through the

pandemic. During 2021, we established

our new employee engagement forum,

Culture Matters, providing a quarterly

forum where employee feedback and

engagement can be tabled formally. Our

Non-Executive Director for Workforce

Engagement, Ilaria del Beato, attends the

Culture Matters meetings and provides

regular updates to the Board, ensuring

consideration is given to employee

needs and concerns. The Board also

understands employees’ views through

our regular employee surveys as well as

‘Unite Live’ sessions with our CEO and

senior leaders enabling employees to

ask questions directly of the CEO and

leadership team. Our commitment to

employee engagement can be seen by

our employee engagement score of 75

(2020: 74).

Further information on employee engagement

can be found on pages 99–102

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

The need to foster business

relationships with our customers,

University partners and suppliers

Customers

Our purpose, Home for Success, is to

provide a safe and welcoming home for

students to engage, learn and thrive

at university, while preparing them

for life beyond. Our student survey

programme provided an opportunity

for students to provide direct and frank

feedback which enabled us to listen

to the student voice to understand

what is important to them during their

time living with us and also on wider

topics. During 2021, climate change

was reported as a top priority for our

customers and accordingly we plan

to increase engagement with them

on how they can develop sustainable

livinghabits.

The Board reviews the Net Promoter

Score from our student surveys. This

helps the Board decide where to invest

in customer service and property

enhancements to ensure we deliver

value-for-money for our customers.

Our city teams engage with our

student customers on a day-to-day

basis, covering welfare issues which

have increased during Covid-19. This

is complemented by our Resident

Ambassadors, who provide peer-to-

peer support to students, and organise

activities in our properties to help

foster like-minded communities.

University partners

Universities are key strategic

stakeholders, directly accounting for

around half of our reservations each

year under nomination agreements and

the other half indirectly through their

students who book directly with us. The

reputation, health and future growth of

our University partners remains central

to our business prospects.

Partnering with the strongest

universities helps us provide a range

of different approaches delivering

solutions which work for our partners

and support their growth ambitions.

Through this partnering, we can explore

opportunities for new University

partnerships, where we can unlock

operational efficiencies, alongside new

accommodation options. This in turn

helps support our improved day-to-day

operations and our longer-term growth.

Our Higher Education Engagement

Team meets regularly with university

leaders and teams at various levels

enabling us to discuss this strategic

planning as well as day-to-day

operational requirements. This

feedback is shared with our Board

who in turn consider our strategies for

delivering value to universities. Our

annual Higher Education Engagement

survey provides the Board with

key insight into our reputation and

performance with our university

partners as further detailed as part of

our Higher Education Trust operational

KPI on page 33. This helps inform

the way we improve our product and

service. The Board is also regularly

updated on trends in the Higher

Education sector in the UK and globally,

which inform the Group’s strategy

around the universities with which it

seeks to partner over the long-term.

Suppliers

We work with a wide range of suppliers

across our operations and development

activities to deliver a high-quality,

affordable customer offer.

Our teams maintained strong

relationships with suppliers and

throughout Covid-19. This was

especially important during Covid-19

when we initially paused development

activity at Middlesex Street, London

and Campbell House, Bristol, and

subsequently resumed activity in

early 2021. The Board recognises the

importance of supplier relationships

and were provided with regular

updates throughout the year which

included feedback following a

thoroughreviewofour supplier

relationships and interviews with

ourtwenty-fivestrategic suppliers.

Our impact on the community

andthe environment

Community

Home for Success is about creating a

sense of belonging and community

both in our properties and beyond.

To maximise the value we create for

communities and ensure our ability to

continue to operate and grow within

them, we seek to build trusted, long-

term relationships with community

partners. This can be seen in our

development activity where we actively

engage with local communities to

ensure the design of our buildings,

public spaces and community facilities

also meets their needs. Our high-

quality properties provide additional

economic benefit for local businesses

and development activity helps

regenerate local areas, deliver public

realm improvements and create new

community spaces. Our operational

and property teams actively engage

with communities through public

services, local authorities and local

businesses. Our Positive Impact

programme encourages our teams to

work with local stakeholders.

The environment

As a responsible business, our wider

stakeholders demand we proactively

manage environmental, social and

governance risks. Moreover, we

understand the significant contribution

that property makes to global CO

emissions and how essential it is that

we play our part in the fight against

climate change while keeping in mind

the likely consequence of our decisions

in the long-term.

The Board has oversight of our

environmental impact through review

of our Sustainability Strategy, which

was approved by the Board in 2020

and launched externally in 2021. This

new strategy specifies clear targets to

reduce our environmental impact over

time. In addition, our Net Zero Carbon

Pathway, published in December 2021,

details our approach to reach net zero

carbon across our operations and

developments by 2030. Engagement

around environmental impact comes

indirectly through feedback from

investors, students, universities and

local communities, all of which is

considered by the Board. During the

year, the Sustainability Committee

considered the Group’s approach to

climate disclosures under Task Force

on Climate-related Financial Disclosure

(TCFD), providing feedback which

has shaped the enhanced reporting

included in this Annual Report.

Further information on our Sustainability Strategy

can be found on pages 34–55

SECTION 172 continued

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

Investors Our investors wanted to understand

our business, its resilience

through Covid-19 and longer term

sustainability, as well as be kept

up-to-date with events impacting

financial returns.

Our 2021 Capital Markets Day set out the Group’s strategy to deliver on

its purpose, ‘Home for Success’. The event focused on enhancing the

student experience and discussed planned investments in the portfolio to

drive rental growth. It also explored the ways in which we are improving

our environmental and social impact and how we plan to deliver financial

returns to our shareholders.

In 2021, we reinstated our dividend payments with a payout ratio of 80%

ofadjusted EPS as market conditions stabilised.

Employees Our employees were concerned

about the impact of Covid-19 on

their health and wellbeing in their

workplace, its impact on our day-

to-day business operations and

the resilience of our longer term

business.

Our employees were concerned

about equality, diversity and

inclusivity (EDI).

We obtained a BSC Covid Secure status to ensure health and safety in our

operations through the pandemic.

We are trialling a new Hybrid Flexible Working Policy and expanded the

training and resources we provide to our people around health, safety and

wellbeing as well as enhancing mental health provision.

In 2021, we hired a Diversity, Inclusion & Wellbeing lead who is

developing our EDI & Wellbeing strategy and helping us embed equality,

diversity, inclusion and wellbeing into our culture through alearning and

development programme.

Customers

Our customers wanted action on

climatechange.

Throughout the year, we engaged with students on a range of issues which

impact on their stay in our properties. In light of their feedback on the

climate change survey, we are developing initiatives focused on how they

can play a role in making their stay more sustainable which we know is an

important issue for them.

Our customers wanted increased

support.

We increased peer-to-peer support for students through our new Resident

Ambassador programme, which provides invaluable support to students in

finding like-minded students. The Resident Ambassadors are focused on

finding the voice of the student community in properties and are working

with our property teams to deliver a personalised student experience.

Our customers wanted more value-

for-money.

We improved our hassle-free, value-for-money offer to attract customers

currently living in houses of multiple occupancy (HMOs) and are seeing an

increase in sales to UK second and third year students and a meaningful

increase in re-booking activity for 2022/23.

University

partners

Our University partners wanted

clarity on the Covid-19 measures in

place across our properties.

Our University partners wanted

to be supported in their growth

ambitions.

We maintained regular contact with our university partners updating

them on the latest Covid-19 measures and working with them to support

students throughout the year. Our properties remained open and

operational throughout the pandemic.

We regularly engaged with university teams to offer a range of different

approaches which ensured we delivered the right solutions for them and

are focused to work with universities to unlock operational efficiencies

alongside new accommodation requirements.

Suppliers Our suppliers wanted longer term

relationships.

To help ensure we have longer term and valuable supplier relationships,

we undertook a thorough review of our supplier relationships during

2021 with support from a third-party procurement consultancy, including

interviews with our twenty-five strategic suppliers.

The community

and the

environment

Our local communities wanted

to ensure they benefit from our

presence in their communities.

We continue to be aware of the

growing importance on climate

change and environmental, social

and governance issues for all of our

stakeholders.

Throughout 2021 and through our development activity, we employ over

1,500 roles in local communities. In addition, we invested £3 million in

initiatives to reduce our environmental impact and over 296 hours of

employee volunteering was carried out in the year.

A structured community engagement strategy is being developed to

ensure greater ongoing engagement from the development stage through

to operations.

Our Sustainability Committee was formed in 2021 to provide formal

oversight and challenge to the execution of the Group’s Sustainability

Strategy launched in 2021. In addition, sustainability performance

measures are being introduced into the Executive remuneration.

STAKEHOLDER STAKEHOLDER CONCERN OUR RESPONSE

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

CHAIR’S STATEMENT

“During the year the business returned to

earnings growth, increased occupancy,

grew the development pipeline and

delivered disposals to enhance the quality

of the portfolio. We also continued to do

what’s right for all stakeholders, including

providing further financial support

to students.”

Richard Huntingford

Chair

Dear Shareholders,

2021 has been a successful year for Unite, in which

we have delivered a strong performance despite the

challenges posed by the Covid-19 pandemic. I would

like to start by thanking all our staff across the group

for the hard work and resilience they have shown

to deliver for our student and university customers

and position the business for future growth. I would

also like to thank our university partners for their

ongoingsupport.

During the year the business returned to earnings growth,

increased occupancy, grew the development pipeline and

delivered disposals to enhance the quality of the portfolio.

We also continued to do what’s right for all stakeholders,

in line with our values, including providing further financial

support to students.

The year in review

2021 saw a recovery in our financial performance and a

return to growth. Across our portfolio, the Group delivered

an improvement in occupancy to 94% for the 2021/22

academic year (2020/21: 88%) alongside 2.3% rental

growth, reflecting strong student demand. Together with a

lower impact from rental discounts offered in response to

the pandemic, this resulted in a 15% increase in adjusted

EPS to 27.6p (2020: 24.0p).

A ROBUST PERFORMANCE

We continued to do what’s right for all

stakeholders, in line with our values

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

Investor demand for the student

accommodation sector remains strong

which, together with rental growth,

supported a 4.6% revaluation uplift in

the property portfolio during the year.

This contributed to 8% growth in our

EPRA NTA to 882p (31 December 2020:

818p) and a return to an IFRS profit

before tax of £343.1 million (2020: loss

of £120.1 million), equating to IFRS EPS

of 85.9p (2020: loss of 31.8p).

The balance sheet remains in robust

health with LTV reduced to 29% following

£261 million of disposals in the year and

receipt of a £53 million performance

fee from our LSAV joint venture. This

provides the financial capacity to deliver

our secured development pipeline and

pursue new growth opportunities.

Reflecting the improving trading

outlook and the Board’s confidence

in the Group’s future outlook, the

proposed dividend for the year has

been increased by 73% to 22.1p.

Delivery of our strategy

Unite is the largest operator of

purpose-built student accommodation

in the UK with 74,000 beds across 25

leading university towns and cities and

celebrated its 30th anniversary this

year. The business growth to date has

been built on the solid foundations

of a best-in-class operating platform,

high-quality portfolio, trusted university

relationships and in-house development

capability. Our aim is to further develop

this platform to create a sector-leading

business, which delivers value for

its customers, attractive returns for

shareholders and has a positive impact

on the environment and wider society.

As outlined at our Capital Markets Day

in October 2021, our stakeholders have

rising expectations around our product,

service and wider business impact on the

environment and society. In response,

our strategy is focused on delivering an

enhanced experience for our customers,

supported by investments in technology

and our estate and a more segmented

customer offer over time.

This activity will support sustainable

rental growth through our value-for-

money offer and margin improvements

over time. Our secured development

pipeline also offers significant visibility

over future growth in earnings and

netassets.

A responsible and resilient business

We are committed to creating a

responsible and resilient business, which

delivers for all of our stakeholders over

the long term. This commitment has

shaped our response to the pandemic,

during which we have acted to protect

the interests of students, our university

partners, employees and investors.

We have placed significant focus on

the health, safety and wellbeing of our

customers and our people by reducing

risks in our buildings as far as possible

and supporting those needing to self-

isolate. Recognising the disruption caused

to students during the national lockdown

in early 2021, we offered additional rental

discounts to students unable to use their

accommodation. We have now provided

over £100 million in financial support to

students during the pandemic. The Board

believes this response has strengthened

our reputation with students, parents,

universities and Government.

Our new Sustainability Strategy, launched

in early 2021, includes stretching

new targets for how we will reduce

our environmental impact, improve

opportunities for employees and raise

standards across the student housing

sector. We published our Net Zero

Carbon Pathway at the end of 2021, which

sets out the activities and investments

required by the business to meet our

2030 net zero ambition. Delivery and

development of this strategy is being

overseen by our new Sustainability

Committee, formed during 2021.

Board changes

This is my first year as Chair, following

Phil White stepping down from the Board

with effect from 31 March 2021.

I would like to thank Phil for his

leadership over many years and his

contribution to the growth of Unite and

making Unite the business it is today.

I have a strong empathy for Unite’s

‘Home for Success’ purpose and have

been hugely impressed by the talent and

commitment of our teams since joining

the business.

We have a strong Board with a mix of

complementary skills as well as diversity

of knowledge, background and gender.

As a team, we bring a range of expertise

from the higher education, real estate,

finance and hospitality sectors. During

the year, Richard Akers stepped down

from the Board in view of his other

business commitments. Richard was

a very valuable member of the Unite

Board with his wealth of experience

of the wider property market and his

sound judgement. On behalf of the

Board, we wish Richard well.

Based on our year end Board

composition, we meet the Hampton

Alexander gender target with 33% of

the Board being female and will look

to further broaden the diversity of our

Board in the coming years.

Looking forward

There is growing demand for UK

Higher Education and an unmet need

for the high-quality, value-for-money

accommodation that we provide. These

drivers support strong organic growth,

underpin demand for our secured

developments and create opportunities

for new growth through development,

strategic partnerships with universities

and potentially expansion into other

complementary living sectors to our

operating platform and customer focus.

As a result, I look forward with great

confidence to the Group delivering

attractive and growing returns to

shareholders over the coming years.

Richard Huntingford

Chair

23 February 2022

TOTAL ACCOUNTING RETURN

10.2%

-0.6%

RENTAL GROWTH

2.3%

ADJUSTED EBIT MARGIN

62.3%

2021

10.2%

2020

-3.4%20192017 2018

11.7%

13.2%

14.4%

20192017 2018

3.4%

3.2%

3.4%

2021

2.3%

2020

2021

62.3%

2020

62.1%

201920182017

71.7%71.3%

67.9%

1. See glossary for definitions and note 8 for alternative performance measure calculations and reconciliations.

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

CHIEF EXECUTIVE’S REVIEW

RESILIENCE AND

FLEXIBILITY

During the Covid-19 pandemic we prioritised working

with our University partners to support students

“The business has seen

a strong recovery in

performance in 2021. We are

well positioned for 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.”

Richard Smith

Chief Executive Officer

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 increased the support

offered to students and our employees

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

29.0p

12.75p

22.7p

10.25p

2017 20192018 2020

22.1p

2021

37.1p

24.0p

34.1p

27.6p

30.3p

20192017 20202018 2021

2020

2018

86p

2019

2017

-32p

95p

-32p

91p

2021

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 announced a dividend of 22.1 p

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

inthe table below.

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 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 restrictions

during the fourth 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.

Financial highlights

2021 2020

Adjusted earnings £110.1m £91.6m

Adjusted EPS 27.6p 24.0p

IFRS profit/(loss) before tax £3 43.1m £(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%

1. See glossary for definitions and note 8 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 8 of the financial statements.

1. The financial statements are prepared in accordance with International Financial Reporting Standards (IFRS). The Group uses alternative performance measures (APMs), which

are not defined or specified under IFRS. These APMs, which are not considered to be a substitute for IFRS measures, provide additional helpful information and are based on

the European Public Real Estate Association (EPRA) best practice recommendations. The metrics are also used internally to measure and manage the business and to align to

the performance related conditions for Directors’ remuneration. See glossary for definitions and note 8 for calculations and reconciliations.

2. Adjustment made to EPRA EPS to remove the impact of the LSAV performance fee. Further details are provided in notes 2 and 8.

ADJUSTED EARNINGS PER SHARE

1, 2

(P)

27.6p

DIVIDEND PER SHARE (P)

22.1p

IFRS BASIC EARNINGS PER SHARE (P)

86p

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

Strategic overview

Having shown real resilience during the

pandemic, the business is now 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

1st-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

-year students

seeking greater independence as well

as an 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.

CHIEF EXECUTIVE’S REVIEW continued

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 the 90% of our rental

portfolio and 100% of our development

pipeline being located in Russell Group

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 completed

the disposals of non-strategic assets

identified following our acquisition of

Liberty Living in 2019.

DELIVERING FOR

OUR CUSTOMERS

AND UNIVERSITIES

ATTRACTIVE

RETURNS FOR

SHAREHOLDERS

A RESPONSIBLE AND

RESILIENT BUSINESS

HOME FOR SUCCESS

OUR STRATEGIC

OBJECTIVES

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

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 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 by our net zero carbon

commitment 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 efficiency initiatives to reduce

consumption, save carbon and ensure

ongoing compliance with regulations,

such as energy performance certificate

minimum standards. 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.

CLASS OF 2021

Students arriving at university in

2021experienced significant disruption

to their studies due to the pandemic.

As a result, we didn’t want to assume

their needs would be the same as

previous cohorts

In response, we hosted roundtables with students and conducted a

survey with applicants, which was used to compare responses with

surveys from 2019 and 2017.

The results flagged preparedness for university and student wellbeing

as key issues. There was also greater desire from students for support

to build communities in their accommodation. These findings helped

inform our student welcome materials and events for the 2021/22

academic year.

For more about this project, go online to:

unite-group.co.uk/partnerships/insights

A best in-class student experience

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

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 10th anniversary this year

and to date our support has helped

provide accommodation scholarships

for over 500 care leavers and

students who are either care leavers

or estranged from their families. We

are committed to delivering positive

social impact for our students and

communities over the long term, which

is reflected in our target to invest 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

£107 million (Unite share: £55 million) of

cladding remediation costs, 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

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.

CHIEF EXECUTIVE’S REVIEW continued

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 re-sold each year

on a direct-let basis or re-priced 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 our rent.

DEVELOPMENT IN THE

HEART OF LONDON

At Aldgate east, London, we are

set to deliver 920 new beds for the

2022/23 academic year. The scheme,

located on Middlesex Street, is our

largest ever development with a total

development cost of £187 million

We are in advanced negotiations with a high tariff University

partner for a five-year nomination agreement for this development

for approximately two thirds of the total beds. The project is

expected to realise £109 million in NTA uplift by completion and

add 2.0p to EPRA EPS.

For more about this project, go online to:

unite-group.co.uk/our-portfolio/development-pipeline

Investing to enhance our estate

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

OPTIMISING OUR

PORTFOLIO

Development and University

partnerships are significant drivers

of growth

We have secured development and a University partnerships

pipelineof £967 million representing c6,000 beds for delivery

ofthenext four years.

In 2021, we opened Artisan Heights in the centre of Manchester,

a £57 million development providing over 600 beds. We are due

to open two new properties in time for the start of the 2022/23

academic year at Middlesex Street, Aldgate, London and Campbell

House in Bristol. Middlesex Street will be a landmark asset in

partnership with King’s College London. Campbell House is let to the

University of Bristol under a 15-year nomination agreement.

Both UCL and University of the Arts London are developing new

campuses in Stratford, London which are due to bring a further

10,500 full-time students to the area from the 2022/23 academic

year. We have exchanged contracts to acquire a c.1,000 bed

development site in Stratford, east London on a subject to planning

basis, further expanding our footprint in London.

Growth through development

andUniversity partnerships

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 Higher Education

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 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 Higher Education

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.

For more about this project, go online to:

unite-group.co.uk/our-portfolio/development-pipeline

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

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 could be better 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-1st-

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 already 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.

CHIEF EXECUTIVE’S REVIEW continued

NET CARBON ZERO

BY 2030

In December 2021 we published our

Net Zero Carbon Pathway which sets

out our approach to achieving our

carbon reduction targets

These targets have been validated by the Science Based Targets

initiative. We are developing individual plans for all of our buildings

to deliver energy efficiency improvements and will complete these

in 2022. A further milestone in the year was the purchase of

around 20% of our electricity direct from a windfarm in Scotland

under a new corporate power purchase agreement, a key step

towards fulfilling our RE100 commitment to purchase 100%

renewable electricity by 2030.

Our broader Sustainability Strategy is focused on creating a

business which will shape a positive future for generations to

come and enhancing the contribution that we make to society.

Weare engaging with our customers, partners and suppliers

toadopt new ways of working which support society’s wider

mandate to do the right thing.

For more about this project, go online to:

unite-group.co.uk/sustainability/our-net-zero-pathway

Improving our environmental and social impact

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

very confident in the prospects for

thebusiness.

Richard Smith

Chief Executive Officer

23 February 2022

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

18-year-old population and participation rate

18-year-old participation rate (LHS)

18-year-old population (RHS)

1,000

000s

900

800

700

25%

30%

40%

35%

45%

600

500

2015 2018 2021 2024 2027 2030

730

893

38%

YoY change in university acceptances

by domicile and tariff group (2021/22)

Source: UCAS

10,000

5,000

-5,000

-10,000

-15,000

-20,000

Non-EU MediumEU

Domicile Tariff Group

Lower Higher

The number of applicants and the number of students

accepted onto courses in 2021 was 750,000 and 562,000

respectively (2019: 729,000 and 570,000). The 1% year-on-year

(YoY) reduction in acceptances reflected a record participation

rate among UK 18-year-olds and further growth in non-EU

students but this growth was more than offset by a 50%

reduction in EU acceptances following Brexit.

The reduction in EU student numbers was higher than our

initial expectations for a 40% fall in demand post-Brexit. It

is unclear at present to what extent this has been driven by

increases in tuition fees and loss of access to tuition fee loans

for EU students or the influence of travel disruption caused

by the pandemic. Reflecting this impact, our share of beds let

to EU students reduced to 5% for the 2021/22 academic year,

down from 9% in the prior year.

Higher tariff universities once again outperformed, reflecting

an ongoing flight to quality by students, with a 1% increase in

acceptances, which compared to reductions of 4% and 2% for

medium and lower tariff institutions respectively.

The initial applications data for the 2022/23 academic year

is encouraging, with overall applications up 7% on pre-

pandemic levels in 2020/21. This reflects a 5% increase in

applications by UK school leavers, who represent our key

customer group, driven by a record application rate of

43.4% (2020/21: 42.6%) and demographic growth. Non-EU

applications increased by 5% year-on-year, reflecting strong

demand from China and India as well as less mature markets

such as Nigeria. Overall, applications from international

students are unchanged year-on-year, reflecting a further

reduction in demand from EU students following Brexit.

The Government has announced that A-level grading will

return to pre-pandemic levels over the next two years with

grading in 2022 to reflect a midway point between 2021

and 2019. This clarity will support universities in their offer

making to students for the 2022/23 academic year and is

expected to result in a more normal distribution of students

among institutions next year.

Growing demand for Higher Education

The long-term outlook for student numbers remains strong.

Demographic growth is significant over the next decade,

with the 18-year-old population returning to the height of

2010 by 2024 and continuing to grow strongly thereafter.

This would imply demand for around 200,000 additional

UK undergraduate places by 2030 at current participation

rates. We do not expect this new demand to be distributed

evenly, with growth likely to be concentrated in high-tariff

and teaching-led Universities delivering strong graduate

outcomes. Regional differences in demographics are also

significant. London sees the greatest demographic growth

over the next 10–15 years and is therefore expected to see

the greatest increase in student demand.

RECORD STUDENT

NUMBERS AND

PARTICIPATION RATES

Full-time student numbers reached

2.1 million for 2020/21

MARKET OVERVIEW

The Government is also targeting further growth in

international student numbers by actively seeking to

increase the UK’s share of international students from Africa,

the Middle East and Asian countries, outside of China.

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

60%

65%

75%

80%

85%

90%

95%

70%

100%

Source: JLL

Occupancy comparison (Unite vs sector peers)

2020/21 2021/22

83.8%

UK PBSA Unite Sector peers

88.2%

88.0%

94.0%

74.9%

83.3%

UK student accommodation investment volumes

Portfolios Single assets

100

£bn

2012 2013 2014 20162015 2019 202020182017 2021

Source: CBRE

Indicative direct-let yields by location

31 Dec 2021 31 Dec 2020

London

3.65–4.10%

3.90–4.25%

Prime regional

4.50–4.75%

4.50–5.00%

Major regional

5.00–5.75%

5.00–6.00%

Provincial

6.00 –7.50%

6. 25 –7.5 0%

MARKET OVERVIEW continued

Resilient occupancy and rental growth

The UK PBSA market delivered rental growth of 1.7% for

the 2021/22 academic year, broadly in line with the 1.6%

delivered in 2020/21, with growth somewhat depressed by

vacancy in some markets as a result of disruption created by

the pandemic. JLL’s Student Housing Leasing Survey reported

a recovery in occupancy to 88% in 2021/22 from 83% in

2020/21 across the sector. Our occupancy and rental growth

in 2021/22 (94% and 2.3% respectively) both outperformed

the wider sector, reflecting the strengths of our best-in-class

operating platform, income visibility through our nomination

agreements and alignment to the strongest universities.

For the 2021/22 academic year, average weekly ensuite

rents for corporate PBSA ranged from £130–235 per week

in major regional markets and £265 per week in London.

This compares to our average weekly ensuite rent of £141 in

regional markets and £222 in London. The largest segment

of PBSA demand remains at a price point of between £100

to £150 per week, where there is also the opportunity to

attract and retain more non-1st-year students from the

private rented sector. Around two thirds (66%) of our beds

inregional markets are priced below £150 per week.

Current UK inflation implies an increase in rental growth

from multi-year nomination agreements with fixed or

inflation-linked annual rental increases for 2021/22 to

around 4%. Based on our expectation of strong student

demand and a further easing of international travel

restrictions, we anticipate a return to full occupancy and

rental growth of 3.0–3.5% in 2022/23.

of local universities, building amenities and fire safety. Larger

investors also recognise the value created by specialist

operating platforms, which are capable of delivering a higher

consistency of product and service to customers alongside

cost efficiencies through scale. As a result, we would expect

larger operating platforms of 10,000 beds or more to attract

a portfolio premium if they come to the market.

Strong investment appetite

The PBSA sector’s strong fundamentals and a track record

of consistent rental growth continues to attract significant

volumes of capital. Approximately £3 billion of assets traded

in 2021, below the volumes seen in the previous two years

due to a shortage of available stock in the market. North

American investors were the dominant buyers of portfolios

during the year, reflecting investment appetite from private

equity buyers.

There remains a strong appetite to deploy capital in the

sector, with investment demand principally coming from

international or institutional investors. Investors are

increasingly focused on the strength of location, the health

Valuation growth supported by yield compression

Capital values rose across the student accommodation

sector in 2021, driven by rental growth and yield

compression. Yields for UK student accommodation reduced

by c.10–25 basis points in the year, reflecting increased

competition for assets from larger operators and private

equity as well as the attractive income characteristics

of the sector. We have continued to see capital growth

outperformance by London and other prime regional

markets. However, there has also been increased investor

interest for assets in weaker locations and cities in the past

12 months.

Looking forward, we see yields remaining broadly stable

in2022, albeit with continuing polarisation between

primeand secondary markets in a competitive market

forstudent numbers.

An indicative spread of direct-let yields by location is

outlinedbelow:

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

Source: Cushman & Wakefield

10,000

15,000

20,000

25,000

30,000

5,000

35,000

New supply of PBSA beds

Provincial London

2016 2018 20202017 2019 2021 2022F

New supply slowing

The PBSA sector now provides homes to over 700,000

students, representing around one-third of the UK’s student

population. At this level, there still remains a c.365,000

shortfall in beds compared to the numbers of 1st-year

and international students, before taking account of the

increasing numbers of 2nd and 3rd-year students who are

choosing this type of accommodation.

2021 saw the delivery of an additional 23,000 beds across

37 different UK markets, around two thirds of which was

delivered in the 25 cities in which we operate. There has

been a reduction in new supply in the past two years, which

is partly explained by short-term disruption created by

the pandemic but also some more fully supplied markets

adjusting to higher levels of recent supply. New supply in

London remains constrained, with only 3,000 beds delivered

in the year, reflecting limited land supply and more restrictive

planning requirements for student accommodation in the

new London Plan. We expect new supply to run at around

15,000–25,000 beds p.a. in the nexttwo to three years.

The new London Plan requires new student accommodation

developments to secure a nomination agreement with

one or more Higher Education providers as well as the

provision of at least 35% of units at affordable student rents.

Moreover, local authorities are increasingly keen to promote

new supply in the Build to Rent (BTR) sector, creating

increased competition for development sites in major UK

cities. We see a trend towards mixed-use planning consents,

incorporating BTR units alongside student accommodation.

These factors increase barriers to entry for new PBSA

supply, however we remain confident in our ability to secure

new development opportunities thanks to our long-held

university relationships, flexible operating platform and

highly experienced development team.

Development costs increasing

Demand in the UK construction sector has recovered

strongly following the initial slowdown in activity created by

the pandemic. This coupled with supply chain disruption,

increasing raw material costs and pressures on availability

of skilled labour in some trades has led to inflation in build

costs of around 5% during 2021. We expect build costs to rise

by around a further 3–5% in 2022, followed by a return to

increases of 2–3% from 2023 as the market adjusts to current

pressures around supply of materials and labour.

Land prices have increased in regional markets over the

past year despite rising build costs. This reflects increasing

demand from PBSA developers as well as competing uses

such as BTR, scarcity of sites in some cities and rising

investment values. Land price inflation remains more muted

for larger sites capable of delivering greater than 500 beds,

which remain the target for our land purchasing.

Growing focus on environmental sustainability

There is a growing focus on environmental sustainability

in the student accommodation sector. Many governments

reiterated pledges to reduce emissions at COP26 and it is

clear that business and industry will need to play a big part

in delivering these changes. Increasing Minimum Energy

Efficiency Standards (MEES) will also require significant

investment across the purpose-built sector and HMOs to

meet new requirements for EPC ratings of C by 2027 and B

by 2030 for private rented property. There are significant

challenges in improving older building stock and many

HMOs are not fit for purpose. We estimate a potential cost

to student HMO landlords of £10–12 billion for required

investments in energy efficient technologies and building

fabric based on an average improvement cost of £40,000–

50,000 for a typical shared property. These costs may reduce

through technological innovation, Government subsidy or

exemptions but private landlords will still be required to

make a significant investment in their properties over the

next decade.

Our research shows that students are more concerned

about climate change than any other issue. We expect

this tobecome a major influence in their choice of

accommodation, impacting occupancy and rental growth

over the long-term. Our sector leadership in sustainability,

reflected in our ambition to achieve net zero carbon

by 2030, creates a significant opportunity to positively

differentiateour customer offer and attract more students

from the HMO sector over time.

We are yet to see clear evidence of a ‘green premium’ or

‘brown discount’ emerge for PBSA in investment markets

but expect this to happen over the medium-term, as has

already been seen in the office sector, as sustainability

considerations grow in importance for stakeholders.

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

OUR STRATEGY

Our strategic objectives underpin

thedelivery of our strategy

DELIVERING FOR

OUR CUSTOMERS

AND UNIVERSITIES

ATTRACTIVE

RETURNS FOR

SHAREHOLDERS

A RESPONSIBLE

AND RESILIENT

BUSINESS

• Dividend payout of 80% of adjusted EPS

• Recovery in earnings and return

tonormalised growth of 6–8% p.a.

• Return to pre-Covid-19 adjusted

EBITmargins

• Increasing our alignment to

thestrongest universities

• Sourcing new growth opportunities

through development and

Universitypartnerships

• Disciplined capital management

with new capital to pursue

growthopportunities

• Delivering a best-in-class

studentexperience

• Investment to enhance our

physicalestate

• Front-line service excellence training

• Investment in our digital capabilities

and technology platform

• Segmentation of our product

andservice

• Maintaining our proactive response

tocladding risk

• Becoming net zero carbon by 2030

• Creating resource efficient assets

andoperations

• Enhancing the health and wellbeing

ofour employees and students

• Providing opportunities for all through

investment in the Unite Foundation

and the Leapskills programme.

• Raising standards for the student

housing sector

CURRENT STRATEGIC FOCUS

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

• Return to 97% occupancy and

3.0–3.5% rental growth

• Drive adjusted EBIT margin

improvement through income

growth and cost discipline

• Secure new sites for the

development pipeline

• Secure planning on 2024 and 2025

development completions

• Targeting £200–250 million of

disposals to enhance the quality

of our portfolio

• Earnings per share

• NTA per share

• Total accounting return

• Like-for-like rental growth

• Adjusted EBIT margin

• LTV

• Delivered 94% occupancy and

2.3%rental growth for 2021/22

academic year

• Added £371 million of developments

toour secured pipeline

• Secured planning approval for

our Derby Road development

inNottingham

• £261 million of disposals, increasing

portfolio quality

• Received £53 million performance

feefrom LSAV

• Improve Net Promoter Score

• Increase rebooking rate with

direct-let customers

• Successful delivery of three

assetmanagement projects in

Manchester properties for 2022/23

• Wider roll-out of customer

segmentation trials

• Continued investment in our

technology platform (PRISM)

• Deliver two new developments

• Increase number of nomination

agreements

• Net Promoter Score

• Higher Education Net Promoter Score

• Customer retention

• New nomination agreements

andUniversity partnerships

• Social advocacy

• Provided 50% Covid-19 rent discounts

for 10 weeks for students not living

intheir accommodation

• Complimentary four-week tenancy

extension over summer 2021

• Launched our new group-booking tool

• Re-launched our Resident Ambassador

programme, offering peer-to-peer

support to students

• Delivered an enhanced solution

forstudent room moves

• Postgraduate trials carried out

atsevenproperties

• Complete costed asset transition

plans for the entire portfolio

• Deliver c.£10 million of

energyinvestments

• Increase engagement with

studentsand employees around

sustainable behaviours

• Continue to progress cladding

remediation programme

• Enhanced investment in Unite

Foundation

• Re-launch Leapskills programme

forschool leavers

• Carbon emissions

• Energy and water intensity

• EPC ratings

• Employee engagement score

• Investment in social initiatives

• Gender and ethnic diversity mix

• Unite Foundation scholarships

• GRESB rating

• Number of reportable accidents

• Launched new Sustainability Strategy

in March 2021

• Net Zero Carbon Pathway published,

including targets validated by the SBTi

• Full provision made for replacement of

HPL cladding on 24 high-rise properties

• Relaunched our Positive Impact

scheme for community engagement

• Issued our first sustainability-

linkedloan

• GRESB score improved to 85 (2020: 81)

2021 IN REVIEW 2022 OBJECTIVES LINKS TO PERFORMANCE

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

ADJUSTED EARNINGS

PER SHARE

(P)

27.6p

EPRA NTA

PER SHARE

(P)

882p

TOTAL ACCOUNTING

RETURN (%)

10.2%

LOAN-TO-VALUE

RATIO (%)

29%

30.3p

2017

34.1p

2018

37.1p

2019

24.0p

2020

27.6p

2021

14.4%

2017

13.2%

2018

11.7%

2019

-3.4%

2020

10.2%

2021

29%

31%

2017

29%

2018

37%

2019

34%

2020 2021

1. The financial statements are prepared in accordance with International Financial Reporting Standards (IFRS). The Group uses alternative performance measures (APMs), which

are not defined or specified under IFRS. These APMs, which are not considered to be a substitute for IFRS measures, provide additional helpful information and are based on

the European Public Real Estate Association (EPRA) best practice recommendations. The metrics are also used internally to measure and manage the business and to align to

the performance related conditions for Directors’ remuneration. See glossary for definitions and note 8 for calculations and reconciliations.

2. 2017 & 2018 based on EPRA NAV as previously reported.

2017 20212019

720p

790p

847p

818p

882p

20202018

KEY PERFORMANCE INDICATORS

The business delivered a strong performance in 2021

FINANCIAL KPIs

Link to Remuneration

Bonus and LTIP

Measure

Our EPRA NTA per share

measures the market value

of rental properties and

developments less any

debt used to fund them

plus any working capital

inthebusiness.

Performance in 2021

The NTA increase has been

driven by an increase in

the value of the Group’s

property portfolio (due

to rental growth, higher

occupancy and modest

yield compression),

development surpluses,

recognition of the remaining

LSAV performance fee

and a further provision

forthe replacement of

HPLcladding.

Link to Remuneration

Bonus and LTIP

Measure

The total accounting return

to shareholders is the ratio

of growth in EPRA NTA per

share plus dividends paid

as a percentage of opening

EPRA NTA per share.

Performance in 2021

Growth in EPRA NTA was the

key component of the total

accounting return delivered

in the year, alongside

dividends paid of 19.25p.

Link to Remuneration

Bonus

Measure

Our ratio of net debt

toproperty values, on

asee-through basis.

Performance in 2021

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.

Link to Remuneration

Bonus and LTIP

Measure

Our measure of profit per

share reflects the level

of income delivered by

operating activities.

Performance in 2021

The business delivered

a strong recovery in

financial performance

in 2021, despite some

ongoing disruption created

by Covid-19, delivering

adjusted EPS of 27.6p,

up 15% YoY. This reflects

higher occupancy for the

2021/22 academic year

and a lower impact from

rental discounts offered to

students in response to the

pandemic.

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

SAFETY (NUMBER

OF ACCIDENTS)

CUSTOMER

SATISFACTION

EMPLOYEE

ENGAGEMENT

HIGHER EDUCATION

TRUST

2017

2018

2019

2020

2021

2017

2018

2019

2020

2021

N/A

2020

2017

2018

2019

2021

3. NPS in grey.

2018 2019 2020 20212017

N/A

OPERATIONAL KPIs

Link to Remuneration

N/A

Measure

The number of RIDDOR

reportable accidents in our

operations each year acts

as an indicator of our health

and safety management.

Performance in 2021

There were seven reportable

incidents in 2021. Five

reports comprised of

incidents or accidents that

resulted in our employees

being absent from work

for over seven days. The

majority of these incidents

related to manual handling

or slips, trips and falls.

Priorities going forward

Our focus for 2022

will be refreshing our

manual handling training

for employees which

incorporates a focus on slips,

trips and falls enabling us to

address the leading cause of

such incidents

Link to Remuneration

Bonus

Measure

Net Promoter Score (NPS)

isa new measure introduced

in 2020 which provides

a commercially relevant

customer experience

measure.

Performance in 2021

The Net Promoter Score

for the 2021 student arrival

check-in was 35 after

adjusting for properties that

were non comparable due

to cladding remediation

works. An improvement

in the score followed

investment in driving up

product quality e.g. wifi

and the Turnaround Room

process and cleanliness

scores. In addition, there

were improvements in a

number of areas such as

information before arrival,

help and support and

making customers feel

safe. Sites where the new

post-graduate product

was trialled saw a positive

upward trend.

Priorities going forward

With the business returning

to a normal operating

environment, further

improvement in NPS is

anticipated. NPS will be used

more regularly throughout

the year.

Link to Remuneration

N/A

Measure

Independent, anonymous

surveys are undertaken

by an external provider

amongst our employees to

gain regular and insightful

feedback on how they feel

and how we can continue to

improve. Scores are based

on the methodology adopted

by an external provider.

Performance in 2021

During Covid-19 a number

of employee surveys were

undertaken to check the

welfare of our teams. The

participation score on the

main survey saw 91% (2020:

69%) of employees complete

the survey.

Priorities going forward

An annual survey will be

undertaken supplemented

by a number of other

engagement channels that

have been put in place

during Covid including

UniteLive.

Link to Remuneration

Bonus

Measure

Regular surveys are

undertaken with our Higher

Education customers to

understand their perception

of Unite and how we

meet their needs. In 2021

we transitioned to a Net

Promoter Score.

Performance in 2021

Due to Covid-19 pandemic

this was our first survey

since 2019. The score fell

slightly but the decline was

lower than the majority

of other companies which

saw sharper drops during

Covid-19. Scores for those

University partners with

whom there was a pre-

existing relationship pre-

pandemic were particularly

encouraging with our Covid

response consolidating our

reputation with them.

Priorities going forward

Through our partnerships

we anticipate a continuous

improvement of the NPS.

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

SUSTAINABILITY REPORT

OUR SUSTAINABILITY

STRATEGY AND PROGRESS

IN 2021

NET ZERO

CARBON

RESOURCE

EFFICIENT

Our Sustainability Strategy

consists of five pillars covering

environmental, social and

governance issues. This page

setsout the highlights in year

andour focus for 2022.

This year our sustainability activities

were enhanced with the formation

ofa Group Sustainability Committee

to oversee the implementation of

our Sustainability Strategy.

For more about our Sustainability Committee

go to pages 126–129

COMMITMENT

Becoming net zero

carbon for both

our operations and

developments by 2030

PERFORMANCE

ON TRACK

• April – Signed first Corporate

Power Purchase Agreement

• December – Published net

zero carbon pathway for

operations and developments

with science based target

accredited by SBTi, and

alignment with RIBA Climate

Challenge benchmarks

for embodied carbon and

operational energy for future

developments

• Creation of individual

assettransition plans for

everyproperty

2022 FOCUS

• Ongoing development of the

Sustainable Construction

Framework

• Reduce embodied carbon

in new developments,

refurbishments and projects

COMMITMENT

Reducing waste, energy

and water use and helping

students adopt life-long

sustainable behaviours

PERFORMANCE

ON TRACK

• Property improvement

projects including LED lighting,

heating controls and air-

source heat pumps

• Completed scenario based

analysis of material climate-

related risks in line with TCFD

• Trials commenced on reducing

water usage in properties

• Piloted new waste and

recycling initiatives

2022 FOCUS

• Continued roll-out of water

and energy efficient initiatives

ENVIRONMENTAL, SOCIAL

AND GOVERNANCE

For more about this project, go online to:

unite-group.co.uk/sustainability

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

“In March 2021 we launched our

Sustainability Strategy which builds on our

purpose, Home for Success, and our values.”

Richard Smith Chief Executive Officer

HEALTH &

WELLBEING

OPPORTUNITIES

FOR ALL

RAISING

STANDARDS

COMMITMENT

Enhancing the health

and wellbeing of

our employees and

students

PERFORMANCE

AHEAD OF TARGET

• Improved employee

engagement score

of 75 (2020:74)

• October – Launch of

newemployee Culture

Mattersforum

• Launch of a range of new

student support policies and

procedures which focus on

enhanced student wellbeing

2022 FOCUS

• Continued monitoring of

employee and student

engagement/listening forums

• Refreshed student

supportprogramme

COMMITMENT

An environment where

all can succeed, whatever

their background,

gender or ethnicity

PERFORMANCE

AHEAD OF TARGET

• Six module EDI leadership

workshop undertaken

byleaders

• Appointment of EDI &

Wellbeing lead

• Ongoing commitment to invest

in social initiatives

• Peer-to-peer support from

Resident Ambassadors

programme

• Increased support for Unite

Foundation providing a long-

term funding agreement to

deliver their five-year plan

2022 FOCUS

• Relaunch of Leapskills and

Positive Impact employee

programmes

• Focus on succession planning

and supporting personal

development through launch

of new training academy

• Introduction of mentoring for

talent with high potential

COMMITMENT

Raising standards across

the student housing

sector for governance,

safety and transparency

PERFORMANCE

ON TRACK

• GRESB score improved

to 85 (2020:81)

• Climate risk scenario

modelling undertaken in

accordance with TCFD

• Over £100 million investment

in supporting students during

Covid pandemic

2022 FOCUS

• Increase visibility and

assurance around

sustainability performance

with greater focus on

impactmeasures

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

During the year, we have recalibrated our thinking based on the latest and emerging legislation and good practice

requirements. For example, a major focus for our ‘Opportunities for All’ pillar has been raising awareness of equality,

diversity and inclusion and promoting career opportunities within our business for members of teams.

This provides a strong foundation for delivery of our future targets.

SUSTAINABILITY REPORT continued

Our Sustainability Strategy helps us bring together a

range of activities, some of which are already underway

in the business, while prioritising areas of focus which

are of most interest to our stakeholders

Key performance indicators relating to environmental metrics

2020 2021 YEAR ON YEAR CHANGE

Average Scope 1+2 (location

based) emissions intensity –

tonnes CO

e/bed/yr

0.61 0.60 1.6% reduction

Average energy intensity –

kWh/bed/yr

2,821 2,970 5.3% increase

EPC ratings as %

of total floor area

A–B C D–G A–B C D–G A–B C D–G

35.1% 22.1% 42.8% 35.1% 21.8% 43.1%

0.27% reduction in A–C rated

sites

Total social contribution £1.8 million £1.8 million No change

GRESB rating 81**** 85**** 4 point improvement

Water intensity per m

36.6 39.8 8.7% increase

% of electricity from

renewable sources

74.0% 99.9% 35.0% increase

Investment in energy

efficiency initiatives (£m)

– £3 million £3 million increase

Scope 1 and location based Scope 2 emissions intensity fell by 1.6%, as although energy intensity rose by 5.3% as occupancy

returned to near pre-pandemic levels, it was mitigated by a 9.8% reduction in grid electricity carbon intensity from 2020 to

2021. Proportion of A–C rated sites by floor area fell slightly by 0.27%. This is where a site which has not yet benefited from

energy efficiency improvements had a new EPC produced to replace an expired EPC, with a small change in score pushing it

across a rating boundary.

Water consumption increased slightly, reflecting the reduced opportunity to fix leaks in student bedrooms as a result of

Covid-19 management practices. The commencement of our first corporate PPA in 2021 helped raise the proportion of

electricity purchased that is REGO backed up to 99.9%.

Overall our GRESB rating rose by 4 points to 85 reflecting our ongoing progress implementing our Sustainability Strategy.

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

Our stakeholder materiality review, undertaken

in 2020, continues to inform our actions

2021 saw significant progress towards our Net Zero Carbon

goal. We published our Net Zero Carbon Pathway which

includes our approach to achieving our carbon reduction

targets, which have been validated by the Science Based

Targets initiative. We are developing individual plans for each

of our buildings, which will be completed in 2022, setting out

the energy efficiency improvements required to fulfil our

1.5

C SBTi validated science based carbon target. Another

key milestone for 2021 was the purchase of around 20% of

our electricity direct from a windfarm in Scotland under a

new corporate power purchase agreement. This is a key step

towards fulfilling our RE100 commitment to purchase 100%

renewable electricity by 2030.

We calculate and report our emissions in line with the GHG

Protocol Corporate Standards and UK Government guidelines,

including both location based and market based Scope 2

emissions. As a TCFD supporter, we disclose details of the

most significant climate-related risks and impacts we face,

including physical and transitional risks, and we are factoring

these into our plans and activity to reduce exposure and

mitigate impacts, details can be found on pages 51–52.

Detailsof non-financial reporting can also be found on

page46 and further details can be found on our corporate

website at www.unite-group.co.uk/sustainability.

We remain committed to transparency and disclosure on ESG

issues, achieving further improvements in our 2021 Global

Real Estate Sustainability Benchmark (GRESB) score and

achieving a ranking of 1st out of 7 in the European residential

listed sector. Our full GRESB scorecard can be viewed on

our corporate website, along with our CDP and EPRA sBPR

disclosures and benchmark reports.

All our actions are focused on creating a business which

will shape a positive future for generations to come. This

means we need to support our teams in delivering on our

commitments and also work with our customers, partners

and suppliers to adopt new ways of working which support

society’s wider mandate to do the right thing.

The following pages provide an update on our Sustainability

Strategy progress during the year.

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

SUSTAINABILITY REPORT continued

We are the UK’s first purpose-built

student accommodation provider

to commit to achieving net-zero.

InDecember 2021 we published our

NetZero Carbon Pathway, which

confirmed a focus to:

1. Reduce operational energy

consumption: Based on a target of

28% reduction in energy intensity by

2030 against 2019 base year. This target

is inline with the Carbon Risk Real

Estate Monitor (CRREM) 1.5°C energy

reductionpathway.

2. Invest in renewable energy: We have

made a commitment under the RE100

programme to source 100% renewable

electricity by 2030 and will seek to

purchase more energy in the future via

corporate power purchase agreements

that support the development of new

renewable energy generation capacity.

3. Reduce embodied carbon: Based on

targets in line with the RIBA Climate

Challenge programme, we target a 48%

reduction in embodied carbon by 2030.

4. Mitigate residual carbon: We will

offset any residual operational or

development emissions that cannot

be removed completely using certified

carbon offsets, aiming to prioritise

measures that actively remove

atmosphericcarbon.

We have already invested over £30 million

in energy efficiency since 2014 and

have identified a further c.£100 million

of additional opportunities for capital

investment to achieve carbon reduction

targets. This represents an annual

investment of around £10 million in energy

initiatives going forward (equivalent to

£5–7million p.a. on a Unite share basis).

Our in-house energy and environment

team has developed a new modelling tool

that is being used to produce individual

plans for all of our properties, setting out

a route to net zero carbon. Work to meet

targets for new developments will focus

on site selection, material selection, design

optimisation andcutting construction site

impacts. Weare developing a Sustainable

Construction Framework to support

this work which will help ensure that

sustainability considerations are factored

into each stageof a project.

NET ZERO CARBON

Becoming net zero carbon for both our operations and developments by 2030

THE FOUR Cs

Impact assessments informing asset

transition plans

We are identifying and delivering operational performance improvements

in our estate. Working closely with our estates and operations functions,

our in-house energy and environment team has developed a modelling

tool to help chart each building’s route to net zero. Taking in real life energy

consumption data, information from detailed site surveys and insight from

previous energy efficiency improvements, the tool calculates the current

breakdown of energy consumption by usage e.g. as lighting, space heating,

hot water, small power, and landlord plant, and models the potential

impact of different combinations of energy efficiency measures.

Their impact is assessed against what we call the four Cs: consumption,

carbon, cost and compliance. The findings from each building’s plan feeds

directly into our asset management and capital investment planning,

ensuring a holistic approach to improving asset performance.

CASE STUDY

For more about this project, go online to: unite-group.co.uk/sustainability

CONSUMPTION

Energy consumption

reductions achieved

COST

Both capital investments

required and the impact on

utility costs

CARBON

Impact on building

emissionsincluding landlord

and tenant areas

COMPLIANCE

The impact on future EPC rating

to ensure compliance with

forthcoming minimum energy

efficiency standards

ASSET PERFORMANCE

This approach is being utilised

in the refurbishment of Parkway

Gate in Manchester, which will

becompleted in time for students

to occupy in September 2022.

Thebuilding will be adapted to

reduce energy consumption by

30%, in line with our net zero

carbon target.

Parkway Gate, Manchester

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

CASE STUDY

OUR VISION FOR

NET CARBON

ZERO BUILDINGS

Our vision is to develop net zero carbon

buildings and our current projects in

development are incorporating aspects

which reduce both embodied carbon

and operational energy

By working with our supply chain, we are looking at how net

zero carbon can be built into the construction process through

optimising design, using low-carbon materials and using good

construction sitepractices.

Across our existing estate, we are rolling out a range of measures to

reduce energy use and carbon emissions. Such initiatives include

decarbonising our energy supply through the purchase of 100%

renewable electricity, reducing heat loss through upgrades to

insulation and glazing, installing solar panels on existing buildings

where feasible, introducing smart building controls and using high

efficiency LED lighting and controls to reduce energy use.

For more about this project, go online to:

unite-group.co.uk/sustainability/our-net-zero-pathway

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

SUSTAINABILITY REPORT continued

As well as cutting carbon in line

with our net zero carbon target,

we are committed to reducing

our wider environmental impact.

We are focused on cutting energy

and water use, reducing our

impact through our supply chain

and managing our exposure to

climateand wider environmental

risks to create an efficient and

resilient business.

Key to this is identifying the right

solutions, 2021 saw us trialling a

number of new initiatives. These

included water saving measures

suchas direct-flush toilets with

no cistern, and retrofit packaged

air-source heat pumps to replace

electrichot water cylinders.

Our focus on keeping our employees

and students safe during the

pandemic meant we suspended

our award winning student and

employee sustainable engagement

programme, Positive Impact. This

has been relaunched for the 2021/22

academic year and will continue to

help students to adopt behaviours

which are better for the environment

and which help to create positive

social impact.

We have a unique opportunity to help

students adopt lasting responsible

living habits, laying the foundations

for life-long sustainable behaviours.

Water stress has been identified as a potential long term issue, leading to

operational disruption and rising prices. We have been trialling ways to reduce

water use in existing buildings. In 2021, we piloted new cistern-less toilet flush

mechanisms which showed potential to cut water use for toilet flushing by up to

50%. We will be running further trials on a wider scale during 2022 with a view to

expanding this programme in 2023 and beyond.

CASE STUDY

RESOURCE EFFICIENT

Reducing waste, energy and water use and helping students adopt life-long sustainable behaviours

ADDRESSING CLIMATE RISKS

Water trials to reduce water stress

We recognise the serious threat that climate change poses and, as a TCFD

supporter, are committed to disclosing details of the most significant climate-

related risks and impacts identified for our business. These include both physical

risks (e.g. extreme weather) and transitional risks (e.g. increasing regulation).

We will continue to report on how these factors could affect our business and

operations, and how we plan to mitigate them through changes to the way we

manage our existing operations and build new properties. Further details are set

out in our TCFD disclosure on pages 50–55.

For more about this project, go online to: unite-group.co.uk/sustainability

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

The Covid pandemic has increased

the importance and focus given

tothe welfare of both employees

andstudents.

The Group has a strong track record

in this field and during the pandemic

we supported our students and

employees. We have continued to

enhance our working practices for

employees through the introduction

of hybrid working for central support

services teams and, following the

recruitment of new ED&I Wellbeing lead

held our first Culture Matters employee

forum which is underpinning existing

employee networks e.g. Women’s and

LGBT+ forums.

In summer 2021, we kickstarted

preparation for the new 2021/22

academic year with Fresh Start

employee events taking place across

the country, enabling our teams to reset

their plans for the incoming student

cohort, including increasing need for

greater welfare support for students.

In light of student welfare challenges,

heightened by the pandemic, in July,

our Student Services offering was

relaunched to address increasing

mental health challenges among

students. This included the introduction

of new student support and

safeguarding policies, new welfare

check guidance for on-site teams, new

case conferencing and risk assessment

protocols and a new support animals

protocol. During 2022 we are piloting

the Student Minds programme ‘Look

After Your Mate’ and will continue to

play an active role in the continued

evolution of student welfare policy and

practice in the higher education sector.

STUDENT WELLBEING

Using technology to stay connected

In April and May 2021, after a long winter of lockdown, we arranged a series

ofevents to help our students manage their wellbeing and to encourage them

toreach out for support when needed.

CASE STUDY

HEALTH & WELLBEING

Enhancing the health and wellbeing of our employees and students

The programme included a popular student-led session on Five Ways to

Wellbeing hosted by our Resident Ambassadors, focusing on proven strategies

to improve wellbeing. The ambassadors were coached and supported by our

Student Support Managers.

The programme included a session run by Student Minds, showing the

resources available on the Student Space website. This also highlighted

specialistinformation for students from diverse backgrounds or experiencing

particular symptoms.

An additional panel session was led by chaplains from three universities,

discussing the support that they offer to students from all faiths or none.

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

SUSTAINABILITY REPORT continued

We are driven by our values and

aspire to create a culture where

individuals can be different and are

valued for being different.

Changing mindsets through the lens

of inclusion helps us to transform

communities and creates room for

everyone, in line with our values.

Research overwhelmingly shows that

when employees work for an inclusive

business where equality, diversity,

inclusion and wellbeing are at the

heart of business decisions and people

care, there is better collaboration,

reduced organisational bias, higher

performance and productivity as well

as a bottom-line business advantage.

In addition there is greater motivation,

engagement, loyalty and an increased

feeling of belonging. This year we

have given our employees greater

opportunities to speak up about their

experiences and become part of the

conversation. This activity has been

supported through the recruitment of

an ED&I lead.

A focus on succession planning and

supporting personal development

will help us maintain a balanced

talent pipeline enhanced through the

introduction of mentoring for talent

with high potential.

The business has a strong track

record of promoting internally and

developing talent within the business.

To support new ways of working and

the refreshed strategic direction, new

talent and capability will be brought

in as required alongside developing

internalcapability.

Gender diversity

Male Female

Board 6 3

Management 33 17

All employees 1,006 846

EQUALITY, DIVERSITY

AND INCLUSION

Driving impactful change through

commitment and role modelling,

supported by education

In 2021, senior leaders from across the business participated in

a sixworkshop development programme with René Cayarol, an

external specialist in coaching and a pioneer in cultural diversity and

inclusive leadership. An EDI & Wellbeing Manager was hired who is

now supporting the wider team with the creation and delivery of a EDI

& Wellbeing strategy. A series of virtual skills sessions were launched

forline managers so they could gain greater understanding of their

own vulnerability and be braver in starting what are sometimes

difficultconversations.

Also to gain greater feedback and information on personal experiences,

an EDI employee survey was undertaken which has resulted in renewed

emphasis on championing the collection of EDI data.

CASE STUDY

OPPORTUNITIES FOR ALL

An environment where all can succeed, whatever their background, gender or ethnicity

For more about this project, go online to:

https://www.unite-group.co.uk/about-us/people-and-culture

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

CASE STUDY

THE UNITE

FOUNDATION

Unite Students is proud to be

the principal supporter of the

Unite Foundation, the only

charity that provides a home

at university for estranged

and care experienced students

through a unique accommodation

scholarship scheme

We have committed over £13 million to the charity since

its inception in 2012, including a £5 million injection as

part of the Foundation’s 5th anniversary celebrations in

2017. With our support the Foundation provides a home

at university for 80 new students each year. To date it

has awarded 514 scholarships and 254 scholars have

graduated. There are currently 166 students who are

eligible for the scholarship and of those 91 have a home

at university with us. Twenty-six University partners

currently support the scheme.

During 2022, in celebration of the Foundation’s 10th

anniversary, we have renewed our commitment to the

Foundation agreeing a long-term funding commitment

to enable them to realise the ambitions of the new five-

year strategic plan.

The Foundation continues to develop new delivery

models enabling University partners to participate

in its scholarships and increase the number of

accommodation scholarships available.

UNITE INVESTMENT TO DATE

£13m

SCHOLARSHIPS AWARDED TO DATE

514

For more about this project, go online to:

unite-group.co.uk/sustainability/the-unite-foundation

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

For more about this project, go online to:

unite-group.co.uk/sustainability/positive-impact

SUSTAINABILITY REPORT continued

Our ambition is to continue to lead on sustainability and raise

standards within the PBSA sector.

In addition to our focus on environmental and social impact, we remain

committed to transparency, good governance and driving up standards

across the whole student accommodation sector.

We use data and insight to help track our progress. On the back of the

Covid pandemic, we believe the actions we took have consolidated

our position in the sector and improved our reputation across our

stakeholder groups.

Fire safety remains a critical part of our strategy and we were one of the

first companies to remove ACM cladding from our buildings. Our values

of ‘Doing what’s right’ and ‘Keeping us Safe’ has led to the development

of a more proactive, risk-based approach to fire safety, embedded

across our entire business. We have improved the way we manage fire

risk over the past three and a half years.

New regulation and the availability of insight and knowledge following

the fire at Grenfell Tower have helped influence the improvements

we have made. Our approach is also shaped by a clear drive to

go further and faster whenever appropriate. This approach and

commitment extends beyond the way we operate our existing estate,

to new buildings and those under construction. 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. We are committed to increasing the required investment to

meet new and emerging regulation so that students are kept safe.

Notable achievements in the year included:

• 1st out of 7 in the GRESB European residential listed sector.

Oursustainability activities are benchmarked in the upper quartile

of GRESB making us the highest ranking in our sector

• Deeper understanding of climate-related risks through scenario

based analysis and enhanced disclosure in line with TCFD

• First PBSA to have targets validated by the SBTi targets

• Net Zero Carbon Pathway launched

• First UK PBSA to sign up to RE100

• Started buying renewable power under corporate PPA

Other significant developments include:

• Commitment to 1% of annual profits being focused on social

initiatives such as Leapskills and the Unite Foundation

• Awarded the British Safety Council Sword of Honour in 2020 for

excellence in health and safety management

• Providing 83 young people with jobs through the Government

Kickstart scheme

• Collaborating with Government agencies including Public Health

England during the Covid pandemic with regular briefings and

updates with agencies responsible for students at universities

• Launched Accommodation Matters, the first Higher Education

podcast, fully focused on the student accommodation sector

• Continued partnership with the British Heart Foundation

POSITIVE IMPACT

A United Nations award

winning programme

supported by the NUS

Our Positive Impact programme is an

iteration of the NUS Green Impact scheme,

a United Nations award winning programme

which targets sustainable behaviour

change. Unite Students is the only PBSA

participating nationally in the programme

and during 2022, we are refreshing the

programme for relaunch to our teams. The

programme is our key vehicle for driving

employee engagement and all of our city

teams are working to achieve a minimal

bronze level award during 2022. Some

teams are working towards silver or gold

levels, which includes a defined community

project. Each city has a recognised Positive

Impact Lead supported by the Social

Impact team to help drive activity within a

region. This year, the bronze criteria have

been mapped against the UN Sustainable

Development Goals (SDGs) and our

sustainability commitments.

CASE STUDY

RAISING STANDARDS

Across the student housing sector leading for governance, safety and transparency

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

CASE STUDY

OUR RESPONSE TO COVID

We were the first purpose-built student

accommodation provider to release

studentsfrom their contracts during the

firstnational lockdown

In January 2021 when students were returning to University faced with further

uncertainty and significant disruption, all eligible students received a 50% rent

discount for up to ten weeks. Our student rent support activity since the start

of the pandemic has totalled over £100 million.

During the pandemic we have played our part to do the right thing for students

in a fair and proportionate way, always mindful that most students wanted to

return and enjoy university life. All our properties remained open throughout the

pandemic and through the efforts of our teams, none of whom we furloughed,

we have continued to support students at all times.

Throughout the pandemic the business worked with a range of Government

agencies to focus on student safety including Public Health England who used

our data and insight to inform their planning with the Department for Education.

For more about this project, go online to: unite-group.co.uk/media-and-pr

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

We provide in the following pages statutory reporting for the key impacts on our business.

Non-financial information statement

The table below summarises how we comply with non-financial performance reporting requirements.

All policies are also available on www.unite-group.co.uk/investors.

Employees

Social matters

Description of

the business

model

Details of who we are, how we operate

and the value we create can be found

onpages 8–13

Equality, diversity and inclusion

Policy is focused on providing

opportunities for all

Development and increased

training around health, safety

andwellbeing

17

Employee engagement through

our newly created employee

forum, Culture Matters

5 & 104

Our whistleblowing policy

enables employees to raise a

concern in confidence

104

Gender pay gap 159–160

Board Diversity Policy seeks to

enhance the overall diversity

of the Board and ensures an

appropriate and diverse mix of

skills, experience and knowledge

119

Anti-corruption

and bribery

Human rights

Our anti-bribery policy confirms our

zero tolerance approach to bribery

and corruption and outlines employee

responsibilities. Read our policy at

www.unite-group.co.uk

Environmental

matters

Policy, due

diligence and

outcomes

Our policies

All of our public policies are available on

our website, www.unite-group.co.uk

SUSTAINABILITY REPORT continued

The policies included in this non-

financial information statement

contain further details (as cross

referenced herein) of the policy,

due diligence conducted and policy

outcomes, which also include

thefollowing:

Risk management detailing our risk

management framework and risk

review process

Principal risks and uncertainties

considering both internal and

external risks, the potential

impactand details of risk mitigation

in place

Viability statement considering the

viability of the Group for the next

three year period

Audit Committee report 120

Group Health & Safety Policy which

details the Group’s commitment

to the health & safety of our

employees, students and visitors

to our site

Non-financial KPIs relevant to the

Company’s business

33 & 36

Our Resident Ambassador

programme provides peer to

peer support for students

5 & 59

Market overview focusing on

demographic trends

The Group is the principal

supporter of the Unite Foundation,

the only charity that provides a

home at university for estranged

and care experienced students

Our response to Covid-19 including

student rental discounts

5 & 45

Sustainability report includes

reference to our Sustainability

Strategy, launched in March 2021,

setting out clear objectives in respect

of environmental, social

and governance matters

TCFD 50

Our pledge to be net zero carbon by

2030 was published in our Net Zero

Carbon Pathway in December 2021

Read further details at page 126

andon our website at

www.unite-group.co.uk

We operate a zero tolerance approach

to slavery to ensure it does not occur

anywhere within our business or supply

chain. We carry out due diligence on

all third parties we work with. Read our

Modern Slavery statement and our Code

of Ethics on www.unite-group.co.uk

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

Carbon emissions and climate change

In line with our new net zero carbon ambition, we have

made some changes to how we report energy and carbon

consumption, including reporting progress against a new

base year linked to our science-based targets, replacing

the base year of 2014 previously used. In line with our new

SBTi approved science-based carbon targets. 2019 has

been used as our new base year, as the impact of Covid-19

related disruption in 2020, as outlined in last year’s Annual

Report, means it is not representative of our normal levels

of emissions and so cannot form the basis of our new

targets. Our new 2019 base year includes actual emissions

as previously reported in 2019, together with the 2019

emissions associated with the former Liberty Living portfolio

(not reported in 2019 as it was not part of Unite at that time).

All Scope 1 and Scope 2 emissions arise in the UK.

Although the impact of the pandemic on our operations was

less severe in 2021 than in 2020, we experienced reduced

levels of occupancy and changes in student behaviour

compared to a normal year, keeping energy consumption

below pre-pandemic levels.

2021 did see consumption increase by 5.4% from 2020,

although this remained 6.8% below our new 2019 base.

Despite this increase in energy consumption from 2020

to 2021, combined Scope 1 and location-based Scope 2

emissions fell by 1.6% vs 2020 driven by a 9.8% reduction

in grid electricity carbon intensity; combined Scope 1 and

market-based Scope 2 fell further still by 37.5% compared to

2020, reflecting the fact that 99.9% of electricity purchased

in 2021 was REGO backed, an increase of 25.9% on 2020

levels. While over £3 million was invested in energy efficiency

capital projects, the phased delivery of these initiatives

(including installation of smart networked heating controllers

and heat pumps) means they made only a small contribution

in year.

Scope 3 emissions fell significantly from 2021 reflecting the

fact that no new developments were completed in 2021 and

so there was no embodied carbon contribution to Scope 3

category 1 emissions in year.

Absolute gas consumption

Absolute electricity consumption

Absolute district heat consumption

Gas consumption per bed

District heat consumption per bed

Electricity consumption per bed

kWh/bed/yr

3,500.0

2019

as reported

202120202019

new base year

2,500.0

1,500.0

1,000.0

500.0

3,000.0

2,000.0

Utilities consumption per bed Absolute utilities consumption

2019

as reported

202120202019

new base year

250,000,000

150,000,000

50,000,000

200,000,000

100,000,000

kWh/bed/yr

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

ESTATE DATA

2019 as

reported

2019 new

base year

†

2020 2021

Data Data Data

Change vs

2019 base year

Change vs

prior year Data

Change vs

2019 base year

Change vs

prior year

Year end bed numbers 49,992 73,990 75,531 2.08% 51.09% 76,171 2.95% 0.85%

Pro rata bed numbers 49,242 73,240 74,193 1.30% 50.67% 74,303 1.45% 0.15%

Pro rata floor area (m

) 1,400,011 1,931,148 1,962,411 1.62% 40.17% 1,945,560 0.75% -0.86%

† (including Liberty Living)

ENERGY & WATER USE

2019 as

reported

2019 new

base year

†

2020 2021

Consumption Consumption Consumption

Change vs

2019 base year

Change vs

prior year Consumption

Change vs

2019 base year

Change vs

prior year

Natural gas

Absolute (kWh) 39,616,444 57,414,070 55,587,055 -3.2%

40.3% 59,170,049 3.1% 6.4%

Relative to bed numbers (kWh/bed) 804.5 783.9 749.2 -4.4% -6.9% 796.3 1.6% 6.3%

Relative to floor area (kWh/m

) 28.3 29.7 28.3 -4.7% 0.1% 30.4 2.3% 7.4%

Electricity

Absolute (kWh) 106,148,132 167,593,224 141,656,529 -15.5%

33.5% 149,211,285 -11.0% 5.3%

Relative to bed numbers (kWh/bed) 2,155.7 2,288.3 1,909.3 -16.6% -11.4% 2,008.1 -12.2% 5.2%

Relative to floor area (kWh/m

) 75.82 86.78 72.18 -16.8% -4.8% 76.7 -11.6% 6.2%

Renewable electricity

As % of overall electricity purchased 60.9% 61.1% 74.0% 21.2%

21.5% 99.9% 38.8% 25.9%

Heat

Absolute (kWh) 11,775,682 11,775,682 12,091,340 2.7%

2.7% 12,312,277 4.6% 1.8%

Relative to bed numbers (kWh/bed) 239.1 160.7 162.9 1.4% -31.9% 165.7 3.1% 1.7%

Relative to floor area (kWh/m

) 8.41 6.10 6.16 1.0% -26.7% 6.3 3.8% 2.7%

TOTAL ENERGY (gas + electricity + heat)

Absolute (kWh) 157,540,259 236,782,977 209,334,924 -11.6%

32.9% 220,693,611 -6.8% 5.4%

Relative to bed numbers (kWh/bed) 3,199.3 3,232.9 2,821.4 -12.7% -11.8% 2,970.2 - 8.1% 5.3%

Relative to floor area (kWh/m

) 112.5 122.6 106.7 -13.0% -5.2% 113.4 -7. 5% 6.3%

Water

Absolute (m

) 1,954,648 3 ,037,827 2,723,396 -10.4% 39.3% 2,956,278 -2.7% 8.6%

Relative to bed numbers (m

/bed) 39.7 41.5 36.7 -11.5% -7.5% 39.8 -4.1% 8.4%

Relative to floor area (m

) 1.4 1.6 1.4 -11.8% -0.6% 1.5 -3.4% 9.5%

† Including Liberty Living.

SUSTAINABILITY REPORT continued

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

GREENHOUSE GAS EMISSIONS

2019 as

reported

2019 new

base year

†

2020 2021

Emissions Emissions Emissions

Change vs

2019 base year

Change vs

prior year Emissions

Change vs

2019 base year

Change vs

prior year

Total Scope 1 emissions

Absolute (tonnes CO

e) 7,397 10,669 10,392 -2.6% 40.5% 11,009 3.2% 5.9%

Relative to bed numbers (tonnes CO

e/bed) 0.150 0.146 0.140 -3.9% -6.8% 0.148 1.7% 5.8%

Relative to floor area (kg CO

e/m

) 5.3 5.5 5.3 -4.2% 0.2% 5.7 2.4% 6.9%

Total Scope 2 emissions (location based)

Absolute (tonnes CO

e) 29,205 44,910 35,113 -21.8% 20.2% 33,784 -24.8% -3.8%

Relative to bed numbers (tonnes CO

e/bed) 0.593 0.613 0.473 -22.8% -20.2% 0.455 -25.9% -3.9%

Relative to floor area (kg CO

e/m

) 20.9 23.3 17.9 -23.1% -14.2% 17.4 -25.3% -3.0%

Total Scope 2 emissions (market based)

Absolute (tonnes CO

e) 3,128 18,833 10,694 -43.2% 241.9% 2,170 -88.5% -79.7%

Relative to bed numbers (tonnes CO

e/bed) 0.064 0.257 0.144 -43.9% 126.9% 0.029 -88.6% -79.7%

Relative to floor area (kg CO

e/m

) 2.2 9.8 5.4 - 4 4.1% 143.9% 1.1 -88.6% -79.5%

Total Scope 1+2 emissions (location based)

Absolute (tonnes CO

e) 36,602 55,579 45,504 -18.1% 24.3% 44,793 -19.4% -1.6%

Relative to bed numbers (tonnes CO

e/bed) 0.743 0.759 0.613 -19.2% -17.5% 0.603 -20.6% -1.7%

Relative to floor area (kg CO

e/m

) 26.1 28.8 23.2 -19.4% -11.3% 23.0 -20.0% -0.7%

Total Scope 1+2 emissions (market based)

Absolute (tonnes CO

e) 10,524 29,502 21,086 -28.5% 100.4% 13,178 -55.3% -37.5%

Relative to bed numbers (tonnes CO

e/bed) 0.214 0.403 0.284 -29.4% 33.0% 0.177 -56.0% -37.6%

Relative to floor area (kg CO

e/m

) 7.5 15.3 10.7 -29.7% 42.9% 6.8 -55.7% -37.0%

Total verifiable Scope 3 emissions

Absolute (tonnes CO

e) 9,859 15,134 12,422 -17.9% 26.0% 4,576 -69.8% -63.2%

Relative to bed numbers (tonnes CO

e/bed) 0.200 0.207 0.167 -19.0% -16.4% 0.062 -70.2% -63.2%

Relative to floor area (kg CO

e/m

) 7.0 7.8 6.3 -19.2% -10.1% 2.4 -70.0% -62.8%

Total non-verifiable Scope 3 emissions

Absolute (tonnes CO

e) 113,963 114,623 66,924 -41.6% - 41.3% 50,448 -56.0% -24.6%

Relative to bed numbers (tonnes CO

e/bed) 2.3 1.6 0.9 -42.4% -61.0% 0.7 -56.6% -24.7%

Relative to floor area (kg CO

e/m

) 81.4 59.4 34.1 -42.5% -58.1% 25.9 -56.3% -24.0%

Total of verifiable and non-verifiable Scope 3 emissions

Absolute (tonnes CO

e) 123,822 129,757 79,346 -38.9% -35.9% 55,024 -57.6% -30.7%

Relative to bed numbers (tonnes CO

e/bed) 2.5 1.8 1.1 -39.6% -57.5% 0.7 -58.2% -30.8%

Relative to floor area (kg CO

e/m

) 88.4 67. 2 40.4 -39.8% -54.3% 28.3 -57.9% -30.1%

† Including Liberty Living.

Floor Area: As part of our new base year calculation we have used an updated floor

area data set to calculate intensity metrics. This data set includes corrections from new

EPCs and where infill development has taken place etc., and has been applied to the

2019 base year data and onwards in the table above

Energy consumption: Energy data reported is predominantly half-hourly meter data

(92.6% and 89.7% respectively for electricity and gas), with remainder being billing

data (6.1% and 9.4% respectively) and a small number of estimates (1.3% and 0.9%

respectively) where neither meter or billing data is yet available. District heating data is

86% billing with 14% estimates.

Boundaries: Energy and water consumption reported is whole-building including all

that used by students, as our all-inclusive billing means these contribute directly to

Scope 1 and 2 emissions rather than Scope 3. Energy and emissions are reported along

operational control lines (not equity share lines) and includes all Unite Group plc entities,

including 100% of all buildings operated by Unite Students regardless of ownership.

GHG calculation methodology: GHG emissions have been calculated in accordance

with HM Government’s ‘Environmental Reporting Guidelines: including streamlined energy

and carbon reporting March 2019 (Updated Introduction and Chapters 1 and 2)’ and the

GHG Protocol’s ‘A corporate Accounting and Reporting Standard (Revised Edition)’.

Scope 1 emissions include gas consumed in properties, and fuel consumed in

business vehicles.

Scope 2 emissions include grid electricity consumption, and district heating

consumption in properties.

Verifiable Scope 3 emissions include Category 1 (Purchased goods and services –

water, calculated using water meter and billing data), Category 3 (Fuel and energy-

related activities including T&D and WTT emissions, calculated using same energy data

used for Scope 1 and 2 emissions), Category 6 (Business travel – including direct and

indirect (WTT and T&D) emissions from flights (including RF), and rail travel, calculated

using data provided by travel booking partners), where verifiable data sources exist.

Non-verifiable Scope 3 emissions include Category 1 (Purchased goods and services

– operation and management of real estate assets, calculated using QUANTIS Scope 3

evaluator tool based on spend), Category 2 (Capital goods – new properties, calculated

using a detailed embodied carbon assessment of a real and representative new build

property, Category 5 (Waste Generated in Operations calculated using QUANTIS Scope

3 evaluator tool based on spend), and Category 7 (Employee commuting calculated

using QUANTIS Scope 3 evaluator tool), where insufficient data is available to verify.

Emissions factors: Emissions factor used are the relevant factors from the ‘UK

Government emission conversion factors for greenhouse gas company reporting (2021

data set)’. Location Based Scope 2 emissions are calculated using the UK national average

grid emissions factor, whilst Market Based Scope 2 emissions are calculated using our

supplier Npower’s contractual emissions factor which is zero for all electricity purchased

under our Group supply contract as 100% is backed by REGOs. We disclose detail asset

by asset consumption to CDP and GRESB (Global Real Estate Sustainability Assessment).

Independent verification: all energy and carbon data reported is subject to

independent verification by SGS UK Ltd to a level of “Reasonable Assurance” against

the requirements of ISO 14064-3:2006. While this has been competed for all prior

years, at time of publishing this report the process was still ongoing for 2021 data.

Once completed, details will be published via our website www.unite-students.

co.uk/sustainability.

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES

Introduction

The Board recognises the scale of the challenge posed

by climate change, its potential impact on real estate and

therefore the urgent need to take mitigating action. With the

built environment accounting for c.40% of all greenhouse

gas emissions, we also recognise our responsibility to

do what we can to minimise our carbon footprint and

encourage our customers to do the same. We have set out a

detailed pathway to achieving net zero carbon by 2030 and

committed to helping our customers adopt sustainable living

habits which will stay with them for life. This is a goal shared

by our investors, customers, suppliers and people. We have

set climate targets validated as 1.5°C – aligned by the Science

Based Targets initiative (SBTi) and CRREM, and we are a

signatory of the RE100 initiative.

We have complied with the requirements of LR 9.8.6R by

including climate-related financial disclosures consistent with

the TCFD recommendations and recommended disclosures

We support the aims of the Task Force on Climate-related

Financial Disclosures (TCFD) and believe that businesses

should clearly communicate the risks and opportunities that

climate change brings.

In this Annual Report, we continue to integrate climate-

related disclosures throughout the Strategic Report. In this

section, we discuss in detail the risks and opportunities

arising from climate change, the potential impact on our

business, and the actions we are taking to mitigate these

risks in line with TCFD requirements.

Governance

Our Chief Executive has overall responsibility for our climate-

related risks and opportunities with ongoing oversight of

climate-related issues with our Sustainability Committee, a

sub-Committee of the Board. Our Sustainability Committee

meets four times per year to maintain Board oversight of

environmental, social and governance issues, and hold the

business to account for performance in this area including

the management of climate-related risk. The Board also

undertakes a twice-yearly formal risk review (see page 74)

which includes sustainability related risks.

Our Executive Team coordinates the implementation of our

Sustainability Strategy across the business, drives continual

improvement, and is responsible for the assessment,

management and reporting of climate-related risks and

opportunities. This is primarily managed through our

Customer and Property Leadership teams which bring

together senior managers and coordinates delivery of our

Sustainability Strategy.

Our Investment Committee, responsible for reviewing

and approving all major investment decisions, requires all

proposals to consider sustainability related issues, including

climate change, as part of decision making.

Our 2022 LTIP awards will include sustainability metrics

relating to operational energy consumption and EPC ratings.

Further detail is contained within the Remuneration Report

from pages 134–167.

Sustainability Committee Group Board

Executive Committee

Property Leadership TeamCustomer Leadership Team

Sustainable Procurement

Transparency & Reporting

Social Impact

EDI & Wellbeing

Sustainable Construction

Sustainable Investment

Energy Purchasing

Student Sustainable Behaviour

Employee Sustainable Behaviour

Environmental Performance

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

Strategy

Climate change is a principal risk which has the potential to

impact our business in the short, medium and long term.

We face potential acute and chronic physical risks from the

effects of climate change on our business, including extreme

weather and flooding. Potential transition risks associated

with the shift to a low-carbon economy include changing

consumer preferences, impacts on investment property

valuations according to their climate resilience and future

policy and regulation.

Description Rising average temperatures and frequency of

heatwaves make our buildings uncomfortably

hot during the summer months.

Increased rainfall may increase the risk of both

flash flooding from acute rainfall and rivers

bursting banks.

Likelihood

Unlikely Possible

Key metrics Energy intensity and Scope 1+2 emissions Energy intensity and Scope 1+2 emissions

Impacts We may be required to relocate customers

in excessively hot rooms at our expense or

otherwise compensate for disruption.

Sustained increases in temperature may make

us unable to let buildings during the summer

without active cooling or investment in passive

cooling technologies.

The impact of a flood could be significant to a

single property, either from temporary disruption

to our customers and operations teams, or

damage to the building itself and the plant and

machinery within. In the most extreme scenario,

a flood may damage the plant room of a building

requiring temporary closure whilst repairs are

completed.

Time period

L S

Financial implications c.£15 million of summer short term lettings

income at risk or increased cooling costs.

Higher temperatures during winter may reduce

the heating requirement of our buildings.

The geographic diversity of the portfolio means

that flood damage is unlikely to be material in

the context of the Group.

A risk assessment using Environment Agency

flood risk data found that approximately 10% of

the total portfolio has a High (1 in 76–100 years)

or Very High (1 in <75 years) risk of flooding.

Methodology We compared forecast temperatures during

the summer under 1.5°C, 2°C and 4°C scenarios

using the RCP8.5 projections versus the

1981–2010 baseline. The datasets used for this

analysiswere extracted from the UKCP18 data

published by the Met Office Hadley Cell GCMs

(HadREM3-GA705).

We compared forecast rainfall during the

winter under 1.5°C, 2°C and 4°C scenarios using

the RCP8.5 projections versus the 1981–2010

baseline. The datasets used for this analysis were

extracted from the UKCP18 data published by the

Met Office Hadley Cell GCMs (HadREM3-GA705).

Management response We routinely monitor building temperature

and ensure comfortable temperatures

aremaintained at all times as part of

studentwelfare.

We reviewed the flood risk of the portfolio during

2021 in partnership with our insurers and will

continue to do so. We maintain operational flood

response plans at higher risk properties.

These also present opportunities where, for example,

ourleadership in the sector may be valued by our customers

and ultimately lead to improved financial performance.

Through our risk management process, we identified

heatstress and flood risk as the two climate-related

risksmost likely to materially affect the Group’s future

financial performance.

RISK HEAT STRESS FLOODING

1. Likelihood based upon expectation of risk crystalising given current trends and experience.

S M L

Short-term Medium-term Long-term

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Description The transition to a low carbon

economy will require significant

investment in our portfolio and

present stranding risk to assets

if we are not able to adapt at

sufficient pace.

Our 2021 Student Survey

highlighted climate change as the

number one priority for students.

We expect climate change to

continue and to be of increasing

importance for University partners

and other stakeholders.

Regulation and Government

policy will continue to evolve and

we must both comply and make

bestuse of regulations to deliver

our strategy.

Likelihood

Likely Likely Likely

Key metrics GRESB and EPC ratings Renewable energy sources, gender

split in leadership team

EPC ratings

Impacts Stranded assets may no longer

meet Minimum Energy Efficiency

Standards (MEES), cost more to

operate, be harder to let or suffer

a ‘brown discount’ in valuation due

to lower liquidity.

Our leadership in the sector may

be recognised by our customers

and partners providing additional

business opportunities or income

benefits from our leadership in

sustainability.

Failure to at least meet

stakeholder expectations could

be detrimental to business

performance through many

channels including our ability to

secure nomination agreements

and increased financing costs.

Regulations may require increased

or acceleration of investment

to meet MEES. Carbon pricing

may impact the viability of

our development pipeline and

ongoingoperating costs of the

existing portfolio.

Time period

L S

L M

Financial

implications

We have invested over £30 million

since 2014 and plan to invest a

further £100 million to support

our sustainability targets.

Our investment in energy efficiency

has already delivered cumulative

savings of approximately £20

million and expect this to grow as

we invest more.

We typically target our

sustainability investments to

payback in 10 years or less on

anundiscounted basis.

Not quantified. The UK Government has set a

legally binding net zero target of

2050. Under our more ambitious

strategy, we expect to spend £100

million on our transition to net

zero carbon by 2030.

Methodology We reviewed our portfolio using

the CREEM tool with asset specific

energy data and market based

energy sources reflecting our

100% REGO power procurement.

n/a n/a

Management

response

Delivery of our 2030 net zero

target, in conjunction with our

asset transition plans are expected

to avoid asset stranding. We will

monitor progress against these

plans and take corrective action

where required.

We actively engage with our

customers, University partners,

suppliers and investors to

explain and seek feedback on our

sustainability performance and

goals in addition to understanding

their requirements and

expectations.

We engage with Government and

our advisory teams to understand

likely future legislation and the

impacts that it might have on

the business.. This gives us the

greatest amount of time possible

to adapt to new regulation ahead

of introduction.

1. Likelihood based upon expectation of risk crystalising given current trends and experience.

TRANSITION STAKEHOLDER VALUES POLICY AND REGULATIONRISK

TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES continued

S M L

Short-term Medium-term Long-term

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

As has been seen in other real estate asset classes, we expect a “green premium” to emerge in PBSA for assets with

leadingenergy and environmental performance. We consider any premium more likely to emerge through property

valuation yields driven by investment demand rather than income. Conversely, a “brown discount” may apply for less

efficient buildings where substantial investment may be needed in future to reach net zero carbon or comply with

emerginglegislative requirements.

Were a 5bps green premia to apply to asset valuations for assets with an EPC rating of B higher, valuations would increase

by £40 million, reflecting a 6p increase in NTA per share of the Group. Conversely 5bps brown discount on assets rated E or

belowwould reduce valuations by £3 million, a 0p decrease in NTA. We have considered the resilience of our strategy under

twoclimate scenarios:

Our Sustainability Strategy has been validated as 1.5

C aligned by the SBTi and is a core part of our wider Group Strategy.

We therefore expect our Strategy to be resilient under a <2

C such a scenario in both the short term to 2030 and the longer

term beyond. Under a 4

C climate scenario, the resilience of our Strategy is likely to be tested, particularly towards the middle

of the century as temperatures increase significantly. We may face increased costs and have to increase our investment in

sustainability to mitigate the worst impacts of climate change. We will continue to monitor the potential impacts of climate

change on our Strategy and make adjustments when appropriate.

C Scenario

equivalent to RCP1.9

limitingtemperature

risesto1.5°C by 2100

Significant transition and mitigation activity

• £100 million invested into sustainability

initiatives in addition to over £30 million

invested since 2014

• Will achieve minimum EPC rating of B

from2030

• Mitigates increasing pricing of carbon

emissions and offset costs

• Meets changing university, student and

investor expectations for environment

performance, potential for green/brown

premia/discounts to asset values

Physical risks broadly maintained

• Continuing transition risk as expectations

and regulation continue to evolve

• No significant risk of heat stress disrupting

summer lettings

• Strategy provides broad resilience ifworst

effects of climate change mitigated globally

C Scenario

equivalent to RCP8.5

withtemperatures

rising to 4°C by 2100

No significant changes from RCP8.5 pathway

• No significant changes to prevailing

physicalrisks in next decade

• Average 1 in c.250 year risk of flooding due

to surface water based upon Environment

Agency zoning

Increased physical and adaption risk

• More aggressive carbon reduction

investment ultimately required

• Risk to summer and short term

lettingsviability

• Increased average 1 in c.200 year risk

offlooding due to surface water

RESILIENCE OF OUR STRATEGY SHORT TERM (NEXT 10 YEARS) LONGER TERM

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We have also taken action on the risk of increased water scarcity and potential price increases as a result of climate change

to reduce the intensity of water usage in our portfolio. As set out in the Sustainability Report, we have installed low volume

shower heads and toilet cisterns. Such efficiency measures are part of our new developments’ standard specification.

Direct financial costs from climate-related disruption on the Group have been negligible to date. However, the Group has

invested over £30 million into energy efficiency since 2014.

Building on c.£3 million of capital already deployed in 2021, we will be accelerating efforts in 2022 with c.£10 million investment

planned for 2022 in solar PV, improvements in building fabric and glazing, smart building controls, and air source heat pumps, as

well as measures to cut water use. As well as cutting carbon emissions, these measures deliver significant reductions in energy

costs, helping to mitigate rising energy prices and typically achieving financial payback within 10 years. We have identified a

further c.£100 million (c.£60 million at Unite share) of further opportunity for capital investment to help us achieve our 28%

energy efficiency target.

Risk management

The process for assessing, identifying and managing climate-related risks is the same for all principal risks with responsibility

sitting with the Board and is described on pages 74–88. Details of how we identify, assess and manage climate-related risks are

covered in Principal Risk 8 on page 86.

We undertake a climate-related risk scoping workshop assessment at least annually, as part of our overall risk management

process described in the Risk Management Report, covering the constituent risks of our broader Sustainability and ESG risk,

to identify the most material risks and assess their potential impacts under different future climate scenarios, as well as the

likelihood, business consequences, and possible management and mitigation strategies. We use judgement to determine the

most significant climate risks and prioritise investment in mitigations which are then approved by the Board. The findings from

this process are shared with our Sustainability Steering Group and our wider Executive Committee comprising of Executive

Directors and other business directors, who ensure these risks are factored into business planning and decision making.

All investment cases are required to consider sustainability, specifically delivery of net zero and EPC requirements. This is

reflected in our business strategy set out in the Strategic Report section of our 2021 Annual Report pages 30–31 with one of

the three strategic objectives of our business plan being to create a “Responsible and Resilient Business”. Relevant climate-

related risks and opportunities are therefore communicated to our Executive Committee and Group Board, for consideration

during business planning and decision making. Relevant business functions are then tasked with tracking, managing and

reporting on relevant climate-related risks via our Property and Customer Leadership Teams who in turn also report into

our Executive Committee. Climate-related risks are considered out to 2050, across all of our operations including the UK and

globally giventhat 30% of our customers come from overseas, and sensitivity of climate-related risks to macroeconomic and

geopolitical factors.

In order to determine how our business could potentially be impacted, both positively and negatively, by a changing climate,

we have conducted extensive research to determine the potential impacts of a changing physical world both in terms of the

physical changes (weather patterns, temperature increase etc.) and the transitional changes (legislative, financial etc.).

To manage risks at an operational level, KPIs are set for various stages of the building life cycle including: design stage,

development, refurbishment and demolition. The use of building ratings tools such as CREEM and BREEAM, along with the

targets set as part of our net zero pathway and asset transition plans, ensure a consistent approach to sustainability and

specifically to managing the risks of climate change across our entire portfolio. Our portfolio has been modelled using CREEM

which, although lacking a specific PBSA asset class, allows us to track progress against transition pathways for each asset.

Each of our projects, whether it is a refurbishment, asset management initiative or a new acquisition or development, are required

to ensure that climate-related issues are considered, such as how to deliver net zero and reach a minimum EPC rating of B.

TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES continued

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

Metrics and targets

The metrics used in our risk management process to assess climate-related risks are set out in our Sustainability Report on

page 34–55.

Our Scope 1, Scope 2, and Scope 3 greenhouse gas emissions, including comparison to prior years, are externally verified to a

reasonable level of assurance and are disclosed on pages 48–49. These disclosures include both absolute and relative measures

to aid comparability in our performance.

In 2021 we launched our new Sustainability Strategy which includes a net zero carbon commitment for the business and

development by 2030. This is built on our Science Based Targets approved by the SBTi, and a commitment under the RE100

scheme to purchase 100% renewable electricity by 2030. As a residential landlord, our customers’ energy use is included within

our Scope 2 emissions, this gives us significant opportunity to reduce both our and our customers’ impact on the environment.

We published our net zero pathway during 2021. This sets out the action we will take over the coming decade. Net zero will

require us to reduce energy intensity by 28%, source all of our energy from renewable sources and reduce embodies carbon in

new developments by 48%.

We review our performance against these metrics on an ongoing basis as part of our business performance. Investment into

sustainability measures is made with reference to these metrics and our individual asset transition plans which are being

developed to support our net zero pathway. Should performance diverge from the required trajectory to 2030, we will assess

and potentially accelerate interventions required to deliver our net zero pathway.

Summary table of key metrics and performance:

Metric Target vs baseline 2021 performance 2020 performance

Operational energy intensity (28)% (8.1)% (13)%

Proportion of renewable electricity 100% (99.9)% (74.0)%

Scope 1 and 2 carbon emissions per bed (56)% (20.6)% (19.2)%

The Group is considering the introduction of carbon pricing into its development appraisals during 2022. Initially this

pricing will likely be notional and charged to projects based upon externally established pricing benchmarks. Over time,

we anticipate cost of carbon being charged to new developments and the cost reinvested into delivery of sustainability

initiatives within the business.

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OPERATIONS REVIEW

“We are committed to

investing in an enhanced

student experience that

delivers value-for-money

for students and support

our purpose of creating

a Home for Success“

Karan Khanna

Chief Customer Officer

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 some

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.

DELIVERING FOR OUR

CUSTOMERS

Our best-in-class operating platform

continues to deliver and support both service

enhancements and operational efficiency

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

Summary income statement

2021

£m

2020

£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%

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. See glossary for definitions of APMs

and note 8 for calculations and reconciliations.

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 operating expenses. The increase in 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

£m

2020

£m Change

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.

Continued over

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OPERATIONS REVIEW continued

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

Nominations

Direct-let

TotalUK China EU Non-EU

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 re-

distributed 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.

Continued over

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

OUR PURPOSE IN ACTION

GENERATION Z

Student expectations are evolving

Generation Z expectations are evolving and with elevated expectations students

want improved social space and amenities which cater for their interests as

well asthe use of latest technology. In addition, University partners have higher

expectations for student welfare.

This year, we have trialled a number of new initiatives to respond to these

changing needs. This included providing more information prior to arrival about

their accommodation, new features on the MyUnite app and increasing our

welfare provision. We have also increased our event activity in properties, building

communities for like-minded students who can connect through common interests.

These events are run by our Resident Ambassadors who provide peer-to-peer

support and host a calendar of events, enabling students to connect.

For more about this project, go online to: unite-group.co.uk/partnerships/insights

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OPERATIONS REVIEW continued

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

Occupancy

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

2021/22

Beds

2020/21

% Income

2021/22

Single year 14,529 17,709 38%

2–5 years 7,75 4 5,748 22%

6–10 years 6,034 6,873 17%

11–20 years 6,608 6,724 16%

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 1st-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

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

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.

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 support 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 in 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.

Karan Khanna

Chief Customer Officer

23 February 2022

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

PROPERTY REVIEW

“We are growing our

alignment to the strongest

universities, investing in

London and key regional

cities and maintaining

discipline around capital

recycling.”

Nick Hayes

Group Property Director

OPTIMISING OUR

PORTFOLIO

We have a record secured development and

University partnership pipeline for delivery

over the next four years

EPRA NTA PER SHARE

INCREASED BY 8% TO

882p

(31 December 2020: 818p)

IFRS NET ASSETS PER

SHARE UP 9% TO

880p

(31 December 2020: 809p)

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

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.

Continued over

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

PROPERTY REVIEW continued

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 and compliant spend on fire safety improvements and we will make future investments, as required, to ensure

our buildings remain 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

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

Like-for-like

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 UNITE GROUP PLC | Annual Report and Financial Statements 2021

OUR PURPOSE IN ACTION

ENHANCING

OUR STRONG

LONDON

FOOTPRINT

The London Plan, Stratford, London

London provides a significant growth opportunity for PBSA,

particularly East London. Following the Olympics, Stratford, in

the east of London, offers excellent transport links and shopping

facilities and has become a hub for residential living and particularly

student accommodation. We already offer c.1,700 beds across

two buildings in Stratford, all close to Stratford station and local

amenities including Westfield Stratford. Both University College

London and the University of the Arts London have future plans

to develop and extend their campuses in Stratford and are looking

for new student accommodation. To support this requirement, we

have two properties in planning adding c.1,800 beds to our existing

portfolio with completion expected in 2025/26. Both properties will

include large bedrooms and large amenity spaces which will appeal

to international students, postgraduates and returners which is a

market that continues to grow.

For more about this project, go online to:

unite-group.co.uk/our-portfolio/development-pipeline

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

PROPERTY REVIEW continued

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 LSAV Lease Total Unite share

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.

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

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 certain 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.

Continued over

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

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

No.

Total

completed

value

£m

Total

development

costs

£m

Capex in

period

£m

Capex

remaining

£m

Forecast

NAV

remaining

£m

Forecast

yield on

cost

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

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

2024 596 85 67 1 64 18 6.2%

TP Paddington, London

2024 768 203 156 3 151 48 6.0%

Stratford, London

2025 1,008 251 160 – 158 92 6.3%

East London

2026 700 241 177 – 177 63 5.4%

Total University partnerships 4,423 1,139 791 67 591 258 6.0%

Total pipeline (Unite share) 5,956 1,374 967 79 732 311 6.2%

1. Subject to obtaining planning consent.

PROPERTY REVIEW continued

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

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 1st-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.

Nick Hayes

Group Property Director

23 February 2022

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

FINANCIAL REVIEW

“The business delivered

a strong recovery in

financial performance

in 2021, despite some

ongoing disruption created

byCovid-19.”

Joe Lister

Chief Financial Officer

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 note 8 of

thefinancial statements.

MAINTAINING OUR

FINANCIAL STRENGTH

A resilient and agile risk management approach

has helped us navigate the Covid-19 pandemic

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

2021

£m

2020

£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 3 43.1 (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.

Continued over

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

For more about this project, go online to:

unite-group.co.uk/media-and-pr

FINANCIAL REVIEW continued

The Unite Group plc 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.

OUR SUSTAINABLE

FINANCE FRAMEWORK

Linking the company’s financing

strategy with our wider

Sustainability Strategy

The Sustainable Finance Framework, announced

in April 2021, enables us to fund our sustainability

journey through debt instruments that are

environmentally and socially impactful, allowing

investors to more directly link the benefits of

their funding to our sustainability objectives. The

Framework sets up the criteria for financing projects

through sustainable bonds, loans and other debt

products. Initiatives 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.

Building on our commitment to our sustainability goals,

in September 2021 a £450 million sustainability-linked

unsecured revolving credit facility (RCF) from HSBC,

NatWest and Royal Bank of Canada was launched

incorporating three sustainability-linked performance

targets aligned to our Sustainability Strategy. This RCF

is our first sustainability-linked loan and future loans

are expected to include similar sustainability-linked

features against the UN Sustainable Development

Goals (SDGs).

CASE STUDY

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

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 of (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

£m

Net debt

£m

Other assets

£m

Net assets

£m

Unite share

of NAV

£m

Total

return Maturity

Unite

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 USAFs 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

£m

2020

£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

Joe Lister

Chief Financial Officer

23 February 2022

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

RISK MANAGEMENT

“Our risk management

framework is designed

and operates to ensure the

Board can clearly identify

our risks and assess our risk

profile and risk appetite.”

Chris Szpojnarowicz

Company Secretary

and Group Legal Director

Our risk management framework

The Board has overall responsibility for the

oversight of risk as well as maintaining a robust

risk management framework and internal control

system, with the Audit Committee reviewing

the effectiveness of our risk management and

internal control processes. Our risk management

framework is designed to ensure the Board can

clearly identify our risks, assess our risk profile

and set our risk appetite, and ensure these risks

are being managed and mitigated transparently

and effectively. Integral to this design is ensuring

we are agile and resilient, which proved especially

critical through 2020 and 2021 as we navigated the

dynamic and widespread challenges of Covid-19.

RESILIENT AND AGILE

Our approach to risk helped the business

deliver the strong 2021 performance

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

The Board conducts a twice-yearly

dedicated risk review. This considers

risks with both a top-down review

(identifying a wide range of strategic

and emerging risks and opportunities)

as well as a bottom-up review

(challenging the detailed risk trackers

produced by the Customer and

Property Leadership Teams). As part

of this focused risk review, the Board

undertakes its annual assessment of

the principal risks facing the Group,

taking account of those that would

threaten our business model, future

performance, solvency or liquidity as

well as the Group’s strategic objectives.

As the UK and the rest of the world

continued to live with Covid-19

through 2021, we continued to adapt

our approach to risk management

as appropriate. Whilst we remained

vigilant to the impact that Covid-19

could have on our principal risks, the

Board remained satisfied that there

were no fundamental changes to our

principal risks due to Covid-19.

Our risk management framework and

how we assess our principal risks,

identify emerging risks and ultimately

manage and mitigate risk are set out on

the following pages.

Our Covid-19 risk response

The Group continued to take a

proactive and pragmatic approach to

managing the business in response

to the changing nature of the ongoing

pandemic. The health, safety and

wellbeing of our customers and

employees has always been a principal

risk and Covid-19 underlined the

importance of putting them first. This

safety risk has remained elevated and

as the pandemic continued through

the course of 2021, alongside physical

health, the risk to mental health and

wellbeing of our student customers and

our people has significantly increased.

To protect the risk to our reputation,

the Board’s Covid-19 risk plan ensured

clear dialogue and engagement

with our customers, Public Health

England, local authorities, Universities

and other stakeholders as well as

direct Government engagement.

As we navigated the impact of the

pandemic for our business, staying

loyal to our value ‘doing what’s right’

guided our decision making. This was

demonstrated with the measures we

put in place to respond to Covid-19

for our customers and employees.

This included protecting our long-

term reputation and enhancing our

University partnerships through

the pandemic; Unite waived rent for

students who choose to return home

during the third term of 2019/20

academic year, offered discounts to

those not using their accommodation

during the third national lockdown in

early 2021, offered late check-out at

the end of the 2020/21 academic year

and early check in at the start of the

2021/22 academic year, offering up to

three weeks’ free accommodation to

those students arriving from amber

list countries to enable them to self-

isolate. We also ensured a safe working

environment for our employees (for

more, see page 5).

The Board’s decision at the start

of the pandemic to conserve cash

through (among other things)

cancelling dividends and deferring two

developments proved effective and

with improving student occupation

for the 2021/22 academic year and an

improving Covid-19 outlook, the Board

was able to reinstate dividends and

resume the development activities.

To manage our Financing risks,

the Board continued the detailed

monitoring of headroom under our

banking covenants under various

stress tested scenarios. Covenants vary

between facilities but are principally

based on LTV and interest cover ratios

(ICRs). The ICR ratios were especially

challenged by the widespread nature

of the pandemic and its impact on

income. The Board ensured proactive

engagement with lenders.

Assessing our overall risk profile and setting our risk

appetite. Active consideration of our principal risks and our

agility inreacting when the unexpected happens or new

requirements arise.

Identifying a wide range of strategic and emerging risks

and opportunities.

Output – six risk categories

Challenging risks identified by operational management and

more technical risks such as information technology, security,

business continuity, GDPR, financing and treasury.

Engaging with senior leaders in the Higher Education sector and

technical experts on key issues such as Covid-19 and fire safety.

Read more on

pages 79–81

1. Board leads risk review 3. Bottom-up review

2. Top-down review 4. Board searches externally for best practice

Market risks

(supply and demand)

Operational

risks

Property/

development risks

ESG

risks

Financial

risks

People

risks

Read more on

pages 82–83

Read more on

pages 84–85

Read more on

pages 86–87

Read more on

page 87

Read more on

page 88

Continued over

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

PRINCIPAL RISKS AND UNCERTAINTIES

Our risk appetite

The Group’s risk appetite is considered

as a fundamental part of the Board’s

strategy setting and annual budget

– it does not happen in isolation. Our

risk appetite is underpinned by our

objective of being a responsible and

resilient business whilst delivering for

our customers and universities with

attractive returns for our shareholders.

During the year, the Board continued

to regularly review and assess our risk

appetite against the context of the

especially fluid and uncertain Covid-19

situation with a primary focus on the

resilience of the business and its agility.

This considered both threats to – and

opportunities in – our business as well

as wider macro risk developments

impacting the PBSA sector and the

broader Higher Education sector,

property market and economy.

Our overall risk appetite in the year was

broadly unchanged from the previous

financial year, with the Board taking

an ongoing prudent approach to risk

and opportunity whilst the impact and

duration of the pandemic continues as

uncertain.

Risks – and the related benefits of our

actions – are reviewed and assessed

with a greater emphasis on their impact

on all stakeholders – employees,

customers, universities, investors and

suppliers – along with wider society in

the context of Covid-19 and its impact

on the economy.

Stress testing / scenario planning

andour Strategic Plan

Each year, the Board develops and

refreshes the Group’s Strategic Plan.

This is based on detailed three-year

strategic/financial projections (with

related scenario planning) and rolls

forward for a further two years using

more generic assumptions. The Board

maps our strategic objectives against

our risk profile. Then, always conscious

that risk events do not necessarily

happen in isolation, the Board stress

tests these projections against multiple

combined risk events. Through this

process, a base case and stress-tested

Strategic Plan are developed.

During 2021, this scenario planning

continued to closely monitor

Government and public health

authority guidance on Covid-19, the

ongoing and adapting operating plans

of universities for 2021/22 and 2022/23

academic years, as well as the emerging

impacts of Brexit on overseas student

mobility. The Board developed a wider

range of scenarios and stress tests to

assess our preparedness and ability to

withstand adverse market conditions.

Creating the right corporate culture

for effective risk management

The Group’s risk management

framework is designed to identify the

principal and emerging risks, ensure

that risks are being appropriately

monitored, controls are in place and

required actions have clear ownership

with requisite accountability.

This year, in recognition of the

continued growth of the business, we

made some changes to how we manage

risk and related assurance activities. We

appointed a Group Risk and Assurance

Director to embed best practice in risk

management across the business. In

addition, with effect from 1 January

2022, we have expanded the scope of

the Audit Committee; recognising the

importance of risk in all that we do and

the increasing regulatory burden with

TCFD and the potential changes that

may arise from the Department for

Business, Energy & Industrial Strategy

white paper “Restoring trust in audit

and corporate governance”, so it

becomes the Audit & Risk Committee.

The Committee will have increased

oversight for risk and provide the

Board with further assurance over risk

management in the Group.

The organisation has an open and

accountable culture, led by an

experienced leadership team operating

in the sector for a number of years. This

culture is set by the Board in the way

it conducts its Board and Committee

meetings and cascades through the

organisation enabling a suitable culture

for risk management.

The culture of the organisation

recognises – and accepts – that risk is

inherent in business and encourages

an open and proactive approach to risk

management as opposed to a blame

culture. By viewing our risks through

the lens of our strategic objectives,

the Group is able to ensure risk

management is pro-active and pre-

emptive and not a tick box exercise.

The Board has the overall responsibility

for the governance of risks and ensures

there are adequate and effective

systems in place. It does this in

variousways:

• Risks are considered by the Board

as an intrinsic part of strategy

setting and consideration of new

opportunities – risk is recognised as

an inherent part of each opportunity

• A twice-yearly formal review by the

Board of principal risks, how they

are changing and considering any

emerging risks

• Enhanced stress testing/scenario

planning to reflect the changing

nature of Covid-19

• The Executive Committee considers

and updates the principal and

emerging risks that the Group is

facing or should consider and then

brings these to the Board for its

detailed assessment of these risks

• Specific risk management in

dedicated Board sub-Committees

allowing focus on specific risk areas

(for example, the Audit Committee,

Health and Safety Committee and

the Sustainability Committee)

• The Executive Committee and

senior leadership team scrutinise

and challenge management activity

allowing a focused forum for risk

identification and review

• Risk assurance through external

andinternal auditors as well as

specialist third party risk assurance

where appropriate

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

OUR RISK MANAGEMENT FRAMEWORK

OUR KEY RISK INDICATORS

Risks assessed as part of strategy setting, annual budget and risk oversight

Owned by the Board and its Committees

Twice-yearly formal risk review and ongoing monitoring

of risk integral to Board meetings

Embedded risk management culture

Openness, transparency and clear ownership of risk management

(supported by risk trackers) cascades through the organisation

Risk management and assurance

framework overseen by the Audit

Committee. Detailed risk trackers

are developed and regularly updated

by the Customer and Property

Leadership Teams. The Executive

Committee reviews and challenges

these risk trackers and related risk and

opportunity activity.

People and Culture

Policies and Controls

University

Partnerships

Risk Management

Our Service

Platform

Our Properties

The Board

Policies and controls underpin our

riskmanagement framework

(such as Capital Operating

Guidelines; Treasury Policy;

Investment Committee and the

internal controls framework)

Safety

Higher Education trust

Customer satisfaction

% Nominations

Safety

Customer satisfaction

Employee engagement

Gross Asset Value

Asset age

Occupancy

Rental Growth

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

PRINCIPAL RISKS AND UNCERTAINTIES continued

Robust assessment of principal risks

The Directors confirm that they have

conducted a robust assessment of the

principal and emerging risks facing the

Group together with an assessment of

the procedures to identify emerging

risks. The process for how the Board

determined these risks is explained

above and these risks are set out on

pages 79–88.

Viability statement

The Directors have assessed the

viability of the Group over a three

year period to December 2024, taking

account of the Group’s current position

and the potential impact of its principal

risks. The Directors consider the three

year lookout period to be the most

appropriate as this aligns with the

Group’s own strategic planning period

combined with the levels of planning

certainty that can be derived from

the development pipeline. Based on

this assessment, the Directors have a

reasonable expectation that the Group

will be able to continue in operation and

meet its liabilities as they fall due over

the period to December 2024.

The outlook and future prospects

beyond the viability period for the

business remains strong, reflecting

the underlying strength of student

demand, our alignment to the strongest

universities and the capabilities of

our best-in-class operating platform.

Thereare significant growth

opportunities for the business created

by the ongoing shortage of high

quality and affordable purpose-built

student accommodation, universities

need to deliver an exceptional

student experience through their

accommodation and the growing

awareness of the benefits of PBSA

among non-1st-year students.

Inparticular, we see opportunities

for new developments and University

partnerships, building on the strength

of our enhanced reputation in

thesector.

The Group achieved an improvement in

financial performance from the 2020/21

academic year and expects a further

improvement in financial performance

from the 2021/22 academic year. The

Directors believe that UK universities

will continue to experience strong

demand from UK students as the 18

year old demographic profile becomes

increasingly favourable and the further

relaxation of international travel

restrictions allows increased numbers

of international students to study in the

UK. The Group has an annual business

planning process, which comprises

a Strategic Plan, a financial forecast

for the current year and a financial

projection for the forthcoming three

years (which includes stress testing

and scenario planning and also rolls

forwards for another two years). This

plan is reviewed each year by the Board

as part of its strategy setting process.

Once approved by the Board, the plan

is cascaded down across the Group

and provides a basis for setting all

detailed financial budgets and strategic

actions that are subsequently used by

the Board to monitor performance.

Theforecast performance outlook

is also used by the Remuneration

Committee to establish the targets

for both the annual and longer-term

incentive schemes.

The financing risks of the Group

are considered to have the greatest

potential impact on the Group’s

financial viability. The three principal

financing risks for the Group are:

• short-term debt covenant

compliance

• the Group’s ability to arrange

newdebt/replace expiring debt

facilities; and

• any adverse interest rate

movements

The Group has secured funding for

the committed future development

pipeline, which includes the Unite and

Liberty Living unsecured loan facilities

and prepares its Strategic Plan on

a fully funded basis in line with the

three year outlook period. Disposals

are an important part of our strategy

with the recycling of assets out of our

portfolio generating capital to invest

in development activity and other

investment opportunities.

To hedge against the potential of

adverse interest rate movements

theGroup manages its exposure with

a combination of fixed rate facilities

and using interest rate swaps for its

floating rate debt. During the year

theGroup has complied with all

covenant requirements attached to

itsfinancingfacilities.

Read our Financial review on pages 70–73

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

• Offering market leading customer service is key to helping us address any reduction in demand. Ensuring we have high quality

properties aligned to universities with a growing share of student demand mitigates demand reduction

• Longer term impact of Covid-19 including possible restrictions

on travel and societal change such as changing patterns of

study / alternative course delivery

• Changes in Government policy on Higher Education funding

• Immigration policy changes affecting international student

numbers and behaviour

• Brexit impacting numbers of EU students coming to study

intheUK

• Covid-19: ongoing impact for the business alongside wider

andindirect global impact

• Student applications: The number of applicants and the number

of students accepted onto courses in 2021 was 750,000 and

562,000 respectively (2020: 729,000 and 570,000)

• Brexit disruption continued through 2021

• UK continued as second most popular international destination

for students after the US

• The 2020/21 academic year was the first year of the new two-

year post-study work visa for international students (three years

for postgraduates)

• Ongoing monitoring of Covid-19 guidance from the Government

and public health authorities as well as extensive dialogue with

our HE partners on their dynamic operating plans. Prepared

budgets and business plans under a variety of scenarios and

stress tests to assess our preparedness and ability to withstand

the adverse market conditions

• Government dialogue and ongoing monitoring of Government

HE and immigration policy and its impact on UK, EU and

international student numbers studying in the UK

• Implemented our plan for our key Brexit operational risks –

People, Procurement and Development – through our Brexit

Disruption Plan

• Capitalise on the energy from the Fresh Start events

andcontinue to drive excellent customer service

• Continuing to work with our HE partners on their dynamic

operating plans and increase the number of beds under

nominations agreement

• Ongoing monitoring of Government HE funding

andimmigrationpolicy

• September 2021 saw the launch of the Turing Scheme,

replacingthe EU Erasmus scheme

• Uncertainty continues as to when any of the recommendations

in The Higher Education Funding Review (published in May 2019)

will be implemented

• Increased focus on quality and length of nomination agreements

• Regularly reviewed our portfolio to ensure we have a quality

portfolio, appropriately sized and in the right locations

• Undertook a refresh of our core purpose – Home for Success –

with a series of ‘Fresh Start’ employee events. The focus of the

events was to put our customers, students living with us, back

at the heart of everything we do, empowering our teams to give

a great customer experience in in their cities and properties

• Engagement with the two largest think tanks in HE to

understand and influence future HE policy

• Focus on driving higher levels of re-bookers

• Continued focus on portfolio management, using disposals

toreduce exposure in higher risk markets

Demand reduction: driven by macro events (such as Covid-19, Government policy around HE or

immigration andBrexit uncertainty)

RISK MANAGEMENT OBJECTIVE

POSSIBLE EVENTS POTENTIAL IMPACT

WHAT HAPPENED IN 2021

RISK MITIGATION IN 2021

FOCUS FOR 2022

MARKET RISK

Read more about Market review on pages 27–29

Read about our Business model on pages 8–14

• Covid-19 impacted the business in the 2020/21 academic

year leading to a loss of income compared to plans; improving

position for the 2021/22 academic year.

• Potential reduction in demand, leading to reduced profitability

and asset values

• Departure from EU impacting EU research grants and EU

students coming to the UK

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

PRINCIPAL RISKS AND UNCERTAINTIES continued

• Offering quality service is key to ensuring we have relationships with the high and mid ranked Universities, the ones most likely to

sustain a reduction in demand. We have embarked on a transformation programme to ensure our operating platform remains world-

class and helps us deliver the best customer service efficiently

• Offering a wider range of product enables students to have more choice

• Increasing focus on the cost of a university education –

affordability and value – with increasing value-for-money

demanded by students

• Increasing risk of blended university learning (digital plus in

person) – accelerated by Covid-19

• Emerging risk of shorter/more semester-led courses and

increasing home study

• Emerging risk of monitoring or regulation of the costs, rents,

profitability and value-for-money of student accommodation

• Potential for London Weighting applied to student finance to be

removed as part of the Government ‘levelling-up’ review

• Emerging risk of Further Education being promoted over HE

• Increasing proportion of second and third year students chose PBSA. 65% of direct-lets are to non 1st-years.

• Alongside our ‘Fresh Start’ events, we re-launched our Resident Ambassador programme, with 191 ambassadors focused on finding

the voice of the student community in properties, working with our in property teams to deliver a more personalised experience and

not a ‘one size fits all’.

• Having waived 2020 summer rents for students returning home

due to Covid-19 during the first national lockdown early in 2021,

Unite was the first PBSA operator to offer 50% discounted rents

and a complimentary four week extension in the summer to

allow students to enjoy the summer in their university cities

conscious this was an especially challenging time for them

• Provided flexible check-in for students during September/

October 2021

• Offered international students from “amber list” countries three

weeks accommodation free of charge at the start of the 2021/22

academic year to enable them to self-isolate

• Connected students via the MyUnite digital app before they

moved in so they could get to know each other in advance

• Further investment in training to provide increased provision and

access to student wellbeing and mental health support, including:

• Working with our HE partners on their dynamic operating plans

during the continuing pandemic and ensuring we still provide

the best and valued customer experience, whilst keeping

everyone safe

• Demonstrating the value-for-money of our offer compared

toalternatives, with our continued focus on Home for Success

and our brand promise

– 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

– Online chat rooms for students in the same building,

andonline events run by student ambassadors

– MyUnite App: students communicate remotely with our

inproperty teams without having to leave their rooms

– 24/7 support through the Unite Emergency Contact Centre

and a partnership with Nightline

– Dedicated welfare leads for all students including those

inquarantine and/or self-isolation

– Worked closely with our University partners supporting

students and maintaining our focus to keep all students

andstaff safe across our properties through the pandemic

• Ongoing monitoring of Government higher education funding

• Working with HE partners to increase the number of beds under

nominations agreements

• Ongoing review of our services, product proposition

andspecification

• Greater segmentation of product for customers

Demand reduction: value-for-money/affordability

RISK MANAGEMENT OBJECTIVE

POSSIBLE EVENTS POTENTIAL IMPACT

WHAT HAPPENED IN 2021

RISK MITIGATION IN 2021

FOCUS FOR 2022

MARKET RISK

Read more about Market review on page 27–29

Read our Business model on pages 8–14

• Covid-19 has directly impacted the student experience and

elevated concerns around university education affordability

and value-for-money. This has generally focused on questions

around the value of the student experience with students

studying on-line through the pandemic and limitations on their

in-person study and wider university lifeexperience

• More competition and reduced demand for year-round

student accommodation in the longer-term resulting in lower

profitability and asset values

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

• Offering great service as well as having high quality properties is critical to mitigating any supply surplus

• New supply of beds as sustained high levels of investment

demand filter into the development market, primarily through

investors providing forward commitments to smaller developers

• New supply impacted by more challenging planning environments and the emergence of the private rent sector (PRS) asanalternative

option for sites that could have been developed for PBSA

• The PBSA sector continues to mature and is becoming increasingly professionalised

• Disciplined investment approach to markets with supply/

demand imbalance

• Exposure to the best universities underpinned with our new

developments secured with nomination agreements

• Our portfolio: delivering our development pipeline underpinned

with strong University partnerships

• Our people and our operating platform: ensure our people and

systems continue to help us deliver consistently high levels of

service to students and universities alike

• Our capital structure: ensuring we have a strong yet

• Investment in our brand and student experience –

creatingbetter environments within our new developments

through Home for Success

• Maintaining strong relationships with key Higher

Educationpartners

flexiblecapital structure so we can adapt appropriately

assupply grows

• Completion of the disposal programme set out at the time of

the Liberty Living acquisition in 2019, increasing the alignment

of our portfolio to the strongest university cities and sustain

rental growth over a longer time horizon

Supply increase: maturing PBSA sector and increasing supply of PBSA beds

RISK MANAGEMENT OBJECTIVE

POSSIBLE EVENTS POTENTIAL IMPACT

WHAT HAPPENED IN 2021

RISK MITIGATION IN 2021

FOCUS FOR 2022

MARKET RISK

Read more about Market review on pages 27–29

Read more in Operations review and Property review on pages 56–69

• More competition for the best sites

• Potential impact on rental growth and occupancy

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

PRINCIPAL RISKS AND UNCERTAINTIES continued

• Ensuring the safety of our customers, contractors and employees is fundamental to our service offer

• Covid-19 impacting our customers, employees and contractors

• Fatality or major injury from a fire or other incident at a property

• Multiple contractor injuries at a development or operational site

• Covid-19 has impacted our safety risk in many ways. Our safety

risks such as fire and contractor safety continue, and in some

cases are even increasing. More students are cooking in their

student accommodation so there is an increased risk of kitchen

fires and we have seen other behavioural challenges. Along

with the physical health impacts of Covid-19, our students’ and

employees’ wellbeing and mental health are being challenged

even more than usual

• Changes to Building Regulations continued the focus on fire

safety especially in high-rise residential properties

• Focus on combustible materials continued, with high-pressure

laminates (HPL) and other materials under review, with a high

number of properties remediated during the year

• Fire safety management – despite Covid-19, continued focus on our

policies and procedures, risk assessments, training and fire records

• Continued working closely with Ministry for Housing,

Communities and Local Government (MHCLG) and local fire

authorities and fire safety experts to ensure fire safety and

address any remedial actions following Grenfell Tower learnings

• H&S has direct Board supervision by the H&S Committee (a

sub-Committee of the Board) which actively supervises H&S,

ensuring robust policies and procedures are in place and

consistently complied with

• H&S is also actively reviewed in the Customer Leadership Team

and Property Leadership Team, ensuring that H&S is top of mind in

our day-to-day operations and regularly assessed and validated

• First accommodation provider to achieve Covid Secure status

accredited by the British Safety Council

• Regular dialogue and engagement with Public Health England,

local authorities, our various stakeholders as well as direct

Government engagement on Covid-19

• Comprehensive Covid-19 risk management programme, including:

– Covid Response Team, Covid Secure Workplace and Covid

Secure BSC Assurance

– Covid audits by our Regional H&S Managers (these audits

consist of 20 questions checking whether we are compliant

with our Covid safe requirements e.g. staff are wearing

facemasks; sanitiser stations are stocked, and additional

cleaning regimes are in place)

• Monitoring the dynamic Covid-19 situation and proactively

revising our operating practices

• Further strengthen the H&S team with the appointment

ofaDirector of Safety

• Continued focus on the safety and wellbeing of our customers,

employees and contractors

– Our Covid Wiki page (our online employee repository for

Covid information) with working safely guidance, change of

lay out and ‘how-to’ videos

– Recognising the increasing mental health risk, we expanded

our H&S wellbeing for employees and appointed Healthy

Work Company to work with our operational and safety teams

• Continued engagement with Faithful & Gould for assurance on

Development safety risk (this includes specific Covid-19 audits

on sites as well as a Wellbeing focus)

• Finding ways to show visible leadership for Safety & Wellbeing

driven by our senior leaders. We measure how our teams feel

safe and well at work through Glint employee surveys and how

our customers feel safe and secure in their homes (NPS)

• Well-resourced health and safety team, working with our

customer facing teams on a continual basis

• Use of audits and external consultants to ensure that we are

maintaining high standards

• Fifteen buildings with HPL remediated during the year with

minimum disruption to students

• Implementation of our cladding remediation plan with activity

prioritised according to our risk assessments, starting with

those over 18 metres in height

• Monitoring and preparing for emerging fire & building

safetyregulations

Major health and safety (H&S) incident in a property or a development site

RISK MANAGEMENT OBJECTIVE

POSSIBLE EVENTS POTENTIAL IMPACT

WHAT HAPPENED IN 2021

RISK MITIGATION IN 2021

FOCUS FOR 2022

OPERATIONAL RISK

Read more about Health and Safety Committee report | pages 130–133

Read our Business model on pages 8–14

• Covid-19 impacting both the physical and mental health of our

customers and employees

• Fire or similar safety incident impacting our employees, the

students living with us, contractors working on-site and visitors

• Reputational damage and loss of trust in Unite as a

reliablepartner

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

• Having strong but proportionate controls to minimise risk of data loss and to ensure we are compliant with information security

anddata protection regulations

• Significant loss of personal or confidential data or disruption

tothe corporate systems either through cyber attack or

internaltheft/error

• Responded to the external Cyber Maturity Assessment

completed in Q4 2020, making further improvement in

our Information Security approach and controls with the

implementation of its key recommendations

• Technical security controls aligned to industry standards which

was supported through external security testing and renewal

ofour certification under the Cyber Essentials Plus scheme

• Agreed Information Security Strategy and Technical

SecurityRoadmap

• Provided ongoing support to the challenges presented by Covid-19,

such as technical improvements to support increased remote

working, improved awareness for employees on information risks

of working from home and ensuring the increase in personal data

collected for tracking was handled appropriately

• Continued monitoring of the increased data protection

risks due to the processing of Covid-19 health related data.

Steps taken to mitigate the risk included cross-functional

collaboration, strict access and data retention controls and

stringent procedural controls

• Conducted the Security Awareness For Everyone (SAFE)

Programme driving new initiatives and education campaigns

• Monitoring of emerging cyber threats to identify any issues

thatrequired a response

• Continue the alignment with the ISO27001 Information Security

standard, which provides a framework for a risk-based approach

to identifying, implementing and improving security controls

• Re-launch the Information Security Committee as the

Information Security and Data Protection Committee (IS&DPC)

and associated working group to better enable business level

engagement with Information owners

• Progressed improvement in security controls through

implementing the Information Security Management

Systemaligned to ISO27001

• External penetration test undertaken with all high risk

findingsaddressed promptly

• Ongoing programme of training and awareness to promote

everyone’s responsibility to protect information, especially

personal data

• Continued to capture customers’ self-isolation status data

tosupport with Covid-19 response activity

• Information Security and Data protection policies in place

todefine rules for protecting information. Range of policies

andsupporting procedures are being expanded

• Developed Information security vulnerability assessment

andthreat hunting capability

• Improved Information Security Incident Management

procedures, with a focus on our repose to the increased threat

ofRansomware

• Conducted a review and gap assessment of the Data Protection

activities to define an improved framework approach

• Renewed Cyber Insurance policy

• Expand the perpetual security monitoring and testing activities

• Continue to monitor the processing of, and controls in place for,

Covid-19 health related data

Information Security and Cyber threat

RISK MANAGEMENT OBJECTIVE

POSSIBLE EVENTS POTENTIAL IMPACT

WHAT HAPPENED IN 2021

RISK MITIGATION IN 2021

FOCUS FOR 2022

OPERATIONAL RISK

Read our Business model on pages 8–14

• Reputational and / or financial damage with increased scrutiny

including sanctions and fines

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

PRINCIPAL RISKS AND UNCERTAINTIES continued

• Optimising our portfolio

• High-quality service for students and universities

• Reduce our environmental impacts

• Covid-19 impacting delivery of schemes to programme

• Site acquisition risk – increasing competition for the best sites

• Planning risk – delays or failure to get planning

• Construction risk – build cost inflation due to increasing

development (albeit tempered by Covid-19 / economic

uncertainty)

• Construction execution risk – delivery delays impacting labour/

materials coming from outside the UK

• Disposals risk – inability to execute our disposals programme

• Climate risk – physical, regulatory and transactional risks

associated with climate change and the environmental impact

of our development activity

• Resumed development activity for schemes deferred in 2020 to conserve cash due to Covid-19

• Developed plans for delivery of our first net zero buildings

• Secured development and university pipeline partnerships of £967million representing c.6,000 beds for delivery over the next 4 years

• Experienced development team with extensive site selection

and planning expertise, coupled with strong track record

and focus on project delivery and strong relationships with

construction partners with appropriate risk sharing. Group

Board approval for commitments above a certain threshold

• Financial investment in schemes carefully managed prior

togrant of planning

• Managed development delivery despite Covid-19 as well

asmanaged Brexit-related disruption

• Regular development team and property review, with Group

Board Director oversight to ensure failure to secure sites or

complete on time are managed in the budget

• Optimising our portfolio:

– Growing alignment to strongest universities

– New investment focused on 8-10 markets (London and

prime regional cities)

– Securing more sites to build the pipeline for 2024 and beyond

– Continued discipline around capital recycling with focus

on building/location quality and targeting £200–250m

ofdisposals in 2022.

• Detailed planning pre-applications and due diligence before

siteacquisition

• Build cost inflation regularly appraised and refreshed.

Mid-sized framework contractors used and longer-term

relationships established to mitigate cyclical swings

• Engagement with our supply chain regarding future reductions

in embodied carbon through our development activity, for

example through building design and material specification

– Reducing the impact of our operational carbon emissions

as well as embodied carbon from our development and

refurbishment activity

• Managing Development cost inflation

Inability to secure the best sites on the right terms. Failure or delay to complete a development

within budget and on time for the scheduled academic year

RISK MANAGEMENT OBJECTIVE

POSSIBLE EVENTS POTENTIAL IMPACT

WHAT HAPPENED IN 2021

RISK MITIGATION IN 2021

FOCUS FOR 2022

PROPERTY/DEVELOPMENT RISK

Read more about our Property review on pages 62–69

Read more about our development pipeline and University partnerships pipeline on pages 62–69

Read more about secured development and partnerships pipeline on pages 62–69

Read more about our Sustainability Strategy on pages 34–49

• NTA and EPS affected by deferred schemes and/or reduced

financial returns, with cash tied up in development

• Reputational impact of delivering a scheme late and leaving

students without accommodation

• Recycling our portfolio through disposals is a critical aspect

of our development strategy and failure to deliver planned

disposals may result in a deteriorating net debt position and

negatively impact our ability to commit to all our planned

development pipeline

• Potential increases in construction costs as we seek to reduce

the carbon intensity of our developments and comply with

more stringent building regulations

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

• Managing the quality of our portfolio and our balance sheet leverage by recycling capital through disposals and reinvesting into

developments and acquisitions of assets aligned to the best universities

• Buying, developing or selling properties at the wrong point

inthe cycle

• The purpose-built student accommodation sector continued to

deliver strong performance relative to the wider UK real estate

sector amid the disruption caused by Covid-19. Strong sector

fundamentals and a track record of consistent rental growth

continue to attract significant volumes of capital to the sector

• Earlier in the Covid-19 pandemic, transaction activity slowed but

transaction activity now returning especially where sellers are

willing to provide a one-year income guarantee to buyers

• The average net initial yield across the portfolio is 4.9%

• Group Board and Property Leadership Team ongoing

monitoring of property market, direction and values

• Ensuring we have a strong yet flexible capital structure

sowecan adapt appropriately to market conditions

• Clear and active asset management strategy

• Continue monitoring of Covid-19, Government and central bank policies and their impact on the property market and general economic

conditions. Ensuring a strong yet flexible capital structure to manage the property cycle

• Ongoing monitoring of build cost inflation and factoring this into our appraisal of future schemes

• Continued focus on Home for Success and our partnerships with stronger universities

(December 2020: 5.0%). At a city level, there was yield

compression in London and other super prime provincial

markets, offset by a further increase in yields in more fully

supplied provincial markets

• Acquisitions – disciplined acquisitions strategy exercising

caution over portfolio premiums being paid in the market.

Careful management of net debt and LTV

• Maintaining disciplined approach to new development

transactions by maintaining Group hurdle rates

Property markets are cyclical and performance depends on general economic conditions

RISK MANAGEMENT OBJECTIVE

POSSIBLE EVENTS POTENTIAL IMPACT

WHAT HAPPENED IN 2021

RISK MITIGATION IN 2021

FOCUS FOR 2022

PROPERTY/DEVELOPMENT RISK

Read more about our Business model on pages 8–14

Read more about Property portfolio and Disposals on pages 62–69

• Reduction in asset values reducing financial returns and

leadingto an increase in LTV

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

PRINCIPAL RISKS AND UNCERTAINTIES continued

Environmental risks: the risk of not addressing the impact of climate

change on our business and not addressing the transition to a low

carbon economy

• Regulatory risks: ongoing evolution of more stringent climate

related regulations such as energy efficiency standards and

reporting standards

• Physical risks: increased frequency and severity of extreme

weather events such as high winds, intense rainfall and heatwaves

• Transition risks: risk associated with the transition to a

low carbon economy such as increased regulation, rising

stakeholder expectations on performance and disclosure,

reducing embodied carbon, asset stranding, energy supply

challenges and rising non-commodity costs

• Stakeholder risks: not being prepared and / or able to meet

increasing expectations from our investors, Higher Education

partners and our student customers around reducing our

contribution to climate change

Social risks: the risk of not delivering the social aspects of our

Sustainability Strategy:

• Opportunities for all and our ED&I and Wellbeing commitments

for our people and customers

• Social impact through positive engagement with our customers,

University partners and communities

Governance risks: the risk of not meeting the increasingly stringent

and complex reporting requirements and wider governance

aroundsustainability

ESG risk: failing to proactively address the environmental, social and governance risks

demanded of Unite Students as a responsible business

POTENTIAL IMPACT

SUSTAINABILITY / ESG RISK

•

Deliver our Sustainability Strategy

• Deliver energy and carbon performance improvements required to follow UK decarbonisation targets

RISK MANAGEMENT OBJECTIVE

• Launched our Sustainability Strategy and established our

Sustainability Committee

• Published our Net Zero Carbon Pathway, validated by the

Science Based Targets Initiative (SBTI)

• A key milestone for 2021 was the purchase of around 20%

ofour electricity direct from a windfarm in Scotland under

anewcorporate power purchase agreement

• Our Group’s revolving credit facility on renewal was converted into a

sustainable loan agreement with 3 KPIs linked to our environmental

and social initiatives, namely: (1) targeted reductions in Scope 1

& 2 carbon emissions, (2) improvements in the % of assets with

an A-C EPC rating and (3) the value of social investments made

by the business, including the Unite Foundation

• Increasing stakeholder expectation around ESG performance

and disclosure, and themes such as Task Force on Climate-related

Financial Disclosures (TCFD), GRESB and net zero carbon emissions

• Volatile wholesale energy markets with ongoing uncertainty

andcomplexity, and increasing non-commodity costs

• Achieved MSCI ESG rating: AA (2020: AA), CDP Climate Change

rating:B and GRESB score and rating: 85 (2020: 81)

• Launched our Positive Impact programme; an iteration of the

NUS Green Impact scheme, a United Nations award winning

programme which targets sustainable behaviour change, driving

activities with organisations and their customers to support this

WHAT HAPPENED IN 2021

• Developed our Asset Transition Plans as part of our building

energy performance strategy to manage EPC risk exposure

anddeliver performance improvements across our portfolio

as well as closer integration with asset management and

development activity

• Enhanced focus in the wider business on improving

sustainability performance and reporting

• Implementing further corporate power purchase agreements

(PPAs) linking a proportion of our baseload energy consumption

directly to renewable energy generation assets

• Continued investment in energy efficiency initiatives to deliver

real world energy and carbon savings

• Disclosed in line with EPRA sBPR, achieving Silver rating

RISK MITIGATION IN 2021

Read our Sustainability Committee report on pages 126–129

Read more about our Sustainability Strategy on pages 34–49

• Reputational and financial impacts arising from lack of clarity

about environmental targets and enforcement action for non-

compliance, such as on minimum standards for EPCs

• Damage to properties and disruption to customer experience,

operations and supply chain due to extreme weather events

• Reduced investor confidence and access to finance

• Requirement for significant capital investment and asset

management activity to address these environmental risks

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

• Embed sustainability in our “business as usual”

• Ongoing review of our sustainability targets and performance

and delivery of our Sustainability Strategy

• Complete the asset transition plans for all our properties

• Complete the development of our Social Investment Fund which

will act as the umbrella for all the social investments carried out

by the Group, focusing on activity which directly benefits young

people through education, life skills and employment

FOCUS FOR 2022

ESG risk: failing to proactively address the environmental, social and governance risks

demanded of Unite as a responsible business

• Deliver for our customers and universities with attractive returns for our shareholders, whilst being a responsible and resilient business

• Managing the quality of our portfolio and our balance sheet leverage by recycling capital through disposals and reinvesting into

developments and acquisitions of assets aligned to the best universities

• Breach a debt covenant

• Inability to replace debt on expiry

• Interest rate increase

• Unable to meet future financial commitments

• Due to Covid-19, our debt covenants, like for so many

borrowers, were fundamentally tested by the sudden,

unexpected and wide ranging shock of the pandemic.

There has been a specific focus on ICR covenants, not

historically a risk and not necessarily designed for a shock

suchas this

• Maintained our disciplined approach to leverage, with see-through

LTV of 29% at 31 December 2021 (31 December 2020: 34%)

• Mitigated the Covid-19 reduced income by (among other things)

reducing our dividends and reducing costs where possible

• Due to Covid-19 and specifically ICR covenants, continued

our increased covenant monitoring across a range of income

/ stress scenarios to ensure that if any risks emerge, we are

ready to identify further action and work with lenders well in

advance of formally reporting a covenant breach. In addition,

external audit review of covenant compliance through the Going

Concernprocess

• Ongoing monitoring of cash headroom, liquidity and covenant headroom / compliance

• Extend the maturity profile of our debt and diversify our funding sources

• Funding future development acquisitions beyond 2023

• Unite Group PLC 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

• See-through average cost of debt 3% (31 December 2020: 3.1%)

and 90% of see-through investment debt is subject to a fixed

interest rate (31 December 2020: 75%) for an average term of

5years (31 December 2020: 4.2 years)

• Compliance with our debt covenants

• Proactive engagement with all our lenders

• Interest rates monitored by the funding team as an integral

partof our refinancing activity – owned by the CFO and with

Group Board oversight

• Gearing ratios defined in our Capital Operating Guidelines

andreviewed and approved by the Group Board

• Interest rate exposure hedged through interest rate swaps

andcaps and fixed rate debt

Balance sheet liquidity risk / compliance with debt covenants

RISK MANAGEMENT OBJECTIVE

POSSIBLE EVENTS POTENTIAL IMPACT

WHAT HAPPENED IN 2021

RISK MITIGATION IN 2021

FOCUS FOR 2022

FINANCING RISK

Read more about our Business model on pages 8–14

Read more about Financial review on pages 70–73

• Breaching a debt covenant may lead to an event of default

followed by a repayment demand which could be substantial

• Inability to replace debt on expiry may lead to a possible

forced sale of assets potentially below valuation. Slowdown

ofdevelopment activity

• Adverse interest rate movements can lead to reduced

profitability and reduction in property values (through resulting

expansion of valuation yields and lower valuations)

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

PRINCIPAL RISKS AND UNCERTAINTIES continued

• People are key to the delivery of our service to students and universities

• Disproportionate effect of Covid-19 on the workforce due

toGovernment policy decisions, impact of long Covid

• Loss of talent to other purpose-built student

accommodationproviders

• Fail to meet our obligations / commitments in ED&I areas

• New People team recruited to drive the core strategy forward

• New Culture Matters forum launched; designed to put the

employee voice ‘front and centre’ in supporting the shaping

ofour people strategy

• Succession planning for key roles

• Training co-ordination and tracking was centralised,

bringing more consistency

• Delivered ED&I training to our senior leaders

• Maintained our Real Living Wage status

• Covid-19 secure environment, with policies and procedures reviewed in line with Government advice and policy

• Notice periods for key members of staff reviewed and amended

• Provided a range of channels for our teams to ask questions and feedback

• We held regular ‘Unite Live’ sessions with our CEO and key senior leaders to provide business updates with the opportunity

toaskquestions

• Conducted our employee engagement survey and shared findings with our teams to help jointly develop actions plans

• Implemented flexible working policy

• Finalise, communicate and embed the strategy for ED&I

andWellbeing

• Improve training and awareness

• Focus on succession plan and supporting personal

development through launch of training academy

• Introduction of mentoring for talent with high potential

• Review and update recruitment policies and practices,

includinghow we promote roles

• Explore the use technology to mitigate bias in recruitment

Unable to attract, develop and retain an appropriately skilled, diverse and engaged workforce

RISK MANAGEMENT OBJECTIVE

POSSIBLE EVENTS POTENTIAL IMPACT

WHAT HAPPENED IN 2021

RISK MITIGATION IN 2021

FOCUS FOR 2022

PEOPLE RISK

Read more about our Business model on pages 8–14

• Higher absences through illness

• Potential for corporate liability

• Unable to attract high calibre talent to the business

• Unable to deliver challenging business strategy in the next

fiveyears

• Reputational damage from not meeting ED&I targets

The Strategic Report on pages 1–88 was approved on 23February 2022 by

the Board and is signed on its behalf by:

Richard Smith

Chief Executive Officer

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

GOVERNANCE

CONTENTS

90 Chair’s introduction

toGovernance

92 BoardofDirectors

96 Boardstatements

99 Boardleadershipandpurpose

106 Divisionofresponsibilities

109 Boardactivities

117 NominationCommittee

120 AuditCommittee

126 SustainabilityCommittee

130 Health&SafetyCommittee

134 RemunerationCommittee

136 Directors’RemunerationPolicy

153 AnnualReportonRemuneration

168 Directors’Report

171 StatementofDirectors’

Responsibilities

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

“The Board’s response early

in the pandemic, ensuring

the right governance and

dedicated resources were

in place, has helped the

business with this resilient

performance through 2021”

Richard Huntingford

Chair

CHAIR’S INTRODUCTION TO GOVERNANCE

Through the hard work and dedication of our teams,

underpinned by our robust governance and risk

management framework, we have seen the business

deliver a strong performance in 2021. The Board’s

response early in the pandemic, ensuring the right

governance and dedicated resources were in place, has

helped the business with this resilient performance

through 2021. The Board has overseen the return to

earnings growth driven by increased occupancy, whilst

in parallel ensuring we enhance our portfolio by growing

the development pipeline and delivering disposals.

Thesafetyofourcustomersandemployeeshasalwaysbeen

oneofourkeyrisksandespeciallysothroughthepandemic.

Itwasimportantweremainedopenandfullyoperational,

providingsafeandsecurehomestosomanyyoungpeople

atsuchacriticalpartoftheirlife,andourBritishSafety

CouncilCovidSecureaccreditationandourengagementwith

universitiesandpublichealthauthorities,haveenabledus

todoso.Wetookanumberofkeystepstoensurethesafety

andwellbeingofourcustomers,employees,andvisitors

tooursites.ThesearedetailedintheHealthandSafety

Committeereportonpages130–131.

A SUCCESSFUL AND

RESILIENT 2021

The Board’s governance has supported

delivery of a successful year

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

ThechallengesofCovid-19weighed

heavilyonourkeystakeholders,in

particularourcustomers,whose

livesandstudiescontinuedtobe

impactedbythepandemic.TheBoard

recognisedtheongoingdisruption

tostudentsduringthenational

lockdowninearly2021andlivingour

valuesandespecially‘doingwhat’s

right’,weofferedadditionalrental

discountstostudentsunabletouse

theiraccommodation.TheBoardhas

overseenover£100millionoffinancial

supporttostudentsthroughthe

pandemicandbelievesthisresponse

hasstrengthenedourreputation

withstudents,parents,universities,

andGovernment.

TheBoard’sfocusonourvaluesand

specifically‘doingwhat’sright’and

‘raisingthebartogether’hasalso

drivenournewSustainabilityStrategy,

launchedinearly2021.Consciousthisis

acomplexanddynamicarea,theBoard

establishedournewSustainability

Committeeearlyin2021toensure

governanceandstrategicoversightof

thedeliveryofstretchingnewtargets

toreduceourenvironmentalimpact,

improveopportunitiesforemployees

andraisestandardsacrossthestudent

housingsector.CriticaltotheBoard

overseeinghowwewillreduceour

environmentalimpact,isour2030

netzerocarbonroadmap,published

attheendof2021andvalidatedby

theScienceBasedTargetsInitiative

(SBTi).ThisgivestheBoardassurance

andconfidenceinthedeliveryofour

SustainabilityStrategy.Formoredetail,

seetheSustainabilityReportonpage

34andtheSustainabilityCommittee

reportonpage126.

ThroughtheworkoftheNomination

Committee,wehavereviewedour

Boardcomposition.Ourmixof

complementaryskillsandrangeof

expertiseacrossthehighereducation,

realestate,finance,andhospitality

sectorshassupporteduswellthrough

thepandemic.Thisismyfirstyearas

Chair,followingPhilWhitestepping

downon31March2021,andIam

gratefulforPhil’sleadershipmaking

Unitewhatitistodayandhelping

prepareourplatformforgrowth.

Duringtheyear,RichardAkersalso

steppeddownfromtheBoarddue

tohisotherbusinesscommitments.

IamgratefulforRichard’svaluable

contributionstotheBoardwithhis

wealthofrealestateexperienceand

soundjudgement.

TheBoardseesgrowingdemandfor

highereducationintheUKtogether

withfurtherdemandforhigh-

quality,value-for-moneystudent

accommodation.Weseethisdemand

asadriverforthebusiness’sorganic

growth,whilsttheBoardalsoconsiders

ourstrategyforgrowththroughfurther

development,Universitypartnerships

andpotentiallyotherlivingsectors

complimentarytoouroperating

platformandcustomerfocus.

Engagementwithourwider

stakeholderscontinuesaskeytoour

growth,alongwithrobustandeffective

governanceandriskmanagement.

Thefollowingpagesexplainhow

ourgovernanceandstakeholder

engagementhavesupported

usthrough2021andhowitwill

continuetosupportourgrowthand

sustainabilityinthelonger-term.

Richard Huntingford

Chair

23February2022

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

BOARD OF DIRECTORS

Richard Huntingford

Chair

Years on the Board: 2

RichardjoinedtheBoardon

1December2020andbecame

theChairon1April2021.

Relevant skills, experience

and contribution

Richardisacharteredaccountant,and

hasover30yearsofplcboardexperience

includingasChiefExecutiveofChrysalis

Groupplcbetween2000and2007andas

aNon-ExecutiveDirectorofVirginMobile

Holdings(UK)plc.HisChairroleshave

includedWirelessGroupplc(formerly

UTVMediaplc),CrestonplcandCrown

PlaceVCTplcandRichardiscurrently

ChairofFutureplc.

Richard’sprovenFTSEchair,wider

non-executiveandexecutiveexperience

helpsusensurebestpracticeinboard

effectivenessandcorporategovernance.

Hiswealthofexperienceinpublic

companygovernanceandleadership,

corporatefinance,investment,business

development,investorrelationsand

mediahelpsusdriveourstrategy

developmentandeffectiveengagement

withourwiderstakeholders.

External appointments

• Futureplc(Chair)

• JPMorganMidCapInvestment

Trustplc(Non-ExecutiveDirector)

Richard Smith

ChiefExecutiveOfficer

Years on the Board: 10

RichardbecameChiefExecutiveOfficer

inJune2016afterworkingasUnite’s

ManagingDirectorofOperationssince

2011andjoiningthebusinessasDeputy

ChiefFinancialOfficerin2010.

Relevant skills, experience

and contribution

PriortoUnite,Richardspent19yearsin

thetransportindustry,workinginthe

UK,Europe,AustraliaandNorthAmerica.

Richardspent14yearsatNational

ExpressGroupwhereheheldarangeof

seniorfinance,strategyandoperations

roles,includingGroupDevelopment

DirectorandChiefFinancialOfficer,

NorthAmerica.

Richardcontinuestoleadthesuccessful

development,communicationand

implementationoftheGroup’sstrategy,

providingclearandvaluedleadership

anddeliveryoftheGroupKPIs.His

engagementwithourinvestorshelps

ensureourstrategyiswellunderstood

andvalued.Hisoperationalexpertisehas

helpedensurethebusiness’sresilience

andongoingdeliverythroughthe

challengesofCovid-19whilstensuring

theGroupiswell-placedforgrowth.

External appointments

• IndustrialsREITLimited

(Non-ExecutiveDirector)

Joe Lister

ChiefFinancialOfficer

Years on the Board: 13

JoejoinedUnitein2002andwas

appointedChiefFinancialOfficerin

January2008havingpreviouslyhelda

varietyofrolesincludingInvestment

DirectorandCorporateFinanceDirector.

Relevant skills, experience

and contribution

Joehascontinuedtoleadthedesign

anddeliveryoftheGroup’ssustainable

growthandfinancialperformance,which

wasespeciallytestedthrough2020and

2021byCovid-19.Joe’sdeepexperience

ofourbusinessandespeciallyour

fundingarrangementshasbeencritical

inhelpingusnavigatethechallengesof

thepandemic.TogetherwithRichard,

Joeensuresthedevelopmentand

communicationoftheGroup’songoing

performanceandstrategywithour

investors.JoeistheExecutiveBoard

leadforourSustainabilityStrategy,our

PropertyportfolioandourInformation

SystemsandTechnology(thisincludes

Boardresponsibilityforinformation

securityanddataprotection).

External appointments

• HelicalPLC

(Non-ExecutiveDirector)

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

Composition of the Board

Non-ExecutiveDirectors 1

Independent

Non-ExecutiveDirectors 6

Chair

ExecutiveDirectors

Non-ExecutiveDirectors

Gender diversity

Female 3

Male 6

33%

67%

Independence

Ross Paterson

Non-ExecutiveDirector

Years on the Board: 5

RossjoinedUniteinSeptember2017and

becametheAuditCommitteeChairin

January2018.

Relevant skills, experience

and contribution

RossistheFinanceDirectorof

StagecoachGroupplc,andasamember

ofStagecoach’sBoardisresponsiblefor

finance,businessdevelopmentandlegal.

RosscontributestoUnite’sBoardusing

hismanyyears’experienceofmanaging

financeinacomplexoperational

businesslikeourown.Healsobrings

valuedinsighttoinnovationaswe

continuetoenhanceourserviceoffer

toourstudentcustomers.Rossuses

hisfinancialandbroaderbusiness

experienceasChairoftheAudit

Committee,helpingoverseetheGroup’s

financialrigouranddelivery.

External appointments

• StagecoachGroupplc

(FinanceDirector)

• WCTGroupHoldingsLimited

(Non-ExecutiveDirector)

• InstituteofCharteredAccountants

ofScotland(BusinessPolicyPanel

member)

NominationCommitteeMember

AuditCommitteeMember

RemunerationCommitteeMember

Health&SafetyCommitteeMember

SustainabilityCommitteeMember

CommitteeChair

Elizabeth McMeikan

SeniorIndependentDirector

Years on the Board: 8

ElizabethwasappointedaNon-Executive

DirectorinFebruary2014andbecame

theSeniorIndependentDirectorofUnite

inJanuary2018.

Relevant skills, experience

and contribution

Elizabethhassignificantexperiencein

customer-focusedbusinessespreviously

workingatTescoandColgatePalmolive,

whereshewassuccessfulindriving

growththroughanunderstandingof

customerneedsandaninnovative

marketingapproach.Previouslyshe

wasaNon-ExecutiveDirectorofJD

Wetherspoonplc,thechairofMoat

HomesLtd,aleadinghousingassociation

intheSouthEast,andCH&CoLtd,a

privatelyownedcateringcompany.

Elizabethbringsherextensiveconsumer-

focusedexperience,bothasanexecutive

andalsoontheboardsofotherFTSE

companies,tohelpoverseethedesign

anddevelopmentofourcustomer

propositionandenhancedcustomer

service.AsSeniorIndependentDirector

ofUnite,ElizabethsupportstheChairin

theeffectiverunningoftheBoard,andas

ChairoftheRemunerationCommittee,

helpsensuretheExecutiveDirectors’

andbroaderseniorleadership’s

remunerationisalignedtothelong-term

sustainablesuccessoftheGroup.

External appointments

• McBrideplc

(Non-ExecutiveDirector)

• DalataHotelGroupPlc

(Non-ExecutiveDirector)

• FrescaGroupLtd

(Non-ExecutiveDirector)

• CustodianREITplc(Senior

IndependentDirector)

Committee key

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

BOARD OF DIRECTORScontinued

Ilaria del Beato

Non-ExecutiveDirector

Years on the Board: 4

IlariawasappointedaNon-Executive

DirectorinDecember2018.Ilariaisalso

ourDesignatedNon-ExecutiveDirector

forWorkforceEngagement.

Relevant skills, experience

and contribution

IlariaisCEOofFrasersPropertyUK,

partofFrasersProperty,aglobalreal

estategroup.IlariawasformerlyCEO

ofGECapitalUK,aregulatedBankand

corporatelenderandledGECapital

RealEstateUK,acommercialrealestate

investor,developerandlender.

Ilariabringsher30yearsofexperiencein

realestate,includingassetmanagement,

investmentandlending,totheGroup.

ThisexperienceisvitaltotheGroupas

wenavigatetheongoingandupcoming

marketuncertaintiesandincreasing

professionalisationofthesector.

External appointments

• FrasersPropertyUK(CEO)

Dame Shirley Pearce

Non-ExecutiveDirector

Years on the Board: 3

DameShirleyjoinedtheBoard

inNovember2019asaNon-

ExecutiveDirectorandChairs

ourSustainabilityCommittee.

Relevant skills, experience

and contribution

DameShirleyhasheldchair,senior

executiveandnon-executiverolesat

boardlevelinHigherEducation,health

andpolicingwithexperienceofboth

thepublicandprivatesectors.Shirley

wasViceChancellorofLoughborough

Universityfrom2006–2012andwasboard

memberattheHigherEducationFunding

CouncilforEngland,theUniversitiesand

CollegesEmployersAssociation,and

theHealthcarecommission,aswellas

beingaNon-ExecutiveDirectorofHealth

EducationEngland,andtheNorfolk,Suffolk

andCambridgeshireStrategicHealth

Authority.Shehasheldseniorgovernance

rolesattheLSE,andwasappointedan

independentrevieweroftheTeaching

ExcellentFramework.Shewasappointed

CBEin2005forservicestoeducationin

theNHSandin2014appointedDBEfor

servicestoHigherEducation.

DameShirleybringsherwideranging

andhandsonexperienceintheHEsector

totheBoard.Thisisespeciallycriticalat

atimeofongoingchangeinthesector,

whereherinsightandknowledgeofHE

andbroaderpolicyinitiativeshelpinform

theBoardonourstrategicdirection.As

ChairofSustainabilityCommittee,Shirley

helpsensureappropriateoversightof

ourSustainabilityStrategy.

External appointments

• CommitteeonStandardsinPublic

Life(Independentmember)

• HigherEducationQualityAssurance

PanelfortheMinistryofEducation

inSingapore

• RoyalAnniversaryTrust(Trustee)

• HCA(AdvisoryBoardmember)

• AssociationofUniversity

AdministratorsAUA(HonPresident)

Thomas Jackson

Non-ExecutiveDirector

Years on the Board: 3

ThomasjoinedasaNon-Executive

DirectorinNovember2019following

theGroup’sacquisitionofLibertyLiving

fromCPPIB.

Relevant skills, experience

and contribution

ThomashasbeentheheadofCPP

Investments’UKrealestatebusiness

since2015andisresponsibleforCPP

Investments’entryintoanumberofnew

realestatesectors,includingstudent

housing,lifesciencesandtheBuild-to-

rentsector.Inadditiontosittingonthe

BoardofTheUniteGroupPLC,Thomas

alsositsonanumberofCPPInvestments’

office,retailandlogisticsJointVenture

boards.BeyondtheUK,Thomasisalso

responsibleforCPPInvestments’real

estateinvestmentactivityinGermany

andtheCEEregions.Thomasoriginally

joinedCPPInvestmentsin2011andwas

instrumentalinitstransactionactivityin

Spain,theNordicsandIndia.

PriortojoiningCPPInvestments,Thomas

wasaVicePresidentintherealestate

investmentbankingteamatMacquarie

bankandfocusedonM&Atransactions

withintheUKandEuropeanpublicand

privaterealestatecompanies.

Thomasbringswiderangingrealestate

experience,notonlyfromthestudent

housingsector,butalsohiswiderbuild-

to-rent,retailandlogisticsrealestate

experiencetotheBoard.Hisinternational

experiencewillalsobeinvaluablefor

theBoard,helpingprovideawider

perspectiveondevelopmentsinreal

estateastheBoardprogressesfurtherits

strategicthinking.

External appointments

• CanadaPensionPlanInvestment

Board(ManagingDirector,Headof

RealEstate,UK)

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

Professor Sir Steve Smith

Non-ExecutiveDirector

Years on the Board: 2

ProfessorSirStevejoinedtheBoardon

1April2020.

Relevant skills, experience

and contribution

ProfessorSirStevebringshiswealthof

experienceintheHEsector.Hewasthe

Vice-ChancellorandChiefExecutiveof

theUniversityofExeterfrom2002to

August2020.SirStevewasthepresident

ofUniversitiesUK(2009–2011),Chairof

UCAS(2012–2019),servedontheBoards

ofUUKandtheRussellGroup,andwas

ChairoftheUUKInternationalPolicy

Network(2014–2020).

Between2007and2010,SirSteveled

forHigherEducationonthePrime

Minister’sNationalCouncilofExcellence

inEducation,whichprovidedadvice

toGovernmentaboutstrategyand

measurestoachieveworld-class

educationperformanceforallchildren

andyoungpeople.SirStevewasknighted

in2011forservicestoHigherEducation

locallyandnationally.

SirSteve’sextensiveexperienceinthe

HEsectorcontributestohowtheBoard

navigatesachangingHEsector.In

addition,hishands-onknowledgeand

insightintohowuniversitiesoperate

helpusdevelopstrongerUniversity

partnerships.SirStevealsoChairsour

HealthandSafetyCommitteeandhison-

campusknowledgehelpsusensureour

approachtosafetyiswellalignedwith

ourcustomers,universities,employees

andwiderstakeholders.

External Appointments

• ChairoftheLiveableExeter

PlaceBoard

• TrusteeforFulbrightProgramme

Chris Szpojnarowicz

CompanySecretary

Years with Unite: 8

ChriswasappointedCompanySecretary

andGroupLegalDirectorin2013.

Relevant skills, experience

and contribution

PriortoUnite,ChrisheldGeneral

CounselrolesatGE,MTVNetworksand

othermultinationals.Hewaspreviously

anM&A/corporateandcommercial

lawyeratCliffordChanceandBaker

McKenzie.Chrisuseshisgeneral

counselandcorporate/commerciallegal

experiencetoensureourcorporate

andriskgovernanceisalignedwithour

businessactivity.

External appointments

• TheWestofEnglandFriends

HousingSociety(BoardTrustee)

NominationCommitteeMember

AuditCommitteeMember

RemunerationCommitteeMember

Health&SafetyCommitteeMember

SustainabilityCommitteeMember

CommitteeChair

Committee key

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

BOARD STATEMENTS

Under the UK Corporate Governance Code, the

Board isrequired to make a number of statements.

Thesestatements are set out below

TheUniteGroupPLCislistedonthe

LondonStockExchangeandissubjectto

therequirementsoftheUKCorporate

GovernanceCode2018(the“Code”).

TheBoardisrequiredtoapplythe

principlesoftheCodeandtoeither

complywiththeprovisionsoftheCode

or,whereitdoesnot,explainthereasons

fornon-compliance.

Thecodeisavailableatwww.frc.org.uk

TheBoardisrequiredtoconfirmthatthe

Grouphasadequateresourcestocontinue

inoperationfortheforeseeablefuture.

TheBoardisrequiredtoassesstheviability

oftheCompanytakingintoaccountthe

currentpositionandthepotentialimpact

oftheprincipalrisksanduncertaintiesset

outonpages76–88.

TheBoardconsidersthattheCompanyhas,

throughouttheyearended31December2021,

appliedtheprinciplesandcompliedwiththe

provisionssetoutintheCodeexceptinrelationto

(a)Provision19:Chairtenure:PhilWhiteresigned

astheChairandNon-ExecutiveDirectoron

31March2021afterservingontheUniteBoard

fortenyearsandwassucceededbyRichard

HuntingfordasChairon1April2021,whowas

independentonappointment(seeexplanationon

page96of2020AnnualReportonChairtenureand

successorappointment);(b)Provision38:alignment

ofExecutiveDirectorpensioncontributionswith

theworkforce(seeexplanationonpage138ofthe

Directors’RemunerationReport)and(c)Provision

40and41:Engagementwiththeworkforceon

remunerationpolicy(seeexplanationonpage152

oftheDirectors’RemunerationReport).

Aftermakingenquiriesandhavingconsidered

forecastsandappropriatesensitivities,the

Directorshaveformedajudgement,atthe

timeofapprovingthefinancialstatements,

thatthereisareasonableexpectationthatthe

Grouphasadequateresourcestocontinuein

operationalexistencefortheforeseeablefuture,

beingatleast12monthsfromthedateofthese

financialstatements.

TakingaccountoftheCompany’scurrent

positionandprincipalrisks,theDirectorshave

areasonableexpectationthattheGroupwill

beabletocontinueinoperationandmeetits

liabilitiesastheyfalldueoverthethree-year

periodtoDecember2024.

DetailsonhowtheCompany

hasappliedtheprinciplesand

compliedwiththeprovisions

canbefoundthroughoutthis

CorporateGovernancesection

oftheAnnualReport.

Thetablebelowonpage98details

wheredisclosureagainstthe

principlesoftheCodecanbefound

inthisCorporateGovernancereport.

MoredetailsontheGoingConcern

statementcanbefoundonpages

190–191.

MoredetailsontheViability

statementcanbefoundonpage78.

REQUIREMENT

BOARD STATEMENT

MORE INFORMATION

COMPLIANCE WITH THE CODE

GOING CONCERN

VIABILITY STATEMENT

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

TheBoardisrequiredtoconfirmthatit

hascarriedoutarobustassessmentof

theprincipalandemergingrisksfacing

theCompanyandincludeadescription

oftheseprincipalrisks,whatprocedures

areinplacetoidentifyemergingrisks,and

anexplanationofhowthesearebeing

managedormitigated.

TheBoardisrequiredtomonitorthe

Company’sriskmanagementandinternal

controlsystemsand,atleastannually,

carryoutareviewoftheireffectiveness.

TheBoardshouldconfirmthatitconsiders

theAnnualReport,takenasawhole,is

fair,balancedandunderstandableand

providestheinformationnecessaryfor

shareholderstoassesstheCompany’s

positionandperformance,businessmodel

andstrategy.

Arobustassessmentoftheprincipaland

emergingrisksfacingtheCompanywas

undertakenduringtheyear,includingthose

arisingfromclimatechangeandCovid-19,and

thosethatwouldthreatenitsbusinessmodel,

futureperformance,solvencyorliquidity,

togetherwithanassessmentoftheprocedures

toidentifyemergingrisks.

TheBoardconductedareviewofthe

effectivenessoftheinternalcontrols,supported

bytheworkoftheinternalauditorandtheir

reportstotheAuditCommittee.

Nosignificantweaknesseswereidentified

throughthecourseofthereviews.

TheDirectorsconsider,tothebestofeach

person’sknowledgeandbelief,thattheAnnual

Report,takenasawhole,isfair,balancedand

understandableandprovidestheinformation

necessaryforshareholderstoassessthe

Company’spositionandperformance,business

modelandstrategy.

Informationaroundkeyrisksand

riskmanagementprocessesand

howtheyarebeingmanagedor

mitigatedcanbefoundonpages

74–88andonpages120–125of

theAuditCommitteereport.

Detailsonthesystemsofrisk

managementandinternalcontrol

canbefoundonpages74–88.

SeetheAuditCommitteereport

onpages120–125.

REQUIREMENT

BOARD STATEMENT

MORE INFORMATION

PRINCIPAL AND EMERGING RISKS FACING THE GROUP

RISK MANAGEMENT AND INTERNAL CONTROL

FAIR, BALANCED AND UNDERSTANDABLE

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

COMPLIANCE WITH THE CODE

TheCompany’sdisclosuresonitsapplicationoftheprinciplesoftheCodecanbefoundinthetablebelow:

BOARD STATEMENTScontinued

A. Long-termsustainablesuccessandcontribution

B. Purpose,valuesandculture

C. Resourcesandcontrolframework

D. Engagementwithshareholdersandstakeholders

E. Workforcepoliciesandpractices

F. Boardleadership

G. Boardcompositionandresponsibilities

H. RoleandcommitmentofNon-ExecutiveDirectors

I. Boardeffectiveness

J.Boardappointments,successionplansanddiversity

K. Boardexperience,skillsandknowledge

L. Boardevaluation

M. Internalandexternalaudit–independenceandeffectiveness

N. Fair,balancedandunderstandable

O. Riskmanagementandinternalcontrols

P. Remunerationpoliciesandpractices–long-termstrategyandsuccess

Q. Developmentofpolicyonremuneration

R. Judgementanddiscretion

Pages12to13,15to17,34to49

Pages99to102

Pages74to78,102

Pages12to13,15to17,104

Pages12,15,35,41,42,46,101,102,104

Pages106

Pages107

Pages118and119

Pages92to95,107

Pages114

Pages124

Pages120to125

Pages74to88,124

Pages134to167

Pages136,142

Pages135,142,144,151

BOARD LEADERSHIP AND COMPANY PURPOSE

DIVISION OF RESPONSIBILITIES

COMPOSITION, SUCCESSION AND EVALUATION

AUDIT, RISK AND INTERNAL CONTROL

REMUNERATION

PAGE

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

Withourpeoplebeingattheheart

ofourbusiness,theBoard’sfocuson

HomeforSuccessisalsoaboutensuring

anenvironmentwherebyouremployees

cangrow,develop,succeedandbelong.

TheBoardisdrivenbyourcommitment

todevelopdiverseandinclusiveteams,

filledwithpositiveenergyandnew

ideas.Weprovidearangeofcareer

pathwaysandmakeopportunitiesfor

progressionavailabletoall.

TheBoardhasultimateresponsibility

toUnite’sshareholdersforallthe

Group’sactivitiesaswellasabroader

responsibilitytoconsidertheviewsof

otherkeystakeholdersincludingour

customers,universities,employees

andthecommunitiesweoperateinas

wellasconsideringenvironmentaland

socialissueswhenmakingdecisions.

Thisresponsibilityisintertwinedinto

ourpurposeofHomeforSuccess.

Our values and culture

Weremaincommittedtoourpurpose,

continuingtoevolvethroughour

stakeholderengagementandourpeople.

TheBoard’sambitionistohavea‘One

Team’culture,whereourvaluescan

reflectthemindset,behavioursand

attitudesweaspiretorolemodelacross

thebusiness.Thesecontinuetoshape

ourculture,capturewhoweare,the

thingswebelieveinandhowweact.They

connectusanddriveourbehaviours.As

weprogressonourjourney,wedoso

withanenhancedcommitmenttodoing

what’sright.Thisgoesbeyondregulatory

complianceandrelatestoallaspectsof

thebusinessincludingtheimpactonour

peopleandcommunities.

During2021,theBoardapprovedthe

formationofour‘CultureMatters’

employeeforum.TheBoardwantedto

ensureouremployees’voiceis‘front

andcentre’inshapingandimplementing

ourPeoplestrategy.Thisforumensures

two-waycommunicationbetween

theBoardandthewidercompany,

involvingandengagingemployees

throughconsultation,enabling

themtocontributetothesuccess

ofthebusiness.IlariadelBeato,our

DesignatedNon-ExecutiveDirector

forWorkforceEngagement,attends

theforummeetings.Thisforumalso

underpinsanumberofemployee

networksalreadyestablishedacross

thebusinessincludingtheWomen’sand

LGBT+forums.

How the Board monitors our culture

Ourculturedefineswhatmakes

Uniteagreatplacetoworkanda

greatcompanytodobusinesswith

andformsthefundamentalbasisfor

ourgovernance.TheBoardmonitors

corporateculturethroughinteraction

anddialoguewithourpeopleandalso

throughregularemployeeengagement

surveysandsitevisits.ThisBoard

interactiontakesplacerightthrough

theorganisation,helpingensureour

valuesandculturearewellunderstood

andgivingourpeopletheopportunity

forfrankandopenfeedbackandthe

sharingofdifferentviews.

Ouremployeesurveyshelpmeasure

engagementthroughtheirparticipation

ratesaswellasthefeedbackreceived

acrossthebroadrangeoftopics

surveyed.During2021,theBoard

resumeditsCityvisits(notpossible

through2020duetoCovid-19)and

visitedouroperationsinCardiff,

anewcityforUnitefollowingour

LibertyLivingacquisition,andour

newdevelopmentsinBristol.Our

+20

HETrustscoreshowsuniversities

trustustosupportthemandgives

aninsightonourculturefromour

externalstakeholders.Ourinitiatives

undertakensupportingourValues

mentionedonpages99–101reflects

ourvaluesledculture.

BOARD LEADERSHIP AND PURPOSE

The Board is responsible for

establishing the Company’s purpose,

values and strategy, promoting

its culture, overseeing its conduct

and affairs, and for promoting the

long-term sustainable success of

the Company for the benefit of its

members and stakeholders.

Our Purpose – Home for Success

TheBoardhasdefinedourpurpose:

tocreateaHomeforSuccessforall

ourstudents.Wedothisbyproviding

communitieswithinourproperties

wherestudentscansucceedboth

professionallyandpersonally.Our

purposedescribesourshared

commitmentandmotivationand

helpsusarticulateourbusiness

model,developourstrategy,operating

practices,approachtoriskandhowwe

engagewithourstakeholders.

HomeforSuccessisaboutprovidingthe

righthomeexperienceforallthetensof

thousandsofstudentsthatcometolive

withuseachyearfromacrosstheglobe

andtoenablethemtoachievewhatever

goalsandambitionstheyaspireto.The

Boardoverseesourserviceproposition

andhowwekeepourstudentssafe

andsecure.OurpurposeofHomefor

Successand‘doingwhat’sright’ledtothe

Board’sdecisiontoofferfurtherrental

discountsin2021andcomplimentary

tenancyextensionsintothesummerof

2021toallowstudentstoexploreand

enjoytheiruniversitycitiesfollowing

theongoingCovid-19disruption.This

hasenhancedourreputationwith

students,parents,universitiesandthe

GovernmentandunderlinesourHome

forSuccesspurpose.

TheBoard’sfocusonHomefor

Successisalsoaboutensuringthe

rightplatformforourUniversity

partnersbyunderstandingtheirlong-

termaspirations,accommodation

requirementsandevolving

expectationsaroundstudentwelfare.

Thismeansourofferisbuiltaroundthe

prioritiesofstudentsanduniversities

alike.OurfocusonourHomefor

Successpurposeandthequalityand

resilienceofouroperatingplatformhas

enabledallourpropertiestoremain

openduringnationallockdowns,

providinghomestoourstudent

customersthroughoutCovid-19.

GOVERNANCE LEADERSHIP

AND CORPORATE CULTURE

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

CREATINGROOM

FOREVERYONE

Being authentic and striving for a truly

diverseand inclusive environment

Uniteisabusinessthatstrivestobewelcoming

andinclusivetoall,creatinganopportunity

toparticipateandfeelvalued.TheBoardhas

zerotoleranceofanyformofdiscrimination

andembracesculturaldiversitytoprovide

anenvironmentthatenableseveryonetobe

theirtrueselves,creatingasenseofbelonging

foreveryone.

KEEPING

USSAFE

Safety is at the heart of our brand

andatthecore of everything we do

TheBoardbelievesweareatourbestwhen

everyonearoundusisattheirbest.Lookingafter

everyone’swellbeing,bothphysicallyandmentally

remainstheBoard’skeypriority.Safetyisnotjust

somethingelsewedo,itispartofeverythingwe

doandisweavedthroughtheentirebusiness

andculture.

BOARD LEADERSHIP AND PURPOSEcontinued

Our Values and Culturecontinued

Our Values

The Board led the development of our values, which guide the organisation in delivering our purpose

of a Home for Success, where everyone feels they belong and are treated equally.

• 34%female/66%gendersplitinleadershipteam

• 66%ofmanagerialrolesfilledinternally

• 83individualshiredsupportingGovernment’s

Kickstartscheme

• 514Foundationscholarssupportedsince2012

and254scholarsgraduated

• SignedupforBlackInternsprogramme

• Sixcityteamtrainingsessionsheldunder

Leapskillsprogramme

• SevenRIDDORaccidents

• BritishSafetyCouncilCovidAssurance

Assessmentcompliant

• Over1,000bodycam/soloprotectcameras

inoperationacrossourcityteams

100

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

DOING

WHAT’SRIGHT

Always operate with a highly ethical,

collaborative and solution driven mindset

BeingaresponsiblebusinessispartofourDNA.

TheBoardalwayslookstodotherightthing

intherightway,creatingtrustforourpeople,

ourstudents,ourUniversitypartnersandthe

communitiesweoperatein.Thisdrivesthe

Board’sactionsanddecisionsasdemonstrated

bytheBoard’sleadershipinthedecisiontooffer

rentdiscountsandfour-weekcomplimentary

summerextensionsoftenancyagreementsdue

tothepandemic.TheBoardchallengesthestatus

quowhenneededandtakesaccountabilityfor

itsactions.

RAISINGTHEBAR

TOGETHER

Continuously focused on improving

thewaythings are done

TheBoard’sambitionistoconstantlystriveto

bebetter,byembracinganinquisitivemindset

andexploringthepotentialofourpeople’sown

development.Thisdoesnotmeanconstantly

tryingnewideasbutfocusingonourown

expertiseandbuildingonthat.TheBoarduses

clearinsightanddatatohelpinformusand

understandwhatreallymatterstostudents,

drivingefficiency,effectivenessandagreat

customerexperienceeverytime.

• NetCarbonZerocommitmentby2030

• RealLivingWageemployer

• GoldInvestorinPeopleaccreditation

• LaunchoffirstCultureMattersemployee

engagementforum

• Over£73millioninvestedinreplacement

ofcladding

• SocialprogrammesincludingLeapskillsand

UniteFoundation

• PartnershipwiththeBritishHeartFoundation

• +35CustomersatisfactionNPS

• +20HigherEducationTrustNPS

• MaintainedaGRESB4-starratingandimproved

scoreto85

• Serviceimprovementsdrivenbyideassubmitted

byemployees

Formoreaboutourcultureandvalues,goonlineto:

unite-group.co.uk/cultureandvalues

101

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FINANCIAL

STATEMENTS

OTHER

INFORMATION

BOARD LEADERSHIP AND PURPOSEcontinued

Fresh Start – reinvigorating our

Purpose, Values and Culture

FollowingCovid-19disruption

through2020,theBoardwaskeen

toreinvigorateourpurpose,values

andcultureoncephysicallymeeting

togetheragainbecamepossible

through2021.Tosupportthis,the

businessran19FreshStartevents

across16cities,witheveryoneacross

thebusinessinvited.TheBoard’sfocus

fortheseeventswastoensurewe

putourcustomersbackattheheart

ofeverythingwedo,empowering

ourteamstogiveagreatcustomer

experienceintheircitiesand

properties.After18monthsofworking

throughtheCovidpandemic,thisalso

providedanopportunitytobringteams

togetherandspendqualitytimeas

ateam.

Unite Live

UniteLiveprovidesemployeeswithan

opportunitytoengagewithourChief

ExecutiveOfficerandseniorleadership

directlythroughanonlineforum.Any

questioncanbetabledaboutworking

inUnitewithregularquestionsrelating

tosafety,wellbeinganddiversity.

Weupdateourpeopleonbusiness

developmentsthroughweeklyupdates

fromourCommunicationsteamand

viaarangeofplatformsincludingthe

employeeintranet,theHub.

Board oversight

TheBoarddischargessomeofits

responsibilitiesdirectlyandothers

throughCommitteesandsenior

management.TermsofReference

fortheCommitteesareavailable

inourGovernanceFramework,

publishedonwww.unite-group.co.uk/

about-us/corporate-governance.To

dischargetheirbroaderresponsibility

effectively,theGroupoperatesinan

open,harmoniousandtransparent

manner,ensuringopencommunication

betweentheBoardandthebusiness

anditsstakeholders.

During2021,theBoardstarted

meetingagaininpersonwhere

Covid-19guidanceallowedthisbut

alsoheldhybridmeetingsensuring

therewasampleopportunitytolisten

andheardirectlyfromtheleadership

team,thewiderbusinessandour

stakeholders.During2021,thisincluded

comprehensiveengagementwithour

employees,customersanduniversities

ontheimpactofCovid-19aswellasour

environmentalandsocialimpact.

TheBoardalsoreceivesupdates

onbusinessperformancefromour

leadershipteam,includingtheChief

CustomerOfficer,GroupInvestment

&ESGDirector,GroupProperty

Director,DeputyChiefFinancialOfficer,

ChiefStrategyOfficer,HeadofHealth

&Safety,GroupCommunications

Director,HeadofEnergy&

Environment,ChiefTechnologyOfficer,

HigherEducationEngagementDirector

andGroupLegalDirector&Company

Secretary(amongothers).

The Board is also responsible for:

• Assessing,monitoringand

promotingtheCompany’sculture,

andensuringthatthisclosely

alignswithitspurpose,valuesand

strategy(seepage99–101,Our

ValuesandCulture).

• Ensuringthenecessaryresources

areinplaceforthebusinesstomeet

itsstrategicobjectives.During2021,

thisrequiredtheBoardtoensure

therewasanappropriatebalance

betweendedicatedresourcesto

focusonCovid-19whilstensuring

otherteamscouldalsofocuson

otherstrategicprioritiessuchas

FireSafetyandimplementingour

SustainabilityStrategy.

• Establishingworkplacepoliciesand

businesspracticesthatalignwiththe

Company’scultureandvaluesand

supportitsstrategy(seepage104).

• Overseeingtheimplementationofa

robustcontrolsframeworktoallow

effectivemanagementofrisk,with

thisoversightdelegatedtotheAudit

Committee(seepages120–125).

• Effectivesuccessionplanningfor

keyseniorpersonnel,muchofwhich

isdelegatedtotheNomination

Committee(seepages117–119).

TheBoardhasultimateresponsibility

toUnite’sshareholdersforallthe

Group’sactivitiesaswellasabroader

responsibilitytoconsidertheviewsof

otherkeystakeholdersincludingour

customers,universities,employees,

suppliersandthecommunitieswe

operateinaswellasconsidering

environmentalandsocialissueswhen

makingdecisions.AlloftheBoard’s

significantdecisionsareconsidered

havingregardtoSection172and

specificallythelikelyconsequencesof

thesedecisionsinthelongtermand

theirimpactonourstakeholders.Pages

12–17oftheStrategicReporthighlight

howtheBoardhassoughttoeffectively

considerandengagewithour

shareholdersandwiderstakeholders.

Whiletheabovesummarisesthekey

areasofBoardresponsibility,itisnot

intendedtobeexhaustive.

BOARD SITE VISITS

propertiesvisitedbytheBoard

duringtheyear

102

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

Board structure

Board Committees

TheBoardhasdelegatedcertainresponsibilitiestoitsCommittees,asdetailedonthefollowingpages.

ThetermsofreferenceforeachCommitteearereviewedannually.

During2021,theBoardestablishedtheSustainabilityCommitteetooverseetheimplementationofourSustainability

StrategyandensureUniteisaresponsible,resilientandsustainablebusiness.

ThecurrentmembershipofeachCommitteeoftheBoardissetoutinthechartbelow:

Ross Paterson

IlariadelBeato

ProfessorSirSteveSmith

Elizabeth McMeikan

RossPaterson

ShirleyPearce

ProfessorSirSteveSmith

Professor Sir Steve Smith

ElizabethMcMeikan

IlariadelBeato

ShirleyPearce

RichardSmith

Shirley Pearce

RichardSmith

RossPaterson

IlariadelBeato

ThomasJackson

AUDIT

COMMITTEE

The Audit Committee oversees

the financial reporting, risk

management and internal

controlprocedures.

REMUNERATION

COMMITTEE

The Remuneration Committee

determines the remuneration

policy in consultation

with shareholders for the

remuneration of the Board and

the implementation of this policy.

HEALTH & SAFETY

COMMITTEE

The Health and Safety Committee

oversees the performance of

theGroup’s health and safety

andhelps drive the Group’s “Safe

and Secure” promise.

SUSTAINABILITY

COMMITTEE

The Sustainability Committee

oversees the implementation

of the Sustainability Strategy

and helps ensure Unite is

a responsible, resilient and

sustainable business.

Seecommittee report on pages 134–167

Seecommittee report on pages 126–129

Seecommittee report on pages 120–125

Seecommittee report on pages 130–133

CommitteeChair

Richard Huntingford

ElizabethMcMeikan

RossPaterson

IlariadelBeato

ProfessorSirSteveSmith

ShirleyPearce

ThomasJackson

RichardSmith

NOMINATION

COMMITTEE

The Nomination Committee

reviews the structure, size,

composition, skills and

experience of the Board and

focuses on succession planning

with due regard to diversity.

Seecommittee report on pages 117–119

103

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

BOARD LEADERSHIP AND PURPOSEcontinued

How the Board operates and

stakeholder engagement

TheBoardhasanannualoperating

rhythmwithanagendaofitemsfor

theforthcomingyearbuiltaround

ourstrategicobjectives.TheBoard’s

meetingsaresplitbetweenstrategy

(consideredinlightofprincipaland

emergingrisks,opportunitiesand

theapprovalofspecificinvestments

abovecertainthresholdsaswellas

ESGandlongertermsustainability)

androutineoperational,propertyand

financialupdates(providingcontext

forthestrategicdiscussionsaswellas

governanceoversightofin-yearactivity).

Meetingsusuallytakeplacethroughout

theUK,oftenatuniversitiesorinour

operatingcities,althoughthiswas

morechallengingduringthepandemic.

ThesemeetingsenabletheBoardto

meetVice-Chancellorsandlearnabout

theirexperienceswithUnite,their

accommodationrequirementsmore

generallyandbroaderdevelopments

intheHigherEducationsector.Inthe

beginningofthisyearmeetingstook

placevirtuallyorashybridmeetings

(toallowforongoingsocialdistancing

measures)andinthesummerof2021

resumedinpersonmeetingsoncethis

waspossible.

Seniorleadersareregularlyinvitedto

attendmeetingsandpresenttothe

Board.Thesemeetingsprovidethe

Board,andinparticulartheNon-

ExecutiveDirectors,withdirectand

openaccesstoleadersthroughout

theGroupandhelpsbuildacultureof

opennessanddirectness.Inaddition,

externalexpertsarealsoinvitedto

presenttotheBoard(suchasuniversity

Vice-Chancellorsandpropertyvaluers)

togivetheDirectorsabroaderand

independentperspective.

Stakeholderengagementonpages

12–17explainshowtheBoardengages

andmeasurestheviewsofourkey

stakeholdersandtheoutcomesfrom

thisengagement.

Workforce engagement and the role

of our Designated Non-Executive

Director for Workforce Engagement

TheBoardhasdesignatedoneofits

Non-ExecutiveDirectors(Ilariadel

Beato)tohelpensuretheviewsand

concernsoftheworkforcearebrought

totheBoardandtakenintoaccount

followingtheframeworkof‘listen,

reflectandrepresent’.TheBoard

choseIlariasincesheisaCEOatareal

estategroupandthuswellplacedto

understandcurrentchallengesfaced

byemployeesandalsosinceIlaria

isamemberofourSustainability

Committeewhichincludesour

SocialimpactaspartofitsESGremit.

Herroleincludes:

• attendingtheCultureMattersforum;

• monitoringouremployeeengagement

surveysandactionsarising;

• solicitingtheviewsofemployees

onremunerationstructuresand

processesacrosstheGroup;

• collaboratingwithourGroupPeople

DirectorandthewiderPeopleteam

whoalsoheartheviewsofthe

workforcedirectly;and

• providingfeedbacktotheBoardon

Peopleconcernsandtheresultsof

surveysandotherliaison.

ByattendingtheCultureMattersforum

andengagingwithpeopleacrossour

organisation,Ilariaisableto:

• understandtheconcernsofthe

workforceandsharetheseatBoard

meetings;

• ensuretheBoard,andinparticular

theExecutiveDirectors,take

appropriatestepstoevaluate

theimpactofproposalsand

developmentsontheworkforceand

considerwhatstepsshouldbetaken

tomitigateanyadverseimpact;and

• ensureplansarefedbackto

theworkforce.

Thischosenengagementmechanism

continuestobethesubjectoffeedback

fromtheworkforceindetermining

thatitisanappropriateandeffective

mechanismforengagementandis

includedintheannualagendaofthe

CultureMattersforum.

Workforceengagementhasledto

shapingtheBoard’sdecisionmaking.

Through2021,thesedecisionswere

primarilyfocusedonourpeopleandan

increasedfocusonequality,diversity,

inclusionandbelongingaswellassafety

andwellbeing.Thisappliedtoboththose

employeeswhocontinuedtoworkinour

propertiesandthoseemployeesable

tofulfiltheirrolesworkingfromhome.

Seepage12onhowweengagedwith

ourpeoplein2021.Ourengagement

resultedinthefollowing:

• TherecruitmentofanED&Ilead

whoisdevelopingourED&Iand

wellbeingstrategyandembedding

diversity,inclusionandwellbeing

intothecultureofourbusiness

throughalearninganddevelopment

programme.

• ED&Itrainingprogrammesledby

DiversityspecialistRenéCarayoland

sharingofviewsandexperiences

ofdiversityandinclusioninthe

workplace.Formoreaboutthese

programmesseepage42.

• Employeesbeingabletoinclude

theirpronounsintheiremailprofiles

throughourBetterData,Fairer

Workplaceproject.Seemoreunder

‘Providingopportunitiesforall’on

pages35,42and128andEquality,

DiversityandInclusiononpage42.

• Wellbeingfoundationaltraining

forallemployees,especiallythose

workingfromhomeconscious

thishascontinuedfortwoyears.

TheBoardcontinuestosupport

flexibilityinourwaysofworking.

Seemoreonpage35onEnhancing

thehealthandwellbeingofour

employeesandstudents.

• RelaunchofourPositiveImpact

programme(seemoreonpage44

aboutthisprogramme).

TheBoard,throughthedetailedwork

oftheRemunerationCommittee,also

monitorspayandpracticesacrossthe

widerworkforcewiththeGroupPeople

Directorattendingthesemeetingsto

updateonworkforceinitiativesand

offeranemployeeperspectivetothe

Committee’sdeliberations.

TheBoardalsoconsidersdiversity,

inclusivityandbelongingacrossthe

workforce,byconsidering(amongother

things)ourgenderandethnicdiversity

throughouttheGroupaswellasour

genderpaygap.

Investment in workforce

TheCompanyinvestsinourpeople,

consciousthatwecanonlydelivera

homeforourstudents,andultimately

ourpurposeofHomeforSuccess,

throughourpeople.Ourpeoplearea

keystakeholderandhowweengage

withthemandmeasurethisissetout

onpages12,15,17,35,104and138.

TheCompanyisafullyaccreditedLiving

Wageemployerandprovidesrecognition

throughpayawards,annualbonusesfor

allemployeesandourannualemployee

scheme,StarsAwards,recognising

individualsandteams.Seniorleadersare

eligibletoparticipateintheLongTerm

IncentivePlan.Allemployeesareeligible

toparticipateintheCompany’sSAYE

scheme.Asaresponsibleandsustainable

business,creatingdiverseandengaged

teamsiscriticaltoouron-goingsuccess.

Whistleblowing programme

TheBoardannuallyreviewsour

Whistleblowingprogrammeand

thenatureofconcernsraised.Our

Whistleblowingpolicyandaclear

explanationastohowemployeescan

raiseaconcerninconfidenceisreadily

availableandpublishedonourintranet.

Thisincludesraisingaconcernviaan

independentthird-partyifsomeone

feelsthisisnecessary.Concernsraised

aretheninvestigatedbytheCompany

Secretaryandescalatedasappropriate.

104

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

Section 172 of the Companies Act 2006 (Section 172)

Section172requirestheDirectorstotakeintoconsiderationtheinterestsofstakeholdersintheirdecisionmaking.In

particular,Section172(1)statesthatregardshouldbehadtothelong-termconsequencesofdecisions;theinterestsofthe

Company’semployees;theneedtofostertheCompany’sbusinessrelationshipswithsuppliers,customersandothers;the

impactoftheCompany’soperationsonthecommunityandtheenvironment;theimpactoftheCompanymaintaininga

reputationforhighstandardsofbusinessconductandtheneedtoactfairlyasbetweenmembersoftheCompany.Pages

15to17explainshowthiswasconsideredduring2021.Further,pages109to113explainBoardactivityanddecisionmaking

duringtheyearwhichflowedfromourstakeholderengagementandhowthisisalignedtoourstrategicobjectives.

How we engage with our investors

TheBoardvalueseffectivecommunicationwithshareholdersandotherprovidersofcapitaltothebusinessandwelcomes

theirviewsontheGroup’sapproachtocorporategovernance.TheBoardcreatessustainablevalueforourthreetypesof

investors:institutional,retailanddebtinvestors:

Investorsattendouryear-endandhalf-

yearresultspresentations(thesewere

heldvirtuallythisyearduetoCovid-19but

areusuallyinperson).Theyear-endresults

presentationalsoincludedthelaunchof

ournewSustainabilityStrategy.

Afterourresults,ourExecutiveDirectors

heldmeetingswithinvestorstoensure

theirviewsweretakenintoconsideration

aswedevelopourstrategy,helpthem

understandtheongoingperformance

ofthebusinessandourapproachtothe

reinstatementofdividends.

WeheldaCapitalMarketsDayinOctober

inManchester,showinginvestorsour

newpropertiesandourCityoperations

andsharingviewsontheHigher

Educationoutlook.

Wealsoengagewithinvestorsthroughout

theyearonvariousaspectsofenvironmental,

socialandgovernancematters.

TheBoardismadeawareoftheviews

ofmajorshareholdersconcerningthe

Companythrough,amongothermeans,

regularanalystandbrokerbriefingsand

shareholdersurveys.Thesewillcontinue

throughout2022.RichardHuntingfordalso

reachesouttothetop20shareholders

eachyear.

DuetocontinuedCovid-19

disruption,wehadtoholdour2021

AGMasaclosedAGM.However,to

ensureallshareholdersweregiven

anopportunitytoraisequestionsof

theBoard,shareholderswereinvited

toaskquestionsviaemailinadvance

ofthemeeting.

Allresolutionsputtothe2021

AGMreceivedoverwhelmingsupport

fromourshareholders.Theresults

ofvotingareavailableat:www.unite-

group.co.uk/investors/agm.There

werenoresolutionswithlessthan

80%votinginfavourandtherefore

CodeProvision4didnotapply.

Bond holders

Bondholdersareinvitedtoan

annualmeetingwithsenior

managementandTreasurytoupdate

themonperformanceandbusiness

strategy.Otherdiscussionsareheld

withbondholdersonspecifictopics

asrequiredsuchasESGandour

SustainabilityStrategy.

Lenders

Regulardialogueismaintainedwith

ourkeyrelationshiplenders,through

meetingsorconferencecallswith

ourCFOandTreasuryteam.Our

Treasuryteamalsoactivelyengages

withnewandpotentiallenders.

Duringearly2021engagementwith

ourlendershadfocusedonour

Financingcovenantscompliance

butisnowonceagainaddressing

ourfinancingcommitments

moregenerally.

Credit Rating Agencies

Duringtheyear,businessand

financialupdateswereprovidedby

ourTreasuryteamtoStandard&

Poor’sandMoody’swhogaveusan

investmentgradecorporateratingof

BBBandBaa2,respectively.

INSTITUTIONAL INVESTORS

INSTITUTIONAL INVESTORS: c.800

NUMBER OF EQUITY INVESTORS: c.1,250

RETAIL INVESTORS

PRIVATE INVESTORS: c.450

DEBT INVESTORS

NUMBER OF LISTED BONDS: 5

Shareholder consultation on proposed newRemuneration Policy

During2021,theRemunerationCommitteeconductedaconsultationwiththeCommitteeChairengagingwiththe20largest

shareholders(representingapproximatelytwo-thirdsoftheissuedsharecapital)andwithproxyadvisors(GlassLewis,

theInvestmentAssociationandISS)regardingproposedchangestotheCompany’sRemunerationPolicy(moredetailon

page136).TheCommitteewasgratefulforinvestorstakingthetimetoparticipateintheconsultationandtheconstructive

feedbackreceived.TheCommitteeusedthisdirectfeedback,alongwiththelatestinvestorandshareholderproxyvoting

principlestorefineandconcludeourfinalproposals.Thefeedbackreceivedandtheoutcomeofthisengagementissetout

onpages136–138underReviewoftheDirectors’RemunerationPolicy.

During2021,theCompanyrefresheditscorporatewebsiteprovidinginsightfulinformationforbothinstitutionalandretail

investors.Wecontinuetoofferascripdividendalternativetoshareholders,whichenablesthemtooptforsharesratherthan

cashwithnodealingcostsorstampduty.Theschemewasrenewedforafurtherthreeyearsatthe2021AnnualGeneral

Meeting.Fulldetailsareavailableonourwebsite.TheCompanyhasfrequentdiscussionswithshareholdersonarangeof

issuesaffectingitsperformance,bothfollowingtheCompany’sannouncementsandinresponsetospecificrequests.The

Companyregularlyseeksfeedbackamongitsshareholders,theinvestorcommunitymorebroadlyanditswiderstakeholders.

105

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

DIVISION OF RESPONSIBILITIES

Composition of the Board

ThecompositionoftheBoardissetout

inthetableonpage108.

TheBoardcurrentlyconsistsofthe

Chair,twoExecutiveDirectorsandsix

Non-ExecutiveDirectors.

EachoftheDirectorsoffersthemselves

forelectionorre-electionattheAnnual

GeneralMeeting,tobeconvenedthis

yearon12May2022,inaccordancewith

therequirementsoftheCode,Brief

biographiesofalltheDirectorsand

theirskills,experienceandcontribution,

aresetoutonpages92to95.Following

theindividualperformanceevaluations

ofeachoftheNon-ExecutiveDirectors

seekingre-election,itisconfirmed

thattheperformanceofeachofthese

Non-ExecutiveDirectorscontinuesto

beeffective.Theyeachdemonstrate

commitmenttotheroleandaddvalue

andrelevantexperiencetotheBoard.

On15December2021,RichardAkers,

aNon-ExecutiveDirectorofthe

Company,steppeddownfromthe

Boardinviewofhisotherincreasing

businesscommitments.Richardhas

servedasaNon-ExecutiveDirectorof

theCompanysince1September2018.

Independence

TheBoardconsidersfiveofitssixNon-

ExecutiveDirectorstobeindependent.

ThomasJacksonisnotconsideredtobe

independent,havingbeennominated

asaDirectoroftheCompanybyits

largestshareholderCanadaPension

PlanInvestmentBoard(CPPIB)

pursuanttoaRelationshipAgreement

signedaspartoftheLibertyLiving

acquisition.Accordingly,theCompany

meetstherequirementoftheCode

thatatleasthalfoftheBoard(excluding

theChair)ismade-upofindependent

Non-ExecutiveDirectors.Inaddition,

RichardHuntingford(Chairofthe

Board)isconsideredindependenton

hisappointmenttotherole.

Roles

TheChairandtheNon-Executive

Directorsconstructivelychallengeand

helpdevelopproposalsonstrategy,and

bringstrong,independentjudgement,

knowledgeandexperiencetothe

Board’sdeliberations.Therolesofthe

ChairandCEOareclearlyseparated.

Summariesoftheresponsibilitiesof

theChair,CEOandSeniorIndependent

Directoraresetoutinthetablebelow.

Thetermsandconditionsof

appointmentoftheNon-Executive

Directorsareavailableforinspectionat

theCompany’sregisteredofficeandat

theAnnualGeneralMeeting.

Time commitment

On1April2021,ElizabethMcMeikan

becameaSeniorIndependentandNon-

ExecutiveDirectorofCustodianREITplc.

Nopotentialconflicthasbeenidentified

inrelationtoElizabeth’sappointment.

Elizabeth’stotaltimecommitmentwith

CustodianREITplcisanticipatedtobe

c.22daysperyear.Therearenotiming

issuesidentifiedwithUnites’Board

datesandCustodianREITplc.Custodian

REITplchasaMarchfinancialyear-end.

TheBoardapprovedthisappointment

inadvanceandagreedthatitwouldnot

impactElizabeth’scommitmentasa

Non-ExecutiveDirectorofUnite.

Non-ExecutiveDirectorsareexpected

tocommitapproximately20daysper

annumtothebusinessoftheGroup.We

havereviewedtheresponsibilitiesofall

Directorsandaresatisfiedthattheycan

fullyfulfilthiscommitment.During2020

and2021additionaltimecommitment

wasneededasaresultofCovid-19

andtheDirectorsattendedregular

Covid-19Boardcallsinadditiontothe

scheduledBoardmeetingstoensurean

appropriatebalancebetweenafocused

Covid-19responseandanongoingfocus

onotherkeybusinessareas.

ItistheBoard’spolicytoallowExecutive

Directorstoacceptdirectorshipsof

otherunconnectedcompaniessolong

asthetimecommitmentsdonothave

anydetrimentalimpactontheability

oftheDirectortofulfilhisduties.Itis

consideredthiswillbroadenandenrich

thebusinessskillsofDirectors.Any

suchdirectorshipsmustbeundertaken

withpriorapprovaloftheBoard.

RichardHuntingford’sprincipal

responsibilitiesare:

• toestablish,inconjunctionwith

theChiefExecutive,thestrategic

objectivesoftheGroupforapproval

bytheBoard

• toorganisethebusinessof

theBoard

• toenhancethestandingofthe

Companybycommunicating

withshareholders,thefinancial

communityandtheGroup’s

stakeholdersgenerally

Role: Chair

RichardSmithhasresponsibilityfor:

• establishing,inconjunctionwiththe

Chair,thestrategicobjectivesofthe

Group,forapprovalbytheBoard

• implementingtheGroup’sbusiness

planandannualbudget

• theoveralloperationalandfinancial

performanceoftheGroup

Role: Chief Executive

AsSeniorIndependentDirector,

ElizabethMcMeikan’sprincipal

responsibilitiesareto:

• actasChairoftheBoardiftheChair

isconflicted

• actasaconduittotheBoardfor

thecommunicationofshareholder

concernsifotherchannelsof

communicationareinappropriate

• ensurethattheChairisprovided

witheffectivefeedbackonhis

performance

Role: Senior Independent Director

106

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

Board tenure

EachoftheExecutiveDirectorshasa

rollingcontractofemploymentwitha

12-monthnoticeperiod,whileNon-

ExecutiveDirectorsare,subjecttore-

electionbyshareholders,appointedto

theBoardforatermofapproximately

threeyears.Theadjacentchart

showsthecurrenttenureoftheNon-

ExecutiveDirectors(roundeduptothe

nearestyear).

RichardHuntingford

IlariadelBeato

ElizabethMcMeikan

RichardAkers*

RossPaterson

DameShirleyPearce

TomJackson

ProfessorSirSteveSmith

0 2 4

NED Tenure

61 3 5 7 8

*RichardAkersresignedon15December2021

Professional advice and training

Directorsaregivenaccessto

independentprofessionaladviceatthe

Company’sexpensewhentheDirectors

deemitnecessaryinorderforthem

tocarryouttheirresponsibilities.The

Directorsalsohaveregulardialogue

with,anddirectaccessto,theadvice

andservicesoftheCompanySecretary,

whoensuresthatBoardprocesses

andcorporategovernancepractices

arefollowed.

TheBoardconsidersitimportantthat

theCommitteeChairscontinueto

receivesectorandrelevantfunctional

training(suchasonaccounting,

corporategovernanceandexecutive

remunerationreportingdevelopments)

andaccordinglytheCommitteeChairs

attendrelevantexternalseminars.

TheBoardasawholereceivesongoing

trainingoncorporategovernanceand

otherrelevantdevelopments.

Board induction

OnappointmenttotheBoard,

eachDirectortakespartina

comprehensiveandpersonalised

inductionprogramme.Thisinduction

isalsosupplementedwithongoing

trainingthroughouttheyeartoensure

theBoardiskeptuptodatewith

keylegal,regulatoryandindustry

updates.AnyDirectoronappointment

undergoesinductionprogramme

followingthisframework:

• Thebusinessandoperationsofthe

GroupandtheHigherEducation

sector;theroleoftheBoardand

mattersreservedforitsdecisions;

thetermsofreferenceand

membershipofBoardCommittees;

andpowersdelegatedtothose

Committees.

• TheGroup’scorporategovernance

practicesandproceduresandthe

latestfinancialinformationabout

theGroup.Thelegalandregulatory

responsibilitiesasaDirectorand,

specifically,asaDirectorandChair

ofalistedcompany.

Aspartoftheinductionprogramme,

theymeetwithkeyseniorexecutives,

sofromtheoutsettheyhave

accesstopeoplethroughoutthe

organisationtohelpthemformtheir

ownindependentviewsontheGroup,

itsperformanceandthesectorwe

operatein.Inaddition,theymeetwith

representativesoftheCompany’skey

advisers.Arrangementsaremadefor

eachDirectortovisitkeylocations

toseeourbusinessoperationsand

propertiesfirst-handandtheHigher

Educationinstitutionswithwhich

wepartner.

107

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

DIVISION OF RESPONSIBILITIEScontinued

Board activities in 2021

Directors’ attendance at meetings

Current

Directors Status

Date of

appointment

tothe Board Board

Audit

Committee

Remuneration

Committee

Nomination

Committee

Health

& Safety

Committee

Sustainability

Committee

Richard

Huntingford

Chair/Independent 01December2020 11/11 – – 100% – –

Elizabeth

McMeikan

Independent 01February2014 11/11 – 100% 100% 100% –

Joe

Lister

Executive 02January2008 11/11 – – – – –

Richard

Smith

Executive 01January2012 11/11 – – – 100% 100%

Ross

Paterson

Independent 21September2017 11/11 100% 100% 100% – 100%

Richard

Akers

Independent 01September2018 11/11 100% 100% 100% – 100%

Ilaria

del Beato

Independent 01December2018 11/11 100% – 100% 100% 100%

Dame Shirley

Pearce

Independent 01November2019 11/11 – 100% 100% 100% 100%

Thomas

Jackson

Non-independent 29November2019 11/11 – – 100% – 100%

Professor Sir

Steve Smith

Independent 01April2020 11/11 100% – 100% 100% –

Phil

White

Chair 21January2009 3/3 – 100% – – –

1. Resignedon15December2021.

2. Resignedon31March2021.

108

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

BOARD ACTIVITIES

2021 Board activities table

Governance Strategy

Financial & Risk

management People

Operational and

commercial

February HigherEducation

sectorreview

GroupStrategy

review

AnnualTaxreview

Valuerupdate

Genderpay

gapreview

ED&Iinitiatives

Developmentmarket

update

March ApproveAnnual

Report

IRreview

Launched

Sustainability

Strategy

LSAVextension

Preliminaryresults

Groupcashflow

review

ResumingDividend

Developmentsafety Post-completion

review

Claddingreview

May AnnualGeneral

Meeting

Reviewauditors

Developmentstrategy

andreview

Reviewinternal

controls

ReviewInformation

Security

EmployeeWellbeing

review

Disposals

June Embedding

SustainabilityStrategy

DigitalUpskilling

programme

Strategyand

Growthinitatives

Fundingoptions

Principaland

emergingrisksreview

SafeandSecure

promiseduring

Covid-19

Employee

engagement–

CultureMatters

FireSafety

Investmentmarket

review

Developmentand

Estatesupdate

July RefreshingourOKRs

(ObjectivesandKey

Resultsinlightof

Covid-19)

InternalAuditCyber

Securityreview

HEsectorand

Covid-19

Interimresults

Debtstrategy

Plansforour2021

internalBoard

evaluation

Covid-19operational

review

September ClimateChangerisks

andTCFD

HigherEducation

sectorengagement

Refreshingour

Sustainability

Strategy

Marketing,

Communications

andBrandStrategy

Review

Interimsfeedback

Sustainability-linked

revolvingcredit

facility

Workforce

Engagementupdate

People&Culture

Review

Customersurvey

update

NetZeroCarbon

Pathway

October CapitalMarketsDay

Shareholder

Consultation on

RemunerationPolicy

Sustainabiltity

progressreview

CladdingUpdate Studentwellbeing

UniteFoundation

update

Property–

development

approval(DerbyRoad,

Nottingham)

November InternalBoard&

CommitteeEvaluation

feedback

AuditCommittee

expansiontoAudit&

RiskCommittee

DataandTechnology

RoadMapand

Strategy

Implementation

Update

2022budgetthemes Organisational

peopledesignto

deliverourStrategy

Firesafety

December InternalAudit&

Assurance

NetZeroCarbon

Pathway

AnnualTaxstrategy

review&approval

Principaland

emergingrisksreview

2022budgetapproval

EmployeeBonus

Scheme

Whistleblowing

review

LibertyLiving

integration–review

oflearnings

109

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

BOARD ACTIVITIEScontinued

Board Decision making during 2021

STRATEGIC OBJECTIVE

DELIVERINGFOROUR

CUSTOMERSANDUNIVERSITIES

Safety, health and wellbeing:

Governance to ensure the

health, safety, wellbeing and

security of our customers is

paramount.

During 2021 this has continued

with a particular focus on

Covid-19 and fire safety.

Operational risk –

Major health and

safety incident in

aproperty or a

development site

onpage 82

TheBoardreviewsthesafetyofourstudents,visitorsandemployees,

aswellascontractorsatourdevelopmentsites,ateachBoardmeeting.

• Covid-19:TheBoardoverseeshowourpropertiescanremainopen

andoperationalthroughoutthepandemicandensuresweemploy

theappropriaterangeofmeasuresacrossourbuildingstoreduce

transmissionofCovid-19wherepossible.

• Fire safety:TheBoardandtheHealthandSafetyCommitteereview

andchallengeourfiresafetyprogramme,acriticalpartofourhealth

andsafetystrategy.TheBoardiscommittedtothebusinessbeinga

leaderinfiresafetystandardsthroughaproactive,risk-basedapproach

embeddedacrossthebusinessandensuringthatstudentsand

ouremployeesarekeptsafe.TheBoardalsooverseesourcladding

remediationprogrammeandrelatedspending.

BOARD’S GOVERNANCE ROLE LINK TO PRINCIPAL RISK WHAT THE BOARD DID IN 2021 AND ITS DECISION MAKING

Ensuring our product is

affordable and provides good

value-for-money for our

customers.

Market risks – Demand

reduction: value-for-

money / affordability

onpage 80

Boardgovernanceofourdecisionandcommitmentto‘doingwhat’s

right’oofferfurtherrentaldiscountsandcomplimentarytenancy

extensionstoourcustomersunabletousetheiraccommodationat

thestartof2021.

BoardanalysisoftheHigherEducationaccommodationsector,and

ensuringwecontinuetoofferanaffordableandvalue-for-moneyproduct.

Boardanalysisofourcustomerofferandhowweserviceundergraduate

1st-yearstudentsthroughlettingstouniversitiesundernomination

agreementsandalsoconsideringtheopportunitiestotailorourcustomer

propositiontobettermeettheneedsofreturningstudentsseeking

greaterindependenceandpostgraduateandinternationalstudentswho

maybewillingtopayapremiumforahigherlevelofservice.Oversight

oftrialsin2021ofapostgraduatefocusedcustomerofferwhich

deliveredincreasesinrentalincomeandNetPromoterScoresandour

resultingincreasedofferofourproductandservicesegmentationfor

postgraduatesforthe2022/23salescycle.

ReadmoreaboutOperations review on pages 56–61

ReadmoreaboutHealth & Safety Committee report on page 130

110

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

DELIVERING FOR OUR CUSTOMERS AND UNIVERSITIES CONTINUED

Governance to ensure our best-in-

class operating platform delivers

for our customers and University

partners.

Market risks – supply

and demand on

pages 79–81

ThroughourdirectengagementwithVCsandotherlevelsof

managementwithinuniversities,theBoardisabletotakeinto

accounttheviewsofthesestakeholdersaswellasmonitoringand

measuringourperformance.

Boardoversightthatouroperatingplatformandourcustomer

facingoperationalapps(suchastheMyUniteapp)deliver:

• arobustbookingsystem

• animprovedandscalableplatformforrevenuemanagement

 andcustomerengagement

• enhancedservicelevelsforbothuniversitiesandstudents

• marketdifferentiation.

ReadmoreaboutOperations review on page 56–61

ReadmoreaboutStakeholder engagement on pages 12–17, 104

Ensuring our ‘safe and secure’

promise extends to keeping our

customers’ and employees’

personal data safe and secure.

Operations risk –

Information Security

and Cyber threat on

page 83

Ongoingreviewofourinformationsecurityanditsgovernance,

inparticularhavingregardtotheGeneralDataProtection

Regulation(GDPR).

BOARD’S GOVERNANCE ROLE LINK TO PRINCIPAL RISK

WHAT THE BOARD DID IN 2021 AND ITS DECISION MAKING

Board scrutiny of our developments

and portfolio recycling to ensure we

partner with the right universities

and enhance our long standing

relationships.

Building university relationships

through ongoing engagement and

dialogue with universities.

Market risk – supply and

demand and Property/

Development risk

on pages 79–81 and

pages 84–85

Boardportfolioactivityfocusedonincreasingouralignmenttohigh

andmid-rankeduniversitiesandbeinginthebestlocationswith90%

ofourrentalportfolioand100%ofourdevelopmentpipelinelocated

inRussellGroupcitiesandbecomingmoreconcentratedtowards

thestrongestmarketsovertimeandourweightingtowardsLondon

increasingto44%throughdeliveryofourdevelopmentpipeline.

Boardapprovalofdevelopment/disposalsactivity.

ReadmoreaboutDevelopment and University partnership activity

on page 66

111

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

BOARD ACTIVITIEScontinued

Board Decision making during 2021continued

STRATEGIC OBJECTIVE

ATTRACTIVERETURNS

FORSHAREHOLDERS

Dividend Policy: Board

governance role in framing of our

dividend policy.

Financing risk

on page 87

Boardfocusonreinstatingourdividendpaymentswithapayout

ratioof80%ofadjustedEPSasmarketconditionsstabilised.

BOARD’S GOVERNANCE ROLE LINK TO PRINCIPAL RISK

WHAT THE BOARD DID IN 2021 AND ITS DECISION MAKING

Development pipeline: Board

scrutiny of city and site selection for

new developments against a

backdrop of increasing competition

for the best sites.

Governance of developments/

acquisitions to ensure they run to

budget and schedule and are

earnings accretive.

Property/Development

risk on pages 84–85

Boardoversightofournewinvestmentfocusedon8–10cities,

includingLondonandprimeregionalmarketswiththestrongest

demandoutlook.Through2021,theBoardledtheincreasein

developmentthroughadevelopmentpipelineincreaseto6,000

bedsand£967millionintotaldevelopmentcost.

TheBoardtakesintoaccountitsengagementwithuniversities

aboutthesedevelopmentswhenmakingadecisionwhetherto

proceedornotwiththesedevelopmentschemes.

ReadmoreaboutDevelopment and partnership activity on page 66

Disposals: Board governance of

our portfolio recycling as we

increase our exposure to the UK’s

best universities, while generating

capital to invest in further

development activity.

Property/Development

risk on pages 84–85

Boardoversightofthesaleof£261millionofassetstoenhance

ouroverallportfolioqualityandfundreinvestmentintothe

improvementofourestate.Thesehavereducedourfootprint

from27to25marketsandincludesdisposalsidentifiedfollowing

ouracquisitionofLibertyLivingin2019.

ReadmoreaboutDisposals on page 69

112

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

STRATEGIC OBJECTIVE

ARESPONSIBLEAND

RESILIENT BUSINESS

Sustainability: As a listed plc and

responsible/trusted business, our

wider stakeholders demand we

proactively manage

environmental, social and

governance risks. The Board

oversees the setting and

implementation of our

Sustainability Strategy which has

the overarching ambition for Unite

to clearly lead the student housing

sector on sustainability issues

andbe in the leading pack of

realestate companies in the

widersector.

Sustainability/ESG risk

on page 86

DuringMarch2021,theBoardledthelaunchofournew

SustainabilityStrategydevelopedfollowingextensive

stakeholderengagementandmaterialityassessments.

ThisnewSustainabilityStrategyprovidesaclearstructurewith

objectives,flagshiptargetsincludingnetzerocarbonoperations

andconstructionfrom2030andgovernancetoensureits

successfuldelivery.

TheBoardapprovedtheNetZeroCarbonPathway,builton

sciencebasedtargetsvalidatedbytheSBTi,whichsetsoutthe

activitiesandinvestmentrequiredtoachieveourobjective

ofbecomingnetzerocarbonacrossboththeCompany’s

operationsanddevelopmentactivitiesby2030.

TheBoardalsointerrogatedourongoingESGregulatoryand

reportingcompliance.

TheBoardconsideredtheBoard’sspecificclimatechangerisks,

identifyingthemacross:Regulatoryrisk;Physicalrisk;Transition

risk;andStakeholderrisk.TheBoardconsideredtheimpactof

theserisksandoverseestheassuranceofthecorresponding

riskmanagement.

BOARD’S GOVERNANCE ROLE LINK TO PRINCIPAL RISK

WHAT THE BOARD DID IN 2021 AND ITS DECISION MAKING

Fire safety: Proactive Board

oversight of improvements in fire

safety, demonstrating leadership on

removal of HPL cladding.

Employee wellbeing: Governance

to ensure the health, safety,

wellbeing and security of our

1,900employees is paramount.

Diversity and inclusion

Operational risk –

Major health and safety

incident in a property

or a development site

on page 82

Operational risk –

Major health and safety

incident in a property

or a development site

on page 82

TheBoardoversawtheGroupbeingoneofthefirstcompanies

totakeactiontoremoveAluminiumCompositeMaterials(ACM)

claddingfromourbuildingswhereneeded.Followingthis,the

BoardledthereviewofHigh-PressureLaminate(HPL)claddingon

ourpropertiesandthegovernanceofourcladdingremedialplan

andtheinvestmenttobeincurredoverthenext12–36months

implementingthisplan.

TheBoardhasdesignatedoneofitsNon-ExecutiveDirectors(Ilaria

delBeato)tohelpensuretheviewsandconcernsoftheworkforce

arebroughttotheBoardandtakenintoaccount.

TheBoardapprovedtheformationofourCultureMattersforum.

Thisputstheemployeevoice‘frontandcentre’insupportingthe

shapingofourPeoplestrategyandconsultingonstrategicchange.

TheBoardalsohasoversightofvariouswellbeingandEquality,

Diversity,Inclusion&Belonging(ED&I)initiatives.Wehireda

Diversity,Inclusion&BelongingleadwhoisdevelopingourED&I

andwellbeingstrategyandembeddingequality,diversity,inclusion

andwellbeingintothecultureofthebusinessthroughalearning

anddevelopmentprogramme.

Readmoreaboutemployee wellbeing and ED&I initiativesunder

Workforce engagement on pages 42 and 104

113

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

BOARD ACTIVITIEScontinued

A RESPONSIBLE AND RESILIENT BUSINESS CONTINUED

HE Government Policy and

Brexit: Continued focus on

potential HE Government

policychanges as well as our

Brexitresponse.

Market risk – supply and

demand pages 79–81

OngoingBoardmonitoringofHEGovernmentpolicyandits

impactforPBSAandmorewidelyaswellascontinuedmonitoring

ofhowwearerespondingto,andmitigatingtheimpactof,Brexit

onourbusiness.

Covenants compliance:

GroupBoard oversight of our

Covenantscompliance.

Financing risk

onpage 87

BoardoversightofourFinancingCovenantscompliance

testedbythesudden,unexpectedandwiderangingimpactof

Covid-19.During2020andearly2021,therehasbeenaspecific

focusonICRcovenants.

TheBoardmonitorsCovenants’complianceacrossarangeof

income/stressscenariostoensurethatifanyrisksemerge,the

Boardisreadytoidentifyfurtheractionandworkwithlenders

wellinadvance.

CovenantcompliancealsohasoversightintheAuditCommittee

andbytheexternalauditreviewofourCovenantcompliance

throughtheGoingConcernprocess.

BOARD’S GOVERNANCE ROLE LINK TO PRINCIPAL RISK

WHAT THE BOARD DID IN 2021 AND ITS DECISION MAKING

Capital structure: Group Board

focus on a strong and flexible

capital structure, which can

adapt to market conditions, and

reducing and diversifying the

cost of funding.

Financing risk

on page 87

Boardoversightofourcapitalstructure,includingthe£450

millionsustainability-linkedunsecuredrevolvingcreditfacility.

ReadmoreaboutFinancial review on page 70

Leadership development and

succession planning/talent

pipeline.

Market risk – supply and

demand on pages 79–81

TheNominationCommitteefocusesonBoardsuccessionaswell

asourbroadertalentpipelineandleadershipdevelopment.

Readmoreaboutsuccession planning/talent pipeline on page 117

Board Decision making during 2021continued

114

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

2020 BOARD EVALUATION RECOMMENDATIONS 2021 PROGRESS AGAINST THESE RECOMMENDATIONS

1. Consider setting up a Sustainability Committee, reporting

to the Board, to have oversight of the development,

integration and communication of the Sustainability

Strategy and review how climate-related change and

environmental concerns are integrated into our strategy.

The Board established a Sustainability Committee in early

2021 toprovide this formal oversight and challenge to the

execution of the Group’s Sustainability Strategy. During 2021,

the Committee had three Committee meetings and expects

to have four meetings per year going forwards.

2. Create space in the Board agenda for more unstructured

strategicdiscussion and blue-sky thinking and

discussion.

One 2021 Board meeting was focused purely on our strategy

development and strategy is also picked up on Board focused

sessions focusing on different themes of our strategy.

3. Continue to develop the Board’s oversight of the

Company’s culture and approach to employee

engagement.

The Board approved our new People strategy, which among

otherthings focuses on diversity and inclusion. The creation

ofthe Culture Matters forum and the work of our Designated

NonExecutive Director for Workforce Engagement helps

theBoard better understand our employees and the

businessculture.

4. Create more opportunities for the Board members

tospend moreinformal time together when

circumstances permit.

In mid-2021, the Board transitioned to hybrid meetings and

has now moved back to in person meetings together with

operational City visits (which included Bristol and Cardiff

in2021).

Progress against the 2020 Board Evaluation recommendations

2021 performance evaluation

EachyeartheBoard,itsCommitteesandDirectorsare

evaluated,considering(amongotherthings)thebalance

ofskills,experience,independenceandknowledgeonthe

Board,itsdiversity(includinggender),howitworkstogether

asaunitandotherfactorsrelevanttoitseffectiveness.

TheCompany’spolicyistoconductanexternallyfacilitated

evaluationeverythirdyear.During2021,theevaluationwas

conductedinternally.Thepreviousexternalevaluationwas

in2020andthenextexternalevaluationisexpectedtobe

during2023.

Board evaluation process

TheBoardcompletedananonymousonlinequestionnaire

usingThinkingBoard,providedbyIndependentAudit

Limitedthataddressedabroadrangeofissuesandwhich

enabledittoprovidecommentsonarangeofmatters.The

questionscoveredBoardperformance,culture,thecontent

andscopeoftopicscoveredatBoardmeetings,andthe

natureanddynamicsofDirectorcontributionsatmeetings.

Thequestionsetwereconsistentwith2020toprovide

comparativeresults.Therewereseparatequestionnairesfor

theAudit,Remuneration,Health&SafetyandNomination

Committee.TheconclusionswerediscussedbytheBoard

andeachCommitteeattheirmeetingsinQ4of2021.Since

theSustainabilityCommitteewasonlyestablishedearlierin

2021,itwasnotincludedintheformalCommitteeevaluation

processbuttheSustainabilityCommitteeconsideredits

effectivenessinJanuary2022.

Conclusion from this year’s Boardevaluation

ThegeneralconclusionwasthattheBoardandits

Committeescontinuetooperatetoahighstandardand

workeffectively.Otherareasofstrengthincludedtheskills

andexperienceoftheNon-ExecutiveDirectorsbothto

challengeandsupporttheExecutiveteam,andcontributions

toBoarddiscussionanddecisionmaking.Theconsensus

isthattheBoardiseffectivelydevelopingandreviewing

itswiderbusinessstrategyandSustainabilityStrategy,

withclearalignmentaroundourPurposeandValues.The

DirectorsbelievethattheBoardfulfilsitsrolerelatingto

strategy,risk,governanceandoversightofoperationaland

financialperformancewell.Thekeyareaswherethereare

opportunitiesforfurtherdevelopmentinclude:

• organisationoversight,withaparticularregardto

successionplanning,cultureandvalues;

• abetterunderstandingofrisksandmitigationaround

ITanddataandhowthismayinformourstrategyand

moregenerallyunderstandinghowourriskslinkto

ourstrategy;

• abetterunderstandingofourPeopleissuesanddata;and

• upskillinginfastdevelopingareassuchasTechnology,

SustainabilityandNetZero.

TheBoardandeachofitsCommitteesreviewedthe

suggestionsandoutcomesoftheBoardevaluationand

havedevelopedanimplementationplan.TheBoardalso

considereditsandtheCommittees’currentcomposition.

TheonlychangewasaddingRichardSmithasamemberof

theNominationCommittee(effective1February2022)soas

CEOhecouldsharehisviewsontheBoard’sstructure,size

andcompositionandhelpingensuretheBoardhastheright

balanceofskills,diversityandexperience.

115

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FINANCIAL

STATEMENTS

OTHER

INFORMATION

DELIVERING FOR OUR CUSTOMERS

AND UNIVERSITIES

ATTRACTIVE RETURNS

FOR SHAREHOLDERS

A RESPONSIBLE AND

RESILIENT BUSINESS

2022 governance priorities

Governance of initiatives to enhance

student experience and increase

customer retention.

Governance to support our university

partners to deliver their accommodation

needs and future growth ambitions

through off-campus development, on-

campus development or stock transfer.

Governance to generate attractive

returns for shareholders through a

combination of growing recurring

income, rental growth and value add

through our development activities,

University partnerships and potentially

other living sectors complimentary to

our operating platform and customer

focus.

Governance to ensure continued

progress against the five pillars of our

Sustainability Strategy. Governance

of our Net Zero Carbon Pathway and

investments in energy initiatives.

Governance of our People strategy

to ensure the Group embraces the

opportunities a truly diverse and

inclusive workforce brings across all

levels of our business, creating a sense

of belonging and ensuring our people

can bring their true selves to work.

BOARD ACTIVITIES continued

116

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

Richard Huntingford

Chair of the Nomination Committee

Elizabeth McMeikan

Senior Independent Director

Ross Paterson

Non-Executive Director

Ilaria del Beato

Non-Executive Director

Dame Shirley Pearce

Non-Executive Director

Thomas Jackson

Non-Executive Director

Professor Sir Steve Smith

Non-Executive Director

Richard Smith

Chief Executive Officer

(Joined effective 1 February 2022)

NOMINATION COMMITTEE

Succession planning and diversity continue

as the Committee’s primary focus

PEOPLE GOVERNANCE

NUMBER OF MEETINGS

ATTENDANCE

100%

Committee

Membership

117

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OTHER

INFORMATION

NOMINATION COMMITTEE continued

Nomination Committee

Chair’soverview

Succession planning and growing

the diversity of the Board has

been the primary focus of the

Committee through 2021, whilst

also monitoring ongoing executive

succession planningand our talent

andleadershipdevelopment.

Composition

The Committee consists of all the

Non-Executive Directors and, effective

1 February 2022, Richard Smith also

joined the Committee. The Committee

felt it important that the Chief Executive

is a member of the Committee

for Board composition and wider

leadership succession discussions

and planning. At the invitation of

the Committee, other people may

be invited to attend meetings of the

Committee if considered desirable in

assisting the Committee in fulfilling

itsrole.

Role

The role of the Committee is to:

• Ensure that appropriate procedures

are adopted and followed in the

nomination, selection, training,

evaluation and re-election of

Directors and for succession

planning, with due regard in all cases

to the benefits of diversity on the

Board, including gender

• Regularly review the structure,

size, composition, skills and

experience of the Board and to make

recommendations with regard to any

adjustments considered necessary

• When it is agreed that an

appointment to the Board should be

made, lead a selection process that

is formal, rigorous and transparent

• Be responsible for identifying,

reviewing and recommending

candidates for appointment to

theBoard

Nomination Committee meetings

The Nomination Committee met

twice with 100% attendance at

thesemeetings.

Review of Board composition

andsuccession planning

During the year, the Committee

reviewed the Board’s composition to

ensure it has the correct balance of

skills, experience, independence and

knowledge. The Committee noted

the Board was strengthened by the

appointment of two Non-Executive

Directors with strong HE experience

(Dame Shirley Pearce and Professor

Sir Steve Smith). This proved especially

helpful for higher education insight as

the Board navigated Covid-19 through

2020 and 2021.

The Committee believes the Board

currently has the correct balance of

skills, experience, independence and

knowledge but is conscious of the

tenure of the longer standing Non-

Executive Directors. Consequently,

in early 2022, the Committee created

a dedicated sub-committee to start

the search for a new Non-Executive

Director. MWM Consulting, an external

search consultancy, is leading the

search for this new Non-Executive

Director. MWM Consulting has no

other connection with the Company or

individual Directors.

Board succession planning for

executive roles is also considered by

the Committee, looking to ensure

the business has a deep, diverse and

inclusive talent pipeline for future

Board appointments. As an integral

part of executive succession planning,

the Committee oversees our talent

mapping to ensure we are growing and

nurturing our talent and developing

our high-performers’ potential. Our

diversity and inclusivity initiatives

(outlined below) are aligned with this

succession planning.

Diversity and inclusion

The Board recognises that diversity and

inclusion is fundamental to the culture

of the Group, our purpose of Home

for Success and ultimately our long-

term sustainability. With employees

a key stakeholder and at the heart of

our business, the Board’s focus is on

creating a workplace where people feel

they belong and can bring their whole

and true selves into the workplace.

Our values recognise this, especially

‘creating room for everyone’.

In 2021, the Board oversaw the

formation of our Culture Matters

forum. This puts the employee voice

‘front and centre’ in supporting

the shaping of our People strategy

and consulting on strategic change.

During the year senior leaders from

across the business participated in a

six-module workshop development

programme with Rene Cayarol, an

external specialist in coaching and

a pioneer in cultural diversity and

inclusive leadership. To help implement

our EDIstrategy, we appointed a new

EDI&Wellbeing Lead.

118

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

Board Diversity Policy

The Board and Nomination Committee

drive the agenda for diversity across

the business. We are making progress,

but recognise we need to do more.

The Board’s diversity policy is that

Board appointments (a) are made on

merit and relevant experience, while

taking into account the broadest

definition of diversity and (b) ensure

Unite has, on an ongoing basis, the

most effective Board and leadership

team to operate the business for the

benefit of all its stakeholders. The

Committee ensures that when making

Board appointments the retained

search firm places an emphasis on

putting forward candidates who

would enhance the overall diversity

of the Board. On an ongoing basis,

the Committee keeps under review

the tenure and experience of the

Executive and Non-Executive Directors

to ensure the Board has an appropriate

and diverse mix of skills, experience,

knowledge and diversity.

Board and senior leadership diversity

The Board embraces the Code’s underlying principles with regard to Board

balance and diversity, including in respect of ethnicity, gender and age.

As of 31 December 2021, the Board comprised three women and six men, meeting

the recommendations of the Hampton-Alexander Review with a Board comprising

at least 33% women.

Female 3

Male 6

Gender diversity

33%

67%

As of 31 December 2021, the number of women in the Executive Committee and

their direct reports (including the Company Secretary as required by the Code)

was 18 (out of a total of 51) representing 35% of this Group. We are looking to grow

the percentage of women in leadership positions.

Male Female Total

Executive Committee

and Company Secretary 7 2 9

Direct Reports 26 16 42

Total 33 18 51

Total (%) 65% 35% 100%

The Nomination Committee is also

conscious of the Parker Review

and in particular one of its key

recommendations that each FTSE250

Board should have at least one director

of colour by 2024. Building on our

diversity initiatives and having regard to

this recommendation, the Nomination

Committee will build a pipeline of

candidates working towards the goal

ofmaking a Board appointment no

laterthan 2024.

In addition, the Committee will continue

its focus on delivering diversity for the

wider business to help the Company

develop a deep and diverse succession

plan at more senior levels within the

organisation.

Richard Huntingford

Chair – Nomination Committee

23 February 2022

119

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FINANCIAL

STATEMENTS

OTHER

INFORMATION

Ross Paterson

Chair of the Audit Committee

Ilaria del Beato

Non-Executive Director

Professor Sir Steve Smith

Non-Executive Director

AUDIT COMMITTEE

The Audit Committee provided oversight for

the Board in respect of the Group’s financial

management and reporting

FINANCIAL GOVERNANCE

NUMBER OF MEETINGS

ATTENDANCE

100%

Committee

Membership

120

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

Audit Committee Chair’s overview

During the year, the Audit Committee

continued its key oversight role for the

Board with its specific duties as set out

in its terms of reference to reassure

shareholders that their interests

are properly protected in respect of

the Group’s financial management

andreporting.

The Audit Committee works to a

structured programme of activities,

with agenda items focused to coincide

with key events in the annual financial

reporting cycle. The Audit Committee

reports regularly to the Board on

itswork.

During the year, the Audit Committee

has continued to monitor the integrity

of the Group’s financial statements

and supported the Board with its

ongoing monitoring of the Group’s

risk management and internal control

systems in line with the requirements

under the UK Corporate Governance

Code. The Audit Committee determined

the focus of the Group’s internal audit

activity, reviewed findings, and verified

that management was appropriately

implementing recommendations. The

Audit Committee also challenged the

approach to assessing the Group’s

ability to continue as a going concern

and its likely loan covenant compliance,

by reviewing various scenarios for

future performance.

The Audit Committee undertook a

review of its effectiveness in September

2021. The review found that the Audit

Committee is working effectively. The

review identified areas in which we

can strengthen our performance and

these are reflected in the Committee’s

priorities for 2022.

During 2021, the Audit Committee

undertook a full evaluation exercise of

the Deloitte audit approach to ascertain

the effectiveness of the external audit

function. Further to the completion

of the evaluation of the external audit

process, we are satisfied with both

the auditor’s independence and audit

approach and have recommended to

the Board that Deloitte be re-appointed

as auditor in 2022.

We last reviewed the effectiveness

of the internal auditors,

PricewaterhouseCoopers (PwC),

in 2020. Whilst we were satisfied

with both the independence and

effectiveness of the internal auditors,

we undertook a full review of the

overall risk assurance arrangements,

including internal audit, to ensure they

remained appropriate and effective

for the enlarged Group following the

major acquisition of Liberty Living in

2019. The review highlighted that risk

and assurance for the enlarged Group

would be more effective if an in-house

team, with external support where

appropriate, was established. The team

is in the process of being established;

a Group Risk and Assurance Director

is now in post and further recruitment

will be completed in 2022. To further

support this transition from external

to in-house, effective from 1 January

2022, the terms of reference of this

Committee expanded to include

oversight of the risk management

framework and the name of this

Committee changed to Audit &

RiskCommittee.

As noted in this Corporate Governance

Statement, the Board delegates certain

of its duties, responsibilities and powers

to the Audit Committee, so that these

can receive suitably focused attention.

However, the Audit Committee acts on

behalf of the full Board, and the matters

reviewed and managed by the Audit

Committee remain the responsibility of

the Directors as a whole.

Role of the Audit Committee

The Audit Committee has delegated

authority from the Board set out in its

written terms of reference. The terms of

reference for the Audit Committee take

into account the requirements of the

Code and are available for inspection

at the registered office, at the Annual

General Meeting and on the Group

website at http://www.unite-group.

co.uk/about-us/corporate-governance.

The key objectives of the Audit

Committee are:

• To provide effective governance

and control over the integrity of

the Group’s financial reporting

andreview significant financial

reporting judgements

• To support the Board with

its ongoing monitoring of the

effectiveness of the Group’s

system of internal controls and

riskmanagement systems

• To monitor the effectiveness of the

Group’s internal audit function and

review its material findings

• To oversee the relationship with the

external auditor, including making

recommendations to the Board in

relation to the appointment of the

external auditor and monitoring

theexternal auditor’s objectivity

andindependence.

Composition of the Audit Committee

The members of the Audit Committee

are set out on page 103 of this

Corporate Governance Statement.

The Audit Committee members are

all independent Non-Executives and

have been selected with the aim of

providing the wide range of financial

and commercial expertise necessary

to fulfil the Audit Committee’s duties.

The Board considers that as a chartered

accountant and serving Finance

Director of a UK-listed company, I have

recent and relevant financial experience

and that the Committee as a whole has

competence relevant to the sector.

121

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OTHER

INFORMATION

Audit Committee meetings

The Audit Committee met five times

during the year and attendance at

those meetings is shown on page 108 of

this Corporate Governance Statement.

Meetings are scheduled to coincide

with key dates in the financial reporting

cycle and a forward agenda is agreed

by theCommittee and reviewed on an

ongoing basis.

Meetings are attended, by invitation,

by the Chief Financial Officer, the

Deputy Chief Financial Officer, the

Group Finance Director and (from

December 2021) the Group Risk &

AssuranceDirector.

I also invite our external auditor,

Deloitte, to most meetings. The Audit

Committee regularly meets separately

with Deloitte without others being

present. As appropriate, I also invite

our internal auditor, PwC, to attend

the meetings. Deloitte and PwC

meet independently of management

to ensure alignment, to update on

respective findings and consider the

impact on the relative approaches of

their work.

Main activities of the Audit

Committee during the year

Meetings of the Audit Committee

generally take place just prior to a

Group Board meeting and I report

to the Board, as part of a separate

agenda item, on the activity of the Audit

Committee and matters of particular

relevance to the Board in the conduct of

its work. At its five meetings during the

year, the Audit Committee focused on

the following activities.

The Audit Committee reviewed the half-

year and annual financial statements

and the significant financial reporting

judgements. As part of this review, the

Audit Committee supported the Board

by reviewing the financial viability and

the basis for preparing the accounts

on a going concern basis. This included

challenging forecast cash headroom

and reviewing scenarios, which

were determined by management,

to stress test the impact of a range

of performance outcomes upon the

viability of the business, in particular

with regard to loan covenants.

The Audit Committee also reviewed and

challenged the external auditor’s report

on these financial statements.

As discussed above, the effectiveness

of the external audit function was

considered during 2021. During the

evaluation process the Audit Committee

considered: the independence and

objectivity of the external auditor; the

make-up and quality of the audit team;

the proposed audit approach and the

scope of the audit; the execution of

the audit and the quality of the audit

report to the shareholders; as well as

ultimately the fee structure.

The Audit Committee discussed reports

from PwC, as the Group’s internal

auditor, on their audit and assessment

of the control environment. The

Committee reviewed and proposed

areas of focus for the internal audit

programme of review including the

approach to ensure that the internal

audit activity continues to be aligned to

the principal Group risks.

Financial reporting

The primary focus of the Audit

Committee, in relation to financial

reporting in respect of the year ended

31 December 2021 was to review with

both management and the external

auditor the appropriateness of the half-

year and annual financial statements

concentrating on:

• The quality and acceptability of

accounting policies and practices

• The clarity of the disclosures and

compliance with financial reporting

standards and relevant financial and

governance reporting requirements

• Material areas in which significant

judgements have been applied or

where there has been discussion

with the external auditor

• Whether the Annual Report and

Accounts, taken as a whole, is fair,

balanced and understandable and

provides the information necessary

for shareholders to assess the

Group’s position and performance,

business model and strategy.

The Audit Committee’s assessment

of the Annual Report to ensure that it

is fair, balanced and understandable

took into account the following

considerations:

• A review of what fair, balanced and

understandable means for Unite

• The high level of input from the Chief

Executive Officer and Chief Financial

Officer with early opportunities for

the Board to review and comment

on the Annual Report

• Ensuring consistency in the

reporting of the Group’s

performance and management

information (as described on pages

30–31), risk reviews (as described on

pages 74–88), business model and

strategy (as described on pages 8 to

13 and 32–33)

• A cross-check between Board

Minutes and the Annual Report is

undertaken to ensure that reporting

is balanced

• Whether information is presented

in a clear and concise manner,

illustrated by appropriate KPIs to

facilitate shareholders’ access to

relevant information.

To aid our review, the Audit Committee

considers reports from the Group

Finance Director and reports from

the external auditor on the outcomes

of their half-year review and annual

audit. As an Audit Committee, we

support Deloitte in displaying the

necessary professional scepticism its

rolerequires.

Significant issues considered

by the Committee

After discussion with both management

and the external auditor, the

Committee determined that the key risk

of misstatement of the Group’s 2021

financial statements related to:

• Property valuations

• Joint venture accounting

Further information about each of

these items is set out on the next page.

AUDIT COMMITTEE continued

122

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

Property valuations

The Group’s principal assets are

investment properties and investment

properties under development that

are either owned on balance sheet

or in USAF or LSAV. The investment

properties are carried at fair value

based on an appraisal by the Group’s

external valuers who carry out the

valuations in accordance with the RICS

Red Book valuation guide, taking into

account transactional evidence during

the year. The valuation of property

assets involves significant judgement

and changes in the core assumptions

could have a significant impact on the

carrying value of these assets.

Management discusses the underlying

performance of each asset with the

external valuers and provides detailed

performance data to them including

rents, university lease agreements,

occupancy, property costs and costs to

complete (for development properties).

Management receives detailed reports

from the valuers and performed a

detailed review of the valuations to

ensure that management considers

the valuations to be appropriate. The

valuation report is reviewed by the

Chief Financial Officer and the Group

Property Director prior to sign-off.

During the year, the Committee and/

or the Board met with members of the

Group’s valuer panel and challenged

them on the basis of their valuations

and their core assumptions, including

the yield for each property, rental

growth and forecast costs.

The Audit Committee questioned the

external valuers on market trends

and transactional evidence that

supports the valuations. The Audit

Committee was satisfied that the

Group’s valuers were appropriately

qualified and provided an independent

assessment of the Group’s assets. The

Audit Committee was satisfied that

an appropriate valuation process had

taken place, the core assumptions

used were reasonable and hence

the carrying value of investment and

development properties in the financial

statements was appropriate.

The external auditor explained the

audit procedures to test the valuation

of investment and development

properties and the associated

disclosures. On the basis of the audit

work, the external auditor reported

no inconsistencies or misstatements

that were material in the context of the

financial statements as a whole.

Further analysis and detail on asset

valuations is set out on pages 62–69.

Joint venture accounting

Two of Unite’s significant assets are its

investments in USAF and LSAV which

the Group has historically accounted for

as joint ventures.

The Group reports under IFRS 10 –

12 which provides guidance on how

an investor should account for its

interests in other entities, including a

definition of control and guidance on

how to classify and account for jointly

controlled arrangements. During

the year, management undertook a

detailed review of its classification for

both USAF and LSAV, and following that

analysis concluded that both USAF and

LSAV should continue to be treated as

joint ventures. The Audit Committee

considered this and agreed there was no

material change and accordingly it was

appropriate to continue to account for

USAF and LSAV as joint ventures under

IFRS 11, with Unite recording its 22.0%

share of the results and net assets of

USAF as a joint venture using equity

accounting and likewise 50% for LSAV.

Other issues considered

bytheCommittee

Accounting for the cost of

claddingremediation

The Group has provided for the

estimated cost of remediating cladding

on properties where there is a legal or

regulatory requirement to do so. The

Audit Committee reviewed, challenged

and agreed the basis on which costs

associated with the remediation of

cladding have been included in the

Financial Statements. The Committee

also reviewed, challenged and agreed

the extent to which the Group had any

constructive obligations in respect

of cladding remediation that should

be provided for. Based on this, the

Committee was comfortable with

the process and controls adopted by

management around the disclosures

and estimation of costs and provisions

associated with cladding remediation.

Risk management

The Group’s risk assessment process

and the way in which significant

business risks are managed is a key

area of focus for the Audit Committee.

Our work here was driven primarily

by performing an assessment of the

approach to risk taken by the Group’s

Executive and senior leadership team

Committee. In 2021 the Executive

Committee took responsibility for

the delivery of the Group’s Risk

Management Framework, which had

previously been held by the Group’s

Risk Committee, a sub-committee of

the Executive. The Audit Committee

considered the work of the Executive

through the year, which included a

risk workshop facilitated by PwC and

has approved both the Group’s Risk

Management Framework, and the

Group’s assessment of its principal

risks nd uncertainties, as set out on

pages 76–88.

Through these reviews, the Audit

Committee considered the risk

management procedures within the

business and was satisfied that the key

Group risks were being appropriately

managed.

The risk assessment flags the

importance of the internal control

framework to manage risk and this

forms a separate area of review for the

Audit Committee.

The Board also formally reviewed the

Group’s principal risks at two meetings

during the year.

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Internal controls

Led by the Group’s risk assessment

process, we reviewed the process

by which the Group evaluated its

control environment. Management

is responsible for establishing and

maintaining adequate internal

controls. Internal controls are designed

to provide reasonable assurance

regarding (among other things) the

reliability of financial reporting and the

preparation of the financial statements

for external reporting purposes.

Acomprehensive strategic planning,

budgeting and forecasting process is

in place. Monthly financial information

and performance insight is reported

tothe Board.

The Audit Committee’s work to review

the effectiveness of the internal

controls was driven by the Deputy Chief

Financial Officer’s report on internal

controls, supported by the work of the

internal auditor and their reports to the

Audit Committee. The feedback from

the Group’s internal auditor on specific

areas of control is tested on a periodic

basis and our external auditor is

requested to provide specific feedback

and assessment of the Group’s financial

controls and highlight any areas of

weakness. No significant weaknesses

were identified through the course of

the Audit Committee’s reviews.

Internal audit

The Group continued to engage PwC

through 2021 to perform internal

audit activity, with this internal audit

function reporting directly to the

AuditCommittee.

Due to the ongoing Covid-19 situation,

the 2021 internal audit plan was

adapted allowing us to focus on key

issues. This approach resulted in PwC

completing two pieces of internal

audit work. The first was over debt

management, in particular the contract

to cash process, the second was on

the integration of Liberty Living into

the Unite portfolio, with a focus on

the implementation of key controls at

former Liberty sites and integration of

former Liberty colleagues. In addition,

a specialist third party audit consultant

was engaged to deliver an audit over

Estates compliance. Overall, both PWC

and the specialist consultant concluded

that there were no significant issues

and controls were well designed,

but noted there were some areas of

improvement to be made to maximise

controls and operational efficiency,

which management is in the process

ofimplementing.

External audit

The effectiveness of the external audit

process is facilitated by appropriate

audit risk identification at the start

of the audit cycle which we receive

from Deloitte in a detailed audit plan,

identifying their assessment of these

key risks.

For the 2021 financial year, the

significant risks identified were in

relation to valuation of properties,

classification of joint ventures, revenue

recognition and management override.

These focus areas were discussed at

the Audit Committee and it was agreed

that they should be the principal areas

of focus as they represent the areas

with the greatest level of judgement

and materially impact the overall

performance of the Group. These

risks are tracked through the year

and we challenged the work done

by the auditor to test management’s

assumptions and estimates around

these areas.

We assess the effectiveness of the audit

process in addressing these matters

through the reporting we receive from

Deloitte at both the half-year and year-

end and also reports from management

on how these risks are being addressed.

For the 2021 financial year, the Audit

Committee was satisfied that there had

been appropriate focus and challenge

on the primary areas of audit risk

and assessed the quality of the audit

process to be good. We hold private

meetings with the external auditor

at each Audit Committee meeting to

provide additional opportunity for open

dialogue and feedback from the Audit

Committee and the auditor without

management being present. Matters

typically discussed include:

• The auditor’s assessment of

business and financial statement

risks and management activity

thereof

• The transparency and openness

of interactions with management,

confirmation that there has been

no restriction in scope placed on

them by management and the

independence of their audit

• How they have exercised

professional scepticism

I also meet with the external lead

audit partner outside the formal

AuditCommittee process.

The Audit Quality Review team of the

Financial Reporting Council reviewed

Deloitte’s audit of the Group’s financial

statements for the year ended

31 December 2020. The Financial

Reporting Council wrote to me setting

out a summary of the scope of the

review, its assessment of the audit

work reviewed and examples of good

practice. The Committee was satisfied

with the assessment.

In October 2021, the Group received

a letter from the FRC requesting

further information following a review

of the 2021 interim financial report.

The questions related to revenue

recognition associated with the LSAV

performance fee. The Audit Committee

reviewed and approved the Group’s

response to the FRC. The Group’s

correspondence with the FRC closed

satisfactorily with agreement on

enhanced disclosures.

Independence and external

audittender

The Audit Committee considers the

re-appointment of the external auditor,

including the rotation of the audit

partner which is required every five

years, each year and also assesses

their independence on an ongoing

basis. 2021 is the seventh year during

which Deloitte has been the Group’s

externalauditor.

AUDIT COMMITTEE continued

124

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

The Audit Committee reviewed

Deloitte’s audit work and determined

that appropriate plans are in place

to carry out an effective and high

quality audit. Deloitte confirmed to the

Audit Committee that it maintained

appropriate internal safeguards

to ensure its independence and

objectivity. As part of the Audit

Committee’s assessment of the on-

going independence of the auditor, the

Audit Committee receives details of

any relationships between the Group

and Deloitte that may have a bearing

on their independence and receives

confirmation that they are independent

of the Group.

As discussed above, an assessment of

Deloitte’s effectiveness, its processes,

audit quality and performance was

undertaken in May 2021 following

completion of the 2020 audit.

The Audit Committee also regularly

considers when it next intends to

complete a competitive tender process

for the Company’s external audit. As

noted above, the Audit Committee

remains satisfied with Deloitte’s

effectiveness and independence. In

view of this, the Audit Committee does

not currently anticipate that it will

conduct an audit tender before 2024

in respect of the 2025 financial year

for which a tender would be required

in accordance with applicable law and

regulations. The Audit Committee

considers this to be in the best interests

of the Company’s shareholders for the

reasons outlined above and will keep

this decision under review.

The Committee confirms compliance

with the provisions of the Statutory

Audit Services for Large Companies

Market Investigation (Mandatory Use

of Competitive Tender Processes and

Audit Committee Responsibilities Order

2014) Order 2014.

Non-audit services

To further safeguard the objectivity

and independence of the external

auditor from becoming compromised,

the Committee has a formal policy

governing the engagement of the

external auditor to provide non-audit

services. No material changes have

been made to this policy during the

year. This precludes Deloitte from

providing certain services, such as

valuation work or the provision of

accounting services.

For certain specific permitted services

(such as reporting accountant

activities and compliance work), the

Audit Committee has pre-approved

that Deloitte can be engaged by

management, subject to the policies

set out above, and subject to specified

fee limits for individual engagements

and fee limits for each type of specific

service. For all other services, or those

permitted services that exceed the

specified fee limits, I as Chair, or in my

absence, another member, can pre-

approve permitted services.

During the year, Deloitte was appointed

to undertake non-audit services.

Fees for non-audit work performed

by Deloitte for the year ended

31December 2021 were £0.1m (2020:

£0.1m). The non-audit fees related to

the work undertaken by Deloitte LLP in

its role as external auditor to the Group

for the review of the half year report.

Further disclosure of the non-audit

fees incurred during the year ended

31 December 2021 can be found in

note 2.6 to the consolidated financial

statements on page 205. Accordingly,

the Audit Committee was satisfied that

both the work performed by Deloitte

LLP, and the level of non-audit fees paid

to it, were appropriate and did not raise

any concerns in terms of Deloitte LLP’s

independence as auditor to the Group.

The Audit Committee approved the

fees for audit services for 2021 after

a review of the level and nature of

work to be performed, including

additional audit procedures required

as a result of Covid-19 and changes in

the regulatory environment, and after

being satisfied by Deloitte that the fees

were appropriate for the scope of the

work required.

Audit Committee evaluation

The Audit Committee’s activities

formed part of the evaluation of Board

effectiveness performed in the year.

Details of this process can be found

under ‘Performance evaluation’.

Ross Paterson

Chair – Audit Committee

23 February 2022

125

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Dame Shirley Pearce

Chair of the Sustainability Committee

Richard Smith

Chief Executive Officer

Ilaria del Beato

Non-Executive Director

Ross Paterson

Non-Executive Director

Tom Jackson

Non-Executive Director

SUSTAINABILITY COMMITTEE

Our Sustainability Strategy supports our growth

as a responsible and resilient business

SUSTAINABILITY

GOVERNANCE

NUMBER OF MEETINGS

ATTENDANCE

100%

Committee

Membership

126

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

It has been a pleasure to chair the Board’s first Sustainability Committee, established in 2021, and provide this report

toshareholders.

The Sustainability Committee was formed to oversee the implementation of our Sustainability Strategy launched in March

2021 and recommend to the Board any changes to this strategy. Our Sustainability Strategy forms a key component of our

business planning and is central to delivering our “Home for Success” purpose and our values, especially “doing what’s right”.

The Sustainability Committee reports to the Unite Board whilst seeking input from several different working groups from

across the business to ensure Unite is a responsible and resilient business.

Keeping in mind the paramount importance of our responsibility to stakeholders and the wider community, the

Sustainability Committee reviews the Group’s performance against its targets and ambitions whilst engaging with the

workforce in accordance with Provision 5 of the UK Corporate Governance Code. With the ever-increasing prominence

ofenvironmental, social and governance matters, the Sustainability Committee’s focus is on the following five pillars of

ourSustainability Strategy:

Environmental Social Governance

Becoming

net zero carbon

by 2030

Net zero carbon

for both our

operations and

developments

Creating

resilient and

resource

efficient assets

and operations

Reducing waste,

energy and water

use by helping

students adopt

sustainable living

habits

Leading the

student housing

sector

Raising standards

across the

student housing

sector for

governance,

safety and

transparency

Enhancing

health and

wellbeing of our

employees and

customers

Improvements

to our service

model, physical

assets and

employee support

Providing

opportunities

for all

An environment

where all

can succeed,

whatever their

background

gender or

ethnicity

Key highlights for the year ended 31 December 2021

There was a strong focus in 2021 to identify the activity, investment and resources required to implement our Sustainability

Strategy. This included an increased focus and review of our sustainability performance and disclosures which led to

the publication of the Net Zero Carbon Pathway. The Sustainability Committee also reviewed the KPI reporting of the

sustainability pillars in detail. The business confirmed its compliance with the Taskforce on Climate-related Financial

Disclosure (TCFD) and improvements in the Global ESG Benchmark for Real Assets (GRESB) rating following input from

theSustainability Committee as further detailed on pages 50–55.

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SUSTAINABILITY COMMITTEE continued

2021 saw the recruitment of an

experienced and dedicated EDI &

Wellbeing lead to help drive forward the

development of the new EDI Strategy

and launch of the Culture Matters

forum. The Sustainability Committee

had oversight over continued social

impact engagement through the Unite

Foundation, the Leapskills programme

and the Positive Impact programme

following its re-launch.

Environmental – Net Zero Carbon

Pathway and Energy Efficiency

Our Net Zero Carbon Pathway was

published on 15 December 2021. The

Sustainability Committee provided

oversight of the publication of our Net

Zero Carbon Pathway and our pledge to

be net zero carbon by 2030 in both our

Developments and our Operations.

The pathway includes a detailed

breakdown of our baseline carbon

emissions and targeted reductions, the

key activities of our delivery strategy

as well as associated reporting metrics

we will use to track our progress. The

Sustainability Committee oversaw the

validation of our net zero targets by

the Science Based Targets Initiatives

(SBTI) which endorses our emissions

reduction targets and ensures they

align with our commitment to support

limiting global temperature increases to

1.5 degrees above pre-industrial levels.

Our pathway to net zero in both our

Operations and Developments involves

four key steps. The first step requires

the reduction in absolute carbon

emissions by cutting operational

energy use to support this step, the

Sustainability Committee ensured

there is an appropriate programme

driving behavioural change for our

student customers and employees

in the responsible use of energy,

whist overseeing significant capital

investment in energy efficiency

measures and a move away from

gas. The second step requires the

decarbonisation of our energy supply

through investment in renewable

energy with the Sustainability

Committee considering options for

onsite renewable generation (such as

solar PV) as well as renewable energy

purchasing. The third step focuses

on reducing embodied carbon of

new buildings we develop through

the application alternative design

and construction approaches such as

modular construction, the use of lower

carbon materials including timber and

cement-replacements, and a focus on

cutting construction activity related

emissions. Finally to achieve net zero

carbon, any residual emissions that

cannot be removed by these first

three steps will be mitigated and

through appropriately certified carbon

offsetting programmes.

Our science based carbon targets

requires a 56% reduction in combined

scope 1 and 2 (market-based) carbon

emissions from a 2019 base year. The

Sustainability Committee oversees

how these reductions will be delivered

through a significant reduction in

energy use and the development of

property specific asset transition plans.

These asset transition plans specify

the physical improvements to building

fabric and services and their impact on

carbon emissions, energy consumption,

utility costs and EPC compliance

in accordance with Minimum

Energy Electricity Standard (MEES)

targets. Fornew developments, the

Sustainability Committee has initially

targeted at least a 20% reduction in

the embodied carbon of new buildings

(from the materials and construction

process) with a view to achieving a 48%

reduction by 2030 to achieve the RIBA

2030 Climate Challenge benchmark of

625kgCO

, where possible. In addition,

the Committee is looking towards a 75%

reduction in operational energy use on

completed schemes again in line with

the RIBA 2030 benchmarks.

The Sustainability Committee

ensures sustainability is a key

consideration in all the business’s

major investment decisions with this

now integrated within our financial

approvals governance. As part of the

decarbonisation of our energy supply,

2021 saw an agreement to source 20%

of our annual electricity supply from a

Scottish wind farm under a corporate

power purchase agreement, supporting

our RE100 commitment to increase

annual sourcing of renewable electricity

to 100% by 2030.

Social – Wellbeing and Providing

Opportunities for all

In what was again a challenging year

due to ongoing disruption to people’s

working and personal lives through the

pandemic, the Sustainability Committee

has had a particular focus on employee

and student wellbeing. Increased

support was given to our employees

whilst remote working and on their

gradual return to the office through

training and newresources.

The Sustainability Committee oversaw

the establishment of our new employee

forum, the Culture Matters Group,

which gives employees a voice and

CUT

EMBODIED

CARBON

REDUCE

BUILDING

ENERGY USE

INVEST IN

RENEWABLE

ENERGY

OFFSET

RESIDUAL

CARBON

EMMISSIONS

NET ZERO CARBON OPERATIONSNET ZERO CARBON DEVELOPMENT

2019 BASELINE

EMISSIONS

145k

tonnes CO

PROJECTED 2030

EMISSIONS

NET ZERO

CARBON

59k

tonnes CO

epocS 3

New development

epocS 3

Other

Scope 2 Scope 1

Pathway to Net Zero Carbon

1 28

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

offers two-way communication

between the senior leadership

team and the wider business by

way of elected representatives. The

Sustainability Committee will receive

regular updates on our people through

our designated Non-Executive Director

for Workforce Engagement.

Our commitment to employee

engagement continues evidenced

by apositive employee engagement

score of 75 (2020: 74). The business will

focus on addressing concerns raised

by all teams and seek input from the

Sustainability Committee.

The Sustainability Committee has

reviewed the Group’s strategy for

delivering positive social impact,

examining areas including equality,

diversity and inclusion, wellbeing of

students and our employees and our

initiatives to deliver a positive social

impact for young people and the

communities in which we operate.

This includes the development of a

Social Investment Fund which acts as

the umbrella for all social investments

carried out by the business including

our contributions to the Unite

Foundation. This fund helps ensure a

more strategic approach to our social

investments and maximising our

impact, with our investments focused

on activity which directly benefits

young people, focusing on education,

life skills and employment and/or the

communities in which weoperate.

The Sustainability Committee oversees

that the new Sustainability Strategy is

being embedded across the business,

with engagement sessions with

managers, Unite Live sessions with

employees and the re-launch of The

NUS Positive Impact programme

in August 2021. This scheme is a

collaboration between the business

and the National Union of Students

aimed at helping students adopt lasting

sustainable living habits through

wellbeing, community and social impact

initiatives and comprised of a network

of champions across the operation

and support side of the business,

with a keen interest and passion

forsustainability.

The Sustainability Committee is

keen to ensure the implementation

of the Sustainability Strategy and

its ambitions and targets become

“business as usual” for our employees

and is intrinsically aligned with “Home

for Success”.

Governance – Leading the

StudentHousing Sector and

RaisingStandards

Our Governance sustainability objective

focuses on us Leading the Student

Housing Sector and Raising Standards.

To help achieve this, the Sustainability

Committee considers two of the leading

sustainability rating providers: GRESB

and MSCI. The Group’s GRESB rating

has improved on a year-on-year basis to

85 (2020: 81), with the business ranked

first among listed residential real estate

companies. The MSCI rating has been

reconfirmed at AA in the 2021 review

(2020: AA). Our governance continues

to score particularly highly but the

Sustainability Committee has identified

opportunities to enhance our rating

through improved disclosure on our

employee development strategy.

Alongside Governance, oversight

of compliance with EPC regulations

remains a key focus for the

Sustainability Committee and the

tightening of minimum standards to ‘B’

by 2030 in England and Wales, and likely

to ‘C’ by 2027 in Scotland. At present,

53% of the Group’s floorspace is rated

A–C, and 100% is fully compliant with

current regulations. The Sustainability

Committee is overseeing the process

for the creation of asset transition plans

for every property to determine the

investment required to ensure ongoing

EPC compliance, alongside reductions

in consumption, carbon emissions

and cost. This includes a variety of

improvement measures such as LED

lighting, heating controls and air-

source heat pumps. The Sustainability

Committee oversees that EPC ratings

are a fundamental consideration in the

refurbishment of any asset and that

energy improvements are delivered

alongside regular lifecycle works.

Sustainable loan agreement

During 2021, as part of the renewal of

the Group’s revolving credit facility,

it was converted into a sustainable

loan agreement with three KPIs

linked to our environmental and

social initiatives, namely: (1) targeted

reductions in Scope 1 & 2 carbon

emissions, (2) improvements in

the % of assets with an A–C EPC

rating and (3) the value of social

investments made by the business,

including the Unite Foundation. The

Sustainability Committee will oversee

the performance of these three KPIs as

part of its oversight of the business’s

Sustainability Strategy, being conscious

that the margin on the loan agreement

will be adjusted either marginally

upwards or downwards depending on

the performance against these KPIs.

Key focus areas for 2022

Looking ahead to 2022, the

Sustainability Committee will:

• oversee the embedding and

implementing of the Sustainability

Strategy and regularly review

the sustainability targets and

performance of the business

• oversee the completion of the

remaining asset transition plans

forour properties

• actively encourage senior leaders

to empower our people to ‘bring

sustainability to life’ in the business

including helping our students

toadopt lasting responsible

livinghabits

• oversee the commitment to support

Unite Foundation scholars in the

2022/2023 academic year as well

as the launch of our enhanced

Leapskills programme. 2022 will

also see the development of our

community investment performance

metrics which will be aligned to the

Societal Impact (B4SI) Framework

• continue to oversee the

development of the Social

Investment Fund.

Dame Shirley Pearce

Chair – Sustainability Committee

23 February 2022

129

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Professor Sir Steve Smith

Chair of the Health & Safety Committee

Richard Smith

Chief Executive Officer

Dame Shirley Pearce

Non-Executive Director

Elizabeth McMeikan

Senior Independent Director

Ilaria del Beato

Non-Executive Director

HEALTH & SAFETY COMMITTEE

A focus on health, wellbeing, safety and security

HEALTH AND SAFETY

GOVERNANCE

NUMBER OF MEETINGS

ATTENDANCE

100%

Committee

Membership

130

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

Highlights and Achievements

from 2021

We remained Covid secure whilst still

ensuring the safety of our teams at

work and customers living with us. In

addition, we rolled out or restarted the

following initiatives:

• Violence and assaults – Following

an increasing number of assaults

and violence against our employees

in 2020, the Health and Safety

Committee oversaw the roll out of

conflict management training across

our service and safety teams. In

addition, body-worn camera trials

were carried out in 12 cities and

body-worn camera technology has

been available in all our cities from

January 2022 following positive

feedback from our employees.

• Customer Check-In – We increased

our focus on Covid-19 safety check-in

measures and provided the local

teams with event safety guidance

for local events. In October 2021,

just after the majority of students

had checked in, we hosted our

annual student fire safety campaign

focused on kitchen safety.

• Health and Safety training –

We continued to deliver training

courses to our employees on Health,

Safety, Security, Fire and Wellbeing.

Alongside this, we continued our

mandatory e-learning modules for

all employees.

• Health and Safety Software – In

the second half of 2021 we rolled out

‘AVA’, new market-leading health and

safety software which has reduced

the need for multiple systems

for reporting on safety incidents,

inspections and audits. It is simpler

for our teams to use and provides

greater insight and improved

datacollection.

• CCTV Upgrades – We successfully

upgraded the CCTV across a third of

our estate, upgrading systems where

the risk was greatest or systems

were end-of-life. The remainder of

the estate will be upgraded within

the next two years, in line with the

life expectancy of the systems.

• Third party H&S and Security

Inspections – We reinstated our

programme of third-party H&S

and Security inspections, paused

in 2020 due to Covid-19. 132 of our

buildings achieved a ‘green’ audit

status meaning they scored 90%

or more across a broad spectrum

of safety areas. A further 23

buildings achieved ‘amber’ with a

score between 80–89%. Given the

challenging conditions that the

teams were operating in, we were

pleased to see a very small number

of our properties receive a ‘red’

report, and in all cases, the score

was over 70%.

Covid 19, fire safety, the mental

wellbeing of employees and safety in

our development activity remained key

areas of focus through 2021.

Covid-19

Staying Covid secure is a priority

forus. Key achievements and

activitiesregarding Covid-19 during

2021 included:

• Covid-19 Secure Workplace – Our

Covid-19 controls and measures

were subject to regular review and

updates to ensure adherence to

ongoing Government guidance

including the re-opening of support

services in Bristol and London.

• Working From Home/Hybrid

Working Policy – We introduced

flexible working arrangements for

our office-based teams alongside

the phased re-opening of our

support services offices in Bristol

and London with physical control

measures and risk assessments

in place. Increased support was

provided to our employees through

training and the availability of new

resources including an online DSE

Assessment and e-learning. We also

commenced a trial of a new hybrid

working policy and are reviewing

employee feedback.

• Getting ready for Academic Year

2021/22 – Our in-property teams

worked tirelessly through Covid-19

to ensure our properties were ready

for safe occupation at the start

of the academic year. Our Home

Charter sets out the requirement for

two-way respect between students

and our teams to maintain a Covid

safe environment for all.

• Student welfare – We have

continued to work closely with our

University partners to increase

access to wellbeing and mental health

support during the ongoing pandemic.

• Covid support team – We set up a

cross functional Covid team providing

support to our employees dealing with

Covid-19 queries. This included regular

updates following Government advice,

calls with Public Health England and

regular ‘drop-in’ sessions for our

teams with Q&A sessions.

Fire Safety

Fire safety is critical to our health and

safety programme and fundamental to

being 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. The business continued its

partnership with the Avon Fire and

Rescue Service as our Primary Authority

and worked with safety experts to

provide advice and assistance on

projects enhancing and maintaining our

safe and secure promise.

All our properties have been confirmed

as safe to operate by independent

fire safety experts. This reflects our

extensive approach to fire safety and

fire impairment across our portfolio,

with increased building patrols and

additional alarm measures where

required. We previously completed

the removal of Aluminium Composite

Materials (ACM) cladding from our

buildings where needed and in 2021

conducted a thorough review of the

use of High-Pressure Laminate (HPL)

cladding on our properties. Four

buildings with HPL were remediated

during the year with limited disruption

to students and works are underway at

eight other buildings.

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HEALTH & SAFETY COMMITTEE continued

The Health and Safety Committee

oversees the ongoing remedial work

in respect of other fire impairments,

including smoke ventilation systems

and Automatic Opening Vents

(AOVs). Areas for improvement were

highlighted by survey reports with a

remedial plan to be completed in 2022.

We continue to anticipate the impact of

evolving fire safety legislation and are

currently reviewing the impact of the

upcoming Building Safety Act.

Mental health and wellbeing

Through 2021, the business engaged an

external provider to review our current

Employee Assistance Programme

and Occupational Health provision to

ensure the level of support and benefits

to employees were fit for purpose.

The primary focus of the review was

the support provided for employees

following critical incidents, however,

thefindings of the report highlighted

areas where improvements could be

made to the service offerings more

generally. In 2022 we plan to introduce

a new Employee Welfare Framework,

taking into consideration the findings

ofthe review. The framework will

include, amongst other thing, the

provision oftraining and support

for employees impacted by serious

incidents andtrauma.

Our focus for 2022

Our top five risks remain unchanged

from 2021 and which we continue

to manage through robust health

and safety management systems for

whichthe Health and Safety Committee

have oversight.

Our focus for 2022 remains on the

safety of our customers and people,

our properties and our workplace.

We will continue to strive to deliver

our brand value ‘Keeping uS Safe’ by

building relationships with universities

and local Fire & Rescue services,

continuing to improve fire safety

knowledge and awareness and

developing our occupational health

and wellbeing programme. We are

also aiming to provide simplified H&S

and Fire Management systems for our

teams, along with a programme of

continued professional development

in managingsafety risk at an individual

property level.

Safety in our Development activity

Throughout 2021 we progressed

the development of two sites:

Middlesex Street in London and

Campbell House in Bristol, and

development continues at Derby

Road in Nottingham for the 2022/23

academic year. In addition, building

improvement works for Parkway

Gate, Manchester and Kincardine,

Manchester commenced in 2021

despite the Covid-19 challenges and

in particular, the impact of contractor

self-isolation.

We continued our efforts, alongside

our contractors, to ensure our

sites were safe to operate and the

relevant social distancing, Covid-19

testing and personal protective

equipment were in place. We

also continued to work with our

supply chain to mitigate delays in

product and material delivery to

ourdevelopmentsites.

In light of what was again a

challenging environment throughout

2021, particular focus was on:

• Wellbeing – Promotion of the

wellbeing programme offered to

construction operatives through

external specialists to promote

the support of British Safety

Council audit recommendations.

Positive feedback has been

received from those subscribing

to the wellbeing programme.

• Reporting – Encouraged

reporting of near misses and

working closely with the estates

and development teams to

encourage cross departmental

collaboration and reporting.

• Integration of project

delivery – The appointment

of a new construction director

who has accountability and

responsibility for unifying H&S

and delivery standards across all

constructionprojects.

• Safety Audits – Continuing

across the development and

estate projects under a revised

metric, which seeks to push our

contractors to achieve industry

leading standards which far

exceed statutory compliance.

All sites inspected under the

revised metric have exceeded

statutory compliance and

thereby reinforces our safe and

securepromise.

• Safety KPIs – Building on

delivering year on year

improvements with our safety

KPIs across all developments.

Safety performance in our

Development Sites and Cladding /

Refurbishment works

Across our Development sites and

cladding / refurbishment works in

2021, we had no RIDDOR reportable

injuries and 16 minor incidents (15 in

our cladding/refurbishments works

and 1 at our Development sites). This

represents good safety performance

against the industry norm and within

our Unite internal benchmarks. This

is especially encouraging despite the

continued challenges of Covid-19.

• Fire Safety

• Electrical safety

• Contractor safety

• Driving for work

• Violence and assault against our

team members in the workplace

2022 top five safety risks

132

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

1. KPI calculated as: No of incidents worked x 100,000 hours / hours worked.

Development sites

Property

Total Hours

Worked

Non-reportable

Incidents

Reportable

Incidents

Arch View House, London 23,230 0 0

Middlesex Street, London 289,124 1 0

Campbell House, Bristol 189,190 0 0

Derby Road, Nottingham 5,380 0 0

Total 506,924 1 0

Cladding / Refurbishment works

Property

Total Hours

Worked

Non-reportable

Incidents

Reportable

Incidents

Chalmers Street, Edinburgh 2,421 0 0

Piccadilly Point, Manchester 21,009 0 0

Jennens Court, Birmingham 44,207 5 0

Aston Student Village – James Watt

and William Murdoch, Birmingham

54,142 0 0

Aston Student Village – Mary Sturge

and Harriet Martineau, Birmingham

37,710 2 0

Unite House, Bristol 14,150 1 0

Rosalind Franklin, Portsmouth 4,800 0 0

James Baillie Park, Leeds 9,556 0 0

Parkway Gate, Manchester 96,324 5 0

Phoenix Court, Bristol 4,547 1 0

Emily Bowes, London 464 1 0

New Medlock House, Manchester 460 0 0

Kincardine, Manchester 10,060 0 0

Total 299,850 15 0

2021 Combined Accident Reporting KPI

Incidents KPI

Benchmark

0 RIDDOR 0.00 0.30

16 Minor 1.98 5.00

Professor Sir Steve Smith

Chair – Health and Safety Committee

23 February 2022

133

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STATEMENTS

OTHER

INFORMATION

REMUNERATION COMMITTEE

Elizabeth McMeikan

Chair of the Remuneration Committee

Ross Paterson

Non-Executive Director

Dame Shirley Pearce

Non-Executive Director

Sir Steve Smith

Non-Executive Director

NUMBER OF MEETINGS

ATTENDANCE

100%

LOW RES

Committee

Membership

On behalf of the Board, it is my pleasure

to present the Directors’ Remuneration

Report for 2021

REMUNERATION

GOVERNANCE

134

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

As in previous years, this report is

split into three sections: this Annual

Statement, the Policy Report and the

Annual Report on Remuneration. This

year, we are asking shareholders to

approve a new Remuneration Policy

at the Annual General Meeting. The

background to, and the reasons for, the

proposed changes are set out later in

this Annual Statement.

2021 performance and reward

2021 was a successful year for Unite,

with a strong recovery in financial

performance and a return to growth

despite the ongoing challenges of

the pandemic. Financial highlights

included a 20% increase in adjusted

earnings (15% on a per share basis),

EPRA NTA growth of 8% and a total

accounting return of 10.2%. From an

operations perspective, we have seen an

improvement in occupancy and rental

growth for the 2021/22 academic year,

with a record development pipeline

funded through prudent asset disposals.

2021 also saw the launch of Unite’s new

Sustainability Strategy which, reflecting

the expectations of stakeholders, sets

out our commitment to net zero carbon

by 2030 and an increased investment in

energy initiatives over the coming years.

Unite’s focus on doing the right thing

for all stakeholders throughout the

pandemic was further evidenced

during 2021. With thanks to our

dedicated and hard-working teams, all

of our properties continued to remain

open and operational, and we also

offered further rental discounts and

complimentary tenancy extensions

to those students unable to use their

accommodation at the start of the

year. We have continued to support

our employees in these uncertain

times and, as in 2020, have neither

furloughed any of our staff nor utilised

any Government support schemes.

Finally, for shareholders, we were able to

reinstate dividend payments, with a full

year dividend for 2021 of 22.1p reflecting

a return to a 80% payout ratio. Against

this backdrop of responsible actions, the

Committee is confident that its decisions

with respect to executive remuneration

for FY21 and FY22 are appropriate.

As disclosed in last year’s report, there

were no increases to Executive Director

salaries for 2021, in line with the

majority of the employees across the

organisation. Entry level salaries were

increased in line with the rates set by

the Living Wage Foundation.

Having suspended the scheme in 2020,

the Committee reinstated the annual

bonus for Executive Directors in 2021.

Following a review of performance

against the targets set at the start of

the year, the Committee has confirmed

that Executive Directors will each

receive bonuses of 102.6% of salary

(cf. a maximum of 140% of salary).

This overall outcome reflects a year of

recovery for the Group, with at least

threshold performance achieved under

all measures and with full payout

registered under each of the TAR, LTV

and GRESB rating measures. A bonus

payout which is broadly in line with the

10-year average outcome at Unite is

considered by the Committee to be a

fair outcome. Further details, including

bonus targets and outcomes are

included on page 156.

LTIP awards made in July 2019 reached

the end of their performance period

as at 31 December 2021. These awards

were based equally on absolute EPS,

relative TSR and relative TAR, with Unite’s

performance for both the TAR and TSR

elements compared to the constituents

of the FTSE350 Real Estate Supersector

Index. Over the three-year performance

period Unite’s relative TSR ranked

between median and upper quartile

versus the comparator group (equating to

60.5% vesting), whilst EPS performance

was below the threshold target owing to

the impact of the pandemic (0% vesting).

Vesting of the relative TAR element will

be finalised following the publication

of comparator results over the coming

months, with Unite currently estimated to

rank between median and upper quartile,

equating to around 50% vesting. Overall

anticipated vesting of the 2019 awards

is therefore around 36.8% of maximum.

Although somewhat lower than the

10-year average long-term incentive

outcome at Unite, the Committee is

satisfied that this vesting level would

appropriately reflect the underlying

performance of, and challenges faced

by, the Company over the last three

years. Awards vesting will be subject to

a two-year holding period from the third

anniversary of grant in July 2022, and will

only be released to Executive Directors in

July 2024. Further details are included on

page 157.

Taken as a whole, the Committee is

satisfied that overall pay outcomes in

respect of the year ended 31 December

2021 are appropriate and accordingly we

have not applied any discretion to this

year’s incentive outcomes. A significant

proportion of Executive Director pay is

dependent on delivery against stretching

short- and long-term targets aligned with

Company strategy. An annual bonus

outcome between target and stretch,

and an overall (estimated) LTIP outcome

just above threshold reflects a year of

recovery for the Group and the progress

made in operational delivery.

Also during the year, Executive Directors

were each granted an award under

the LTIP in April 2021 which will vest

based on performance over the three

financial years to 31 December 2023.

Consistent with previous years, vesting

of these awards continues to be based

on challenging absolute EPS, relative

TSR and relative TAR targets, with any

award vesting required to be held for an

additional two-year period. Reflecting

sensitivities around target setting

arising from the Covid-19 pandemic,

and further to last year’s report, targets

for the absolute EPS element of the

awards were set later in the year than

normal (October 2021) and disclosed in

a market announcement at that time.

The Committee commits to review

any payout from these awards to

ensure that it does not reward windfall

gains, and reflects the performance

of the Company and the experience of

stakeholders over the period. Further

details are included on page 161.

135

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OTHER

INFORMATION

Review of the Directors’

Remuneration Policy

The 2022 AGM marks the third

anniversary of the adoption of the

current Directors’ Remuneration Policy

and in line with UK reporting regulations,

we are submitting a new Policy to

shareholders for approval this year.

Having considered a range of alternative

approaches, the Committee is satisfied

that the existing remuneration structure

– consisting of salaries, pension

contributions and performance-linked

short- and long-term incentives –

remains appropriate. Previous Policy

reviews have focused on the LTIP (in

2016) and the annual bonus (in 2019),

and in each instance the Committee

has made adjustments to align with

developments in market practice and

changes in investor sentiment over the

intervening period. Accordingly, we

believe that the current Policy remains

fit-for-purpose and are putting forward

only minor refinements to the existing

Policy to ensure it remains appropriate

for the next three years.

The Committee conducted a detailed

consultation with Unite’s top 20

shareholders on the proposed changes

in the latter half of 2021, and we would

like to thank those investors who took

the time to provide the feedback which

has shaped our final proposals as

outlined below.

Proposed changes to the

Remuneration Policy:

Simplify the approach to annual bonus

deferral, requiring 50% deferral of any

bonus earned in shares for 2 years,

regardless of existing shareholdings.

Unite’s bonus deferral is currently

determined with reference to a

director’s shareholding levels, with up

to 50% deferral for 3 years where the

relevant shareholding guideline has not

been met, and deferral of any bonus

earned above 100% of salary for 2 years

where it has.

The Committee proposes to strengthen

and simplify this deferral requirement

by removing the differentiation

relating to a director’s shareholding

levels. Going forward it is proposed

that for all Executive Directors, 50% of

any bonus earned will be deferred in

Unite shares for 2 years. This proposal

reflects feedback received from some

investors in previous years, and in %

of bonus deferred terms would bring

Unite in line with market practice across

the FTSE250 (and ahead of most real

estate sector comparators). For existing

Executive Directors, the proposal

means that regardless of annual bonus

outcome, a higher % will be deferred in

shares than is currently the case.

Feedback on this proposed change

during the consultation was supportive,

with respondents confirming that the

revised position would be consistent

with current market best practice and

general investor preference.

Withdrawn proposals

The Committee had proposed to give

itself additional flexibility to vary the

makeup of performance measures in

the annual bonus each year by reducing

the minimum weighting on financial

measures in the annual bonus from

70% to 60% and allowing a greater

weighting to be assigned to relevant

non-financial metrics. Increasing the

weighting on non-financial measures

was aimed at allowing the Committee

to capture other important ESG metrics

which are both a central pillar in Unite’s

strategy and a clear focus area for our

investors, employees and both student

and university customers.

Feedback on this proposed change

during the consultation was more

varied. There was broad support for

the proposal to introduce additional,

relevant non-financial metrics aligned

with our new ESG strategy; however, a

number of investors suggested that this

should be done through a rebalancing

of existing non-financial metrics

rather than through a reduction to the

overall weighting assigned to financial

performance. We did also receive

a number of supportive responses

for this proposal, as well as – in one

case – the suggestion of an alternative

65/35split.

On balance, and recognising the range

of views expressed, the Committee

ultimately decided to drop the

proposed change to the minimum

weighting on financial measures in

the Remuneration Policy, and will

instead maintain this at 70% as per

thecurrent Policy wording. Changes

to thecomposition of annual bonus

metrics for 2022 are set out in the

section below.

Implementation of the new Policy

for2022

In addition to the proposed Policy

changes outlined above, the Committee

also consulted with shareholders

on a number of changes to our

implementation of the Policy over the

next couple of years, as follows:

Proposed changes to implementation

of the Policy:

A phased adjustment to Executive

Director salary levels – to £578,000 for

the Chief Executive, and to £440,000

for the Chief Financial Officer – over the

next couple of years

Executive Director pay levels were

last reviewed in detail back in late

2015, with shareholders consulted

at the time on proposed increases to

the salaries of the CFO and former

CEO by 6% (to £291,000 and £460,000

respectively), and the salaries of the

two Divisional Managing Directors by

up to 18% over two years – in all cases

alongside increases in the annual

LTIPopportunity from 150% to 200%

ofsalary.

In light of the resignation of the former

CEO in early 2016, and following a

decision by the Board to continue with

a smaller executive team and to allocate

responsibilities arising from Richard

Smith’s promotion from Managing

Director, Operations to Chief Executive

between the remaining directors,

these increases were subsequently

revised, with the CFO, for example,

instead receiving a 20% increase (to

£350,000). At the same time, Richard

Smith’s salary on appointment as

CEO was set at £430,000, reflecting

the Committee’s view that – as his

first listed company CEO role – his

salary should be set at a discount to

his predecessor. Salary levels for both

remaining Executive Directors have

since tracked the increases awarded to

the broaderworkforce.

Noting the timing of the last

comprehensive review, and the modest

market positioning even then, the

Committee has been mindful for a

number of years that total pay levels,

and in particular salaries, have not

kept pace with the increase in size

and scale of the company, nor with

market movements. This has been

particularly evidenced in the last couple

of years by salary compression as a

result of seeking to fill key senior roles

below-Board with external hires, and

the market rates required to attract

these individuals to Unite. The talent

market in our sector remains highly

competitive. The Committee recognises

that above-inflation salary adjustments

for Executive Directors remain an

area of significant scrutiny. However,

we believe that, in order to avoid

compounding this issue for the future

(and in the interests of fairness for our

strong performing and increasingly

experienced executive team), an

increase is now warranted.

REMUNERATION COMMITTEE continued

136

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

In respect of the Chief Executive,

the first decision taken has been to

eliminate the on appointment discount

to his predecessor. The Committee

considers that this discount was

warranted at the time, but believes that

the reason for the differential (c.£33k,

after adjusting for wage inflation

across our wider employee population

over that period) has fallen away, with

Richard Smith now an experienced and

high-performing CEO.

The Committee then considered what

increment, if any, should be applied

for both Executive Directors to reflect

the considerable increase in size,

scale and complexity of Unite over the

last 5 years. During this period, the

Executive Directors have overseen the

successful acquisition and integration

of Liberty Living, maintained a strong

development pipeline in the face of

an ever more challenging planning

environment, and put in place a

range of operational and strategic

improvements which have contributed

to the continued strong performance of

the Group in a competitive sector.

Balancing different and competing

stakeholder interests has, and will

continue to bring additional complexity

to the role of senior executives and to

However, the Committee – and indeed

the CEO – are comfortable that this

reflects Joe Lister’s integral role as

part of the senior leadership team, his

experience and tenure with the Group,

his breadth of responsibilities, his

sustained contribution to Unite’s success

in recent years and the pivotal role he

will play in delivering the ambitious

strategic plans over the next few years.

Feedback on the proposed salary

increases during the consultation was

generally supportive, with a number of

investors keen to explore further the

underlying rationale for the proposed

increases and to review the market

pay data used. Our reading of investor

comments received suggests that Unite

has a track record of pay restraint and

the Committee hopes that the strong

justification for the proposed increases

will encourage shareholders to support

this proposal.

Current 1 January 2021 Effective 1 January 2022 Effective 1 January 2023

CEO: Richard Smith £472,313 £522,500 (+10.6%) Up to £578,000 (+10.6%)

CFO: Joe Lister £384,441 £411,250 (+7.0%) Up to £440,000 (+7.0%)

our operations. Executive Directors have

set a clear vision for Unite to leverage

its role as market-leader to help raise

standards across the PBSA sector,

as evidenced by the Group’s decisive

response to the Covid-19 pandemic,

our commitment to the highest levels

of health and safety performance and

our ambitions around sustainability,

employee and customer wellbeing, and

diversity and inclusion. Determining

an increment to reflect these changes

is clearly subjective in nature. Having

reflected, however, on a range of

size metrics, and taking into account

the Committee’s assessment of the

performance of both Executive Directors,

we have concluded that a more

meaningful adjustment is warranted.

The Committee considered over what

period to phase any salary increases,

and in particular whether this should be

a one-off or cover a number of years.

On balance, the Committee believes

that a two-stage increase – with

equal % increases in each of January

2022 and January 2023 – balances

the views of different stakeholders,

and has the advantage of allowing us

to confirm that the second increase

remains warranted by sustained strong

performance and contribution over the

2022 financial year.

A revision to the scorecards of

performance measures applying to

both the annual bonus and LTIP to

introduce additional ESG measures for

2022 cycles onwards;

Annual bonus

Noting the indications of support

received for introducing additional

non-financial metrics aligned to

strategy, the Committee has resolved to

introduce employee engagement into

the Executive Director bonus for 2022

alongside customer satisfaction, Higher

Education trust and GRESB rating. Each

non-financial metric will be assigned

a 7.5% weighting, thereby giving equal

prominence to Unite’s important

stakeholder groups. The introduction of

employee engagement coincides with

the rollout of a new People strategy

across the Group, and reflects the

increasing importance of engaging our

workforce to help deliver against an

ambitious strategy.

Combining each of these

considerations, and taking into account

a modest 2% per annum inflationary

adjustment which might ordinarily have

been applied for 2022 and 2023, our

proposal for Executive Director salaries

over the next couple of years is as set

out in the table below.

As a final check, the Committee

reviewed the proposed salary levels

against market benchmarks provided

by its independent advisers, looking in

particular at real estate sector peers (as

a whole, as well as specific operators),

companies of similar market cap and

the broader FTSE250.

The Committee is satisfied that the

proposals are appropriate in this

context and that salary and total

remuneration levels for both Executive

Directors would remain modestly

positioned against these various

reference points. It is noted that overall

market positioning for the CFO would

remain marginally ahead of that of the

CEO and that the ratio of CFO to CEO

remuneration would remain slightly

ahead of market norms.

Reflecting a general shareholder

preference for objective, quantifiable

targets, the employee engagement

measure will be based on the outcome

of the annual survey conducted by

Glint, the output of which is reported

in our Operational KPIs. In confirming

any payout under this element, the

Committee will also be mindful of

the split in employee engagement

levels by gender. A range of other

important social indicators, including

Diversity & Inclusion, the Gender Pay

Gap and progress against broader

sustainability objectives, will continue

to be monitored by the Sustainability

Committee.

137

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STATEMENTS

OTHER

INFORMATION

LTIP

The Committee also received positive

feedback on a proposal to introduce

sustainability metrics into the long-

term incentive from 2022, but more

varied comments about how this new

element should be accommodated

in relation to existing metrics. The

Committee has endeavoured to find

a compromise which best reflects the

range of feedback received. For 2022,

we have therefore determined that the

LTIP will be based 16% on sustainability

metrics, with relative TSR, relative TAR

and EPS each equally weighted at 28%.

The weighting on sustainability metrics

will in turn be split equally between two

environmental measures: operational

energy intensity and EPC ratings, each

making up 8% of the total LTIP.

The use of operational energy intensity

aligns with our 2030 net zero carbon

commitments and represents an

environmental measure over which

participants will have full control,

avoiding distortions from either how

Unite buys energy (which is easy to

change and should not warrant an

LTIP payout) and grid decarbonisation

(which is outside of management’s

control). Progress against this measure

is dependent on both a continued

investment to improve the energy

efficiency of the buildings which we

operate, and on promoting initiatives to

encourage customers and colleagues

to reduce their energy use. The use of

EPC ratings reflects the importance of

making progress towards increasing

minimum energy efficiency standards,

an area currently under consultation

by the UK Government. Each of these

metrics lends itself to the setting of

objective, quantifiable targets which

can be externally reviewed and verified.

Save for these proposed changes, the

Committee will implement the Policy

in 2022 in a consistent manner to

previous years. In line with our plan

for aligning Executive Director pension

contributions with the wider workforce,

effective 1 January 2022 Richard

Smith and Joe Lister will each receive

a maximum pension contribution

of 14% of salary. A final reduction

to a maximum of 11% of salary will

take effect from 1 January 2023. The

maximum bonus opportunity will be

140% of salary and awards of 200%

of salary will be made under the LTIP.

Further details on each element of

remuneration are included on pages

163–164.

Workforce remuneration

considerations

The Committee continues to monitor

pay and practices for other senior

executives and more broadly across the

wider workforce when considering the

remuneration of Executive Directors.

The Group People Director is invited

to attend Committee meetings on

a regular basis to provide updates

on workforce initiatives and to offer

an employee perspective to the

Committee’s deliberations. This

year the Committee’s work included

reviewing the proposed workforce

salary increases in light of changes

to the Living Wage, and providing

feedback on proposed simplifications

to the broader employee bonus scheme

for FY22.

We have continued to review and

disclose both the statutory CEO pay

ratios and additional ratios looking

at both fixed pay and pay excluding

long-term incentives. The Committee

notes that there has been an increase

in the ratios this year driven primarily

by the resumption of an annual bonus

scheme for Executive Directors. We are,

however, satisfied that the year-on-year

fluctuations mainly reflect differences

in the structure of pay at different levels

of seniority.

Finally, details of our gender diversity

and pay gaps across the Group are

provided on page 159–160, with the

Committee pleased to note a further

modest improvement in both the

mean and median gender pay gaps in

2021. The Group’s recently-launched

Sustainability Strategy includes a target

of ‘Providing opportunities for all’ and

specific goal of ‘Gender Equality’, which,

in addition to the recent recruitment

of an ED&I Manager, reflects that this

is an area of enduring focus for the

leadership team.

Committee changes

Having served just over three years

as Non-Executive Director at Unite,

Richard Akers stepped down from the

Remuneration Committee and the

Board with effect from 15 December

2021. On behalf of the Committee,

I would like to thank Richard for his

insight and valuable contribution to our

work over the past 3 years and wish him

the very best for the future. Following

year-end, effective 1 February 2022,

Professor Sir Steve Smith, currently

Chair of the Health & Safety Committee,

also joined the Remuneration

Committee. I look forward to working

alongside Steve this year and to

the different insights on executive

remuneration that his past experience

will provide us.

Looking ahead

The Committee will continue to monitor

market developments throughout the

2022 AGM season and will consider

the appropriateness of any emerging

trends for Unite. I hope that you

find this report a clear account of

the Committee’s decisions for the

year and would be happy to answer

any questions you may have at the

upcoming AGM.

Elizabeth McMeikan

Chair – Remuneration Committee

23 February 2022

REMUNERATION COMMITTEE continued

138

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

Overview of Unite remuneration policy and implementation

Remuneration in respect of 2021 Overview of proposed new policy Implementation of policy in 2022

Base salary

• Salaries unchanged on 2020

levels, as follows:

– CEO, Richard Smith =

£472,313

– CFO, Joe Lister = £384,441

• Reviewed from time to time,

with reference to salary levels

for similar roles at comparable

companies, to individual

contribution to performance;

and to the experience of

eachExecutive.

• Salaries increased with effect from

1 January 2022, as follows:

– CEO = £522,500 (+10.6%)

– CFO = £411,250 (+7.0%)

See page 154 See page 144 See page 163

Pension,

benefits

• Pension contributions (or

equivalent cash allowance)

atamaximum of 17% of salary

forCEO and CFO.

• Benefits in line with policy.

• For existing Executive Directors:

commitment to phase down

contributions (or equivalent cash

allowance) to the workforce rate

by1 January 2023.

• For new Executive Director

appointees: company pension

contributions aligned with the

broader workforce (11% of salary).

• Benefits typically consist of the

provision of a company car or a

carallowance, and private health

care insurance.

• Pension contributions (or

equivalent cash allowance)

reduced to a maximum of 14% of

salary for CEO and CFO with effect

from 1 January 2022.

• No change to benefits for 2022.

See page 154 See page 144 See page 163

Annual

bonus

• Annual bonuses of 102.6% of

salary for each Executive Director

(73.3% of maximum opportunity).

• Bonuses in excess of 100% of

salary to be deferred in Unite

shares for two years; remainder

to be paid in cash.

• Maximum annual bonus

opportunity for all Executive

Directors of 140% of salary.

• Performance measures typically

include both financial and

non-financial metrics, as well as

the achievement of individual

objectives.

• 50% of any bonus earned is

deferred in shares for two years.

• Malus and clawback

provisionsapply.

• Maximum annual bonus

opportunities of 140% of salary.

• 2022 bonuses to be based:

– 25% on adjusted EPS

– 25% on TAR per share

– 20% on Loan to Value

– 7.5% on customer satisfaction

– 7.5% on Higher Education trust

– 7.5% on employee

engagement

– 7.5% on GRESB rating

See page 156 See page 145 See page 163

LTIP

• 2019 LTIP final vesting to be

finalised once comparator TAR

results are published. Expected

total vesting of 36.8% based on:

– Relative TSR ranking between

median and upper quartile

compared to the constituents

of the FTSE350 Real Estate

Index;

– 2021 adjusted EPS below

thethreshold target;

– Estimated relative TAR

ranking between median and

upper quartile compared

to the constituents of the

FTSE350 Real Estate Index;

• Maximum award size for all

Executive Directors of 200% of

salary in normal circumstances

(upto 300% of salary in

exceptional circumstances).

• Awards vest subject to

performance over a three-year

period. Vested shares are typically

subject to an additional two-year

holding period

• Malus and clawback

provisionsapply.

• Awards of 200% of salary to be

made to each Executive Director

in 2022.

• Performance to be measured

over the period 1 January 2022 to

31December 2024. Awards based:

– 28% on adjusted EPS

– 28% on relative TAR

– 28% on relative TSR

– 8% on operational energy

intensity

– 8% on EPC ratings

• Two-year holding period will apply

to all vested shares.

See page 157 See page 146 See page 164

139

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OTHER

INFORMATION

REMUNERATION COMMITTEE continued

2021 Remuneration at a glance

2021 Single total figure of remuneration for current Executive Directors

Salary (£)

Taxable

benefits (£) Pension (£)

Annual Bonus

(£) LTIP (£) Other (£) Total (£)

Richard Smith 472,313 17, 242 65,613 484,688 349,946 0 1,389,802

Joe Lister 384,441 17, 269 53,406 394,513 284,809 2,483 1,136,922

2021 Annual Bonus outcomes

Measure Weight

Threshold On-target Maximum

Actual

Outcome

(% of max)30% of max 50% of max 100% of max

Adjusted EPS 25% 26p 29p 31p 27.6p 41.0%

TAR per share 25% 47. 5p 55.9p 64.3p 75.9p* 100.0%

Loan to Value 20% 35.0% 34.3% 32.0% 29.0% 100.0%

Customer satisfaction 10% 35 36 38 35 30.0%

Higher Education trust 10% 19 20 22 20 50.0%

GRESB rating 10% 82 83 85 85 100.0%

* Excludes impact of the extension of LSAV and the performance fee.

Executive

Max opportunity

(% of salary)

Overall outcome

(% of maximum)

Overall outcome

(% of salary)

Overall outcome

(£)

Richard Smith 140.0% 73.3% 102.6% £484,688

Joe Lister 140.0% 73.3% 102.6% £394,513

2019-2021 LTIP outcomes

Measure Weight

Threshold Stretch

Actual

Vesting

(% of max)25% vest 100% vest

2021 Adjusted EPS 1/3 46.9p* 56.2p* 27.6p 0.0%

Relative TSR performance 1/3

Median

11.7%

Upper quartile

60.3%

Between median and

upper quartile: 34.7%

60.5%

Relative TAR performance 1/3 Median Upper quartile

Current estimate**:

Between median and

upper quartile

50.0%

Executive

Estimated**

overall vesting

(% of maximum)

Estimated**

interests

vesting Date vesting

Estimated**

value (incl.

dividends)

Richard Smith

36.8%

31,589

24 July 2022 (holding period

applies until 24 July 2024)

£349,946

Joe Lister 25,747 £284,809

* Target range increased to reflect the Liberty Living acquisition plan around earnings accretion and the positive benefit of the IFRS 16 accounting standard change, as

disclosed in the 2019 Directors’ Remuneration Report.

** Vesting of the relative TAR element will be finalised following the publication of comparator results over the coming months, with Unite’s TAR currently estimated to rank

between median and upper quartile (based on performance after two full financial years). Full details will be provided in next year’s report.

140

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

ELIGIBILITY ELEMENT OF PAY ELEMENT OF PAY

Employees at all levels Salary Salaries are generally reviewed annually, taking into account Company and

individual performance, experience and responsibilities. As an accredited

Living Wage employer all of Unite’s employees receive at least the voluntary

living wage rate.

Benefits Employees across all levels of the business are eligible for the company-

funded Health Cash Plan and an enhanced Company sick pay scheme. All

employees have free 24/7 access to our employee assistance programme

which provides counselling and support to employees with everyday

situations and more serious concerns including up to 12 face-to-face

sessions per issue per year. Life assurance cover is provided for all eligible

employees at 4 x annual salary and employees can access a range of deals

and discounts through our discount providers. We offer employees 25

days annual leave a year plus bank holidays and also operate a holiday

purchase scheme to allow employees to purchase up to an extra week of

annual leave each year. Employees can support their chosen charities by

participating in our charity match or give-as-you-earn schemes. We also

offer financial support to our employees through season ticket loans,

student rental discounts and the bike to work scheme and employee

service is recognised with long-service awards.

Pension All employees can participate in the UNITE Group Personal Pension

scheme, with an alternative cash pension allowance available in certain

circumstances. Our pension offering was reviewed and improved with

effect from 1 January 2020, with all employees eligible to receive a company

contribution of up to 11% of salary, subject to their own contribution level.

SAYE We encourage all employees to become shareholders in Unite by

participating in the SAYE scheme, under which participants save monthly

over 3 years with the option to acquire shares at a discount at the end of

the savings period. Currently c.28% of eligible employees participate in

theSAYE.

Annual bonus – cash All employees are eligible to participate in the annual bonus scheme, with

outcomes based on company performance. Maximum opportunities,

performance measures and weightings vary by grade; metrics are similar

across all levels to support delivery of our strategy.

Executive Directors and

other senior leaders

Long-term incentive Executive Directors and other senior leaders may be invited to participate

in the LTIP each year. Performance conditions are consistent for all

participants but award sizes vary.

Executive Directors only Annual bonus – deferred Currently only Executive Directors are required to defer a proportion of

their bonus into Unite shares, which supports shareholder alignment.

Shareholding guidelines While all employees are strongly encouraged to become shareholders to

allow them to share in the success of the Group, currently only Executive

Directors are subject to formal shareholding guidelines (both in-post and

post-exit).

Overview of remuneration across the Group

141

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

REMUNERATION COMMITTEE continued

This report has been prepared in accordance with the provisions of the Companies Act 2006 and Schedule 8 of the Large

and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended). It also meets the

requirements of the UK Listing Authority’s Listing Rules and the Disclosure and Transparency Rules.

In accordance with the Regulations, the following sections of the Remuneration Report are subject to audit: the Single

total figure of remuneration for Directors and accompanying notes (pages 154 to 155, Scheme interests awarded during

the financial year (pages 161 to 162), Payments to past directors (page 162), Payments for loss of office (page 160) and the

statement of directors’ shareholdings and share interests (pages 165 to 166). The remaining sections of the report are not

subject to audit.

The 2018 UK Corporate Governance Code sets out principles against which the Committee should determine the Policy for

executives. A summary of the principles and how the Unite’s Remuneration Policy reflects these is set out below:

PRINCIPLE APPROACH

Clarity – Remuneration arrangements should be

transparent and promote effective engagement

with shareholders and the workforce.

The Committee operates a consistent remuneration approach that is well-understood

internally and externally. The Committee regularly engages with major shareholders

on executive remuneration and undertook a detailed consultation during the design

ofthe current Policy.

Simplicity – Remuneration structures should

avoid complexity, and their rationale and

operation should be easy to understand.

The Group operates a market-standard remuneration structure consisting of fixed pay,

an annual bonus and a single long-term incentive. The annual bonus scheme has been

further simplified as part of the most recent Policy review through the standardisation

of the deferral requirement regardless of existing shareholdings.

Risk – Remuneration arrangements should ensure

reputational and other risks from excessive

rewards, and behavioural risks that can arise

fromtarget-based incentive plans, are identified

and mitigated.

Each year, incentive targets will be set which the Committee believes are stretching

and achievable within the risk-appetite set by the Board. The Committee retains full

discretion to override formulaic incentive outcomes under both the annual bonus and

long-term incentive in the event that this would produce a result inconsistent with the

Company’s remuneration principles.

All variable incentives incorporate recovery provisions (malus and clawback) that

allow the Committee to reduce the outcomes, potentially down to zero, in specified

cases. The Committee believes that these triggers are appropriately wide-ranging and

enforceable.

Alignment to culture – Incentive schemes

should drive behaviours consistent with company

purpose, values and strategy.

All permanent employees participate in the annual bonus, and share similar corporate

performance metrics to ensure cultural alignment across the Group. We believe that

aligning remuneration across the business is a key element of aligning our culture,

fulfilling our values and being a strong driver of business performance.

Predictability – The range of possible values of

rewards to individual directors and any other

limits or discretions should be identified and

explained at the time of approving the policy.

The Committee maintains clear caps on incentive opportunities and will use its

available discretion if necessary.

Proportionality – The link between individual

awards, the delivery of strategy and the long-term

performance of the company should be clear.

Outcomes should not reward poor performance.

The Committee ensures performance metrics are clearly aligned with the Group’s

strategy each year, maintaining an appropriate balance between fixed pay, short- and

long-term incentive opportunities. Targets are set to be stretching but achievable,

within the Board’s risk appetite. Details of our approach to measure selection and

target setting is included as a note to the Policy Table.

142

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

The Committee is seeking shareholder approval for a new Remuneration Policy at the 2022 AGM. A summary of the principal

changes compared to the previously approved Policy is provided in the Annual Statement above, and identified in the

relevant sections below.

The Group aims to balance the need to attract, retain and motivate Executive Directors and other senior executives of an

appropriate calibre with the need to be cost effective, whilst at the same time rewarding exceptional performance. The

Committee has designed a Remuneration Policy that balances those factors, taking account of prevailing best practice,

investor expectations and the level of remuneration and pay awards made generally to employees of the Group.

In addition to the above, the Remuneration Policy for the Executive Directors and other senior executives is based on the

following key principles, which are unchanged from the last Policy review:

• A significant proportion of remuneration should be tied to the achievement of specific and stretching performance

conditions that align remuneration with the creation of shareholder value and the delivery of the Group’s strategic plans,

taking care to consider the needs of all stakeholders;

• There should be a focus on sustained long-term performance, with performance measured over clearly specified

timescales, encouraging executives to take action in line with the Group’s strategic plan, using good business

management principles and taking well considered risks;

• Individuals should be rewarded for success, but steps should be taken, within contractual obligations, to prevent rewards

for failure – whether financial or operational; and

• Above all, executive remuneration should support the values and culture of the Group. Pay should be simple and easy to

understand, with all aspects clear and openly communicated to stakeholders and with alignment with pay philosophies

across the Group.

This section of the report sets out the policy for Executive Directors which the Company is asking shareholders to approve at

the 2022 AGM. It is intended that the revised policy will come into effect from that date.

Directors’ Remuneration Policy

143

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

REMUNERATION COMMITTEE continued

Base salary

To recognise the

individual’s skills and

experience and to

provide a competitive

base reward.

Base salaries are reviewed from

time to time, with reference to

salary levels for similar roles at

comparable companies

, to individual

contribution to performance; and to

the experience of each Executive.

Any base salary increases are applied

in line with the outcome of the review

as part of which the Committee also

considers average increases across

theGroup.

In respect of existing Executive

Directors, it is anticipated that

salary increases will generally

be in line with those of salaried

employees as a whole. In exceptional

circumstances (including, but not

limited to, a material increase in job

size or complexity) the Committee

has discretion to make appropriate

adjustments to salary levels toensure

that they remain market competitive.

None

Pension

To provide an

opportunity for

executives to build

up income upon

retirement.

All Executives are either members

of The UNITE GroupPersonal

Pension schemeor receive a cash

pensionallowance.

Existing Executive Directors receive a

Company pension contribution or an

equivalent cash allowance. Company

contribution levels will be reduced

from 1 January 2022 and1 January

2023 to an equivalent of up to 14%

and 11%of salary respectively.

None

Salary is the only element of

remuneration that ispensionable.

For future Executive Director

appointees, the maximum Company

pension contribution will be aligned

to that offered to a majority of

employees across the Group in

percentage of salary terms (currently

11% of salary).

Benefits

To provide non-cash

benefits which are

competitive in the

market in which the

executive is employed.

Executives receive benefits which

consist primarily of the provision of

a company car or a car allowance,

and private healthcare insurance,

althoughcan include any such

benefits that the Committee

deemsappropriate.

Benefits vary by role and individual

circumstances; eligibility and cost is

reviewed periodically.

The Committee retains the discretion

to approve a higher cost in certain

circumstances (e.g. relocation) or

incircumstances where factors

outside the company’s controlhave

changed materially(e.g. increases

ininsurance premiums).

None

SAYE

To encourage the

ownership of shares

inUnite.

An HMRC approved scheme whereby

employees (including Executive

Directors) may save up to the

maximum monthly savings limit

(as determined by prevailing HMRC

guidelines) over a period of three

years. Options granted at up to a

20%discount.

Savings are capped at the prevailing

HMRC limit at the time employees

areinvited toparticipate.

None

1. Remuneration peer companies include the constituents of the FTSE350 Real Estate Index and UK-listed companies of similar market capitalisation. The Committee reviews

comparator groups periodically to ensure they remain appropriate and retains the discretion to change companies.

Policy Table

FUNCTION OPERATION

PERFORMANCE METRICS

OPPORTUNITY

14 4

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

Annual Bonus

To incentivise and

reward strong

performance against

financial and non-

financial annual targets,

thus delivering value

to shareholders and

being consistent with

the delivery of the

strategicplan.

Performance measures, targets

andweightings are set at the start

ofthe year.

At the end of the year, the

Remuneration Committee determines

the extent to which targets have

beenachieved.

From the 2022 annual bonus onwards,

50% of any bonus payable will be

deferred for twoyears.

Deferral is generally by an allocation

of shares in the Company, which are

generally held in the Employee Share

Ownership Trust.

Awards under the Annual Bonus

are subject to malus and clawback

provisions, further details of which are

included as a note to the policy table.

For Executive Directors, the maximum

annual bonus opportunity is 140% of

basesalary.

Up to 30% of maximum will be paid

for Threshold performance under

each measure and up to 50% of

maximum will be paid for on-target

performance.

A payment equal to the value of

dividends which would have accrued

on vested deferred bonus shares

will be made following the release of

awards to participants, either in the

form of cash or as additional shares.

It is the Committee’s current intention

to make any dividends payments in

the form of shares.

Performance is assessed on

an annual basis, as measured

against specific objectives set

at the start of each year.

Financial measures will make

up at least 70% of the total

annual bonus opportunity in

any given year. The remainder

will be split between non-

financial metrics and personal

/ team objectives according to

business priorities, with the

weighting on the latter being

no more than 20% of the total

annual bonus opportunity.

The Committee has discretion

to adjust the formulaic bonus

outcomes both upwards

(within the plan limits) and

downwards (including down

to zero) to ensure alignment

of pay with performance,

e.g., in the event of one of

the targets under the bonus

being significantly missed or

unforeseen circumstances

outside management control.

The Committee also considers

measures outside the bonus

framework (e.g. H&S) to

ensure there is no reward

forfailure.

For 2022, financial metrics and

non-financial metrics will make

up 70% and 30% of the total

annual bonus opportunity

respectively. Further details

of the measures, weightings

and targets applicable are

provided on page 163.

Changes to 2019 Policy: Delinking of bonus deferral requirement from existing shareholding levels.

FUNCTION OPERATION

PERFORMANCE METRICS

OPPORTUNITY

145

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

REMUNERATION COMMITTEE continued

LTIP

To drive sustained long-

term performance that

supports the creation of

shareholder value.

The LTIP comprises a Performance

Share Plan (PSP) and an Approved

Employee Share Option Scheme

(ESOS).

The ESOS is used to deliver a

proportion of the LTIP in a tax-

efficient manner, and is subject to

the same performance conditions

asawards made under the PSP.

Award levels and performance

conditions are reviewed before

eachaward cycle to ensure they

remain appropriate.

Awards under the LTIP are subject

to malus and clawback provisions,

further details of which are included

as a note to the policy table

The LTIP provides for an award up to

a normal aggregate limit of 200% of

salary for Executive Directors, with

an overall limit of 300% of salary

in exceptional circumstances. The

current intention is to grant each

Executive Director awards equivalent

to 200% of salary.

Awards may include a grant of HMRC

approved options not exceeding

£6kper annum, valued on a fair

valueexchange.

A payment equal to the value of

dividends which would have accrued

on vested shares will be made

following the release of awards to

participants, either in the form of

cash or as additional shares. It is the

Committee’s current intention to

make any future dividends payments

in the form of shares.

Vesting of LTIP awards

is subject to continued

employment and

performance against relevant

metrics measured over a

period of at least three years.

The Committee will select

performance measures

ahead of each cycle to ensure

that they continue to be

linked tothe delivery of the

Companystrategy.

Under each measure,

threshold performance

will result in up to 25% of

maximum vesting for that

element, rising on a straight-

line to full vesting.

If no entitlement has been

earned at the end of the

relevant performance

period, awards will lapse. A

proportion of vested awards

may, at the discretion of the

Committee, be subject to a

holding period following the

end of a three-year vesting

period. The Committee’s

current intention is that all

awards will be required to be

held for an additional two-

year period post-vesting.

As under the Annual Bonus,

the Committee has discretion

to adjust the formulaic LTIP

outcomes to ensure alignment

of pay with performance,

i.e. to ensure the outcome

is a true reflection of the

performance of the Company.

Details of the measures and

targets to be used for 2022

LTIP awards are included

in the Annual Report on

Remuneration on page 164.

Policy Table continued

FUNCTION OPERATION OPPORTUNITY

PERFORMANCE METRICS

146

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

Notes to the policy table

The Committee is satisfied that the above remuneration policy is in the best interests of shareholders and does not promote

excessive risk-taking.

For the avoidance of doubt, in approving this Directors' Remuneration Policy, authority is given to the Company to honour

any commitments entered into with current or former directors (such as the vesting or exercise of past share awards).

Performance measure selection and approach to target setting

Measures used under the Annual Bonus and LTIP are selected annually to reflect the Group’s main short- and long-term

objectives and reflect both financial and non-financial priorities, as appropriate.

The Committee considers that EPS (currently used in both the short- and long-term incentive) is an objective and well-

accepted measure of the Company’s performance which reinforces the strategic objective of achieving profitable growth,

whilst a focus on Total Accounting Return (also currently used in both the short- and long-term incentive) is consistent with

one of our stated objectives and a key indicator of Company performance in the real estate sector. The use of relative TSR

is strongly aligned with shareholders and ensures that executives are rewarded only if they exceed the returns which an

investor could achieve elsewhere in our sector. Finally, from 2022, the Committee has increased the overall weighting on

Sustainability metrics across variable incentives in order to support and reinforce the Group’s strategy in this area.

2022 incentive measures

Captured in… Strategic objectives supported

Annual bonus LTIP

Delivering for our

customers and

universities

Attractive returns for

shareholders

A responsible and

resilient business

Earnings Per Share (EPS)   

Total Accounting Return (TAR)  Absolute  Relative 

Loan To Value (LTV)  

Total Shareholder Return (TSR)  

Customer satisfaction  

Higher Education trust  

Employee engagement  

GRESB rating  

EPC Ratings  

Operational energy intensity  

Targets applying to the Annual Bonus and LTIP are reviewed annually, based on a number of internal and external reference

points. Performance targets are set to be stretching but achievable, with regard to the particular strategic priorities and

economic environment in a given year. Under the bonus, target performance typically requires meaningful improvement on

the previous year’s outturn, and, for financial measures, targets are typically set with reference to market consensus.

Remuneration policy for other employees

Unite’s approach to annual salary reviews is consistent across the Group, with consideration given to the level of experience,

responsibility, individual performance and salary levels in comparable companies. The Company is a fully accredited Living

Wage employer.

In terms of variable incentives, all employees are eligible to participate in an annual bonus scheme with business area-

specific metrics incorporated where appropriate. Senior managers are eligible to participate in the LTIP with annual awards

currently up to 100% of salary. Performance conditions are consistent for all participants, while award sizes vary by level.

Specific cash incentives are also in place to motivate, reward and retain staff below Board level.

All employees are eligible to participate in the Company’s SAYE scheme on the same terms.

14 7

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

Shareholding guidelines

The Committee continues to recognise the importance of Executive Directors aligning their interests with shareholders

through building up a significant shareholding in the Company. Shareholding guidelines are in place that require Executive

Directors to acquire a holding (excluding shares that remain subject to performance conditions) equivalent to 250% of

base salary for the Chief Executive and 200% of base salary for each of the other Executive Directors. Until the relevant

shareholding levels are acquired, up to 50% of the annual bonus payable to the relevant Director will be subject to deferral

into shares. Details of the Executive Directors’ current shareholdings are provided in the Annual Report on Remuneration.

In order to provide further long-term alignment with shareholders and ensure a focus on successful succession planning,

Executive Directors will normally be expected to maintain a holding of Unite shares for a period after their employment as a

Director of the Group. This ‘post-exit’ shareholding guideline will be equal to the lower of a Directors’ actual shareholding at

the time of their departure and the shareholding requirement in effect at the date of their departure, with such shares to be

held for a period of at least two years from the date of ceasing to be a Director. The specific application of this shareholding

guideline will be at the Committee’s discretion.

In order to monitor and enforce the post-exit shareholding requirement, the Committee has established an internal policy

document detailing which shares are covered, the valuation methodology, the holding mechanism and any discretions

available. In summary, this post-exit requirement will apply to any LTIP awards or deferred bonus share awards granted on

or after 9 May 2019 (being the date of approval of the 2019 Policy), with shares deposited into a Nominee Account until such

time that the required post-exit shareholding level has been achieved (calculated annually). Shares held in the Nominee

Account will generally be held for a period of not less than 2 years from the date an individual ceases employment as a

Director of the Group.

Changes to 2019 Policy: Further detail provided on the approach to enforcing post-exit shareholding requirements.

Malus and clawback

Awards under the Annual Bonus and the LTIP are subject to malus and clawback provisions which can be applied to both

vested and unvested awards. Malus and clawback provisions will apply for a period of at least two years post-vesting.

Circumstances in which malus and clawback may be applied include a material misstatement of the Company’s financial

accounts, gross misconduct on the part of the award-holder, error in calculating the award vesting outcome and, from 2019

awards onwards, corporate failure as determined by the Remuneration Committee.

Non-Executive Director remuneration

Subject to annual re-election by shareholders, Non-Executive Directors are appointed for an initial term of approximately

three years. Subsequent terms of three years may be awarded. The appointment, re-appointment and the remuneration

ofNon-Executive Directors are matters reserved for the full Board.

The Non-Executive Directors are not eligible to participate in the Company’s performance-related bonus plan, long-term

incentive plans or pension arrangements.

Details of the policy on fees paid to our Non-Executive Directors are set out in the table opposite:

REMUNERATION COMMITTEE continued

NED Date of service contract

E McMeikan 13 November 2013

R Paterson 21 September 2017

I Beato 20 July 2018

S Pearce 14 October 2019

T Jackson 29 November 2019

S Smith 14 October 2019

R Huntingford 26 October 2020

148

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

Richard Smith Joe Lister

Minimum

£613

£1,240

£486

£2,389

£980

£2,912

£1,884

£2,296

MinimumMaximum MaximumOn-target On-targetMaximum +50%

share price inc.

for LTIP

Maximum +50%

share price inc.

for LTIP

Remuneration (£0000)

Salary, pension, benefits Annual bonus LTIP

£3,500

£3,000

£2,500

£2,000

£1,500

£1,000

£500

£0

100.0%

49.4%

29.5%

21.1%

49.6%

29.4%

21.0%

25.7%

30.6%

43.7%

25.8%

30.6%

43.6%

21.0%

25.1%

53.8%

21.2%

25.1%

53.7%

FUNCTION OPERATION

PERFORMANCE METRICS

OPPORTUNITY

Pay for performance scenarios

The charts below provide an illustration of the potential future reward opportunities for the Executive Directors, and the

potential split between the different elements of remuneration under four different performance scenarios: ‘Minimum’,

‘On-target’, ‘Maximum’ and ‘Maximum including the impact of a 50% share price appreciation on LTIP awards’.

Potential reward opportunities are based on Unite’s remuneration policy, applied to the base salaries effective 1 January

2022. Pension contributions reflect the agreed reduction to a maximum of 14% of salary effective 1 January 2022. The annual

bonus and LTIP are based on the maximum opportunities set out under the Remuneration Policy, being 140% of salary

under the annual bonus and a 2022 LTIP grant of 200% of salary. Note that the LTIP awards granted in a year do not normally

vest until the third anniversary of the date of grant, and the projected value is based on the face value at award rather than

vesting (i.e. the scenarios exclude the impact of any share price movement over the period). The exception to this is the

last scenario which, in line with the requirements of the UK Corporate Governance Code, illustrates the maximum outcome

assuming 50% share price appreciation for the purpose of LTIP value.

Fees

To attract and retain

Non-Executive Directors

of the highest calibre

with broad commercial

and other experience

relevant to the Company.

Fee levels are reviewed annually,

with any adjustments typically

effective 1 January in the year

following review.

The fees paid to the Chair are

determined by the Committee,

whilst the fees of the Non-Executive

Directors are determined by

theBoard.

Additional fees are payable for

acting as Senior Independent

Director and as Chair of any of

the Board’s Committees (Audit,

Remuneration, Nomination, Health

& Safety, Sustainability).

Fee levels are benchmarked against

sector comparators and FTSE-

listed companies of similar size and

complexity. Time commitment and

responsibility are taken into account

when reviewing fee levels.

Expenses incurred by the Chair

and the Non-Executive Directors

in the performance of their duties

(including taxable travel and

accommodation benefits) may be

reimbursed or paid for directly by

the Company, as appropriate.

Non-Executive Director fee

increases are applied in line

with the outcome of the annual

fee review. Fees for the year

commencing 1 January 2022 are

set out in the Annual Report on

Remuneration.

Fee levels will be next reviewed

during 2022, with any increase

effective 1 January 2023.

It is expected that increases

to Non-Executive Director fee

levels will be in line with salaried

employees over the life of the

policy. However, in the event that

there is a material misalignment

with the market or a change in the

complexity, responsibility or time

commitment required to fulfil a

Non-Executive Director role, the

Board has discretion to make an

appropriate adjustment to the

feelevel.

None

149

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

Salary

Benefits

(based on FY21) Pension

2022 maximum

annual bonus

2022 LTIP award

face value

CEO £522,500 £17,242 14% of salary 140% of salary 200% of salary

CFO £411, 250 £17, 269 14% of salary 140% of salary 200% of salary

The ‘minimum’ scenario reflects base salary, pension and benefits (i.e. fixed remuneration) which are the only elements of

the Executive’s remuneration packages not linked to performance.

The ‘on-target’ scenario reflects fixed remuneration as above, plus bonus payout of 70% of salary and LTIP threshold vesting

at 25% of maximum award (50% of salary).

The ‘maximum’ scenario is shown on two bases: excluding and including the impact of share price appreciation on the

value of LTIP outcomes. In both cases, the scenario includes fixed remuneration and full payout of all incentives (140% of

salary under the annual bonus and 200% of salary under the LTIP), with the final scenario also including the impact of a 50%

increase in Unite’s share price on the value of the LTIP (in effect valuing this element of pay at 300% of salary).

MAXIMUM ANNUAL GRANT VALUE

Base salary The base salaries of new appointees will be determined by

reference to relevant market data, experience and skills of the

individual, internal relativities and their current basic salary.

Where new appointees have initial basic salaries set below

market, any shortfall may be managed with phased increases

over a period of two to three years subject to the individual’s

development in the role.

Pension New appointees will receive Company pension contributions or an

equivalent cash supplement aligned to that offered to a majority

of employees across the Group at the time of appointment

(currently 11% of salary).

Benefits New appointees will be eligible to receive benefits which may

include (but are not limited to) the provision of a company car or

cash alternative, private medical insurance and any necessary

relocation expenses. New appointees will also be eligible to

participate in all-employee share schemes.

SAYE

Annual Bonus The structure described in the policy table will apply to new

appointees with the relevant maximum being pro-rated to reflect

the proportion of employment over the year. Targets for the

individual element will be tailored to each executive.

140% of salary

LTIP New appointees will be granted awards under the LTIP on the

same terms as other executives, as described in the policy table.

The normal aggregate limit of 200% of salary will apply, save in

exceptional circumstances where up to 300% of salary may be

awarded.

300% of salary

REMUNERATION COMMITTEE continued

Approach to recruitment remuneration

External appointment to the Board

In the cases of hiring or appointing a new Executive Director from outside the Company, the Remuneration Committee may

make use of all the existing components of remuneration, as follows:

COMPONENT APPROACH

150

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

Executive Date of service contract

J Lister 28 March 2002

R Smith 28 September 2011

In determining appropriate remuneration, the Remuneration Committee will take into consideration all relevant factors

(including quantum, nature of remuneration and the jurisdiction from which the candidate was recruited) to ensure that

arrangements are in the best interests of both Unite and its shareholders. The Committee may make an award in respect

of a new appointment to ‘buy out’ incentive arrangements forfeited on leaving a previous employer on a like-for-like basis,

which may be awarded in addition to the remuneration structure outlined in the table above. In doing so, the Committee

will consider relevant factors including time to vesting, any performance conditions attached to these awards and the

likelihood of those conditions being met. Any such ‘buy-out’ awards will typically be made under the existing annual bonus

and LTIP schemes, although in exceptional circumstances the Committee may exercise the discretion available under Listing

Rule9.4.2 R to make awards using a different structure. Any ‘buy-out’ awards would have a fair value no higher than the

awards forfeited.

Internal promotion to the Board

In cases of appointing a new Executive Director by way of internal promotion, the Remuneration Committee and Board will

be consistent with the policy for external appointees detailed above. Where an individual has contractual commitments

made prior to their promotion to Executive Director level, the Company will continue to honour these arrangements. With

regards to pension contributions, as above, this would be aligned to that offered to a majority of employees across the

Group at the time of promotion to the Board. The Remuneration Policy for other employees is set out on page 147. Incentive

opportunities for below Board employees are typically no higher than Executive Directors, but measures may vary to provide

better line-of-sight.

Non-Executive Directors

In recruiting a new Non-Executive Director, the Remuneration Committee will utilise the policy as set out in the table on page

149. A base fee in line with the prevailing fee schedule would be payable for Board membership, with additional fees payable

for acting as Senior Independent Director and /or as Chair of the Board’s Committees.

Service contracts and treatment for leavers and change of control

Executive Director service contracts, including arrangements for early termination, are carefully considered by the

Committee. In accordance with general market practice, each of the Executive Directors has a rolling service contract

requiring 12 months’ notice of termination on either side. Such contracts contain no specific provision for compensation for

loss of office, other than an obligation to pay for any notice period waived by the Company, where pay is defined as salary,

benefits and any other statutory payments only. Where a payment is made in equal monthly instalments, the Committee

will expect the Director to mitigate his / her losses by undertaking to seek and take up, as soon as reasonably practicable,

any suitable / similar opportunity to earn alternative income over the period in which the instalments are to be made. The

instalment payments will be reduced (including to zero) by the amount of such income that the employee earns and / or

is entitled to earn over the applicable period. Executive Director service contracts are available to view at the Company’s

registered office.

The Remuneration Committee will exercise discretion in making appropriate payments in the context of outplacement,

settling legal claims or potential legal claims by a departing Executive Director, including any other amounts reasonably

due to the Executive Director, for example to meet the legal fees incurred by them in connection with the termination of

employment, where the Company wishes to enter into a settlement agreement and the individual must seek independent

legal advice.

151

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

Calculation of vesting / payment

Annual bonus

Cash element In the event of retirement, ill health, death, disability, redundancy or any other

circumstance at the discretion of the Remuneration Committee, or in the event of

a change of control, Executive Directors may receive a bonus payment for the year

in which they cease employment. This payment will normally be pro-rated for time

and will only be paid to the extent that financial and individual objectives set at the

beginning of the plan year have been met.

Otherwise, Executive Directors must be employed at the date of payment to

receive a bonus.

Deferred element Deferred bonus shares will normally be retained and will be released in full

following completion of the applicable deferral period.

LTIP

Leavers before the end of the

performance period

In the event of retirement, ill health, death, disability, redundancy or any other

circumstance at the discretion of the Remuneration Committee, or in the event

of a change of control, the Committee determines whether and to what extent

outstanding awards vest based on the extent to which performance conditions

have been achieved and the proportion of the vesting period worked. This

determination will be made as soon as reasonably practical following the end of

the performance period or such earlier date as the Committee may agree (within

12 months in the event of death).

In the event of a change of control, awards may alternatively be exchanged for

new equivalent awards in the acquirer where appropriate.

If participants leave for any other reason before the end of the performance

period, their award will normally lapse.

Leavers after the end of the

performanceperiod

Any awards in a holding period will normally vest following completion of the

holding period.

REMUNERATION COMMITTEE continued

When considering exit payments, the Committee reviews all potential incentive outcomes to ensure they are fair to both

shareholders and participants. The table below summarises how the awards under the annual bonus and LTIP are typically

treated in specific circumstances, with the final treatment remaining subject to the Committee’s discretion:

External appointments

With the approval of the Board in each case, and subject to the overriding requirements of the Group, Executive Directors

may accept external appointments as Non-Executive Directors of other companies and retain any fees received. Joe Lister was

appointed as a Non-Executive Director on the Board of Helical Plc effective 1 September 2018 and received a fee of c.£58,000 in

respect of his service for 2021. Richard Smith was appointed as a Non-Executive Director on the Board of Industrials REIT (formerly

Stenprop Limited) effective 4 November 2020 and received a fee of c.£40,000 in respect of his service for 2021.

Consideration of conditions elsewhere in the Company

When making decisions on Executive Director remuneration, the Committee considers pay and conditions across Unite and

reflects on available data such as the Gender Pay Gap reporting and the CEO pay ratio analyses. Prior to the annual salary review,

the Group People Director provides the Committee with a summary of the proposed level of increase for overall employee pay.

The Remuneration Committee did not formally consult with employees in designing the above executive remuneration policy. The

Culture Matters forum, launched in October and attended by the employee engagement NED, will, in future, provide the Board

and Committee with a greater opportunity to solicit the views of employees on remuneration structures and processes across

the Group. Specifically, this forum will include as part of its agenda an opportunity to discuss remuneration issues, answer any

questions around pay practices, and to explain to the workforce how executive pay arrangements align with the wider pay policy.

Consideration of shareholder views

During 2021, the Remuneration Committee consulted with Unite’s top 20 investors and with proxy advisors (Glass Lewis,

the Investment Association and ISS) to seek their views on the proposed changes to the Remuneration Policy, as well as

remuneration at Unite more broadly. Further details are included in the Annual Statement of this report.

The Committee thanks investors taking the time to participate in the consultation and we welcomed the positive and constructive

feedback received. The Committee used this feedback, along with updates to investor body principles published around the time

of the review, to refine and further develop the final proposals. The Committee will continue to monitor trends and developments

in corporate governance and market practice to ensure the structure of the executive remuneration remains appropriate.

152

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

Annual Report on Remuneration

The following section provides details of how Unite’s remuneration policy was implemented during the financial year ended

31 December 2021 and how it will be implemented in 2022.

Remuneration Committee membership in 2021

The primary role of the Committee is to:

• Review, recommend and monitor the level and structure of remuneration for the Executive Directors and other senior

executives;

• Approve the remuneration packages for the Executive Directors and ensure that pay outcomes reflect the performance

of he Company; and

• Determine the balance between base pay and performance-related elements of the package so as to align Directors’

interests to those of shareholders.

The Committee’s terms of reference are set out on the Company’s website. As of 31 December 2021, the Remuneration

Committee comprised three independent Non-Executive Directors.

• Elizabeth McMeikan (Committee Chair)

• Ross Paterson

• Dame Shirley Pearce

Richard Akers served on the Committee prior to stepping down as a Non-Executive Director with effect from 15 December

2021. Certain Executives, including Richard Smith (Chief Executive) and Helene Murphy (Group People Director), are invited

to attend meetings of the Committee, and the Company Secretary, Christopher Szpojnarowicz, acts as secretary to the

Committee. Richard Huntingford and Thomas Jackson are also invited to attend meetings. No individuals are involved in

decisions relating to their own remuneration. The Remuneration Committee convened four times during the year and details

of members’ attendance at meetings are provided in the Corporate Governance section on page 108.

Key activities of the Remuneration Committee in 2021 included:

• Reviewed and approved the Executive Directors’ performance against 2018 LTIP targets and approved vesting;

• Approved the Directors’ Remuneration Report for 2020;

• Determined the Executive Directors’ bonus and LTIP performance targets for 2021 in line with the strategic plan and

approved grant of awards under the LTIP in April 2021;

• Considered remuneration market trends and corporate governance developments;

• Reviewed the Remuneration Policy and conducted shareholder consultations on the proposed changes;

• Reviewed the CEO pay ratio and gender pay data and disclosures; and

• Commenced preparation of the 2021 Directors’ Remuneration Report.

Advisors

Ellason LLP was appointed as the independent remuneration advisor to the Committee effective 1 January 2021 and

retained during the year. The Committee undertakes due diligence periodically to ensure that Ellason is independent and

that the advice provided is impartial and objective. During 2021, Ellason provided independent advice including support on

the review of the Remuneration Policy and consultation, supporting benchmarking for Executive Directors, updates on the

external remuneration environment, performance testing for long-term incentive plans and Directors’ Remuneration Report

drafting support. Ellason reports directly to the Chair of the Remuneration Committee and does not advise the Company on

any other issues. Their total fees for the provision of remuneration services to the Committee in 2021 were £43,113 (2020:

£36,788 to Mercer) on the basis of time and materials.

Ellason is member and signatory of the Code of Conduct for Remuneration Consultants, details of which can be found at

www.remunerationconsultantsgroup.com. None of the individual Directors have a personal connection with Ellason.

153

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

2020 Annual Report on Remuneration Directors' Remuneration Policy

For (including discretionary) 344,430,454 97.76% 213,670,741 96.85%

Against 7,902,466 2.24% 6,938,947 3.15%

Total votes cast

(excluding withheld votes) 352,332,920 220,609,688

Votes withheld 1,024,435 0

Total votes cast

(including withheld votes) 353,357,355 220,609,688

£ Salary

Taxable

benefits Pension

Annual

Bonus LTIP Other

Total Single

Figure Total Fixed

Total

Variable

Note 1 Note 2 Notes 1, 3 Note 4 Note 5 Note 6

R Smith 2021 472,313 17, 242 65,613 484,688 349,946 0 1,389,802 555,168 834,634

2020 425,082 16,202 73,738 0 418,918 0 933,940 515,022 418,918

J Lister 2021 384,441 17,269 53,406 394,513 284,809 2,483 1,136,922 455,117 681,805

2020 345,997 17,498 59,626 0 341,057 2,248 766,425 423,120 343,305

Summary of shareholder voting at AGMs

The following table shows the results of the advisory vote on the 2020 Annual Report on Remuneration at the 2021 AGM and

the binding vote on the 2019 Directors’ Remuneration Policy at the 2019 AGM:

REMUNERATION COMMITTEE continued

Single total figure of remuneration for Executive Directors (audited)

The table below sets out a single figure for the total remuneration received for 2020 and 2021 by each Executive Director

who served in the year ended 31 December 2021:

1. 2020 salary and pension figures reflect the 30% reduction for Executive Directors which applied for a 4-month period from 1 April 2020.

2. Taxable benefits for 2021 consist primarily of company car or car allowance and private health care insurance. The figures above include car

benefits of £15,000 for Messrs. Smith and Lister.

3. Pension figures include contributions to the UNITE Group Personal Pension Scheme and cash allowances, where applicable. Pension

contributions were reduced to a maximum of 17% of salary with effect from 1 January 2021.

4. The 2020 annual bonus scheme was suspended for the Chief Executive and Chief Financial Officer.

5. 2020 figures: The 2018 awards are valued based on the market price on the date of vesting (10 April 2021) of 1,083.5p. These amounts have

been revised upwards from last year’s report to reflect the actual share price on the date of vesting.

2021 figures: For the 2019 awards, vesting of the relative TAR element will be finalised following the publication of comparator results over the

coming months, with Unite currently estimated to rank between median and upper quartile, equating to c.50% vesting. Overall anticipated

vesting of the 2019 awards used in this single figure is therefore around 36.84% of maximum. Similarly, the market price on the date of vesting

for these awards is currently unknown and so the value shown is estimated using the average market value over the last quarter of 2021 of

1,085.5p. See following sections for further details. The value of the vested 2019 awards shown reflects the impact of a c.1% increase in the

vesting share price compared to the share price at grant. Overall, the impact of the share price increase on the awards represents c.1% of the

LTIP value, equivalent to c.£3k for Richard Smith and c.£2k for Joe Lister.

For both 2020 and 2021, LTIP figures include the (estimated) value of dividends for vested awards, in both cases paid as additional shares.

Awards in the form of HMRC-approved options are valued based on the embedded gain at vesting (i.e. subtracting the applicable exercise price)

and attract no dividends.

6. ‘Other’ includes the embedded value of SAYE options at grant.

154

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

£ Base fee

Committee Chair

/ SID fees Taxable benefits Total Single Figure

Note 1 Note 2 Note 2 Note 3

R Huntingford(i) 2021 181,110 – 74 181,184

2020 4,120 – – 4,120

E McMeikan 2021 49,440 16,120 39 65,599

2020 44,496 14,508 133 59,137

R Paterson 2021 49,440 10,300 3 59,743

2020 44,496 9,270 9 53,775

R Akers(ii) 2021 47,235 – – 47,235

2020 44,496 – 9 44,505

I Beato 2021 49,440 – 3 49,443

2020 44,496 – – 44,496

S Pearce(iii) 2021 49,440 8,279 3 57,7 21

2020 44,496 – 9 44,505

T Jackson(iv) 2021 – – 17 17

2020 – – – –

S Smith(v) 2021 49,440 10,300 49 59,789

2020 32,136 4,735 – 36,871

P White(vi) 2021 49,806 – – 49,806

2020 179,302 – 252 179,555

Single total figure of remuneration for Non-Executive Directors (audited)

The table below sets out a single figure for the total remuneration received for 2020 and 2021 by each Non-Executive

Director who served in the year ended 31 December 2021:

1. Changes in Non-Executive Directors and responsibilities as follows:

i. Richard Huntingford joined the Board as Chair Designate on 1 December 2020 and assumed the role of Chair on 1 April 2021.

ii. Richard Akers stepped down as a Non-Executive Director with effect from 15 December 2021.

iii. Dame Shirley Pearce became Chair of the Sustainability Committee with effect from 12 March 2021.

iv. Thomas Jackson joined the Board on completion of the acquisition of Liberty Living Group plc on 29 November 2019. Reflecting the

Relationship Agreement withCPPIB Holdco, Thomas will not receive any fees in respect of his Non-Executive Director position with Unite.

v. Professor Sir Steve Smith joined the Board on 1 April 2020 and became Chair of the Health and Safety Committee from this date.

vi. Phil White stepped down as Chair of the Board with effect from 31 March 2021.

2. 2020 figures reflects the 30% reduction to base fees and additional fees for Non-Executive Directors which applied for a 4-month period from

1 April 2020.

3. Taxable benefits relate primarily to certain travel expenses.

155

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

Measure Weight

Threshold On-target Maximum

Actual

Outcome

(% of max)30% of max 50% of max 100% of max

Financial

(70%)

Adjusted EPS 25% 26.0p 29.0p 31.0p 27.6p 41.0%

TAR per share 25% 47. 5p 55.9p 64.3p 75.9p* 100.0%

Loan to Value 20% 35.0% 34.3% 32.0% 29.0% 100.0%

Non-financial

(30%)

Customer satisfaction 10% 35 36 38 35 30.0%

Higher Education trust 10% 19 20 22 20 50.0%

GRESB rating 10% 82 83 85 85 100.0%

Executive

Overall outcome

(% of maximum)

Overall outcome

(% of salary)

Overall outcome

(£)

Richard Smith 73.3% 102.6% £484,688

Joe Lister 73.3% 102.6% £394,513

Incentive outcomes for the year ended 31 December 2021 (audited)

Annual Bonus in respect of 2021 performance

The maximum bonus opportunity for each Executive Director in 2021 was 140% of base salary, with threshold and on-target

performance paying 30% and 50% of maximum respectively under each performance measure. The 2021 annual bonus

was based on an additive combination of financial (weighted 70%) and non-financial (30%) metrics, with Loan to Value (LTV)

replacing net debt to EBITDA ratio and GRESB rating replacing individual / team objectives as compared to the 2019 scheme.

Further details, including the targets set and performance against each of the metrics, are provided in the tables below:

REMUNERATION COMMITTEE continued

* Excludes impact of the extension of LSAV and the performance fee

In confirming outcomes under the GRESB measure, the Committee considered, with input from the Sustainability

Committee, how the constituent elements forming the overall GRESB rating had changed year-on-year, as well as the

progress made on the Group’s Diversity & Inclusion agenda.

The Committee is satisfied that the overall bonus outcome of 102.6% of salary (cf. a maximum of 140% of salary) in respect of

2021 is appropriate. The overall outcome is around the 10-year average payout and reflects a year of recovery for Unite and

the significant contributions made by both Directors. Reflecting the previous Policy under which the 2021 bonus operated,

and having already reached their respective share ownership guidelines, each Executive Director will receive the first 100%

of salary of their bonus awards in cash, with the remainder (2.6% of salary) deferred in shares for 2 years.

156

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

Measure Weight Targets Outcome Vest %

2021 Adjusted EPS 1/3

0% vesting below 46.9 pence

25% vesting for 46.9 pence

100% vesting for 56.2 pence or more;

Straight-line vesting between these points

27.6 pence 0.0%

TSR ranking vs. constituents

of the FTSE350 Real Estate

Supersector Index

1/3

0% vesting below median

25% vesting for performance in line with median

100% vesting for performance in line with upper

quartile or above;

Straight-line vesting between these points

+34.7%: between

median (+11.7%)

and upper

quartile (+60.3%)

60.5%

TAR ranking vs. constituents

of the FTSE350 Real Estate

Supersector Index

1/3

0% vesting below median

25% vesting for performance in line with median

100% vesting for performance in line with upper

quartile or above;

Straight-line vesting between these points

Estimated:

Between median

and upper

quartile

Estimated:

50.0%

Note: As disclosed in the 2019 report, the EPS target range was increased to reflect the Liberty Living acquisition plan around earnings accretion and the

positive benefit of the IFRS16 accounting standard change. The original target range was 42.1–49.2 pence

Total estimated LTIP vesting (sum product of weighting and vest %) 36.84%

Executive

Interests

held

Estimated

vesting %

Estimated

interests

vesting

Date

vesting

Assumed

market

price

Estimated

value...

... of which, value due

to share price growth

Note 1 Note 2

Richard Smith 85,747

36.84%

31,589

24 July 2022 1,085.5p

£349,946

£2,996

(0.9% of total)

Joe Lister 69,890 25,747 £284,809

£2,442

(0.9% of total)

2019 LTIP vesting (vested on performance to 31 December 2021)

Awards in 2019 were made under the LTIP, consisting of the Unite Group Performance Share Plan and the Unite Group

Approved Employee Share Option Scheme. Vesting of the awards was dependent on three equally-weighted measures over

a three-year performance period: absolute EPS, relative TSR and relative TAR, with Unite’s performance for both the TSR and

TAR elements compared to the constituents of the FTSE350 Real Estate Supersector Index. There was no retest provision.

Further details, including vesting schedules and performance against each of the metrics, are provided in the table below:

Vesting of the relative TAR element will be finalised following the publication of comparator results over the coming months,

with Unite currently estimated to rank between median and upper quartile, equating to c.50% vesting under this element

and 36.84% vesting overall. Awards vesting will then be subject to an additional two-year holding period.

1. In each case, interests held includes 577 HMRC-approved options under the ESOS.

2. Estimated value of HMRC-approved options is based on embedded gain (i.e. after subtracting 1,076.0p exercise price). Value includes the accumulated dividends on

vestedshares.

In line with reporting regulations, the value disclosed above and in the single total figure of remuneration table on page 154

captures the estimated full number of interests vesting (i.e. excluding the two-year holding period). As the market price on

the date of vesting is unknown at the time of reporting, the value is estimated using the average market value over the last

quarter of 2021 of 1,085.5p. Values will be trued-up in the 2022 Annual Report on Remuneration to reflect actual relative TAR

vesting and the actual share price at the date of vesting for these awards.

The estimated values include the impact of a c.1% increase in the assumed market price compared to the share price at grant

(1,076.0p). Executives also became entitled to additional shares representing the dividends payable on vested LTIP shares

over the three-year performance period. The estimated value of these additional shares is included in the row entitled ‘LTIP’

in the single total figure of remuneration table on page 154, and equates to £9,258 and £7,535 for Messrs. Smith and Lister

respectively. Actual dividends payable will be determined on finalising vesting of the TAR element of awards.

157

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

Director

Note 1

Basic salary/total fee

Note 2

Taxable benefits

Note 3

Annual bonus

Note 4

2021 2020 2021 2020 2021 2020

R Smith 11.1% (6.9)% 6.4% 0.0% n/m (100.0)%

J Lister 11.1% (6.9)% (1.3)% 3.4% n/m (100.0)%

R Huntingford 266.3% n/a n/m n/a n/a n/a

E McMeikan 11.1% (7. 3)% (70.5)% (60.2)% n/a n/a

R Paterson 11.1% ( 7. 3) % (71.1)% 100.0% n/a n/a

R Akers 11.1% ( 7. 3) % (100.0)% (98.2)% n/a n/a

I Beato 11.1% ( 7. 3) % n/m (100.0)% n/a n/a

S Pearce 29.7% ( 7.3)% ( 71.1)% 100.0% n/a n/a

T Jackson n/a n/a n/m n/a n/a n/a

S Smith 17.0% n/a n/m n/a n/a n/a

P White 11.1% ( 7.3)% (100.0)% (84.5)% n/a n/a

All employees 2.9% 4.4% 2.3% 2.3% 285.0% (67.8)%

Percentage change in remuneration of Directors and employees

This table is produced in accordance with the Companies (Directors’ Remuneration Policy and Directors’ Remuneration

Report) Regulations 2019 and shows the change in remuneration of Unite Directors and employees over time.

Executive Director remuneration includes base salary, taxable benefits and annual bonus (where eligible). Non-Executive

Director remuneration includes base fee and any additional fees paid, and taxable benefits. The pay for all employees is

calculated using the increase in the earnings of full-time employees for the relevant tax years. The analysis excludes part-

time employees and growth rates are based on a consistent set of employees, i.e. the same individuals appear in the 2021

and 2020 populations for the 2021 analysis and so on.

REMUNERATION COMMITTEE continued

1. Changes in Directors and responsibilities during the 2020 and 2021 financial years as follows:

– Richard Huntingford joined the Board as Chair Designate on 1 December 2020 and assumed the role of Chair on 1April2021.

– Dame Shirley Pearce became Chair of the new Sustainability Committee from 12 March 2021.

– Thomas Jackson joined the Board on completion of the acquisition of Liberty Living Group plc on 29 November 2019. Reflecting the

Relationship Agreement with CPPIB Holdco, Thomas will not receive any fees in respect of his Non-Executive Director position with Unite.

– Professor Sir Steve Smith joined the Board on 1 April 2020 and became Chair of the Health and Safety Committee from this date.

– Richard Akers stepped down as a Non-Executive Director with effect from 15 December 2021

– Phil White stepped down as Chair of the Board with effect from 31 March 2021.

2. The basic salary/total fee figures shown are based on full-time equivalent comparisons. All Directors agreed a temporary 30% reduction to

their salary/fees for the period of four months ended 31 July 2020 which is reflected in the year-on-year comparisons for both 2020 and 2021.

3. For Executive Directors, taxable benefits consist primarily of company car or car allowance and private health care insurance. For Non-

Executive Directors, taxable benefits relate primarily to certain travel expenses and accommodation which, given the relatively small numbers

involved, can produce sizeable % changes from year to year.

4. The figures shown are reflective of any bonus earned during the respective financial year. Non-Executive Directors are not eligible to

participate in the annual bonus scheme.

158

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

2021 £m 2020 £m % change 2020–21

Total employee pay expenditure 65.0 64.7 0.5%

Distributions to shareholders 68.0 0.0 n/m

Relative importance of spend on pay

The table below shows shareholder distributions (i.e. dividends and share buybacks) and total employee pay expenditure for

the financial years ended 31 December 2020 and 31 December 2021, along with the percentage change in both.

Distributions to shareholders reflects actual payments made during the relevant financial year. Employee remuneration

excludes social security costs.

Relationship between the remuneration of the CEO and all employees

The Company’s approach to remuneration is consistent for all employees.

Consistent with previous years, given the significant undertaking required to calculate the single figure of remuneration

for all UK employees, the Committee opted to use data already available from the gender pay reporting as the basis for

identifying employees at P25, P50 and P75 (‘Option B’). We believe this provides a reasonable estimate for employees’ pay at

these levels within the organisation. Further details on the specific steps used in calculating the above ratios are as follows:

• We used the most recent gender pay gap data from 5 April 2021 to rank the hourly rates of all UK employees. From this

initial ranking we identified those individuals positioned at P25, P50 and P75, as well as the immediate employees either

side of P25, P50 and P75.

• Employees selected as P25, P50 and P75 were checked to confirm that they were employed for the whole of the 2021

financial year.

• Total FTE remuneration for each of these individuals was then calculated to 31 December 2021 on the same basis as used

in the single figure table for our CEO. All figures are total amounts paid to full-time employees covering the whole 2021

financial year. Overtime pay, where received during the year, has been excluded so that the figures are comparable with

the Chief Executive.

• In reviewing the employee pay data, the Committee is comfortable that the P25, P50 and P75 individuals identified

appropriately reflect the employee pay profile at those quartiles, and that the overall picture presented by the ratios is

consistent with our pay, reward and progression policies.

The Committee notes that the statutory CEO pay ratios have risen in 2021 as compared to 2020, with , for example, the ratio

of CEO total remuneration to the median employee, for example, increasing from 38.1 to 55:1. This change reflects a number

of factors, most notably the resumption of the annual bonus scheme for Executive Directors in 2021.

Reflecting that a significant proportion of the CEO’s remuneration is linked to Group performance and share price

movements over the longer-term and as a result that changes in the headline ratios may be volatile, the Committee also

reviews ratios for salary and salary plus annual bonus. Participation in the Group’s long-term incentives is currently limited

to c.60 senior leaders, with none of the individuals identified as P25, P50 and P75 in this group. On the other hand, the

significant majority of our employees are eligible to participate in annual bonus arrangements – and so the Committee

considers this ratio, as well as the ratio comparing just salaries, to provide helpful additional context.

Having reviewed these additional data points, the Committee is satisfied that the fluctuation in the headline ratios this year

reflects appropriate differences in the structure of remuneration at different levels of seniority. Unite’s total pay ratios have,

in some years, been high relative to the broader FTSE250; however, the Committee believes that these differences are driven

primarily by the Group’s staffing model and the proportion of the workforce employed in our frontline teams, rather than

excessive pay outcomes at a senior level.

159

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FINANCIAL

STATEMENTS

OTHER

INFORMATION

CEO pay ratio 2021 2020 2019

Note 1

Methodology used B B B

Average number of employees 1,900 1,756 1,450

Ratio of CEO single figure total remuneration:

– To employee at the 25th percentile 57:1 4 4.1 113:1

– To employee at the 50th percentile 55:1 38.1 96:1

– To employee at the 75th percentile 42:1 29:1 70:1

Ratio of CEO base salary plus annual bonus figure:

– To employee at the 25th percentile 42:1 21:1 49:1

– To employee at the 50th percentile 40:1 18:1 41:1

– To employee at the 75th percentile 31:1 14:1 30:1

Ratio of CEO base salary figure:

– To employee at the 25th percentile 22:1 22:1 25:1

– To employee at the 50th percentile 22:1 19:1 21:1

– To employee at the 75th percentile 17:1 14:1 15:1

Additional details

CEO total single figure (£’000) 1,390 934 2,336

CEO base salary (£’000) 472 425 457

Employees total pay and benefits (£’000)

– at the 25th percentile 24.4 21.2 20.6

– at the 50th percentile 25.3 24.6 24.4

– at the 75th percentile 32.8 32.0 33.5

Employees base salary (£‘000)

– at the 25th percentile 21.1 19.6 18.1

– at the 50th percentile 21.8 22.6 21.7

– at the 75th percentile 28.5 29.4 29.6

1. 2020 CEO single figure of remuneration has been trued-up from last year’s report to reflect the actual market price on the date of vesting for

2018 LTIP awards, with ratios updated accordingly.

REMUNERATION COMMITTEE continued

Relationship between the remuneration of the CEO and all employees

160

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

M Allan M Allan M Allan M Allan

M Allan

R Smith R Smith R Smith R Smith R Smith R Smith

Note 1,2 Note 3

CEO single figure of

remuneration (£000) £994 £1,944 £2,987 £2,382

£223

£1,239 £1,456 £2,131 £2,336 £934 £1,390

Annual bonus outcome

(% of maximum) 63.4% 84.0% 89.4% 88.2%

n/a

43.4% 63.6% 74.3% 80.9% n/a 73.3%

LTIP outcome

(% of maximum) 26.3% 83.1% 95.2% 100.0%

n/a

100.0% 96.1% 81.9% 97.1% 33.33% 36.84%

Executive Date of grant

Shares over which

awards granted

Market price at

date of award Face value

Note 1

Richard Smith

12 April 2021

87,549

1,083.5p

£948,593

Joe Lister

71,329 £772,850

Review of past performance

The following graph charts the TSR of the Company and the FTSE350 Real Estate Supersector Index over the ten-year period

from 1 January 2012 to 31 December 2021. Whilst there is no comparator index or group of companies that truly reflects

the activities of the Group, the FTSE350 Real Estate Index (the constituent members of which are all property holding and

/ or development companies or real estate investment trusts within the UK), was chosen as it reflects trends within the UK

property market generally and tends to be the index against which analysts judge the performance of the Company. The

table below details the Chief Executive’s single figure remuneration over the same period.

1. 2020 CEO single figure of remuneration has been trued-up from last year’s report to reflect the market price on the date of vesting for 2018 LTIP awards.

2. 2020 annual bonus scheme was cancelled for Executive Directors in April 2020.

3. 2021 CEO single figure and LTIP outcome are based on an estimate of the vesting of the TAR element, see page 152 for further details.

Scheme interests awarded in 2021 (audited)

LTIP

In April 2021, Executive Directors were granted awards under the LTIP with a face value of 200% of their respective salaries.

Any awards vesting for performance will be subject to an additional two-year holding period.

1. Combination of HMRC-approved options under the ESOS (479) and nil cost options under the PSP calculated using a share price of 1,083.5p, being the closing mid-market

price on the day the awards were calculated.

£1,000

£900

£800

£700

£600

£500

£400

£300

£200

100

£0

Dec 11 Dec 12 Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Dec 18 Dec 19 Dec 20 Dec 21

Unite FTSE 350 Real Estate Supersector Index

161

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

Measure Weight Targets

2023 Adjusted EPS 1/3

0% vesting below 44.0 pence;

25% vesting for 44.0 pence;

100% vesting for 51.5 pence or more;

Straight-line vesting between these points

TSR ranking vs. constituents of the

FTSE350 Real Estate Supersector Index

(2021–2023)

1/3

0% vesting for performance below median;

25% vesting for performance in line with median;

100% vesting for performance at upper quartile or above;

Straight-line vesting between these points.

TAR per share ranking vs. constituents

of the FTSE350 Real Estate Supersector

Index (2021–2023)

1/3

0% vesting for performance below median;

25% vesting for performance in line with median;

100% vesting for performance at upper quartile or above;

Straight-line vesting between these points.

Scheme interests awarded in 2021 (audited) continued

Vesting of the awards is dependent on three equally-weighted measures over a three-year performance period: absolute

Adjusted EPS, relative TAR and relative TSR, with Unite’s performance for both the TAR and TSR elements compared to the

constituents of the FTSE350 Real Estate Supersector Index. Targets for TAR and TSR measures are consistent with those

disclosed prospectively in the 2020 Directors’ Remuneration Report. Reflecting sensitivities around target setting arising

from the Covid-19 pandemic, the Committee agreed targets for the absolute EPS element of awards later in the year than

normal (October 2021) and disclosed these in a market announcement at the time. The Committee is satisfied that any

vesting in 2024 will require exceptional performance over the remainder of the performance period. Details of the vesting

schedules are provided below:

REMUNERATION COMMITTEE continued

The Committee retains overarching discretion under the Remuneration Policy to approve the vesting of these awards.

Anypayout will be scrutinised by the Committee to ensure that it does not reward windfall gains, and reflects the

performance of the Company and the experience of stakeholders over the period.

Deferred annual bonus

Given the suspension of the 2020 annual bonus scheme for Executive Directors, there were no deferred bonus awards

granted during the 2021 financial year.

SAYE

During 2021, Joe Lister entered into a new savings contract under the SAYE plan. Details of all outstanding awards under this

plan are included in the table on page 167.

Exit payments made in the year (audited)

There have been no exit payments during the year ended 31 December 2021.

Payments to past directors (audited)

There have been no payments (2020: £Nil) in excess of the de minimis threshold to former Directors during the year ended

31 December 2021 in respect of their former roles as Directors. The Company has set a de minimis threshold of £5,000 under

which it would not report such payments.

16 2

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

Executive

Base salary from

1 January 2021

Base salary from

1 January 2022 Percentage increase

Richard Smith £472,313 £522,500 10.6%

Joe Lister £384,441 £411, 250 7.0 %

Threshold On-target Maximum

Corporate measures Weight 30% max 50% max 100% max

Financial 70% Adjusted EPS 25.0%

Targets considered commercially

sensitive and will be disclosed

retrospectively in the 2022 DRR

TAR per share 25.0%

Loan to Value (LTV) 20.0%

Non-financial 30% Customer satisfaction 7.5% 36 37 38

Higher Education trust 7.5% 21 22 23

Employee engagement 7.5%

Targets considered commercially

sensitive and will be disclosed

retrospectively in the 2022 DRR

GRESB rating 7.5%

Implementation of Executive Director Remuneration Policy for 2022

Base salary

As detailed in the Annual Statement on pages 135–137, following a detailed review by the Committee it was determined

to increase Executive Director salaries to reflect the increase in size, scale and scope of the Group in recent years, and in

respect of the CEO, to eliminate the on-appointment discount to his predecessor. The first of this two-stage increase took

effect from 1 January 2022 as shown in the table below. A similar % increase will apply with effect from 1 January 2023

subject to Committee confirmation based on each Director’s performance and contribution over 2022.

Salary increases across the Group for 2022 averaged 3.0%. Reflecting our commitment to being an accredited Real Living

Wage employer, entry level salaries were increased by the higher of the rates set by the Living Wage Foundation (c.1.8% in

London and c.4.2% in the rest of the UK) and the 3.0% groupwide increase.

Pension

Executive Directors will continue to receive a pension scheme contribution, a cash allowance of equivalent cost to the

company or a combination of both. With effect from 1 January 2022, total employer pension contributions will be further

reduced to an equivalent of up to 14% of salary for both Executive Directors. A final reduction next year will align both

Executive Directors with the wider workforce.

Annual Bonus

For 2022, the maximum bonus opportunity for each executive will be 140% of salary, with threshold and on-target

performance paying 30% and 50% of maximum respectively under each performance measure.

As disclosed in the Annual Statement on pages 137–138, there will be a change to the performance measures and weightings

for the 2022 bonus scheme. The financial element of the bonus will continue to be based on a combination of EPS, TAR and

Loan to Value (LTV), with the non-financial element to be split between customer satisfaction, Higher Education trust, GRESB

rating and a new measure, employee engagement, each weighted 7.5%. The introduction of employee engagement coincides

with the rollout of a new People strategy across the Group, and reflects the increasing importance of engaging our workforce

to help deliver against an ambitious new strategy. Targets and outcomes for this measure will be based on the annual survey

conducted by Glint, the output of which is reported in our Operational KPIs.

For both the financial and non-financial elements, proposed target levels have been set to be challenging relative to business

plan. Targets for the financial elements are deemed to be commercially sensitive, as are the Employee Engagement and

GRESB rating non-financial elements, and will be disclosed retrospectively in the 2022 Directors Remuneration Report.

The Customer satisfaction and Higher Education reputation targets of the non-financial elements are not deemed to be

commercially sensitive and are disclosed in the table above.

Subject to approval of the new Remuneration Policy, 50% of any bonus earned will be satisfied by an allocation of shares in

the Company deferred for two years. Clawback and malus provisions apply to all awards.

163

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

LTIP

During 2022, Executive Directors will each receive an award equivalent to a maximum of 200% of salary delivered through

acombination of the PSP and ESOS, with the final level of vesting dependent on the achievement of three-year performance

targets. As disclosed in the Annual Statement on page 138, we are introducing two sustainability metrics linked to the

Group’s new strategy for 2022.

The use of operational energy intensity aligns with our 2030 net zero carbon commitments and represents an environmental

measure over which participants will have full control, avoiding distortions from either how Unite buys energy (which

is easy to change and should not warrant an LTIP payout) and grid decarbonisation (which is outside of management’s

control). Progress against this measure is dependent on both a continued investment to improve the energy efficiency of the

buildings which we operate, and on promoting initiatives to encourage customers and colleagues to reduce their energy use.

The use of EPC ratings reflects the importance of making progress towards increasing minimum energy efficiency standards,

an area currently under consultation by the UK Government.

1. Role is undertaken by the Chair of the Board, with no any additional fee payable in respect of chairing this Committee.

2. Fee payable with effect from 12 March 2021.

REMUNERATION COMMITTEE continued

Measure Weight

Threshold Stretch

25% vesting 100% vesting

2024 Adjusted EPS 28.0% 48.5 pence 53.6 pence

TSR ranking vs. constituents of the FTSE350 Real

Estate Supersector Index (2022–2024) 28.0% In line with median In line with upper quartile

TAR per share ranking vs. constituents of the FTSE350

Real Estate Supersector Index (2022–2024) 28.0% In line with median In line with upper quartile

Operational energy intensity: cumulative reduction;

2024 vs 2019 baseline (kWh/m2) 8.0%

6.3% cumulative

reduction

12.6 % cumulative

reduction

EPC ratings: % of floorspace A–C rated in 2024 8.0% 67% of floorspace 79% of floorspace

No vesting below Threshold; straight-line vesting between Threshold and Stretch.

Any awards vesting for performance will be subject to an additional two-year holding period, during which time clawback

provisions will also apply. Further details of the grant date and number of interests awarded will be disclosed in next year’s report.

Implementation of Non-Executive Director Remuneration Policy for 2022

Chair and Non-Executive Director Fees

During the final quarter of 2021, the Board undertook its annual review of Non-Executive Director fees. Following

consideration of salary increases across the Group and indicative fee increases at sector and FTSE comparators, the Board

determined that the basic fee should be increased by 3.0% from £49,440 p.a. to £50,925 p.a. and that additional fees should

be increased by a similar rate. The Committee, in considering similar factors, determined that the fee payable to the Chair

of the Board should be increased by a similar rate from £225,000 to £231,750. Each of these fee increases is in line with

increases applied to the broader employee population.

A summary of the fee increases, which are effective 1 January 2022, is set out in the table below.

Position 2021 fees 2022 fees

Base fees

Chair £225,000 £231,750

Non-Executive Director £49,440 £50,925

Additional fees

Senior Independent Director £5,820 £5,995

Audit Committee Chair £10,300 £10,600

Remuneration Committee Chair £10,300 £10,600

Nomination Committee Chair Note 1 n/a n/a

Health and Safety Committee Chair £10,300 £10,600

Sustainability Committee Note 2 £10,300 £10,600

164

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

Ordinary shares of 25p each

at 31 December 2021

Ordinary shares of 25p each

at 31 December 2020

R Smith 295,586 232,361

J Lister 518,006 464,875

R Huntingford 10,135 10,000

E McMeikan 7,824 7,721

R Paterson 8,312 8,312

I Beato 1,724 1,724

S Pearce 1,163 1,149

T Jackson 0 0

S Smith 0 0

Directors’ interests (audited)

A table setting out the beneficial interests of the current Directors and their families in the share capital of the Company as at

31 December 2021 is set out below. None of the Directors has a beneficial interest in the shares of any other Group company.

Since 31 December 2021, there have been no changes in the Directors’ interests in shares.

Details of Executive Directors’ interests in share-based incentives are set out in the tables below.

Share price information

As at 31 December 2021 the middle market price for ordinary shares in the Company was 1,110.5p per share. During the

course of the year, the market price of the Company’s shares ranged from 930p to 1,237p per ordinary share.

Executive Directors’ shareholding requirements (audited)

The table below shows the shareholding of each Executive Director against their respective shareholding requirement as at

31 December 2021:

1. Includes shares subject to a holding period under the LTIP and deferred bonus shares, where applicable. Excludes SAYE options.

2. Based on share price as at 31 December 2021 of 1,110.5p. Shares subject to deferral / holding periods are taken on a ‘net of tax’ basis for the purposes of the current

shareholdingcalculation.

3. As at the date of stepping down from the Board on 15 December 2021.

Interests

Shareholding

requirement

% of salary /

base fee

Current

shareholding

% of salary /

base fee

Requirement

met?

Owned

outright

Subject to deferral /

holding period

Unvested and / or subject

to perf. conditions

Shares / nil-

cost options

Options /

HMRC options

Shares / nil-

cost options

Options /

HMRC options

Note 1 Note 2

R Smith 295,586 174,375 1,152 289,643 1,782 250% 914% Yes

J Lister 518,006 141,908 1,152 235,693 1,782 200% 1,715% Yes

R Huntingford 10,135 50%

E McMeikan 7, 824 176%

R Paterson 8,312 187%

R Akers Note 3 20,000 449%

I Beato 1,724 39%

S Pearce 1,163 26%

T Jackson 0 0%

S Smith 0 0%

P White Note 4 15,290 85%

165

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

REMUNERATION COMMITTEE continued

Executive

Interests held

at 01.01.21

Granted during

the year

Lapsed during

the year

Vested during

the year

Interests held

at 31.12.21

End of deferral

period

Richard Smith 5,067 – – – 5,067 27.02. 22

Joe Lister 4,124 – – – 4,124 27.02.22

Executive Plan

Interests held

at 01.01.21

Interests

awarded

during the

year

ESOS

exercise

price

Interests

vested during

the year

Interests

lapsed during

the year

Interests

outstanding

at 31.12.21

Period of

qualifying

conditions

Note 1

Richard Smith

PSP 110,258 – – 36,748 73,510 –

10.04.18 –

10.04.21ESOS 739 – 811.0p 246 493 –

PSP 85,190 – – – – 85,190

24.07.19 –

24.07. 2 2ESOS 557 – 1,076.0p – – 557

PSP 117, 3 83 – – – – 117,383

23.04.20 –

23.04.23ESOS 746 – 803.5p – – 746

PSP – 87,070 – – – 87,070

12.04.21 –

12.04.24ESOS – 479 1,083.5p – – 479

314,873 87,549 36,994 74,003 291,425

Joe Lister

PSP 89,732 – – 29,907 59,825 –

10.04.18 –

10.04.21ESOS 739 – 811.0p 246 493 –

PSP 69,333 – – – – 69,333

24.07.19 –

24.07. 2 2ESOS 557 – 1,076.0p – – 557

PSP 95,510 – – – – 95,510

23.04.20 –

23.04.23ESOS 746 – 803.5p – – 746

PSP – 70,850 – – – 70,850

12.04.21 –

12.04.24ESOS – 479 1,083.5p – – 479

256,617 71,329 30,153 60,318 237,475

Directors’ interests in shares and options under Unite incentives (audited)

Deferred bonus

LTIP awards

4. As at the date of stepping down from the Board on 31 March 2021.

Executive Directors’ shareholding requirements (audited) continued

166

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

0 250 500 750 1,000 1,250 1,500 1,750

Richard Smith

250%

200%

914%

1,715%

Joe Lister

Shareholding requirement Current shareholding

Executive

Options held

at 01.01.21

Granted during

the year

Exercised during

the year

Option price

per share

Options held

at 31.12.21

Maturity

date

Note 1

Joe Lister 1,266 – – 710.8p 1,266 01.12.21

1,182 – – 760.8p 1,182 01.12.23

– 913 – 985.2p 913 01.12.24

Richard Smith 2,122 – – 848.0p 2,122 01.12.22

Executive

2021

2020

Richard Smith 444,937 342,046

Joe Lister 362,552 278,839

1. All awards vesting for performance during the year are subject to an additional two-year holding period.

SAYE

1. As at year end, Joe Lister held 1,266 options under the 2018 scheme which had matured but not yet been exercised.

The highest, lowest and closing share prices for 2021 are shown on page 165.

Details of the qualifying performance conditions in relation to the above referred-to awards made in prior years are set out

on previous pages or in earlier reports.

Awards made in prior years took the form of a combination of nil cost options under the PSP and HMRC-approved options

under the ESOS. No variations have been made to the terms or conditions of any awards.

The fair value in respect of Directors’ share options and LTIP awards recognised in the Income Statement is as follows:

The Directors’ Remuneration Report has been approved by the Remuneration Committee and signed on its behalf by:

Elizabeth McMeikan

Chair

– Remuneration Committee

23 February 2022

167

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

Share capital

At the date of this report, there are

399,131,264 ordinary shares of 25p

each in issue, all of which are fully

paid-up and quoted on the London

Stock Exchange.

During the year and through to the date

of this report, the following numbers

of ordinary shares of 25p each were

allotted and issued as follows:

• 789,927 – Unite share scrip scheme

• 133,415 – pursuant to the exercise

of options under The Unite Group

PLC Savings Related Share Option

Scheme; and

• 7,270 – pursuant to the exercise

of options under the Approved

Scheme.

The rights attaching to the Company’s

ordinary shares, as well as the powers of

the Company’s Directors, are set out in

the Company’s Articles of Association.

There are no restrictions on the

transfer or voting rights of ordinary

shares in the capital of the Company

(other than those which may be

imposed by law from time to time

oras set out in the Company’s Articles

ofAssociation).

The Directors have no authority to buy

back the Company’sshares.

In accordance with the Market Abuse

Regulations, certain employees are

required to seek approval to deal in the

Company’s shares.

The Company is not aware of any

agreements between shareholders

that may result in restrictions on the

transfers of securities and/or voting

rights. No person holds securities in

the Company carrying special rights

with regard to control of the Company.

Unless expressly specified to the

contrary, the Company’s Articles of

Association may be amended by special

resolution of the shareholders.

Authority to issue shares

The Directors may only issue shares

if authorised to do so by the Articles

of Association or the shareholders in

general meeting. At the Company’s

Annual General Meeting held on 13

May 2021, shareholders granted an

authority to the Directors to allot

ordinary shares up to an aggregate

nominal amount of £33,184,050 (which

represented one-third of the nominal

value of the issued share capital of

the Company as at 1 April 2021). In

accordance with guidelines issued

by the Investment Association, this

resolution also granted the Directors

authority to allot further equity

securities up to the aggregate amount

of £33,184,050 (representing one-third

of the nominal value of the issued share

capital of the Company as at 1 April

2021). This additional authority was

only permitted for fully pre-emptive

rights issues. As at 31 December 2021,

the shares that had been allotted were

to satisfy awards under the Company’s

share schemes and the scrip scheme

shares. As this authority is due to

expire on 12 May 2022, shareholders

will be asked to renew and extend the

authority, given to the Directors at the

last Annual General Meeting, to allot

shares in the Company, or grant rights

to subscribe for, or to convert any

security into, shares in the Company

for the purposes of Section 551 of the

Companies Act 2006. Further details

on the resolution will be provided in

the Notice of this year's Annual General

Meeting and its explanatory notes.

Disapplication of pre-emption rights

If the Directors wish to allot new

shares and other equity securities, or

sell treasury shares, for cash (other

than in connection with an employee

share scheme) company law requires

that these shares are offered first

to shareholders in proportion to

their existing holdings. There may

be occasions, however, when the

Directors need the flexibility to finance

business opportunities by the issue

of shares without a pre-emptive offer

to existing shareholders. This cannot

be done under the Companies Act

2006 unless the shareholders have

first waived their pre-emption rights.

At the forthcoming Annual General

Meeting, shareholders will be asked

to pass two special resolutions to

grant the Directors powers to disapply

shareholders’ pre-emption rights under

certain circumstances. Further details

on theresolutions will be provided

intheNotice of this year’s Annual

General Meeting.

Change of control

All of the Company’s share schemes

contain provisions relating to a change

of control. Outstanding rewards and

options would normally vest and

become exercisable on a change of

control, subject to the satisfaction of

any performance conditions. Other

than certain of the Group’s banking

facilities, there are no other significant

agreements to which the Company is

a party that affect, alter or terminate

upon a change of control of the

Company following a takeover bid. Nor

are there any agreements between

the Company and its Directors or

employees providing for compensation

for loss of office or employment that

occurs because of a takeover bid.

Going Concern and

viabilitystatement

The going concern statement and

viability statement are set out on pages

190, 191 and page 78 respectively and

are incorporated into this Directors’

Report by reference.

As at 31 December 2021, the Company

had received notifications from the

following companies and institutions

of themselves and their clients holding

3% or more of the issued share capital

of the Company. There have been no

significant changes since that date

through to 23 February 2022.

SHARE CAPITAL

Shareholder

Percentage

of share

capital

Canada Pension Plan

Investment Board (CA) 18.19

BlackRock Inc 6.70

APG Asset Management

NV (NL) 5.98

Abrdn Plc 5.58

Norges Bank Investment

Management 4.82

The Vanguard Group Inc 4.16

Royal London Asset

Management Ltd (UK) 3.87

DIRECTORS’ REPORT

168

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

Disclosures required under Listing Rule 9.8 4R

For the purposes of LR 9.8.4C, the information required to be disclosed by

LR 9.8.4R can be found in the following locations within the Annual Report:

INFORMATION REQUIRED UNDER LR 9.8.4R REFERENCE

Disclosure of information to auditors

The Directors who held office at the

date of approval of the Directors’

Report confirm that, so far as they are

each aware, there is no relevant audit

information of which the Company’s

auditor is unaware; and each Director

has taken all the steps that he/she

ought to have taken as a Director to

make himself/herself aware of any

relevant audit information and to

establish that the Company’s auditor

is aware of that information. This

confirmation is given and should

be interpreted in accordance with

the provisions of section 418 of the

Companies Act 2006.

Directors’ conflicts of interest

The Company has procedures in place

for managing conflicts of interest. A

Director must notify the Chair (and the

Chair notifies the Chief Executive) if he/

she becomes aware that he/she, or any

of his/her connected parties, may have

an interest in an existing or proposed

transaction with the Company or the

Group. Directors have a continuing

duty to update any changes to

theseconflicts.

Political donations

No political donations, contributions or

expenditure were made during the year

ending 2021.

Indemnities

There are no qualifying third party

indemnity provisions or qualifying

pension scheme indemnity provisions

for the benefit of any of the Directors.

Research and development

The Company is not currently carrying

on any activities in the field of research

and development.

Branches outside the UK

The Company does not have any

branches outside of the UK.

Appointment and replacement

ofDirectors

The Company’s Articles of Association

provide that Directors may be

appointed by the existing Directors

or by the shareholders in a general

meeting. Any person appointed by the

Directors will hold office only until the

next general meeting, notice of which

is first given after their appointment

and will then be eligible for re-election

by the shareholders. A Director may be

removed by the Company as provided

for by applicable law and shall vacate

office in certain circumstances as set

out in the Articles of Association. In

addition the Company may, by ordinary

resolution, remove a Director before

the expiration of his/her period of

office and, subject to the Articles of

Association, may by ordinary resolution

appoint another person to be a Director

instead. There is no requirement for a

Director to retire on reaching any age.

All the information referenced above is incorporated by reference into the Directors’ Report.

(1) Amount of interest capitalised and tax relief Note 3.1, page 206

(2) Publication of unaudited financial information n/a

(4) Details of long term incentive schemes Pages 157 and 164

(5) Waiver of emoluments by a Director Page 162

(6) Waiver of future emoluments by a Director n/a

(7) Non pre-emptive issues of equity for cash n/a

(8) Item (7) in relation to major subsidiary undertakings n/a

(9) Parent participation in a placing by a listed subsidiary n/a

(10) Contracts of significance n/a

(11) Provision of services by a controller shareholder n/a

(12) Shareholder waiver of dividends n/a

(13) Shareholder waiver of future dividends n/a

(14) Agreements with controlling shareholders n/a

169

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

Other information incorporated by reference

The following information in the Strategic Report and

Financial Statements is incorporated into this Directors’

Report by reference:

• Results and Dividend on pages 72 and 229

• TCFD disclosures, Greenhouse Gas Emissions and Energy

Consumption Disclosures on pages 50–55

• Financial instruments and financial risk management

on page 74 and Section 4 of the notes to the financial

statements on page 218

• Future developments on pages 23–25 and 66–69

• Employment of disabled persons/Employee involvement

on page 42

• Workforce engagement on page 104

• Engagement with customers, partners, suppliers and

others on page 17

The Corporate Governance report (which includes details of

directors who served throughout the year) on pages 88–170,

the Statement of Directors’ responsibilities on page 171

and details of post balance sheet events on page 237 are

incorporated into this Directors’ Report by reference.

Management Report

This Directors’ Report together with the Strategic Report

and other sections from the Annual Report forms the

Management report for the purposes of DTR 4.1.8 R.

Annual General Meeting

The Annual General Meeting of the Company will be held at

the Company’s registered office at South Quay, Temple Back,

Bristol, BS1 6FL at 9.30am on 12 May 2022. We request that

shareholders who do wish to attend in person preregister

their intention to attend to help us manage numbers. We

will continue to monitor Covid-19 and any impact on our

Annual General Meeting, with the health and safety of our

shareholders, Directors and employees as our priority. If it

becomes necessary or appropriate to make changes to the

proposed format of the Annual General Meeting, we will

inform shareholders as soon as we can. Shareholders are

encouraged to monitor our website at https://www.unite-

group.co.uk/investors/agm and London Stock Exchange

announcements for any updates regarding the Annual

General Meeting arrangements.

Formal notice of the meeting is given separately and will

beavailable on the Company’s website at https://www.unite-

group.co.uk/investors.

This report was approved by the Board on 23February 2022

and signed on its behalf by

Christopher Szpojnarowicz

Company Secretary

23 February 2022

DIRECTORS’ REPORT continued

170

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

The Directors are responsible for preparing the Annual

Report and Accounts and the Group and Parent Company

financial statements in accordance with applicable law

andregulations.

Company law requires the Directors to prepare Group and

Parent Company financial statements for each financial

year. Under that law they are required to prepare the Group

financial statements in accordance with IFRS as adopted by

the UK (Adopted IFRS) and applicable law and have elected

to prepare the Parent Company financial statements in

accordance with United Kingdom Accounting Standards

including FRS 101 – Reduced Disclosure Framework ("United

Kingdom Generally Accepted Practice").

Under company law, the Directors must not approve the

financial statements unless they are satisfied that they give

a true and fair view of the state of affairs of the Group and

Parent Company and of their profit or loss for that period.

In preparing each of the Group and Parent Company

financial statements, the Directors are required to:

• Select suitable accounting policies and then apply

themconsistently

• Make judgements and estimates that are reasonable

andprudent

• State whether they have been prepared in accordance

with IFRSs as adopted by the UK (or in accordance with

UK General Accepted Practice)

• Prepare the financial statements on the going concern

basis unless it is inappropriate to presume that the Group

and the parent company will continue in business.

The Directors are responsible for keeping adequate

accounting records that are sufficient to show and explain

the Parent Company’s transactions and disclose with

reasonable accuracy at any time the financial position of the

Parent Company and enable them to ensure that its financial

statements comply with the Companies Act 2006. They have

general responsibility for taking such steps as are reasonably

open to them to safeguard the assets of the Group and to

prevent and detect fraud and other irregularities.

Under applicable law and regulations, the Directors are also

responsible for preparing a Directors’ Report, Directors’

Remuneration Report and Corporate Governance Statement

that comply with that law and those regulations.

The Directors are responsible for the maintenance and

integrity of the corporate and financial information included

on the Company’s website. Legislation in the UK governing

the preparation and dissemination of financial statements

may differ from legislation in other jurisdictions.

Each of the Directors, the names of whom are set out

onpages 92 to 95, confirms that to the best of his or

herknowledge:

• The Annual Report and Accounts taken as a whole is

fair, balanced and understandable and provides the

information necessary for shareholders to assess the

Company’s position and performance, business model

and strategy

• 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 Directors’ Report includes a fair review of the

development and performance of the business and the

position of the issuer and the undertakings included

in the consolidation taken as a whole, together with a

description of the principal risks and uncertainties that

they face.

R S Smith J J Lister

Director Director

23 February 2022

STATEMENT OF DIRECTORS’ RESPONSIBILITIES

171

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

CONTENTS

174 Independent auditor’s report

184 Consolidated income statement

184 Consolidated statement of

comprehensive income

185 Consolidated balance sheet

186 Company balance sheet

187 Consolidated statement of changes

inshareholders’ equity

188 Company statement of changes

inshareholders’ equity

189 Statements of cash flows

190 Notes to the financial statements

FINANCIAL

STATEMENTS

172

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

STRATEGIC REPORT GOVERNANCE

OTHER

INFORMATION

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

173

To the members of the Unite Group PLC

INDEPENDENT AUDITOR’S REPORT

Report on the audit of the financial statements

1. Opinion

In our opinion:

• the financial statements of The Unite Group plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) give a true

and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 December 2021 and of the

Group’s profit for the year then ended;

• the Group financial statements have been properly prepared in accordance with United Kingdom adopted

international accounting standards;

• the Parent Company financial statements have been properly prepared in accordance with United Kingdom

Generally Accepted Accounting Practice, including Financial Reporting Standard 101 “Reduced Disclosure

Framework”; and

• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements which comprise:

• the consolidated income statement;

• the consolidated statement of comprehensive income;

• the consolidated and Parent Company balance sheets;

• the consolidated and Parent Company statements of changes in equity;

• the consolidated and Parent Company statements of cash flows; and

• the related sections 1 to 9.

The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable

law and United Kingdom adopted international accounting standards. The financial reporting framework that has been

applied in the preparation of the Parent Company financial statements is applicable law and United Kingdom Accounting

Standards, including FRS 101 “Reduced Disclosure Framework” (United Kingdom Generally Accepted Accounting Practice).

2. Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our

responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial

statements section of our report.

We are independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant

to our audit of the financial statements in the UK, including the Financial Reporting Council’s (the “FRC’s”) Ethical Standard

as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these

requirements. The non-audit services provided to the Group and Parent Company for the year are disclosed in section 2.6

to the financial statements. We confirm that we have not provided any non-audit services prohibited by the FRC’s Ethical

Standard to the Group or the Parent Company.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

174

3. Summary of our audit approach

Key audit matters

The key audit matters that we identified in the current year were:

• Investment property and development property valuation; and

• Accounting for Joint Ventures.

In the prior year our report included a key audit matter relating to going concern. However,

given the lessening impact of Covid-19 upon the Group’s current and forecast occupancy, as

well as the available headroom to maintain specific financial ratios, we no longer consider

this to represent a key audit matter.

Within this report, key audit matters are identified as follows:

Newly identified Increased level of risk Similar level of risk

Materiality

The materiality that we used for the Group financial statements was £35.5m which was

determined on the basis of net assets. However, we use a lower materiality threshold of

£5.5m for balances which impact adjusted earnings.

Scoping

Our Group audit scope comprises the audit of The Unite Group Plc as well as Group’s joint

ventures: The Unite UK Student Accommodation Fund (USAF) and The London Student

Accommodation Vehicle (LSAV). All audit work was completed by the Group audit team.

Significant changes in

our approach

Changes to our key audit matters are set in in section 5 below.

4. Conclusions relating to going concern

In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in

the preparation of the financial statements is appropriate.

Our evaluation of the Directors’ assessment of the Group’s and Parent Company’s ability to continue to adopt the going

concern basis of accounting included:

• Obtained an understanding of the relevant controls over the going concern process, including management’s process

to formulate the cashflow forecasts as well as the approval process;

• Challenged the revenue assumptions, for the outturn of the 2021/22 academic year and the assumptions for the

2022/23 academic year. For the 2022/23 academic year specifically, we assessed the Group’s current forward sales

bookings and UCAS application data to forecast occupancy assumptions for reasonableness;

• Challenged the cost assumptions within the forecasts, including consideration of previous incurred costs and the

impact of cost inflation;

• Challenged the likelihood of downside scenarios arising relative to reverse stress tests with reference to the income

and cost assumptions. This included reference to the occupancy rates achieved during the previous academic years

which were negatively impacted by lockdown requirements and restrictions in university in person teaching;

• Determined the sufficiency of Group’s liquidity and headroom positions with reference to borrowing facility

agreements, including the consideration of the availability of undrawn down facilities as well as facilities due to expire

within the going concern period of assessment;

• Tested the arithmetical accuracy of the models used to prepare the Group’s forecast and related scenarios;

• Assessed the reasonableness of key mitigations available to management to raise or preserve cash to ensure the Group

has sufficient liquidity within the going concern period of assessment; and

• Assessed the sufficiency of the Group’s disclosure concerning the going concern basis of preparation.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions

that, individually or collectively, may cast significant doubt on the Group’s and Parent Company’s ability to continue as a

going concern for a period of at least twelve months from when the financial statements are authorised for issue.

In relation to the reporting on how the Group has applied the UK Corporate Governance Code, we have nothing material

to add or draw attention to in relation to the directors’ statement in the financial statements about whether the Directors

considered it appropriate to adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant

sections of this report.

175

FINANCIAL

STATEMENTS

STRATEGIC REPORT GOVERNANCE

OTHER

INFORMATION

To the members of the Unite Group PLC

INDEPENDENT AUDITOR’S REPORT continued

5. Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the

financial statements of the current period and include the most significant assessed risks of material misstatement

(whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the

overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team.

These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our

opinion thereon, and we do not provide a separate opinion on these matters.

5.1. Investment property and development property valuation



Key audit matter

description

The Group’s principal assets are investment properties (2021: £3,192.8m; 2020: £3,716.5m) and

investment properties under development (2021: £324.1m; 2020: £187.2m). The Group also holds

investments in its joint ventures, USAF and LSAV, with their principal assets also being investment

properties. The investment properties are carried at fair value based on an appraisal by the Group’s

independent external valuers. Valuations are carried out at six-monthly intervals for the Group in

accordance with the Royal Institution of Chartered Surveyors (RICS) Valuation – Professional

Standards (the Red Book), taking into account transactional evidence during the year.

The valuation is underpinned by a number of estimates and assumptions as it requires the estimation

of property yields, rental growth, occupancy and property management costs. A small change in

these assumptions could have a significant impact on the valuation of the properties and there is an

associated fraud risk due to the risk of management override of controls relating to the valuation

process. With regards to the valuation of the USAF and LSAV properties, small changes could also

have a significant impact on a key input to the calculation of a performance fee if the hurdle rate is

achieved as this is based on the net asset values of the funds. Valuations are also impacted by

cladding remediation requirements.

With regards to the investment properties under development, additional estimation is required to

forecast discounted cash flows with a deduction for construction costs to complete.

Refer to page 120 (Audit Committee Statement) and section 3.1: Wholly owned property assets and

section 3.4 Investments in joint ventures. Significant accounting judgements and estimation

uncertainty disclosures relating to Investment property and development property valuation are set

out in Sections 1 and 3.1.

How the scope of

our audit responded

to the key audit

matter

We performed testing on the property valuations and assessed the estimates that had been made.

This work included:

• Obtained an understanding and tested the relevant controls over the investment property and

development property valuation processes;

• Understood and challenged the assumptions used in relation to key drivers such as rental income

and growth, occupancy, yields and property management costs including comparing them to the

trends at the end of the year and the following year’s budget;

• Challenged the accuracy, completeness and consistency of the information provided to the external

valuers which included testing a sample of income and tenancy data back to Group held

information which have been subjected to accuracy tests;

• We assessed the independence, objectivity, competence and capability of the Group’s valuers. We

met with the Group’s external valuers to understand the assumptions being taken and consistency

of the estimates with prior year;

• With the assistance our valuation specialists within our Deloitte Real Estate team we benchmarked

the assumptions used against market data, including relevant transactions;

• Reconciled the external valuation reports to underlying financial records to test for completness

and accuracy within the Group’s financial statements;

• Assessed the appropriateness of the external valuers approach with respect to replacement

cladding and the impact on valuations and Unite’s valuation related disclosures;

• Assessed the Group’s development appraisal process through meeting with the development team

and assessing on a sample basis the forecast cost to complete against budget and substantive

testing of costs incurred to date. We challenged the appropriateness of cost to complete

information and reconciled the valuation reports to underlying financial records; and

• Assessed the sufficiency of the Group’s valuation disclosures, including the related sensitivities.

Key observations We are satisfied with the approach and methodology adopted in valuing the property portfolio and

consider the investment property and development property valuations to be suitable for inclusion

in the financial statements at 31 December 2021.

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

176

5.2. Accounting for Joint ventures 

Key audit

matter

description

A significant proportion of the Group’s assets is held within USAF and LSAV, jointly owned entities that are

accounted for under the equity method as joint ventures (2021: £1,044.1m; 2020: £849.0m), on the basis

that Unite does not control the entities. At 31 December 2021 Unite had a 22% (2020: 22%) ownership of

USAF and 50.0% (2020: 50.0%) ownership of LSAV, and acts as manager of both joint venture vehicles.

Due to the complexity of the contractual arrangements, and the Group’s role as manager of the joint

venture vehicles, the assessment of control involves judgements around a number of significant factors,

particularly with regard to USAF. USAF is a multi-investor fund with an Advisory Committee and the Group’s

ownership stake is subject to change. In accordance with the requirements of IFRS 10 Consolidated

Financial Statements, there is a need to assess control with regards to the ability to direct relevant

activities, to have exposure to variable returns and the ability to use power to affect returns at each

reporting period. Management have assessed (in line with the prior year) that the Group does not have

control over USAF and LSAV, but has joint control. Consequently management has accounted for the joint

ventures under the equity method rather than consolidating them within the Group’s financial statements.

During the year, the LSAV fund has been extended beyond its original 2022 maturity for a further 10 years.

Refer to page 120 (Audit Committee Statement) and section 3.4: Investments in joint ventures. Significant

accounting judgement disclosure relating to accounting for joint ventures is set out in Section 1.

How the scope

of our audit

responded to

the key audit

matter

Our audit procedures focused on assessing the activities of the businesses, understanding the contractual

agreements in place and identifying the methodology applied by management in reaching their business

decisions in order to consider the appropriateness of the classification of these arrangements as joint

ventures in accordance with the requirements of IFRS.

With regards to both USAF and LSAV (“the funds”), we have:

• Obtained an understanding of the relevant controls over the accounting for joint ventures;

• Assessed the key activities and how they impact the returns to the Group from the funds and challenged

management’s own consideration of these factors in their application of IFRS, including whether there

was evidence of contradictory evidence;

• Assessed the three key factors relating to control in accordance with the judgement required under IFRS

10. This included whether Unite had exercised control over the funds; and

• Reviewed the fund agreements in the year to confirm that there have been no changes to the USAF fund

agreement and to assess the changes to the LSAV fund agreement following the extension of the fund in

the year. For the changes to the LSAV fund agreement we considered whether these changes impacted

the key factors to assess control.

Given the particular focus on USAF, we have:

• Assessed the role of the USAF Advisory Committee including activities which it is resposnsible for as set

out by the fund agreement;

• Whether the Group has the sole power to direct the activities that are likely to most significantly affect

the returns of USAF in the future, and therefore whether Unite does have control of USAF; and

• Evaluated the impact of changes to the percentage ownership of the fund and whether this impacts

Unite’s power and control.

Key

observations

We are satisfied with management’s conclusion that there has been no changes to the structure and the

role played by the Group as investor and asset / development manager or to the USAF fund agreement. The

LSAV fund has been extended in the year however the changes to the LSAV fund agreement does not

impact the control assessment and accounting treatment.

We are satisfied with management’s conclusion that the Group does not have control of the Joint Ventures.

Therefore, treatment as joint ventures is considered to be appropriate.

177

FINANCIAL

STATEMENTS

STRATEGIC REPORT GOVERNANCE

OTHER

INFORMATION

To the members of the Unite Group PLC

INDEPENDENT AUDITOR’S REPORT continued

6. Our application of materiality

6.1. Materiality

We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the

economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in

planning the scope of our audit work and in evaluating the results of our work.

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

Group financial statements Parent Company financial statements

Materiality £35.5m (2020: £32.5m)

Adjusted earnings impacting measures: £5.5m

(2020: £4.6m)

£34.9m (2020: £31.2m)

Basis for

determining

materiality

Materiality: 1% (2020: 1%) of net assets

Adjusted earnings impacting measures: 5% (2020:

5%) of adjusted earnings

1% (2020: 1%) of Net Assets

Rationale for the

benchmark applied

We determined materiality for the Group based

on 1% of net assets as the balance sheet is

considered to be a key driver of a property group.

In addition to net assets, we consider the

European Public Real Estate (EPRA) measures to

be a critical financial performance measure for

the Group and we have applied a lower threshold

based on 5% of adjusted earnings for testing of

those items impacting adjusted earnings.

As the parent holding company the principal

activity is to hold the investments in

subsidiaries. Therefore, the net assets balance is

considered to be the key driver of the Company’s

performance and the most relevant benchmark

for materiality.

Adjusted earnings impacting measures

Materiality

Net assets

Group materiality

Adjusted Earnings

Group materiality

Net assets

£3,554.4m

Group materiality

£35.5m

Audit Committee

reporting threshold

£1.8m

Group Adjusted

Earnings impacting

measures materiality

£5.5m

Audit Committee

reporting threshold

£1.8m

Adjusted

earnings

£110.1m

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

178

6.2. Performance materiality

We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected

and undetected misstatements exceed the materiality for the financial statements as a whole.

Group and Parent Company performance materiality was set at 70% (2020: 70%) of Group and Parent Company respective

materiality. In determining performance materiality, we considered the following factors:

• our risk assessment, including our assessment of the Group’s overall control environment, and that we consider it

appropriate to rely on controls over a number of business processes; and

• our past experience of the audit, which has indicated a low number of corrected and uncorrected misstatements

identified in prior periods.

6.3. Error reporting threshold

We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £1.8m (2020:

£1.6m), as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also

report to the Audit Committee on disclosure matters that we identified when assessing the overall presentation of the

financial statements.

7. An overview of the scope of our audit

7.1. Identification and scoping of components

Our Group audit was scoped by obtaining an understanding of the Group and its environment, including Group-wide

controls, and assessing the risks of material misstatement at the Group level.

The Group is audited by one audit team, led by the Senior Statutory Auditor. We engage with staff at the Group’s Bristol

head office, as the books and records for each entity within the Group are maintained at this location. The Group only

operates within the United Kingdom – this includes The Unite Group PLC and its related subsidiaries, as well as the two

joint ventures, USAF and LSAV.

We audit all of the results of the Group together with USAF and LSAV, for the purposes of our Group audit. We have also

tested the consolidation process to confirm our conclusion that there were no significant risks of material misstatement of

the aggregated financial information.

7.2. Our consideration of the control environment

From our understanding of the Group and after assessing relevant controls, we tested and relied on controls in

performing our audit of:

• Investment and development property additions and disposals; and

• Rental income recorded within the Group’s room booking system.

There were no areas where we had planned to rely on controls, other than those set out above.

Whilst we did not take controls reliance, we also assessed the controls relating the valuation of investment and

development property given the significance to the Group.

In addition, we have obtained an understanding of the relevant controls such as those relating to the financial reporting

cycle, andthose in relation to our key audit matters.

The Group uses the following application systems for the recording and reporting of its financial statements:

• Oracle EBS – general ledger and room booking system;

• Portal Agent Desktop (PAD) – room booking portal used by students and implemented on top of Oracle EBS and

therefore where revenue transactions are initiated; and

• HFM – used to prepare the Group consolidation at the Group’s Head Office.

179

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OTHER

INFORMATION

To the members of the Unite Group PLC

INDEPENDENT AUDITOR’S REPORT continued

We involved IT specialists to assess the relevant controls over the three systems set out above. Working with IT specialists

we identified and assessed relevant risks arising from each relevant IT system and the supporting infrastructure

technologies based on the role of application in the Group’s flow of transactions. We obtained an understanding of the IT

environment as part of these risk assessment procedures. We further performed the following procedures:

• Determined whether each general IT control, individually or in in combination with other controls, was appropriately

designed to address the risk;

• Obtained sufficient evidence to assess the operating effectiveness of the controls across the full audit period; and

• Performed additional procedures where required if there were exceptions to the operation of those controls, including

relevant mitigating controls.

7.3. Our consideration of climate-related risks

In planning our audit, we have considered the potential impact of climate change on the Group’s business and its financial

statements.

The Group continues to develop its assessment of the potential impacts of climate change including physical and

transitional risks and is scenario based, as explained in the Strategic Report on pages 50 to 51.

As a part of our audit, we have obtained management’s climate-related risk assessment and held discussions with

management to understand the process of identifying climate-related risks, the determination of mitigating actions and

the impact on the Group’s financial statements. Management has assessed that there is currently no material impact

arising from climate change on the judgements and estimates determining the valuations within the financial statements

We performed our own assessment of the potential impact of climate change on the Group’s account balances and classes

of transaction and did not identify any reasonably possible risks of material misstatement. Our procedures also included

reading disclosures included in the Strategic Report to consider whether they are materially consistent with the financial

statements and our knowledge obtained in the audit.

8. Other information

The other information comprises the information included in the Annual Report, other than the financial statements and

our auditor’s report thereon. The directors are responsible for the other information contained within the Annual Report.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise

explicitly stated in our report, we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially

inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to

be materially misstated.

If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether

this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have

performed, we conclude that there is a material misstatement of this other information, we are required to report

that fact.

We have nothing to report in this regard.

9. Responsibilities of Directors

As explained more fully in the Directors’ responsibilities statement, the Directors are responsible for the preparation

of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as

the Directors determine is necessary to enable the preparation of financial statements that are free from material

misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s

ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going

concern basis of accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease

operations, or have no realistic alternative but to do so.

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

180

10. Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from

material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with

ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are

considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic

decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit ofthe financial statements is located on the FRC’s website at:

www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

11. Extent to which the audit was considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line

with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud.

Theextent to which our procedures are capable of detecting irregularities, including fraud is detailed below.

11.1. Identifying and assessing potential risks related to irregularities

In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance

with laws and regulations, we considered the following:

• the nature of the industry and sector, control environment and business performance including the design of the

Group’s remuneration policies, key drivers for Directors’ remuneration, bonus levels and performance targets;

• results of our enquiries of management, internal audit, the Group’s internal legal counsel and the Audit Committee

about their own identification and assessment of the risks of irregularities;

• any matters we identified having obtained and reviewed the Group’s documentation of their policies and procedures

relating to:

• identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of

non-compliance;

• detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or

allegedfraud;

• the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations; and

• the matters discussed among the audit engagement team involving relevant internal specialists, including tax,

valuations and IT specialists regarding how and where fraud might occur in the financial statements and any potential

indicators of fraud.

As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation

for fraud and identified the greatest potential for fraud in the following areas: investment property and development

property valuation owing to the potential manipulation and override by management of the controls relating to the

valuation process; and revenue recognition owing to the risk of management override of controls relating specifically to

the Covid-19 discounts and refunds offered to students which were processed outside of the Group’s automated revenue

system. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the

risk of management override.

We also obtained an understanding of the legal and regulatory framework that the Group operates in, focusing on

provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures

in the financial statements. The key laws and regulations we considered in this context included the UK Companies Act,

Listing Rules, and tax legislation.

In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial

statements but compliance with which may be fundamental to the Group’s ability to operate or to avoid a material

penalty. These included the Group’s compliance with health and safety matters, including fire safety and fire cladding.

181

FINANCIAL

STATEMENTS

STRATEGIC REPORT GOVERNANCE

OTHER

INFORMATION

To the members of the Unite Group PLC

INDEPENDENT AUDITOR’S REPORT continued

11.2. Audit response to risks identified

As a result of performing the above, we identified the valuation of investment property and development property as a

key audit matter related to the potential risks of fraud. The key audit matters section of our report explains the matter in

more detail and also describes the specific procedures we performed in response to that key audit matter.

In addition to the above, our procedures to respond to risks identified included the following:

• reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with

provisions of relevant laws and regulations described as having a direct effect on the financial statements;

• enquiring of management, the Audit Committee, internal audit and in-house and external legal counsel concerning

actual and potential litigation and claims;

• performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of

material misstatement due to fraud;

• reading minutes of meetings of those charged with governance, reviewing internal audit reports and reviewing

correspondence with HMRC;

• in addressing the identified revenue fraud risk relating to the Covid-19 discounts and refunds offered to students:

understanding the relevant controls over the processing and approval of the discounts and refunds; reconciling the

manual revenue adjustments to supporting schedules; and vouching a sample of refunds to tenancy agreement and

cash refunds; and

• in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries

and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a

potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the

normal course of business.

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team

members including internal specialists and remained alert to any indications of fraud or non-compliance with laws and

regulations throughout the audit.

Report on other legal and regulatory requirements

12. Opinions on other matters prescribed by the Companies Act 2006

In our opinion the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance

with the Companies Act 2006.

In our opinion, based on the work undertaken in the course of the audit:

• the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial

statements are prepared is consistent with the financial statements; and

• the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the Group and the Parent Company and their environment

obtainedin the course of the audit, we have not identified any material misstatements in the Strategic Report or

theDirectors’ Report.

13. Corporate Governance Statement

The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and that

part of the Corporate Governance Statement relating to the Group’s compliance with the provisions of the UK Corporate

Governance Code specified for our review.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the

Corporate Governance Statement is materially consistent with the financial statements and our knowledge obtained

during the audit:

• the Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and

any material uncertainties identified set out on pages 188 and 189;

• the Directors’ explanation as to its assessment of the Group’s prospects, the period this assessment covers and why

the period is appropriate set out on page 76;

• the Directors’ statement on fair, balanced and understandable set out on page 95;

• the Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on

pages 74 to 88;

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

182

• the section of the annual report that describes the review of effectiveness of risk management and internal control

systems set out on pages 72 to 86; and

• the section describing the work of the Audit Committee set out on pages 120 to 125.

14. Matters on which we are required to report by exception

14.1. Adequacy of explanations received and accounting records

Under the Companies Act 2006 we are required to report to you if, in our opinion:

• we have not received all the information and explanations we require for our audit; or

• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not

been received from branches not visited by us; or

• the Parent Company financial statements are not in agreement with the accounting records and returns.

We have nothing to report in respect of these matters.

14.2. Directors’ remuneration

Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of Directors’

remuneration have not been made or the part of the Directors’ Remuneration Report to be audited is not in agreement

with the accounting records and returns.

We have nothing to report in respect of these matters.

15. Other matters which we are required to address

15.1. Auditor tenure

Following the recommendation of the Audit Committee, we were appointed by the Board on 10 June 2015 to audit

the financial statements for the year ending 31 December 2015 and subsequent financial periods. The period of total

uninterrupted engagement including previous renewals and reappointments of the firm is 7 years, covering the years

ended 31 December 2015 to 31 December 2021.

15.2. Consistency of the audit report with the additional report to the Audit Committee

Our audit opinion is consistent with the additional report to the Audit Committee we are required to provide in accordance

with ISAs (UK).

16. Use of our report

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the

Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those

matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted

by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a

body, for our audit work, for this report, or for the opinions we have formed.

As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule (DTR) 4.1.14R, these

financial statements form part of the European Single Electronic Format (ESEF) prepared Annual Financial Report filed

on the National Storage Mechanism of the UK FCA in accordance with the ESEF Regulatory Technical Standard (ESEF RTS).

This auditor’s report provides no assurance over whether the annual financial report has been prepared using the single

electronic format specified in the ESEF RTS.

Stephen Craig (Senior statutory auditor)

For and Behalf of Deloitte LLP

Statutory Auditor

London, United Kingdom

23 February 2022

183

FINANCIAL

STATEMENTS

STRATEGIC REPORT GOVERNANCE

OTHER

INFORMATION

Note

2021

£m

2020

£m

Rental income 2.4 2 0 9.0 1 9 6 .1

Other income 2.4 5 7. 9 19 . 5

Total revenue 26 6.9 215 . 6

Cost of sales (6 4 . 4) (53.3)

Expected credit losses (3 . 3) (8.6)

Operating expenses (3 6 . 3) (3 4 .7)

Results from operating activities before gains/(losses) on property 16 2 . 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 (12 4 . 2)

Net valuation losses on property (leased) 3.1 (11 .1) (11 . 2)

Integration/acquisition costs – (9. 2)

Profit/(loss) before net financing costs and share of joint venture profit/(loss) 256. 7 (2 7. 5)

Loan interest and similar charges 4.3 (34.2) (4 1. 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) (3 0 .1)

Finance costs (3 6 .0) (86.6)

Finance income 4.3 – 5.6

Net financing costs (3 6. 0) (8 1.0)

Share of joint venture profit/(loss) 3.4b 12 2 . 4 (1 1.6)

Profit/(loss) before tax 3 4 3 .1 (12 0 .1)

Current tax 2.5a 0.9 (1. 2)

Deferred tax 2.5a 0.5 (0 .9)

Profit/(loss) for the year 34 4.5 (12 2 . 2)

Profit/(loss) for the year attributable to

Owners of the parent company 342 .4 (12 1. 0)

Non-controlling interest 2 .1 (1 . 2)

344. 5 (12 2 . 2)

Profit/(loss) per share

Basic 2.2c 85.9p (3 1. 8p)

Diluted 2.2c 8 5 .7p (3 1. 8p)

All results are derived from continuing activities.

Note

2021

£m

2020

£m

Profit/(loss) for the year 34 4.5 (12 2 . 2)

Mark to market movements on hedging instruments 4.5a 16 . 2 (12 . 8)

Hedges reclassified to profit or loss (0 .9) 2.5

Share of joint venture mark to market movements on hedging instruments 3.4b 0.6 (0 .1)

Other comprehensive income/(loss) for the year 15. 9 (10. 4)

Total comprehensive income/(loss) for the year 360. 4 (13 2 . 6)

Attributable to

Owners of the parent company 358. 3 (13 1. 4)

Non-controlling interest 2 .1 (1 . 2)

360. 4 (13 2 . 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.

For the year ended 31 December 2021

CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2021

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

184

Note

2021

£m

2020

£m

Assets

Investment property (owned) 3.1 3 , 0 9 5 .1 3, 614 .7

Investment property (leased) 3.1 9 7. 7 1 01. 8

Investment property (under development) 3.1 3 2 4 .1 18 7. 2

Investment in joint ventures 3.4b

1,044.1

8 49. 0

Other non-current assets 3.3b 18. 9 2 1. 9

Right of use assets 3.3a 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 5.2 10 8 . 8 104 . 0

Cash and cash equivalents 5.1 10 9. 4 338.3

Total current assets 46 4 .6 4 5 1 .1

Total assets 5 , 0 5 1 .1 5,23 1 .9

Liabilities

Interest rate swaps 4.2 (3.6) (5. 8)

Lease liabilities 4.6a (4 . 9) (4 . 4)

Trade and other payables 5.4 (2 0 0.7) (141. 3)

Current tax liability (0 .1) (0 . 3)

Provisions 5.5 (3 3. 5) (15.7)

Total current liabilities (242.8) (16 7. 5)

Borrowings 4.1 (1,1 6 2 . 0) (1,6 8 9 . 9)

Lease liabilities 4.6a (91. 9) (9 6 .7)

Interest rate swaps 4.2 – (17. 8)

Total non-current liabilities (1 ,253.9) (1, 8 0 4 . 4)

Total liabilities (1, 4 9 6 .7) (1, 9 7 1. 9)

Net assets 3,554 .4 3,26 0.0

Equity

Issued share capital 4.8 9 9. 8 9 9. 5

Share premium 4.8 2 ,1 61. 2 2 ,1 6 0 . 3

Merger reserve 4 0. 2 4 0.2

Retained earnings 1,2 2 5 .0 9 4 9.0

Hedging reserve 1.6 (1 4 .1)

Equity attributable to the owners of the parent company 3 , 5 2 7. 8 3,234.9

Non-controlling interest 26.6 2 5 .1

Total equity 3,55 4.4 3,2 60.0

The financial statements of The Unite Group PLC, registered number 03199160, were approved and authorised for issue

by the Board of Directors on 23 February 2022 and were signed on its behalf by:

R S Smith J J Lister

Direc tor Dir ec tor

At 31 December 2021

CONSOLIDATED BALANCE SHEET

185

FINANCIAL

STATEMENTS

STRATEGIC REPORT GOVERNANCE

OTHER

INFORMATION

Note

2021

£m

2020

Restated

£m

Assets

Investments in subsidiaries 3.5 2,143. 5 1,826.7

Loans to Group undertakings 5.2 1,928.3 1,791.6

Total non-current assets 4,071.8 3,618.3

Interest rate swaps 4.2 6.0 –

Trade and other receivables 5.2 0.1 594.5

Cash and cash equivalents 0.2 2.0

Total current assets 6.3 596.5

Total assets 4,078.1 4,214.8

Current liabilities

Interest rate swaps 4.2 (3.6) (5.8)

Amounts due to Group undertakings 5.4 (38.0) (0.6)

Other payables 5.4 (6.4) (3.8)

Total current liabilities (48.0) (10.2)

Borrowings 4.1 (542.2) (1,066.6)

Interest rate swaps 4.2 – (17.8)

Total non-current liabilities (542.2) (1,084.4)

Total liabilities (590.2) (1,094.6)

Net assets 3,4 87.9 3,120. 2

Equity

Issued share capital 4.8 99.8 99.5

Share premium 4.8 2,161. 2 2 ,160.3

Merger reserve 40.2 40.2

Hedging reserve 1.5 (13.3)

Retained earnings 1,185. 2 833.5

Total equity 3,4 87.9 3,120. 2

Total equity is wholly attributable to equity holders of The Unite Group PLC. The profit (2020: loss) of The Unite Group PLC

in 2021 was £419.5 million (2020: £118.8 million).

The financial statements of The Unite Group PLC, registered number 03199160, were approved and authorised for issue

by the Board of Directors on 23 February 2022 and were signed on its behalf by:

R S Smith J J Lister

Direc tor Dir ec tor

At 31 December 2021

COMPANY BALANCE SHEET

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

186

Note

Issued

capital

£m

premium

£m

Merger

reserve

£m

Retained

earnings

£m

Hedging

reserve

£m

Attributable

to owners of

the parent

£m

Non-

controlling

interest

£m

Total

£m

At 1 January 2021 9 9. 5 2 ,1 6 0 . 3 40. 2 9 4 9.0 (1 4 .1) 3,234. 9 2 5 .1 3 ,2 60.0

Profit for the year – – – 342 .4 – 342 .4 2 .1 344. 5

Other comprehensive income

for the year:

Mark to market movements

on hedging instruments – – – – 16 . 2 16 . 2 – 16. 2

Hedges reclassified to

profitor loss – – – – (0 . 9) (0 . 9) – (0. 9)

Share of joint venture mark to

market movements on

hedging instruments 3.4b – – – – 0.6 0.6 – 0.6

Total comprehensive income

for the year – – – 342.4 15 . 9 358. 3 2 .1 360. 4

Shares issued 4.8 0.3 0.9 – – – 1. 2 – 1. 2

Deferred tax on share-based

payments – – – 0.3 – 0. 3 – 0. 3

Fair value of share-based

payments – – – 2 .4 – 2.4 – 2.4

Own shares acquired – – – (1. 3) – (1. 3) – (1. 3)

Unwind of realised swap gain – – – – (0 . 2) (0. 2) – (0. 2)

Dividends paid to owners

ofthe parent company 4.9 – – – (6 7. 8) – (6 7. 8) – (6 7. 8)

Dividends to non-controlling

interest – – – – – – (0.6) (0.6)

At 31 December 2021 99. 8 2 ,161 . 2 40. 2 1, 2 2 5. 0 1.6 3 , 5 2 7. 8 26.6 3,55 4.4

Note

Issued

capital

£m

premium

£m

Merger

reserve

£m

Retained

earnings

£m

Hedging

reserve

£m

Attributable

to owners of

the parent

£m

Non-

controlling

interest

£m

Total

£m

At 1 January 2020 9 0.9 1, 8 74 . 9 4 0.2 1, 0 6 9. 0 (3. 5) 3, 0 71. 5 26.5 3,0 98 .0

Loss for the year – – – (12 1. 0) – (12 1. 0) (1. 2) (12 2 . 2)

Other comprehensive lossfor

the year:

Mark to market movements

on hedging instruments – – – – (12 . 8) (12 . 8) – (12 . 8)

Hedges reclassified to

profitor loss – – – – 2.5 2.5 – 2.5

Share of joint venture mark

tomarket movements on

hedging instruments 3.4b – – – – (0 .1) (0 .1) – (0 .1)

Total comprehensive

loss for the year – – – (12 1. 0) (10 . 4) (131. 4) (1. 2) (132 .6)

Shares issued 4.8 8.6 2 85.4 – – – 29 4 .0 – 29 4 .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

ofthe parent company 4.9 – – – – – – – –

Dividends to non-controlling

interest – – – – – – (0 . 2) (0 . 2)

At 31 December 2020 9 9. 5 2 ,1 6 0 . 3 4 0.2 9 4 9.0 (1 4 .1) 3,234.9 2 5 .1 3,2 60.0

The notes on pages 190 to 247 form part of the financial statements.

For the year ended 31 December 2021

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

187

FINANCIAL

STATEMENTS

STRATEGIC REPORT GOVERNANCE

OTHER

INFORMATION

Note

Issued

capital

£m

premium

£m

Merger

reserve

£m

Hedging

reserve

£m

Retained

earnings

£m

Total

£m

At 1 January 2021 99.5 2,160.3 40.2 (13.3) 833.5 3,120. 2

Profit and total comprehensive

income for the year – – – 15.0 419.5 434.5

Shares issued 4.8 0.3 0.9 – – – 1.2

Unwind of realised swap gain – – – (0.2) – (0.2)

Dividends to shareholders 4.9 – – – – (67.8) (67.8)

At 31 December 2021 99.8 2,161. 2 40.2 1.5 1,185.2 3,487.9

Note

Issued

capital

£m

premium

£m

Merger

reserve

£m

Hedging

reserve

£m

Retained

earnings

£m

Total

£m

At 1 January 2020 90.9 1,874.9 40.2 (3.0) 952.3 2,955.3

Loss and total comprehensive loss

for the year – – – (10.1) (118.8) (128.9)

Shares issued 4.8 8.6 285.4 – – – 294.0

Unwind of realised swap gain – – – (0.2) – (0.2)

Dividends to shareholders 4.9 – – – – – –

At 31 December 2020 99.5 2,160. 3 40.2 (13.3) 833.5 3,120.2

The notes on pages 190 to 247 form part of the financial statements.

For the year ended 31 December 2021

COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

188

Note

Group Company

2021

£m

2020

£m

2021

£m

2020

£m

Net cash flows from operating activities 5.1 17 1 . 3 73.3 0.8 (0.7)

Investing activities

Investment in joint ventures – (7. 5) – –

Capital expenditure on properties (95 .9) (14 8 . 5) – –

Acquisition of intangible assets (3 . 2) (2 .7) – –

Acquisition of plant and equipment (0. 4) (0 .7) – –

Proceeds from sale of investment property 30 7. 3 – – –

Interest received – 0 .1 – –

Dividends received 3 7.1 10. 2 – –

Payments to/on behalf of subsidiaries – – (25.0) (539.1)

Payments from subsidiaries – – 639.4 35.8

Net cash flows from investing activities 24 4.9 (1 4 9 .1) 614.4 (503.3)

Financing activities

Proceeds from the issue of share capital 1 .1 294 .0 1.1 294.0

Payments to acquire own shares (1. 3) (0.7) – –

Interest paid in respect of financing activities (47. 9) (5 4 . 2) (21.3) (17.5)

Swap cancellation FV settlements and debt exit costs (4 . 2) (3 0 .1) (4.2) (1.5)

Proceeds from non-current borrowings 1 4 7. 0 3 5 5 .1 146.6 225.0

Repayment of borrowings (675.0) (2 3 3 . 3) (675.0) –

Dividends paid to the owners of the parent company (5 7. 2) – (57.2) –

Withholding tax paid on distributions (7. 0) (3. 4) (7.0) (3.4)

Dividends paid to non-controlling interest (0.6) (0. 2) – –

Net cash flows from financing activities (6 4 5 .1) 3 2 7. 2 (617.0) 496.6

Net (decrease)/increase in cash and cash equivalents (2 2 8 .9) 2 51 . 4 (1.8) (7.4)

Cash and cash equivalents at start of year 338.3 86.9 2.0 9.4

Cash and cash equivalents at end of year 10 9. 4 338.3 0.2 2.0

For the year ended 31 December 2021

STATEMENTS OF CASH FLOWS

189

FINANCIAL

STATEMENTS

STRATEGIC REPORT GOVERNANCE

OTHER

INFORMATION

Section 1: Basis of preparation

This section lays out the Group’s accounting policies that relate to the financial statements as a whole.

Where an accounting policy is specific to a particular note to the financial statements, the policy is

described in the note to which it relates and has been clearly identified in a box.

Basis of consolidation

The financial statements consolidate those of The Unite Group PLC (the Company) and its subsidiaries (together referred

to as the Group) and include the Group’s interests in jointly controlled entities. The parent company financial statements

present information about the Company as a separate entity and not as a group.

Subsidiaries are those entities controlled by the Company. Control exists when the Company has an existing right that

gives it the current ability to direct the relevant activities of the subsidiary, has exposure or right to variable returns from

its involvement in the subsidiary and has the ability to use its power to affect its returns. The financial statements of

subsidiaries are included in the consolidated financial statements from the date that control commences until the date

that control ceases.

Intra-group balances and transactions, and any unrealised gains and losses arising from intra-group transactions, such as

property disposals and management fees, are eliminated in preparing the consolidated financial statements. Unrealised

gains arising from transactions with joint ventures are eliminated to the extent of the Group’s retained interest in the

entity. Unrealised losses are eliminated in the same way as unrealised gains except where the loss provides evidence of a

reduction in the net realisable value of current assets or an impairment in the value of non-current assets.

Non-controlling interests are shown as a line item within equity and comprise the non-controlling interests in subsidiaries

which are not directly or indirectly attributable to the Group. Non-controlling interests are assigned to one subsidiary as

at both 31 December 2021 and 2020 (see note 3.4).

The parent company financial statements have been prepared in accordance with Financial Reporting Standard 101

– Reduced disclosure framework (FRS 101), and the Group financial statements have been prepared in accordance

with International Financial Reporting Standards as adopted by the United Kingdom (Adopted IFRS), in conformity

with the Companies Act 2006, and approved by the Directors. On publishing the parent company financial statements

here together with the Group financial statements, the Company is taking advantage of the exemption in s408 of the

Companies Act 2006 not to present its individual income statement and related notes. The Company is also taking

advantage of disclosure exemptions from requirements of IFRS 7, IFRS 13 and IAS 1.

The accounting policies have been applied consistently to all periods presented in these consolidated financial statements.

The Company is a public company limited by shares and is registered in England, United Kingdom, where it is also domiciled.

Measurement convention

The financial statements are prepared on the historical cost basis except for investment property (owned), investment

property (leased), investment property (under development), investments in subsidiaries and interest rate swaps all of

which are stated at their fair value.

Going concern

In determining the appropriate basis of preparation of the financial statements, the Directors are required to consider

whether the Group can continue in operational existence for the foreseeable future.

The Directors have considered a range of scenarios for future performance through the 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.

NOTES TO THE FINANCIAL STATEMENTS

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

190

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.

Standards and interpretations effective in the current period

During the year the following new and revised standards and interpretations have been adopted and have not had a material

impact on the amounts reported in these financial statements:

• IFRS 4, IFRS 7, IFRS 9, IFRS 16 and IAS 39 (amendments) ‘Interest rate benchmark reform – phase 2’ (see note 4.5)

• IFRS 16 (amendments) ‘Covid-19 related rent concessions’

Impact of accounting standards and interpretations in issue but not yet effective

At the date of approval of these financial statements there are a number of new standards and amendments to existing

standards in issue but not yet effective. The Group has not early adopted the new or amended standards in preparing

these consolidated financial statements.

The following new or amended standards and interpretations are not expected to have a significant impact on the Group’s

consolidated financial statements:

• IFRS 10 and IAS 28 (amendments) ‘Sale or contribution of assets between an investor and its associate or joint venture’

• IFRS 16 (amendments) ‘Covid-19 related rent concessions beyond 30 June 2021’

• IFRS 17 ‘Insurance contracts’

• IAS 37 (amendments) ‘Onerous contracts – Cost of fulfilling a contract’

• IFRS 10 and IAS 28 (amendments) ‘Sale or contribution of assets between an investor and its associate or joint venture’

• IAS 16 ‘Property, plant and equipment – proceeds before intended use’

• IAS 8 ‘Definition of accounting estimates’

• IAS 12 ‘Deferred tax related to assets and liabilities arising from a single transaction’

• IFRS 4 ‘Applying IFRS 9 ‘Financial instruments’ with IFRS 4 ‘Insurance contracts’ – Extension of the temporary exemption

from applying IFRS 9

• IAS 1 (amendments) ‘Classification of liabilities as current or non-current’

• IAS 1 (amendments) and IFRS Practice Statement 2 ‘Disclosure of accounting policies’

• IFRS Standards (annual improvements)

The impact of all other IFRS Standards not yet adopted is not expected to be material.

Restatement of prior year Company balance sheet

It has been identified that amounts owed by Group undertakings totalling £1,791.6 million at 31 December 2020 had

previously been presented within current assets in error, and should have been presented within non-current assets.

Although the amounts are repayable on demand, there was no expectation that they would be recovered within 12

months and therefore did not meet the criteria to be classified as current assets. The comparative balance sheet has

accordingly been restated to show these balances within non-current assets. There has been no impact on net assets or

the result for the year as a result of this restatement.

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OTHER

INFORMATION

Section 1: Basis of preparation continued

Critical accounting estimates and judgements

The Group’s significant accounting polices are stated in the relevant notes to the Group financial statements.

The preparation of financial statements requires management to exercise judgement in applying the Group’s accounting

policies. It also requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities,

income and expenses.

Significant accounting judgements

The areas which involve a high degree of judgement or complexity in applying the accounting policies of the Group are

explained in more detail in the accounting policy descriptions in the related notes to the financial statements.

The areas where accounting judgements have the most significant impact on the financial statements of the Group are

as follows:

• classification of joint venture vehicles (note 3.4)

• recognition of provisions for cladding remediation (note 5.5)

Estimation uncertainty

The estimates and associated assumptions are based on historical experience and various other factors that are believed

to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying

values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these

estimates.

Estimates and assumptions are reviewed on an ongoing basis with revisions recognised in the period in which the

estimates are revised and in any future periods affected. In 2021 these revisions include the impact of Covid-19.

The areas involving the most sensitive estimates and assumptions that are significant to the financial statements are set

out below and in more detail in the related notes:

• valuation of investment property and investment property under development (note 3.1)

• valuation of provisions for cladding remediation (note 5.5)

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

192

NOTES TO THE FINANCIAL STATEMENTS continued

Section 2: Results for the year

This section focuses on the results and performance of the Group and provides a reconciliation between

the primary statements and EPRA performance measures. On the following pages you will find disclosures

explaining the Group’s results for the year, segmental information, taxation, earnings and net tangible asset

value (NTA) per share.

The Group uses EPRA earnings, adjusted earnings and NTA movement as key comparable indicators

across other real estate companies in Europe. EPRA earnings, Adjusted earnings and NTA movement are

Alternative Performance Measures (APMs), further details of which are set out in section 8.

IFRS performance measures

Note

2021

£m

2020

£m

2021

pps

2020

pps

Profit/(loss) after tax (*) 2.2b 342.4 (121.0) 85.9p (31.8p)

Net assets (*) 2.3d 3,527.8 3,234.9 880p 809p

(*) Profit/(loss) after tax represents profit/(loss) attributed to the owners of the parent company, and net assets represents equity attributable to the owners of the

parentcompany.

EPRA performance measures

Note

2021

£m

2020

£m

2021

pps

2020

pps

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

(**) Adjusted earnings are calculated as EPRA Earnings less the LSAV performance fee recognised, in order to reflect the comparable performance of the Group’s

underlying operating activities

2.1 Segmental information

The Board of Directors monitors the business along two activity lines, Operations and Property. The reportable segments

for the years ended 31 December 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 amends IFRS measures by removing principally the unrealised investment property

valuation gains and losses such that users of the financials are able to see the extent to which dividend payments

(dividend per share) are underpinned by earnings arising from purely operational activity. In 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 is available in note 2.2b.

The Operations segment manages rental properties, owned directly by the Group or by joint ventures. Its revenues are

derived from rental income and asset management fees earned from joint ventures. The way in which the Operations

segment adds value to the business is set out in the Operations review on pages 56 to 61. The Operations segment is the

main contributor to EPRA earnings and EPRA 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.

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Section 2: Results for the year continued

2.2a) EPRA earnings

2021

Unite

£m

Share of joint ventures Group on

EPRA basis

Total

£m

USAF

£m

LSAV

£m

Rental income 209.0 37.6 36.1 282.7

Property operating expenses (67.7 ) (13.0) (10.2) (90.9)

Net operating income 141.3 24.6 25.9 191.8

Management fees 19.1 (3.2) – 15.9

Overheads (30.7) (0.3) (0.5) (31.5)

Interest on lease liabilities (8.5) – – (8.5)

Net financing costs (38.5) (6.7) (9.6) (54.8)

Operations segment result 82.7 14.4 15.8 112.9

Property segment result (2.2) – – (2.2)

Unallocated to segments 83.9 (0.2) (42.4) 41.3

EPRA earnings 164.4 14.2 (26.6) 152.0

LSAV performance fee (84.1) – 42.2 (41.9)

Adjusted earnings 80.3 14.2 15.6 110.1

Included in the above is rental income of £16.3 million and property operating expenses of £8.3 million relating to sale

and leaseback properties. The unallocated to segments balance includes the fair value of share-based payments of

(£2.4million), contributions to the Unite Foundation of (£1.0 million), LSAV performance fee of £41.9 million, deferred tax

credit of £0.8 million and current tax credit of £2.0 million. Depreciation and amortisation totalling £7.8 million is included

within overheads.

2020

Unite

£m

Share of joint ventures Group on

EPRA basis

Total

£m

USAF

£m

LSAV

£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.

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

194

NOTES TO THE FINANCIAL STATEMENTS continued

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 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

£m

2020

£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 3.4b (88.7) 41.5

Share of joint venture property disposals 3.4b 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

Net LSAV performance fee 2.4 (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 3.4.

2.2c) Earnings per share

Basic EPS calculation is based on the 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 and EPRA EPS and adjusted EPS for the year ended 31 December 2021 and 2020 are as follows:

Note

2021

£m

2020

£m

2021

pps

2020

pps

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 3 8.1p 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.

195

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Section 2: Results for the year continued

2.3 Net assets

2.3a) EPRA NTA

EPRA NTA makes adjustments to IFRS measures by removing the fair value of financial instruments and the carrying value

of intangibles. The reconciliation between IFRS NAV and EPRA NTA is available in note 2.3c.

The Group’s Property business undertakes the acquisition and development of properties. The way in which the Property

segment adds value to the business is set out in the Property review on pages 62 to 69.

2021

Unite

£m

Share of JVs

Group on

EPRA basis

£m

USAF

£m

LSAV

£m

Investment property (owned) * 3,323.3 632.0 909.5 4,864.8

Investment property (leased) 97.7 – – 97.7

Investment property (under development) 324.1 – – 32 4.1

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. LTV is an APM – see section 8.

2020

Unite

£m

Share of JVs

Group on

EPRA basis

£m

USAF

£m

LSAV

£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. LTV is an APM – see section 8.

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

196

NOTES TO THE FINANCIAL STATEMENTS continued

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

£m

Share of JVs Group on

EPRA basis

Total

£m

USAF

£m

LSAV

£m

Operations

Operations segment result 2.2a 82.7 14.4 15.8 112.9

Add back amortisation of intangibles 3.3b 6.1 – – 6.1

Total Operations 88.8 14.4 15.8 119.0

Property

Rental growth 17.4 4.5 25.8 47.7

Yield movement 49.2 12.7 44.6 106.5

Disposal losses (owned) (12.0) (0.3) – (12.3)

Investment property gains (owned) * 54.6 16.9 70.4 141.9

Investment property losses (leased) 3.1a (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 3.3b (3.3) – – (3.3)

Other 0.7 (0.2) (0.2) 0.3

Total Unallocated (107.9) (17.9) 93.9 (31.9)

Total EPRA NTA movement in the year 72.5 13.4 18 0.1 266.0

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).

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Section 2: Results for the year continued

2.3 Net assets continued

2.3b) Movement in EPRA NTA during the year continued

2020

Note

Unite

£m

Share of JVs Group on

EPRA basis

Total

£m

USAF

£m

LSAV

£m

Operations

Operations segment result 2.2a 74.8 11.7 12.0 98.5

Add back amortisation of intangibles 3.3b 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 –

Dividends paid – – – –

LSAV performance fee 11.4 – (5.7) 5.7

Swap cancellation FV settlements and debt break costs 4.3 (30.1) – – (30.1)

Acquisition of intangibles 3.3b (2.7) – – (2.7)

Integration costs (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).

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

198

NOTES TO THE FINANCIAL STATEMENTS continued

2.3c) Reconciliation to IFRS

To determine EPRA NTA, net assets reported under IFRS are amended to exclude the fair value of financial instruments,

associated tax and the carrying value of intangibles.

To determine EPRA NRV, net assets reported under IFRS are amended to exclude the fair value of financial instruments,

associated tax and real estate transfer tax.

To determine EPRA NDV, net assets reported under IFRS are amended to exclude the fair value of financial instruments,

but include the fair value of fixed interest rate debt and the carrying value of intangibles.

The net assets reported under IFRS reconcile to EPRA NTA, NRV and NDV as follows:

2021

NTA

£m

NRV

£m

NDV

£m

Net assets reported under IFRS 3,527.8 3,527.8 3,527.8

Mark to market interest rate swaps (2.4) (2.4) –

Unamortised swap gain (1.5) (1.5) (1.5)

Mark to market of fixed rate debt – – (50.3)

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

£m

NRV

£m

NDV

£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

199

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OTHER

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Section 2: Results for the year continued

2.3 Net assets continued

2.3d) 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

£m

2020

£m

2021

pps

2020

pps

Net assets

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

Accounting policies

The Group recognises revenue from the following major sources:

• Rental income

• Management and performance fees

• Acquisition fees

Revenue is measured based on the consideration to which the Group expects to be entitled in a contract with a

customer and excludes amounts collected on behalf of third parties. The Group recognises revenue when it transfers

control of its service to a customer.

Rental income

Rental income comprises direct-lets to students and leases to universities and commercial tenants. This revenue is

recognised in the income statement over the length of the tenancy period as the Group provides the services to its

customers. Included in the rental contract is the use of broadband facilities and room cleaning services. The Group

does not offer these services as stand-alone products. Under IFRS 15 the Group does not consider these services to be

individually material and has, consequently, bundled these obligations as a single contract. The transaction prices for

rental income are explicitly stated in each contract. A contract liability can result from payments received in advance, until

the date at which control is transferred to the customer and at that point the revenue begins to be recognised over the

tenancy period. Lease incentives are sometimes recognised on commercial units; these are recognised as an integral part

of the total rental income and spread over the term of the lease.

Rental income is derived from contracts which are less than 12 months in length and the Group accordingly recognises

this income in the Income Statement on a straight line basis in accordance with IFRS 16.

Management and performance fees

The Group acts as asset and property manager for USAF and LSAV and receives management fees in relation to these

services. Revenue from these fees is recognised on a straight line basis over time as the joint ventures simultaneously

receive and consume benefits as the Group performs its management obligations which are determined by the

services provided over the course of each academic year, and this reflects the profile of activities being performed.

Detailed calculations in order to determine the transaction prices for these revenue streams are held within the joint

venture agreements.

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

200

NOTES TO THE FINANCIAL STATEMENTS continued

Management and performance fees (continued)

The Group is entitled to a USAF performance fee if the joint venture outperforms certain benchmarks. The Group

recognises a USAF performance fee at a point in time in the year to which the fee relates. The Group initially assesses

the probability of a fee being earned and its transaction price at half year and adjusts for any potential risks to

receiving this income at year-end, when the achieved outturn is known. The USAF performance fee is settled within

12 months of the year to which the fee relates and the Group receives an enhanced equity interest in USAF as

consideration for the performance fee.

The Group is entitled to a LSAV performance fee if the joint venture outperforms certain benchmarks over its original

life ending in 2022. The Group recognises a LSAV performance fee at an amount which is considered ‘highly probable’

to become due based upon estimates of the future performance of the joint venture; such estimates include future

rental income and the discount rate (yield). Prior to the maturity of the joint venture, the Group pro-rates the total LSAV

performance fee over the life of the joint venture and recognises a cumulative catch-up to the currently completed

term where sufficient certainty over outperformance of the benchmark is determined to exist; during the year to

31 December 2021, the Group agreed an extension of the LSAV joint venture which shortened the original term to

2021, and which crystallised the settlement of the performance fee in the year. Prior to 2021, the amount which was

considered ‘highly probable’ to become due was reassessed annually with reference to the latest performance of the

joint venture and forecasts. 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.

As per IFRS 15, the estimated amount of variable consideration is included in the transaction price only to the extent

that it is highly probable that a significant reversal in the amount of revenue recognised will not occur when the

uncertainty associated with the variable consideration is resolved. The performance fee is variable and dependent

on meeting specific performance targets. Accordingly where there is too much uncertainty over the cumulative

outperformance of the benchmarks, particularly in earlier periods of the performance fee period, which cover each 10

year term of the venture, then no amounts of performance fee can be recognised as it is not highly probable that the

performance fee will be earned.

In respect of the period to 30 September 2021 the value of the LSAV performance fee has been agreed and settled,

and the remaining value of this settlement has accordingly been recognised in the year. The LSAV performance fee in

respect of the renewed venture term commencing 1 October 2021 is not considered to have met the highly probable

criteria and therefore no additional fee has been recognised at 31 December 2021.

Management and performance fees are presented in revenue net of the Group’s share of the corresponding expense

within the relevant fund.

At 31 December 2021, no further amounts are deemed to meet the highly probable criteria and therefore we have not

disclosed any future fees receivable from these ongoing contracts.

Acquisition fees

The Group receives acquisition fees from its joint venture partners. This revenue is linked to the acquisition of land or

property and is therefore recognised at the point in time that control of the asset is transferred to the joint venture.

The transaction price for this revenue stream is stipulated in the joint venture agreement as a percentage of the value

of the acquisition. No such land or property acquisitions have occurred in 2021 or 2020.

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Section 2: Results for the year continued

2.4 Revenue and costs continued

The Group earns revenue from the following activities:

Note

2021

£m

2020

£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 (note 3.4) (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 profit/(loss) 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 above.

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.

Accounting policies

The tax charge for the year is recognised in the income statement and the statement of comprehensive income,

according to the accounting treatment of the related transaction. The tax charge comprises both current and

deferred tax.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to

tax payable in respect of previous years. The current tax charge is based on tax rates that are enacted or substantively

enacted at the year-end.

Deferred tax arises due to certain temporary differences between the carrying amounts of assets and liabilities

for financial reporting purposes and those for taxation purposes. Temporary differences relating to investments in

subsidiaries and joint ventures are not provided for to the extent that they will probably not reverse in the foreseeable

future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the

carrying amount of assets and liabilities.

As a REIT, rental profits and gains on disposal of investment properties and property rich investments are exempt

from corporation tax. As a result, no deferred tax provision has been recognised at the balance sheet date in respect of

property assets or units in USAF and LSAV.

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

202

NOTES TO THE FINANCIAL STATEMENTS continued

2.5a) Tax – income statement

The total taxation (credit)/charge in the income statement is analysed as follows:

2021

£m

2020

£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 charge that

would arise at the standard rate of UK corporation tax is reconciled to the actual tax charge as follows:

2021

£m

2020

£m

Profit/(loss) before tax 34 3.1 (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.

203

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Section 2: Results for the year continued

2.5 Tax continued

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

£m

Charged/

(credited)

in income

£m

Charged/

(credited)

in equity

£m

At 31

December

2021

£m

Investments – – – –

Property, plant and machinery andprovisions (0.6) (0.6) – (1.2)

Share schemes (1.3) (0.2) (0.3) (1.8)

Tax value of carried forward lossesrecognised – 0.3 (0.3) –

Net tax assets (1.9) (0.5)* (0.6) (3.0)

* The £0.5 million balance above includes tax movements totalling £0.2 million in respect of Property, plant and machinery, share

schemes and losses which are included in EPRA earnings and therefore not shown as a reconciling item in the IFRS reconciliation in note

2.2b. Removing them results in the £0.3 million movement shown in note 2.2b.

2020

At 31

December

2019

£m

Charged/

(credited)

in income

£m

Charged/

(credited)

in equity

£m

At 31

December

2020

£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 (assets)/liabilities (2.9) 0.9* 0.1 (1.9)

* The £0.9 million balance above includes tax movements totalling £0.8 million in respect of Property, plant and machinery, share

schemes and losses which are included in EPRA earnings and therefore not shown as a reconciling item in the IFRS reconciliation in note

2.2 b. Removing them results in the £0.1 million movement shown in note 2.2b.

The deferred tax asset at 31 December 2021 has been calculated based on the rate at which it is expected to reverse.

On24 May 2021, Finance Act 2021 was substantively enacted which contains provisions to increase the corporation tax

rate to 25% from 1 April 2023. This rate change increases the deferred tax assets recognised at the year end by £0.2m.

As a REIT, disposals of investment property and property rich investments are exempt from tax and as a result no

deferred tax liability has been recognised in relation to these assets.

Legislation is expected to be enacted in 2022 in relation to a new tax, the Residential Property Developer Tax, effective

from April 2022. The Government has confirmed that purpose-built student accommodation will be excluded from the

scope of this tax, and therefore no material impact is expected for the Group.

Company

Deferred tax has not been recognised on temporary differences of £4.3 million (2020: £4.3 million) in respect

of revaluation of subsidiaries and investment in joint ventures as it is considered unlikely that these investments will

be divested.

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

204

NOTES TO THE FINANCIAL STATEMENTS continued

2.6 Audit fees

During the year, the Group obtained the following services from the Company’s auditor and its associates:

2021

£m

2020

£m

Fees payable to the Group’s auditors for the audit of the parent company and

consolidated financial statements 0.4 0.5

Fees payable to the Group’s auditors for other services to the Group:

– Audit of the financial statements of subsidiaries 0.1 0.1

Total audit fees payable to the Group’s auditors 0.5 0.6

Audit-related assurance services 0.1 0.1

Other services – –

Total non-audit fees 0.1 0.1

Non-audit fees in both 2021 and 2020 relate entirely to services provided in respect of the half year review.

Details on the Company’s policy on the use of the auditor for non-audit services is also set out in the Audit Committee

Report on pages 120 to 125.

No services were provided pursuant to contingent fee arrangements.

Section 3: Asset management

The Group holds its property portfolio directly and through its joint ventures. The performance of the

property portfolio, whether wholly owned or in joint ventures, is the key factor that drives net asset value

(NAV), one of the Group’s key performance indicators. The following pages provide disclosures about the

Group’s investments in property assets and joint ventures and their performance over the year.

3.1 Wholly owned property assets

The Group’s wholly owned property portfolio is held in four groups on the balance sheet at the carrying values detailedbelow.

In the Group’s EPRA NTA all these groups are shown at market value, except where otherwise stated.

i) Investment property (owned)

These are assets that the Group intends to hold for a long period to earn rental income or capital appreciation. The assets

are measured at fair value in the balance sheet with changes in fair value taken to the income statement.

ii) Investment property (leased)

These are assets the Group sold to institutional investors and simultaneously leased back. These right-of-use assets are

measured at fair value in the balance sheet with changes in fair value taken to the income statement.

iii) Investment property (under development)

These are assets which are currently in the course of construction and which will be transferred to Investment property

on completion. The assets are initially recognised at cost and are subsequently measured at fair value in the balance sheet

with changes in fair value taken to the income statement.

iv) Investment property classified as held for sale

These are assets whose carrying amount will be recovered through a sale transaction rather than to hold for long-term

rental income or capital appreciation. This condition is regarded as met only when the sale is highly probable and the

investment property is available for immediate sale in its present condition. Management must be committed to the sale

which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

The assets are measured at fair value in the balance sheet, with changes in fair value taken to the income statement. They

are presented as current assets in the IFRS balance sheet.

205

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Section 3: Asset management continued

3.1 Wholly owned property assets continued

Accounting policies

Investment property (owned) and investment property (under development)

Investment property (owned) and investment property (under development) are held at fair value.

The external valuation of property assets involves significant judgement and changes to the core assumptions: rental

income, occupancy and property management costs, as well as estimated future costs, could have asignificant impact

on the carrying value of these assets. Further details of the valuation process are includedbelow.

Construction and borrowing costs are capitalised if they are directly attributable to the acquisition and construction of

a property asset. Capitalisation of borrowing costs commences when the activities to prepare the asset are in progress

and expenditures and borrowing costs are being incurred. Capitalisation of borrowing costs continues until the assets

are substantially ready for their intended use but stops if development activities are suspended. If the resulting carrying

amount of the asset exceeds its recoverable amount, an impairment loss is recognised. The capitalisation rate is arrived

at by reference to the actual rate payable on borrowings for development purposes or, with regard to that part of the

development cost financed out of general borrowings, to the average rate. During the year the average capitalisation rate

used was 3.1% (2020: 2.8%).

The recognition of acquisitions of investment property and land occurs at the date when control passes to Unite.

The recognition of disposals of investment property occurs on legal completion when control passes from Unite. In

accordance with IFRS 15, gains/(losses) from the disposal of investment property are recognised at a point in time.

Contingent consideration receivables are recognised on disposals where the amount of additional consideration is readily

identifiable. It is recognised at the constrained value determined by the amount that is highly probable to be receivable at

the time of the disposal, and any subsequent change in value is recognised in profit or loss in the later period.

Investment property (leased)

The Group holds certain investment property under historic sale and leaseback arrangements, acting as an

intermediate lessor and subleasing its right-of-use assets. For each leased property, the Group assesses whether

a contract is or contains a lease, at inception of the contract. The Group recognises a right-of-use asset and a

corresponding lease liability (see note 4.6a) with respect to all lease arrangements in which it is the lessee. The right-of-

use assets are initially measured at cost in accordance with IFRS 16 and subsequently at fair value in the balance sheet

with changes in fair value taken to the income statement in accordance with IAS 40.

Valuation process

The valuations of the properties are performed twice a year on the basis of valuation reports prepared by external,

independent valuers, having an appropriate recognised professional qualification. The fair values are based on market

values as defined in the RICS Appraisal and Valuation Manual, issued by the Royal Institution of Chartered Surveyors. CB

Richard Ellis Ltd, Jones Lang LaSalle Ltd and Messrs Knight Frank LLP, Chartered Surveyors were the valuers in the years

ended 31 December 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 UNITE GROUP PLC | Annual Report and Financial Statements 2021

206

NOTES TO THE FINANCIAL STATEMENTS continued

The fair value of the Group’s wholly owned properties and the movements in the carrying value of the Group’s wholly

owned property portfolio during the year ended 31 December 2021 are shown in the table below.

2021

Investment

property

(owned)

£m

Investment

property

(leased)

£m

Investment

property

(under

development)

£m

Total

£m

At 1 January 2021 3,614.7 101.8 187.2 3,903.7

Cost capitalised 43.1 7.0 79.3 129.4

Interest capitalised – – 5.2 5.2

Transfer from work in progress – – 2.1 2 .1

Transfer to assets classified as held for sale (228.2) – – (228.2)

Disposals (401.1) – – (401.1)

Valuation gains 125.6 – 52.3 177.9

Valuation losses (59.0) (11.1) (2.0) (72.1)

Net valuation gains/(losses) 66.6 (11.1) 50.3 105.8

Carrying and market value at 31 December 2021 3,095.1 97.7 324.1 3,516.9

Total assets classified as held for sale at 31 December 2021 of £228.2 million (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

property

(owned)

£m

Investment

property

(leased)

£m

Investment

property

(under

development)

£m

Total

£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 £74.3million at 31 December 2021

(2020: £66.8 million) on a cumulative basis.

Investment property (under development) includes interests in land not currently under construction totalling

£18.0million (2020: £19.8 million).

207

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INFORMATION

Section 3: Asset management continued

3.1 Wholly owned property assets continued

Recurring fair value measurement

All investment and development properties are classified as Level 3 in the fair value hierarchy.

Class of asset

2021

£m

2020

£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) 3,6 47.4 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 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

£m

2020

£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

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

208

NOTES TO THE FINANCIAL STATEMENTS continued

Quantitative information about fair value measurements using unobservable inputs (Level 3)

2021

Fair

value

£m

Valuation

technique Unobservable inputs Range

Weighted

average

London –

rental properties

849.8 Discounted

cash flows

Net rental income (£ per week)

Estimated future rent increase (%)

Discount rate (yield) (%)

£191–£373

3%–4%

3.7%–4.9%

£291

3.9%

Prime regional –

rental properties

992.9 Discounted

cash flows

Net rental income (£ per week)

Estimated future rent increase (%)

Discount rate (yield) (%)

£144–£235

1%–4%

4.0%–6.3%

£191

4.7%

Major regional –

rental properties

1,263.6 Discounted

cash flows

Net rental income (£ per week)

Estimated future rent increase (%)

Discount rate (yield) (%)

£62–£173

0%–4%

4.7%–7.0%

£131

5.7%

Provincial –

rental properties

217.1 Discounted

cash flows

Net rental income (£ per week)

Estimated future rent increase (%)

Discount rate (yield) (%)

£109–£188

1%–4%

5.1% –14.2%

£135

7.0%

London –

development properties

249.9 Discounted

cash flows

Estimated cost to complete (£m)

Net rental income (£ per week)

Estimated future rent increase (%)

Discount rate (yield) (%)

£34.0m– £177.3m

£185–£382

3.6%

£126.5m

£289

3.6%

Prime regional –

development properties

48.4 Discounted

cash flows

Estimated cost to complete (£m)

Net rental income (£ per week)

Estimated future rent increase (%)

Discount rate (yield) (%)

£7.1m–£6 4.3m

£176 –£258

4.0%

£35.9m

£181

4.0%

Major regional –

development properties

25.8 Discounted

cash flows

Estimated cost to complete (£m)

Net rental income (£ per week)

Estimated future rent increase (%)

Discount rate (yield) (%)

£33.9m–£45.2m

£171–£213

5.0%

£42.1m

£172

5.0%

3,647.4

Investment property

(leased)

97.7 Discounted

cash flows

Net rental income (£ per week)

Estimated future rent increase (%)

Discount rate (yield) (%)

£95–£185

6.8%

£144

6.8%

Fair value at

31December 2021 3,745.1

209

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OTHER

INFORMATION

Section 3: Asset management continued

3.1 Wholly owned property assets continued

2020

Fair value

£m

Valuation

technique Unobservable inputs Range

Weighted

average

London –

rental properties

1,137.0 Discounted

cash flows

Net rental income (£ per week)

Estimated future rent increase (%)

Discount rate (yield) (%)

£164–£370

2%–3%

3.9%–5.0%

£267

4.0%

Prime regional –

rental properties

949.3 Discounted

cash flows

Net rental income (£ per week)

Estimated future rent increase (%)

Discount rate (yield) (%)

£140–£229

2%–3%

4.0%–6.2%

£169

4.8%

Major regional –

rental properties

1,255.8 Discounted

cash flows

Net rental income (£ per week)

Estimated future rent increase (%)

Discount rate (yield) (%)

£82–£167

1%–3%

4.7%–7.0%

£132

5.7%

Provincial –

rental properties

272.6 Discounted

cash flows

Net rental income (£ per week)

Estimated future rent increase (%)

Discount rate (yield) (%)

£87–£188

1%–3%

5.0%–13.8%

£136

6.8%

London –

development properties

158.8 Discounted

cash flows

Estimated cost to complete (£m)

Estimated future rent increase (%)

Discount rate (yield) (%)

£84.9m–£147.9m

4.0%

£114.9m

4.0%

Prime regional –

development properties

25.6 Discounted

cash flows

Estimated cost to complete (£m)

Estimated future rent increase (%)

Discount rate (yield) (%)

£19.1m–£65.3m

4.3%

£40.8m

4.3%

Major regional –

development properties

2.8 Discounted

cash flows

Estimated cost to complete (£m)

Estimated future rent increase (%)

Discount rate (yield) (%)

£45.5m

–

£45.5m

–

3,801.9

Investment property

(leased)

101.8 Discounted

cash flows

Net rental income (£ per week)

Estimated future rent increase (%)

Discount rate (yield) (%)

£129–£185

6.8%

£147

6.8%

Fair value at

31December 2020 3,903.7

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

210

NOTES TO THE FINANCIAL STATEMENTS continued

Fair value sensitivity analysis

A decrease in net rental income or occupancy will result in a decrease in the fair value, whereas a decrease in the discount

rate (yield) will result in an increase in fair value. There are inter-relationships between these rates as they are partially

determined by market rate conditions. These two key sources of estimation uncertainty are considered to represent those

most likely to have a material impact on the valuation of the Group’s investment property within the next 12 months as a

result of reasonably possible changes in assumptions used. The potential effect of such reasonably possible changes has

been assessed by the Group and is set out below:

Class of assets

Fair value at

31 December

2021

£m

+5%

change in

estimated

net rental

income

£m

-5%

change in

estimated

net rental

income

£m

+25 bps

change in

nominal

equivalent

yield

£m

-25 bps

change in

nominal

equivalent

yield

£m

Rental properties

London 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, 8 47.8 3,468.3 3,477.7 3,872.7

3.2 Inventories

Accounting policies

Inventories are shown at the lower of cost and net realisable value. Net realisable value is the estimated selling price

in the ordinary course of business less the estimated costs of completion and selling expenses. All costs directly

associated with the purchase of land, and all subsequent qualifying expenditure is capitalised.

2021

£m

2020

£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).

211

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OTHER

INFORMATION

Section 3: Asset management continued

3.3 Right of use assets and other non-current assets

Accounting policies

Leased assets

The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a

right of use asset and a corresponding lease liability (see note 4.6a) with respect to all lease arrangements in which it

is the lessee. Right of use assets are initially measured at cost, which comprises a value set equal to the lease liability,

adjusted for prepaid or accrued lease payments and lease incentives. They are subsequently measured at this initial

value less accumulated depreciation and impairment losses.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Property,

plant and equipment mainly comprise leasehold improvements at the Group’s head office and London office as well as

computer hardware at these sites.

Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives. Freehold land

is not depreciated. The estimated useful lives are as follows:

• Right of use assets Shorter of lease and economic life

• Property, plant and equipment 4–7 years

Intangible assets

Intangible assets predominantly comprise computer software which allows customers to book online and processes

transactions within the sales cycle. The expenditure capitalised includes the cost of materials, direct labour and an

appropriate proportion of overheads. The assets are amortised on a straight-line basis over four to seven years, being

the estimated useful lives of the intangible assets, from the date they are available for use. Amortisation is charged to

the income statement within operating expenses.

3.3a) Right of use assets

2021 2020

Buildings

£m

Other

£m

Total

£m

Buildings

£m

Other

£m

Total

£m

Cost

At 1 January 5.8 1.4 7.2 5.8 0.8 6.6

Additions – 0.4 0.4 – 0.6 0.6

Disposals – (0.5) (0.5) – – –

At 31 December 5.8 1.3 7.1 5.8 1.4 7. 2

Amortisation

At 1 January (2.2) (0.7) (2.9) (0.8) (0.3) (1.1)

Amortisation charge fortheyear (0.7) (0.4) (1.1) (1.4) (0.4) (1.8)

Disposal – 0.5 0.5 – – –

At 31 December (2.9) (0.6) (3.5) (2.2) (0.7) (2.9)

Carrying value at 1 January 3.6 0.7 4.3 5.0 0.5 5.5

Carrying value at 31 December 2.9 0.7 3.6 3.6 0.7 4.3

The Group leases several assets including office equipment and vehicles. The average lease term is three years.

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

212

NOTES TO THE FINANCIAL STATEMENTS continued

Approximately 11% of the leases expired in the current financial year (2020: 42%). The expired contracts were replaced

bynew leases for identical underlying assets. This resulted in additions to right of use assets of £0.4 million in 2021

(2020:£0.6 million).

The maturity analysis of lease liabilities is presented in note 4.6a.

Details of interest on lease liabilities and total cash outflows for leases are presented in notes 4.3 and 5.1.

3.3b) Other non-current assets

The Group’s other non-current assets can be analysed as follows:

2021 2020

Property,

plant and

equipment

£m

Intangible

assets

£m

Total

£m

Property,

plant and

equipment

£m

Intangible

assets

£m

Total

£m

Cost

At 1 January 12.1 61.8 73.9 11.4 59.1 70.5

Additions 0.4 3.3 3.8 0.7 2.7 3.4

At 31 December 12.5 65.1 77.7 12.1 61.8 73.9

Depreciation and amortisation

At 1 January (9.2) (42.8) (52.0) (8.1) (36.4) (44.5)

Depreciation/amortisation charge

for the year (0.6) (6.1) (6.7) (1.1) (6.4) (7.5)

At 31 December (9.8) (48.9) (58.7) (9.2) (42.8) (52.0)

Carrying value at 1 January 2.9 19.0 21.9 3.3 22.7 26.0

Carrying amount at 31 December 2.7 16.2 18.9 2.9 19.0 21.9

Intangible assets include £0.8 million (2020: £1.1 million) of assets not being amortised as they are not yet ready for use.

Property, plant and equipment assets include £nil (2020: £0.1 million) of assets not being depreciated as they are not ready

for use. At 31 December 2021 the Group had capital commitments of £nil (2020: £0.1 million) relating to intangible assets

and £nil (2020: £0.3 million) relating to Property, plant and equipment.

213

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STATEMENTS

OTHER

INFORMATION

Section 3: Asset management continued

3.4 Investments in joint ventures (Group)

Accounting policies

Joint ventures are those entities over whose activities the Group has joint control, established by contractual

agreement. The consolidated financial statements include joint ventures initially at cost subsequently, increased or

decreased by the Group’s share of total gains and losses of joint ventures on an equity basis. Interest free joint venture

investment loans are initially recorded at fair value – the difference between the nominal amount and fair value

being treated as an investment in the joint venture. The implied discount is amortised over the contracted life of the

investment loan.

The Directors consider that the agreements integral to its joint ventures result in the Group having joint control

over the key matters required to operate the joint ventures. A significant degree of judgement is exercised in this

assessment due to the complexity of the contractual arrangements.

USAF and LSAV are jointly owned entities that are accounted for as joint ventures. Due to the complexity of the

contractual arrangements and Unite’s role as manager of the joint venture vehicles, the assessment of joint control

following changes to accounting standards (IFRS 10) involves judgements around a number of significant factors. These

factors include how Unite as fund manager has the ability to direct relevant activities such as acquisitions, disposals,

capital expenditure for refurbishments and funding whether through debt or equity. This assessment for USAF is

complex because of the number of unitholders and how their rights are represented through an Advisory Committee.

For some of the activities it is not clear who has definitive control of the activities: in some scenarios the Group can

control, in others the Advisory Committee. However, for the activities which are considered to have the greatest impact

on the returns of USAF, acquisitions and equity financing, it has been determined that the Group and the Advisory

Committee has joint control in directing these activities and that on balance, it is appropriate to account for USAF as a

joint venture. The assessment for LSAV is more straightforward because the Group and GIC each own 50% of the joint

venture and there is therefore much clearer evidence that control over the key activities is shared by the two parties.

The Group has two joint ventures:

Joint venture

Group’s share of

assets/results 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

Venture (LSAV)

50% (50%) Operate student

accommodation

in London and

Birmingham

GIC Real Estate Pte,

Ltd Real estate

investment vehicle

ofthe Government

ofSingapore

LSAV Unit Trust, a Jersey Unit

Trust and LSAV (Holdings) Ltd,

incorporated in Jersey

* Part of the Group’s interest is held through a subsidiary, USAF (Feeder) Guernsey Limited, in which there is an external investor. Anon-

controlling interest therefore occurs on consolidation of the Group’s results representing the external investor’s share of profits and

assets relating to its investment in USAF. The ordinary shareholders of The Unite Group PLC are beneficially interested in 22.0% (2020:

22.0%) of USAF.

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

214

NOTES TO THE FINANCIAL STATEMENTS continued

3.4a) Net assets and results of the joint ventures

The summarised balance sheets and results for the year, and the Group’s share of these joint ventures are as follows:

2021

USAF

£m

LSAV

£m

Total

£m

Gross MI Share Gross Share Gross Share

Investment property 2,867.4 39.3 631.9 1,819.0 909.5 4,686.4 1,580.7

Cash 106.2 1.5 23.4 45.4 22.7 151.6 47.6

Debt (912.1) (12.5) (201.0) (673.0) (336.5) (1,585.1) (550.0)

Swap assets/(liabilities) 0.5 – 0.1 (0.2) (0.1) 0.3 –

Other current assets 106.6 1.5 23.5 22.0 11.0 128.6 36.0

Other current liabilities (211.5) (3.5) (46.6) (40.2) (20.1) (251.7) (70.2)

Net assets 1,957.1 26.3 431.3 1,173.0 586.5 3,130.1 1,044.1

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

£m

LSAV

£m

Total

£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

(Loss)/profit 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.

USAF and LSAV use derivatives to hedge their borrowings. These derivatives are designated in cash flow hedge

relationships which are considered to be fully effective. The share of joint venture mark to market movements on hedging

instruments is recognised in Group’s Other Comprehensive Income within the share of joint venture mark to market

movements on hedging instruments. The total notional value of borrowings in hedge relationships at 31 December 2021

is£225.0 million (2020: £225.0 million). See note 4.5 for further details.

215

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

Section 3: Asset management continued

3.4 Investments in joint ventures (Group) continued

3.4b) Movement in carrying value of the Group’s investments in joint ventures

The carrying value of the Group’s investment in joint ventures increased by £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

£m

2020

£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 sale of property to 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 1,04 4.1 849.0

3.4c) Transactions with joint ventures

The Group acts as asset and property manager for the joint ventures and receives management fees in relation to

theseservices.

In addition, the Group is entitled to performance fees from USAF and LSAV if the joint ventures outperform certain

benchmarks. The Group receives either cash or an enhanced equity interest in the joint ventures as consideration for

the performance fee. The Group has recognised the following gross fees in its results for the year.

2021

£m

2020

£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

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 UNITE GROUP PLC | Annual Report and Financial Statements 2021

216

NOTES TO THE FINANCIAL STATEMENTS continued

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

£m

2020

£m

Included in loss on disposal of property (net of joint venture trading adjustment) 6.6 –

Loss on disposal of property 6.6 –

Cash flow

2021

£m

2020

£m

Gross proceeds 341.9 –

Less amounts settled by transfer of property (99.4) –

Net cash flows included in cash flows from investing activities 242.5 –

As part of the disposal of properties to LSAV, the Group received an additional investment in the joint venture as non-cash

consideration totalling £104.0 million (before costs of £4.6 million), and the settlement of the LSAV performance fee also

resulted in a non-cash increase in its investment value of £53.6 million. The Group’s relative interest in the joint venture

remained unchanged.

The Group did not sell any properties to USAF or LSAV in 2020.

3.5 Investments in subsidiaries (Company)

Accounting policies

In the financial statements of the Company, investments in subsidiaries are held at fair value. Changes in fair value are

recognised in profit or loss and presented in retained earnings in equity.

Carrying value of investment in subsidiaries

The movements in the Company’s interest in unlisted subsidiaries and joint ventures during the year are as follows:

Investment in subsidiaries

2021

£m

2020

£m

At 1 January 1,826.7 2,213.7

Additions – –

Revaluation 316.8 (387.0)

At 31 December 2,143. 5 1,826.7

The carrying value of investment in subsidiaries has been calculated using the equity attributable to the owners of

the parent company from the consolidated balance sheet adjusted for the fair value of fixed rate loans. This includes

investment property, investment property under development and swaps at a fair value calculated by a third party expert.

All investment properties and investment properties under development are classified as Level 3 in the IFRS 13 fair value

hierarchy and have been discussed on page 208. The fixed rate loans range between Level 1 and Level 2 in the IFRS 13 fair

value hierarchy and have been discussed further on page 219.

Significant assumptions underlying the valuation of investment in subsidiaries are valuation of investment property and

investment property under development, together with the value of borrowings and inter-company debt.

A full list of the Company’s subsidiaries and joint ventures can be found in note 9.

217

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

Section 4: Funding

The Group finances its development and investment activities through a mixture of retained earnings,

borrowings and equity. The Group continuously monitors its financing arrangements to manage its gearing.

Interest rate swaps are used to manage the Group’s risk to fluctuations in interest rate movements.

The following pages provide disclosures about the Group’s funding position, including borrowings, gearing and

hedging instruments; its exposure to market risks; and its capital management policies.

Accounting policies

Financial instruments

Financial assets and financial liabilities are recognised in the Group’s balance sheet when the Group becomes a party

tothe contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value, less any attributable transaction costs,

andsubsequently at amortised cost.

With the exception of investments in subsidiaries and derivative financial instruments, no other financial

assets orliabilities have been classified as either fair value through profit or loss or fair value through other

comprehensiveincome.

The accounting policies applicable to specific financial assets and liabilities, and financing costs, are set out in

therelevant notes.

Impairment of financial assets

The Group recognises a loss allowance for expected credit losses on trade receivables.

The accounting policy is set out in full in note 5.2.

Derivative financial instruments

The Group enters into derivative financial instruments to manage its exposure to interest rate risk. Further details

ofderivative financial instruments, including the relevant accounting policies, are disclosed in notes 4.2 and 4.5.

4.1 Borrowings

Accounting policies

Interest bearing borrowings are recognised initially at fair value, less attributable transaction costs. Subsequent to initial

recognition, interest bearing borrowings are stated at amortised cost with any difference between cost and redemption

value being recognised in the income statement over the period of the borrowings on an effective interest basis.

The table below analyses the Group’s borrowings which comprise bank and other loans by when they fall due for payment:

Group – Carrying value Company – Carrying value

2021

£m

2020

£m

2021

£m

2020

£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 – 795.9

In more than two years but not more than five years 419.2 297.3 121.3 –

In more than five years 719.0 568.6 420.9 270.7

1,138.2 1,661.8 542.2 1,066.6

Unamortised fair value of debt recognised on acquisition 23.8 28.1 – –

Total borrowings 1,162.0 1,689.9 542.2 1,066.6

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 UNITE GROUP PLC | Annual Report and Financial Statements 2021

218

NOTES TO THE FINANCIAL STATEMENTS continued

During the year to 31 December 2020 the Group repaid all of its secured borrowings, retaining only unsecured borrowing

at 31 December 2021 and 31 December 2020.

The carrying value and fair value of the Group’s borrowings is analysed below:

Group

2021 2020

Carrying

value

£m

Fair value

£m

Carrying

value

£m

Fair value

£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

Company

2021 2020

Carrying

value

£m

Fair value

£m

Carrying

value

£m

Fair value

£m

Level 1 IFRS fair value hierarchy 425.0 439.0 279.8 312.9

Other loans and unamortised arrangement fees 117.2 117.2 786.8 786.8

Total borrowings 542.2 556.2 1,066.6 1,099.7

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

Group

At 1

January

2021

Financing

cash flows

Fair Value

adjustments

Other

changes

At 31

December

2021

Borrowings 1,689.9 (563.8) (4.3) 40.2 1,162.0

Lease liabilities 101.1 (13.2) – 8.9 96.8

Interest rate swaps 23.6 (3.1) (23.9) 0.9 (2.5)

Total liabilities from financing activities 1,814.6 (580.1) (28.2) 50.0 1,256.3

Company

Borrowings 1,066.6 (550.8) (0.8) 27.2 542.2

Interest rate swaps 23.6 (3.1) (23.9) 0.9 (2.5)

Total liabilities from financing activities 1,090.2 (553.9) (24.7) 28.1 539.7

2020

Group

At 1

January

2020

Financing

cash flows

Fair Value

adjustments

Other

changes

At 31

December

2020

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 37.5 13.2 83.9 1,814.6

Company

Borrowings 442.2 207.5 (0.7) 417.6 1,066.6

Interest rate swaps 7.6 (1.5) 17.5 – 23.6

Total liabilities from financing activities 449.8 206.0 16.8 417.6 1,090.2

219

STRATEGIC REPORT GOVERNANCE

FINANCIAL

STATEMENTS

OTHER

INFORMATION

Section 4: Funding continued

4.2 Interest rate swaps

The Group uses interest rate swaps to manage the Group’s exposure to interest rate fluctuations. In accordance with the

Group’s treasury policy, the Group does not hold or issue interest rate swaps for trading purposes and only holds swaps

which are considered to be commercially effective. The derivatives of the Company are the same as those of the Group,

and the hedge accounting disclosures in note 4.5a are also relevant for the Company.

Accounting policies

Interest rate swaps are recognised initially and subsequently at fair value, with mark to market movements recognised

in the income statement unless cash flow hedge accounting is applied.

The Group designates certain interest rate derivatives as hedging instruments. The interest rate swap is designated

as the hedging instrument in a hedge of the variability in cash flows attributable to the interest risk of borrowings. At

inception the Group documents the relationship between the hedging instrument and the hedged item, along with the

risk management objectives and its strategy for undertaking various hedge transactions.

Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the hedging

instrument is effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged

risk, which is when the hedging relationships meet all of the following hedge effectiveness requirements:

• there is an economic relationship between the hedged item and the hedging instrument;

• the effect of credit risk does not dominate the value changes that result from that economic relationship; and

• the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that

the Group actually hedges and the quantity of the hedging instrument that the Group actually uses to hedge that

quantity of hedged item.

The effective portion of changes in fair value of the interest rate swap is recognised in Other comprehensive income

and presented under the heading of Hedging reserve in equity, limited to the cumulative change in fair value of the

hedged item from inception of the hedge. Any ineffective portion of changes in the fair value of the interest rate

swap is recognised immediately in profit or loss. Amounts previously recognised in other comprehensive income and

accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss, in the

same line as the recognised hedged item. If the Group expects that some or all of the loss accumulated in the hedging

reserve will not be recovered in the future, that amount is immediately reclassified to profit or loss.

The Group discontinues hedge accounting only when the hedging relationship (or a part thereof) ceases to meet the

qualifying criteria. This includes instances when the hedging instrument expires or is sold, terminated or exercised.

The discontinuation is accounted for prospectively. Any gain or loss recognised in Other comprehensive income and

accumulated in the hedging reserve at that time remains in equity and is reclassified to profit or loss when the forecast

transaction occurs. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in the

hedging reserve is reclassified immediately to profit or loss.

The fair value of interest rate swaps is the estimated amount that the Group would receive or pay to terminate the

swap at the balance sheet date, taking into account current interest rates and the current creditworthiness of the

swapcounterparties.

The following table shows the fair value of interest rate swaps which at 31 December 2021 are not designated in

accounting hedge relationships:

2021

£m

2020

£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).

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

220

NOTES TO THE FINANCIAL STATEMENTS continued

4.3 Net financing costs

Accounting policies

Net financing costs comprise interest payable on borrowings and interest on lease liabilities, less interest receivable on

funds invested (both calculated using the effective interest rate method) and gains and losses on hedging instruments

that are recognised in the income statement.

Recognised in the income statement:

2021

£m

2020

£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 net debt. 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

£m

2020

£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 4.3 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%

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Section 4: Funding continued

4.5 Financial risk factors

The Group’s activities expose it to a variety of financial risks: market risks (primarily interest rate risk), credit risk and

liquidity risk. The Group’s treasury policy focuses on the unpredictability of financial markets and seeks to minimise

potential adverse effects on the Group’s financial performance. Details on credit risk can be found in note 5.3.

4.5a) Interest rate risk

The Group is exposed to interest rate risk because entities in the Group borrow funds at both fixed and floating interest

rates. The risk is managed by the Group by maintaining an appropriate mix between fixed and floating rate borrowings, and

by the use of interest rate swap contracts and forward interest rate contracts. Hedging activities are evaluated regularly to

align with interest rate views and defined risk appetite; ensuring the most cost-effective hedging strategies are applied.

The Group’s exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk

management section of this note.

The Group holds its debt finance under both floating and fixed rate arrangements. The majority of floating debt is hedged

through the use of interest rate swap agreements. The Group’s policy guideline has been to hedge 75%–95% of the

Group’s exposure for terms of approximately two to ten years.

At 31 December 2021, after taking account of interest rate swaps, 89% (2020: 70%) of the Group’s borrowing was held at

fixed rates. Excluding the £nil (2020: £250.0 million) of swaps and caps the fixed investment borrowing is at an average

rate of 3.1% (2020: 3.2%) for an average period of 6.4 years (2020: 6.8 years), including all debt with current or forward

starting swaps the average rate is 3.0% (2020: 3.2%).

Under interest rate swap contracts, the Group agrees to exchange the difference between fixed and floating rate interest

amounts calculated on agreed notional principal amounts. Such contracts enable the Group to mitigate the risk of

changing interest rates upon the issuance of forecast fixed rate debt held and the cash flow exposures on the issued

variable rate debt held. The fair value of interest rate swaps at the reporting date is determined by discounting the

future cash flows using the curves at the reporting date and is disclosed below. The average interest rate is based on the

outstanding balances at the end of the financial year.

As the critical terms of the hedge contracts and their corresponding hedged items are the same, the Group performs a

qualitative assessment of effectiveness and it is expected that the value of the interest rate swap contracts and the value

of the corresponding hedged items will systematically change in opposite direction in response to movements in the

underlying interest rates. The main source of hedge ineffectiveness in these hedge relationships has historically been the

effect of the counterparty and the Group’s own credit risk on the fair value of the hedge contracts, which is not reflected

in the fair value of the hedged item attributable to the change in interest rates. No other sources of ineffectiveness

emerged from these hedging relationships. However, changes in anticipated draw down of debt in 2022 as a result of

planned property disposals have meant that the hedged items were no longer expected to occur. As the result the hedge

relationships were discontinued from 1 July 2021. Subsequent changes in fair value of the derivatives of £10.0 million were

recognised directly in profit loss. The amount accumulated in cash flow hedge reserve was reclassified to profit and loss.

The Group holds interest rate swaps and caps at 31 December 2021 against £nil (2020: £250.0 million) of the Group’s

borrowings, in designated in effective hedge relationships. The fair value of these instruments is net asset of £2.5 million

(2020: £23.6 million). These instruments will mature within next 12 months.

The following tables provide information in respect of accounting hedge relationships that were in place until

30 June 2021.

Hedging instruments

Applicable

interest rates Nominal amount Carrying amount Change in fair value

2021

2020

2021

£m

2020

£m

2021

£m

2020

£m

2021

£m

2020

£m

Within one year – 1.6 – – – (5.8) 5.0 (5.8)

Between one and twoyears – 0.1 – 250.0 – (4.2) 2.5 (4.2)

Between two and fiveyears – – – – – – – 2.5

More than five years – 1.6 – 50.0 – (13.6) 8.6 (8.5)

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

222

NOTES TO THE FINANCIAL STATEMENTS continued

Hedged items

Nominal amount Change in value

Hedging reserve –

continuing

Hedging reserve –

discontinued*

2021

£m

2020

£m

2021

£m

2020

£m

2021

£m

2020

£m

2021

£m

2020

£m

Variable rate borrowings – 300.0 (16.2) 12.8 – (15.8) 1.6 1.8

* Balance in cash flow hedging reserve representing the unamortised value of the realised swap gain from hedging relationship for which

hedge accounting is no longer applied.

At 1 July 2021 all of the previously effective Group hedges were de-designated as hedge relationships following changes in

the anticipated timing of debt draw down requirements, and subsequently £10.0 million of swap charges were recognised

in the income statement.

The following table details the effectiveness of the hedging relationship and the amounts reclassified from hedging

reserve to profit or loss:

Changes in OCI

Hedge

ineffectiveness

Line item in

P&L

Reclassified

to P&L –

discontinued

Reclassified

to P&L –

continuing

Line item in

P&L

2021

£m

2020

£m

2021

£m

2020

£m

2021

£m

2020

£m

2021

£m

2020

£m

Variable rate

borrowings

16.2 (12.8) – (3.3)

Mark to market

movements on

interest rate

swaps

(1.1) 2.3 – –

Mark to market

movements on

interest rate

swaps

The interest rate swaps settle on a monthly basis. The floating rate on the interest rate swaps is one-month SONIA (2020:

LIBOR). The Group will settle the difference between the fixed and floating interest rate on a net basis.

In previous years, all interest rate swap contracts exchanging floating rate interest amounts for fixed rate interest

amounts have been designated as cash flow hedges to reduce the Group’s cash flow exposure resulting from variable

interest rates on borrowings. At the end of the current year, the Group has no cash flow hedges in hedge relationships.

The interest rate swaps and the interest payments on the loan occur simultaneously and the amount accumulated in

equity is reclassified to profit or loss over the period that the floating rate interest payments on debt affect profit or loss.

The sensitivity analyses below have been determined based on the exposure to interest rates for both derivative and

non-derivative instruments as at 31 December 2021. For floating rate liabilities, the analysis is prepared assuming the

amount of liability outstanding at the reporting date was outstanding for the whole year. A 1% increase or decrease is

used when reporting interest rate risk internally to key management personnel and represents management’s assessment

of the reasonably possible change in interest rates.

If interest rates had been 1% higher and all other variables were held constant the Group’s loss for the year ended

31 December 2021 would increase by £4.0 million (2020: £8.0 million). The Group’s sensitivity to interest rates has

decreased mainly due to the lower amount of unhedged floating rate debt in place during the year.

Phase 2 IBOR reform

During the year the Group transitioned its floating rate debt and derivative hedging instruments from LIBOR to Sterling

Overnight Interbank Average rate (SONIA). In doing so the Group adopted Interest Rate Benchmark Reform – IBOR ‘phase 2’

(Amendments to IFRS 9, IAS 39, IFRS 7 and 16) and chose to use the practical expedent introduced by the amendments. The

practical expedient allows the effect of the transition relating solely to the lending rate change when borrowings have been

replaced not to be shown as a derecognition of an old instrument and recognition of a new instrument and therefore has

mitigated recognition of any gains or losses in total comprehensive income in the year.

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Section 4: Funding continued

4.5 Financial risk factors continued

4.5b) Credit risk on financial instruments

In order to minimise credit risk, the Group has adopted a policy of only dealing with creditworthy counterparties and

obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults.

The Group only transacts with entities that are rated the equivalent of investment grade and investments in these

instruments, where the counterparties have minimum A- credit rating, are considered to have low credit risk for the

purpose of impairment assessment. The credit rating information is supplied by independent rating agencies where

available and, if not available, the Group uses other publicly available financial information including CDS price and its

own trading records to rate its major customers. The Group’s exposure and the credit ratings of its counterparties are

continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties in

line with Board policy.

Before accepting any new customer, the finance team uses external credit ratings to assess the potential customer’s credit

quality and defines credit limits by customer. Monitoring procedures are also in place to ensure that follow-up action is

taken when ratings deteriorate. The Group does not hold any credit enhancements to cover its credit risks associated with

its financial assets.

The Group considers the following as constituting an event of default for internal credit risk management purposes as

historical experience indicates that financial assets that meet either of the following criteria are generally not recoverable;

• when there is a breach of financial covenants by the debtor; or

• information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its

creditors, including the Group, in full (without taking into account collateral held by the Group).

Details of the credit quality of the Group’s financial assets as well as the Group’s maximum exposure to credit risk by

credit risk rating grades are set out on note 5.3.

4.5c) Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.

Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has established an

appropriate liquidity risk management framework for the management of the Group’s short, medium and long-term

funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves,

banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by

matching the maturity profiles of financial assets and liabilities. Details of additional undrawn facilities that the Group has

at its disposal to further reduce liquidity risk are set out below.

For development activities, the Group has a policy of raising substantially the full amount of equity required for each

development before drawing debt against the development. The funding requirements of developments are therefore

secured at the outset of works.

The Group has the following financial instruments which impact the liquidity risk of the Group either now or in the future:

Financial assets including interest rate swaps, trade receivables, amounts due from joint ventures, other receivables

andcash.

Financial liabilities including borrowings, lease liabilities, interest rates swaps, trade payables, retentions on construction

contracts for properties, other payables and accrued expenses.

The following tables detail the Group’s remaining contractual maturity for its non-derivative financial liabilities with

agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities

based on the earliest date on which the Group can be required to pay.

The contractual maturity is based on the earliest date on which the Group may be required to pay.

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

224

NOTES TO THE FINANCIAL STATEMENTS continued

2021

Weighted

average

effective

interest

rate

Less than

1 month

£m

1–3

months

£m

3 months

– 1 year

£m

1–5

years

£m

years

£m

Total

£m

Carrying

amount

£m

Variable interest rate

instruments 2.0% 0.2 0.4 1.9 130.6 – 133.1 121.3

Fixed interest rate

instruments 3.1% 1.1 2.2 28.5 415.5 786.4 1,233.7 1,040.7

Lease liabilities 4.2% – 3.3 9.8 53.9 94.2 161.1 96.8

Trade and other payables n/a – 130.6 – – – 130.6 130.6

Total 1.3 136.5 40.2 600.0 880.6 1,658.6 1,389.4

2020

Weighted

average

effective

interest

rate

Less than

1 month

£m

1–3

months

£m

3 months

– 1 year

£m

1–5

years

£m

years

£m

Total

£m

Carrying

amount

£m

Variable interest rate

instruments 1.7 1.1 2.3 10.2 810.2 – 823.8 793.1

Fixed interest rate

instruments 3.2 0.7 1.5 25.8 409.6 635.2 1,072.8 896.8

Lease liabilities 4.2 – 3.3 9.7 53.2 107.8 173.9 101.1

Trade and other payables n/a – 91.0 – – – 91.0 91.0

Total 1.8 98.1 45.7 1,273.0 743.0 2 ,161.5 1,882.0

The Company has £133.1 million of variable rate borrowings with weighted average rate of 2.0% and £1,233.7 million

offixed rate borrowings with weighted average rate of 3.1%. The maturity of the Company’s borrowings is disclosed in

note 4.1.

The Group has access to financing facilities as described below, of which £335.0 million were unused at the reporting date

(2020: £60.0 million). The Group expects to meet its other obligations from operating cash flows.

2021

£m

2020

£m

Unsecured bank overdraft facility, reviewed annually and payable at call:

– amount used – –

– amount unused 10.0 10.0

10.0 10.0

Unsecured committed bank loan facilities which may be extended by mutual agreement:

– amount used 125.0 500.0

– amount unused 325.0 50.0

450.0 550.0

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Section 4: Funding continued

4.5 Financial risk factors continued

4.5d) 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

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

226

NOTES TO THE FINANCIAL STATEMENTS continued

4.6 Leases

4.6a) Lease liabilities

Accounting policies

The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a right

of use asset (see note 3.1a) and a corresponding lease liability with respect to all lease arrangements in which it is the

lessee.

The lease liability is initially measured at the present value of the lease payments that are not paid at the

commencement date, discounted by using the Group’s incremental borrowing rate (since the rate implicit in the leases

cannot be readily determined) of 4.17%.

The lease liability is presented as a separate line in the consolidated balance sheet.

The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the leaseliability

(using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.

The Group remeasures the lease liability whenever:

• The lease term has changed, in which case the lease liability is remeasured by discounting the revised lease

payments using a revised discount rate.

• The lease payments change due to changes in an index, in which cases the lease liability is remeasured by

discounting the revised lease payments using an unchanged discount rate (unless the lease payments change is

due to a change in a floating interest rate, in which case a revised discount rate is used).

• A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case

the lease liability is remeasured based on the lease term of the modified lease by discounting the revised lease

payments using a revised discount rate at the effective date of the modification.

The Group did not make any such adjustments during the period presented.

Lease liabilities

Undiscounted cash flows Carrying value

2021

£m

2020

£m

2021

£m

2020

£m

Analysed as:

Non-current 91.9 96.7

Current 4.9 4.4

Total lease liability 96.8 101.1

Lease liability maturity analysis

Year 1 13.0 12.9 4.9 4.4

Year 2 13.3 13.0 5.4 4.8

Year 3 13.5 13.3 6.2 5.4

Year 4 13.4 13.5 6.7 6.2

Year 5 13.7 13.4 7.4 6.6

Onwards 94.2 107.8 66.2 73.7

Total 161.1 173.9 96.8 101.1

The Group does not face a significant liquidity risk with regard to its lease liabilities. Lease liabilities are monitored within

the Group’s treasury function.

227

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Section 4: Funding continued

4.6 Leases continued

4.6b) Lease receivables

The Group accounts for its tenancy contracts offered to commercial and individual tenants as operating leases.

Operating lease contracts with universities contain RPI uplifts and market review clauses.

The lessee does not have an option to purchase the property at the expiry of the lease period.

Maturity analysis of operating lease receivables

The future minimum lease payments receivable under non-cancellable operating leases are as follows:

2021

£m

2020

£m

Year 1 194.1 169.8

Year 2 78.8 93.9

Year 3 57.9 70.7

Year 4 52.0 68.2

Year 5 46.2 63.9

Onwards 239.0 363.0

Total 668.0 829.5

4.7 Capital management

The capital structure of the Group consists of shareholders’ equity and adjusted net debt, including cash held on deposit.

The Group’s equity is analysed into its various components in the Statement of Changes in Equity. The components and

calculation of adjusted net debt is set out in note 4.4. Capital is managed so as to continue as a going concern and to promote

the long-term success of the business and to maintain sustainable returns for shareholders and joint venture partners.

The Group uses a number of key metrics to manage its capital structure:

• net debt (note 4.4)

• gearing (note 4.4)

• LTV (note 2.3a)

• weighted average cost of investment debt (note 4.5a)

In order to manage levels of adjusted gearing over the medium term, the Group seeks to deliver NAV growth and to

recycle capital invested in lower performing assets into new assets and property developments. £403.1 million of property

assets were sold in 2021 and we plan to sell £200–£250 million of property during 2022. The Group targets a yield on

cost of approximately 7% from investments in its development and University partnerships pipeline. The Group does not

commit to developing new sites until sufficient equity and funding to fulfil the full cost of the development is secure.

The Board monitors the ability of the Group to pay dividends out of available cash and distributable profits. Based on

the assumption that no shareholders take up the scrip dividend, the full year dividend will be covered by operating cash

flows. The full year dividend is expected to be £62.3 million compared to operating cash flow of £171.3 million.

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

228

NOTES TO THE FINANCIAL STATEMENTS continued

4.8 Equity

Accounting policies

Ordinary shares are classified as equity. External costs directly attributable to the issue of new shares, other than on

a business combination, are shown as a deduction, net of tax, in equity from the proceeds. Share issue costs incurred

directly in connection with a business combination are deducted from the proceeds of the issue.

The Company’s issued share capital has increased during the year as follows:

Called up, allotted and fully paid

ordinary shares of £0.25p each

2021 2020

No. of

Ordinary

£m

Premium

£m

No. of

Ordinary

£m

Premium

£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.

The Company’s reserves are as follows:

• Called up share capital reserves contain the nominal value of the shares issued;

• Share premium reserves contain the excess consideration received above the nominal value of the shares issued;

• Merger reserves contain the excess in the value of shares issued by the Company in exchange for the value of shares

acquired in respect of subsidiaries acquired (specifically on the acquisition of the Unilodge portfolio in June 2001);

• Hedging reserves contain the cumulative gains and losses on hedging instruments deemed effective; and

• Retained earnings contain the cumulative profits and losses of the Company net of dividends paid and

otheradjustments.

4.9 Dividends

Accounting policies

Dividends are recognised through equity on the earlier of their approval by the Company’s shareholders or

theirpayment.

During the year, the Company paid the final 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.

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Section 5: Working capital

This section focuses on how the Group generates its operating cash flows. Careful management of working

capital is vital to ensure that the Group can meet its trading and financing obligations within its ordinary

operating cycle.

On the following pages you will find disclosures around the Group’s cash position and how cash is generated

from the Group’s trading activities, and disclosures around trade receivables and payables.

Accounting policies

Cash and cash equivalents comprise cash balances and call deposits. Cash equivalents are short-term, highly liquid

investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of

changes in value. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash

management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.

5.1 Cash and cash equivalents

The Group’s cash position at 31 December 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

Group Company

2021

£m

2020

£m

2021

£m

2020

£m

Profit/(loss) for the year 344.6 (122.2) 419.5 (118.8)

Adjustments for:

Depreciation and amortisation 7.8 9.2 – –

Fair value of share-based payments 6.1 2.4 1.7 – –

Dividends received – – (125.0) (300.0)

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 – –

Change in value of investments 3.5 – – (316.8) 387.0

Net finance costs 4.3 34.2 36.3 24.9 26.7

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 and debt exit costs 4.3 4.2 30.1 4.2 1.5

Loss on disposal of investment property (owned) 12.0 1.9 – –

Share of joint venture (profit)/loss 3.4b (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 6.8 (3.6)

(Increase)/decrease in trade and other receivables (52.5) (0.3) 0.1 (0.1)

(Increase) in inventories (2.9) (4.5) – –

Increase/(decrease) in trade and other payables 34.2 (53.3) (6.1) 3.0

Cash flows from operating activities 171.3 74.6 0.8 (0.7)

Tax paid – (1.3) – –

Net cash flows from operating activities 171.3 73.3 0.8 (0.7)

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 UNITE GROUP PLC | Annual Report and Financial Statements 2021

230

NOTES TO THE FINANCIAL STATEMENTS continued

The unallocated net cash outflow includes a net cash outflow 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,

taxpaid of £nil (2020: £1.3 million), investment in joint venture of £nil (2020: £7.5 million) and £0.7 million (2020: £nil)

onother costs.

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 (see note 3.4c for further details).

Dividends received by the Company from its subsidiary undertakings totalling £125.0 million (2020: £300.0 million) are

non-cash distributions of reserves.

5.2 Trade and other receivables

Accounting policies

On the basis that trade receivables meet the business model and cash flow characteristics tests, they are initially

recognised at transaction price and then subsequently measured at amortised cost.

The Group applies the IFRS 9 simplified model of recognising lifetime expected credit losses for all trade receivables as

these items do not have a significant financing component.

In measuring the expected credit losses, the trade receivables have been assessed on a collective basis as they possess

shared credit risk characteristics. They have been grouped based on the days past due and also according to whether

the tenant is a commercial organisation (including universities) or an individual student.

The expected loss rates are based on the payment profile for sales by academic year as well as the corresponding

historical credit losses during the period. The historical rates are adjusted to reflect any current and forwarding looking

macroeconomic factors affecting the customer’s ability to settle the amount outstanding, however given the short

period exposed to credit risk, the impact of macroeconomic factors has not been considered significant within the

reporting period.

Trade receivables are written off (i.e. derecognised) when there is no reasonable expectation of recovery. Failure to

make payments within a reasonable period from the invoice date and failure to engage with the Group on alternative

payment arrangements, amongst others are considered indicators of no reasonable expectation of recovery.

Other financial asset balances are assessed for expected credit losses based on the underlying nature of the asset,

including maturity and age of the asset such as whether a longer term asset or a short term working capital balance

subject to regular settlement arrangements, using the 12 month ECL model. No credit losses have been recognised in

respect of these balances.

Financial assets written off may still be subject to enforcement activities under the Group’s recovery procedures, taking

into account legal advice where appropriate. Any recoveries made are recognised in profit or loss.

The Company’s impairment policies in relation to financial assets are consistent with those of the Group, with

additional consideration given to loans to Group undertakings. In this respect, the Company recognises lifetime ECL

when there has been a significant increase in credit risk (such as changes to credit ratings) since initial recognition.

However, if the credit risk on the loans have not increased significantly since initial recognition, the Company measures

the loss allowance for that financial instrument at an amount equal to 12-month ECL.

The Company expects that the loans to Group undertakings will be repaid in full at maturity or when called. If the

Group undertakings were unable to repay loan balances, the Company expects that in such circumstances the

counterparty would negotiate extended credit terms with the Company. As such, the expected credit loss is considered

immaterial. No change in credit risk is deemed to have occurred since initial recognition and therefore a 12-month

expected credit loss has been calculated based on the assessed probability of default.

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Section 5: Working capital continued

5.2 Trade and other receivables continued

Trade and other receivables can be analysed as follows; all trade and other receivables are current.

Note

Group Company

2021

£m

2020

£m

2021

£m

2020

Restated

£m

Trade receivables 27.9 16.4 – –

Amounts due from Group undertakings 5.6 – – – 594.3

Amounts due from joint ventures 56.8 25.2 – –

LSAV performance fee – 22.8 – –

Prepayments and accrued income 15.3 24.5 – –

Other receivables 8.8 15.1 0.1 0.2

Trade and other receivables (current) 108.8 104.0 0.1 594.5

Loans to Group undertakings (non-current) 5.6 – – 1,928.3 1,791.6

The Group offers tenancy contracts to commercial (universities and retail unit tenants) and individual tenants based on

the academic year. The Group monitors and manages the recoverability of its receivables based on the academic year to

which the amounts relate. Rental income is payable immediately, therefore all receivables relating to tenants are past the

payment due date.

We do not anticipate there to be any expected credit loss on amounts receivable from joint ventures as these remain

highly profitable. Details of amounts due from Group undertakings to the Company are disclosed in note 5.6.

2021

Ageing by academic year

Total

£m

2021/22

£m

2020/21

£m

Prior years

£m

Rental debtors

Commercial tenants (past due and impaired) 0.9 0.5 0.3 0.1

Individual tenants (past due and impaired) 41.9 31.3 3.7 6.9

Expected credit loss carried (14.9) (4.3) (3.6) (7.0)

Trade receivables 27.9 27.5 0.4 –

2020

Ageing by academic year

Total

£m

2020/21

£m

2019/20

£m

Prior years

£m

Rental debtors

Commercial tenants (past due and impaired) 1.4 1.0 0.3 0.1

Individual tenants (past due and impaired) 27.2 19.4 5.0 2.8

Expected credit loss carried (12.2) (4.6) (5.3) (2.3)

Trade receivables 16.4 15.8 – 0.6

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

232

NOTES TO THE FINANCIAL STATEMENTS continued

Movements in the Group’s expected credit losses of trade receivables can be shown as follows:

2021

£m

2020

£m

At 1 January 12.2 3.9

Expected credit loss charged to income statement in year 3.3 8.6

Receivables written off during the year (utilisation of expected credit loss) (0.6) (0.3)

At 31 December 14.9 12.2

The loss allowance for trade receivables is estimated as an amount equal to the lifetime expected credit loss (ECL).

This loss has been estimated using the Group’s history of loss for similar assets and takes into account current and

forecast conditions.

The impact of credit losses is not considered significant in respect of the financial statements.

5.3 Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its

contractual obligations. It arises principally from the Group’s cash balances, the Group’s receivables from customers and

joint ventures and loans provided to the Group’s joint ventures.

At the year-end, the Group’s maximum exposure to credit risk was as follows:

Note

2021

£m

2020

£m

Cash 5.1 109.4 338.3

Trade receivables 5.2 27.9 16.4

Amounts due from joint ventures 5.2 56.8 48.0

194.1 402.7

5.3a) Cash

The Group operates investment guidelines with respect to surplus cash. Counterparty limits for cash deposits are largely

based upon long-term ratings published by credit rating agencies and credit default swap rates. Deposits were placed with

financial institutions with A- or better credit ratings.

5.3b) Trade receivables

The Group’s customers can be split into two groups – (i) students (individuals) and (ii) commercial organisations including

universities. The Group’s exposure to credit risk is influenced by the characteristics of each customer. The Group holds

customer deposits of £0.8 million (2020: £0.8 million) as collateral against individual customers.

5.3c) Joint ventures

Amounts receivable from joint ventures fall into two categories – working capital balances and investment loans. The

Group has strong working relationships with its joint venture partners, and the joint ventures themselves have strong

financial performance, retain net asset positions and are cash generative, and therefore the Group views this as a low

credit risk balance. No impairment has therefore been recognised in 2021 or 2020.

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Section 5: Working capital continued

5.4 Trade and other payables

Accounting policies

Trade payables are initially recognised at the value of the invoice received from a supplier (fair value) and subsequently

at amortised cost. The carrying value of trade payables is considered approximate to fair value.

Trade and other payables due within one year can be analysed as follows:

Group Company

2021

£m

2020

£m

2021

£m

2020

£m

Trade payables 35.3 16.8 – –

Retentions on construction contracts for properties 4.2 5.8 – –

Amounts due to Group undertakings – – 38.0 0.6

Other payables and accrued expenses 96.6 68.4 6.4 3.8

Deferred income 64.6 50.3 – –

Trade and other payables 200.7 141.3 44.4 4.4

Other payable and accrued expenses include £0.8 million (2020: £0.8 million) in relation to customer deposits. These will

be returned at the end of the tenancy subject to the condition of the accommodation and payment of any outstanding

amounts. Deferred income relates to rental income that has been collected in advance of it being recognised as revenue.

Included within accrued expenses is £nil of capital commitments, relating to investment properties under development

(2020: £nil million).

5.5 Provisions

Accounting policies

Provisions are recognised when the Group has a present obligation as a result of a past event, it is probable that the

Group will be required to settle that obligation, and a reliable estimate can be made of the amount of that obligation.

Provisions are measured at the Directors’ best estimate of the expenditure required to settle the obligation and are

discounted to present value where the effect is material.

During 2020, and in accordance with the Government’s Building Safety Advice of 20 January 2020, we undertook a

thorough review of the use of High-Pressure Laminate (HPL) cladding on our properties. We have identified 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 remaining estimated costs recognised in the year would affect net valuation gains/l(osses) on property

in the IFRS P&L and would reduce the Group’s NTA by 2.3p on a Unite share basis. Whilst provisions are expected to be

utilised within two years, there is uncertainty over this timing.

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

234

NOTES TO THE FINANCIAL STATEMENTS continued

The Group has recognised provisions for the cost of these cladding works as follows:

Gross

£m

Unite Share

£m

Wholly

owned USAF LSAV Total

Wholly

owned USAF LSAV Total

At 31 December 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

5.6 Transactions with other Group companies

During the year, the Company entered into various interest-free, repayable on demand loans with its subsidiaries, the

aggregate of which are disclosed in the cash flow statement. In addition, the Company was charged by Unite Integrated

Solutions plc for corporate costs of £4.1 million (2020: £3.1 million). As a result of these intercompany transactions, the

following amounts were due from/to the Company’s subsidiaries at the year end.

2021

£m

2020

£m

Unite Holdings Limited 135.1 141.5

LDC (Holdings) Limited 937.7 1,532.0

Liberty Living Group plc 855.5 712.4

Amounts due from Group undertakings 1,928.3 2,385.9

Unite Integrated Solutions plc 38.0 0.6

Amounts due to Group undertakings 38.0 0.6

The Company has had a number of transactions with its joint ventures, which are disclosed in note 3.4c.

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Section 6: Key management and employee benefits

The Group’s greatest resource is its staff and it works hard to develop and retain its people. The remuneration

policies in place are aimed to help recognise the contribution that Unite’s people make to the performance of

the Group.

On the following pages you will find disclosures around wages and salaries and share option schemes which

allow employees of the Group to take an equity interest in the Group.

Accounting policies

The Group operates a defined contribution pension scheme. Obligations for contributions to defined contribution

pension plans are recognised as an expense in the income statement as incurred.

6.1 Staff numbers and costs

The average number of persons employed by the Group (including Directors) during the year (calculated on a monthly

basis), analysed by category, was asfollows:

Number of employees

2021 2020

Managerial and administrative 509 532

Site operatives 1,288 1,207

1,797 1,739

The aggregate payroll costs of these persons were as follows:

2021

£m

2020

£m

Wages and salaries 62.6 62.0

Social security costs 6.1 5.8

Pension costs 2.4 2.7

Fair value of share-based payments 2.4 1.7

73.5 72.2

The wages and salaries costs include redundancy costs of £0.5 million (2020: £6.1 million).

The total number of persons employed by the Group (including Directors) as at 31 December 2021 was 534 (2020: 508)

managerial and administrative and 1,300 (2020: 1,396) site operatives. There are no employees employed directly by the

Company.

6.2 Key management personnel

The remuneration of the Directors, including non-executive Directors, who are the key management personnel of the

Group and Company, is set out below in aggregate for each of the applicable categories specified in IAS 24 ‘Related

Party Disclosures’. Further information about the remuneration of individual Directors is provided in the audited

part of the Directors’ Remuneration Report on pages 153 to 167 which covers the requirements of schedule 5 of the

relevantlegislation.

2021

£m

2020

£m

Short-term employee benefits 2.3 1.1

Post employment benefits 0.1 0.1

Share-based payment benefits 0.6 0.8

3.1 2.0

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

236

NOTES TO THE FINANCIAL STATEMENTS continued

6.3 Share-based compensation

A transaction is classified as a share-based transaction where the Group receives services from employees and pays

for these in shares or similar equity instruments. The Group operates a number of share-based compensation schemes

allowing employees to acquire shares in the Company.

a) Share schemes

The Group operates the following schemes:

Long-Term Incentive Plan (LTIP), comprising the:

– Performance Share Plan (PSP); and

– HMRC Approved Employee Share Option Scheme (ESOS)

Details can be found in the Directors’ Remuneration Report

Save As You Earn Scheme (SAYE) Open to employees, vesting periods of three years, service

condition

b) Outstanding share options

The table below summarises the movements in the number of share options outstanding for the Group and their average

exercise price:

Weighted

average

exercise

price

2021

Number

of options

(thousands)

2021

Weighted

average

exercise

price

2020

Number

of options

(thousands)

2020

Outstanding at 1 January £0.83 2,672 £1.45 1,929

Forfeited during the year £1.77 (604) £3.47 (159)

Exercised during the year £2.37 (354) £2.38 (255)

Granted during the year £0.69 657 £0.50 1,157

Outstanding at 31 December £0.57 2,371 £0.83 2,672

Exercisable at 31 December £5.45 99 £3.46 59

For those options exercised in the year, the average share price during 2021 was £10.94 (2020: £9.75).

For those options still outstanding, the range of exercise prices at the year-end was 0p to 1084p (2020: 0p to 1076p) and

theweighted average remaining contractual life of these options was 2.2 years (2020: 2.5 years).

The Group funds the purchase of its own shares by the ‘Employee Share Ownership Trust’ to meet the obligations of

the LTIP and executive bonus scheme. The purchases are shown as ‘Own shares acquired’ in retained earnings. As at

31December 2021, the number of shares held by the ESOT was 209,954 (2020: 342,342).

The accounting is in accordance with the relevant standards. No further information is given as the amounts for share-

based payments are immaterial.

Section 7: Post balance sheet events

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.

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Section 8: Alternative performance measures

The Group uses alternative performance measures (APMs), which are not defined or specified under IFRS. These

APMs, which are not considered to be a substitute for IFRS measures, provide additional helpful information. APMs are

consistent with how business performance isplanned, reported and assessed internally by management and the Board,

and provide comparable information across the Group. The APMs below have been calculated on a see through/Unite

share basis, as referenced to the notes to the financial statements. Reconciliations to equivalent IFRS measures are

included in notes 2.2b and 2.2c. Definitions can also be found in the glossary.

Adjusted earnings, 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 net LSAV performance fee, and therefore improve comparability.

Non-EPRA measures may not have comparable calculation bases between companies and therefore may not provide

meaningful industry-wide comparability.

Note

2021

£m

2020

£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 8 176.2 163.4

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 8 184.0 171.8

Net debt 8 (1,521.8) (1,741.8)

Ratio 8.3 10.1

Interest cover (Unite share)

Adjusted EBIT 8 176.2 163.4

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

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

238

NOTES TO THE FINANCIAL STATEMENTS continued

Reconciliation: IFRS profit/(loss) before tax to EPRA earnings and Adjusted earnings

Note

2021

£m

2020

£m

IFRS profit/(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

Net LSAV performance fee (41.9) (5.7)

Adjusted earnings 110.1 91.6

Adjusted EPS yield

2021 2020

Adjusted earnings (A) 27.6p 24.0p

EPRA NTA a EPRA NTA at 1 December (B) t 1 December (B) 818p 847p

Adjusted EPS yield (A/B) 3.4% 2.8%

Total Accounting Return

Note

2021

£m

2020

£m

Opening EPRA NTA (A) 2.3d 818 847

Closing EPRA NTA 2.3d 882 818

Movement 64 (29)

H1 dividend paid 4.9 12.75 –

H2 dividend paid 4.9 6.5 –

Total movement in NTA (B) 83.25 (29)

Total accounting return (B/A) 10.2% (3.4%)

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Section 8: Alternative performance measures continued

EPRA Performance Measures

Summary of EPRA performance measures

Note

2021

£m

2020

£m

2021 2020

EPRA Earnings 152.0 97. 3 38.1p 25.5p

Adjusted Earnings (*) Adjusted 110.1 91 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 EPRA 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%

* Adjusted earnings calculated as EPRA Earnings less LSAV performance fee income recognised

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

Earnings

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 £4.1m £10.6m £(3.2)m £11.5m

Like-for-like gross rental income 4.7%

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

240

NOTES TO THE FINANCIAL STATEMENTS continued

EPRA Vacancy Rate

2021

£m

2020

£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

EPRA Net initial yield (%) * 4.0% 3.8%

Unite Net initial yield (%) ** 4.9% 5.0%

* No lease incentives are provided by the Group and accordingly the Topped Up Net Initial Yield measure 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

£m

2020

£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.

241

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EPRA Valuation movement (Unite share)

Valuation

£m

Change

£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 7.6

Provincial 2.8 0.6 3.4 2.7 0.2 2.8

Total Rental properties 32.4 17.4 49.8 11. 3 5.1 16.4

Increase in beds – – – – – –

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

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

242

NOTES TO THE FINANCIAL STATEMENTS continued

Section 9: Company subsidiaries and joint ventures

In accordance with Section 409 of the Companies Act 2006, a full list of subsidiaries and equity accounted investments

as at 31 December 2021 is disclosed below. Unless otherwise stated, the Group’s ownership interest represents 100%

of the ordinary shares, units or partnership capital held indirectly by Unite Group PLC. No subsidiary undertakings have

been excluded from the consolidation. The Unite Foundation has a year-end of 30 September to facilitate academic year

reporting. All other subsidiaries have a year-end of 31 December.

Registered office and principal place of business: South Quay House, Temple Back, Bristol, United Kingdom, BS1 6FL

LDC (AIB Warehouse) Limited (04872419)** LDC (Portfolio Five) Limited (06079581)**

LDC (Alscot Road) Limited (06176428)** LDC (Portfolio Four) Limited (04985603)**

LDC (Brunel House) Limited (09760628)** LDC (Portfolio One) Limited (03005262)**

LDC (Camden Court Leasehold) Limited (05140620)** LDC (Portfolio) Limited (08419375)**

LDC (Camden Court) Limited (05082671) LDC (Project 110) Limited (05083580)**

LDC (Causewayend) Limited (08895966)** LDC (Project 111) Limited (05791650)**

LDC (Chantry Court Leasehold) Limited (05140258)** LDC (Radmarsh Road) Limited (05435290)**

LDC (Chaucer House) Limited (09898020)** LDC (Skelhorne) Limited (09898132)**

LDC (Constitution Street) Limited (09210998)** LDC (Smithfield) Limited (03373096)

LDC (Construction Two) Limited (04847268) LDC (St Leonards) Limited (08895830)**

LDC (Euro Loan) Limited (06623603)** LDC (St Pancras Way) GP1 Limited (07359501)

LDC (Ferry Lane 2) GP3 Limited (07503842)** LDC (St Pancras Way) GP2 Limited (07359428)

LDC (Ferry Lane 2) GP4 Limited (07503913)** LDC (St Pancras Way) GP3 Limited (07503268)

LDC (Ferry Lane 2) Holdings Limited (07504099) LDC (St Pancras Way) GP4 Limited (07503251)

LDC (Finance) Limited (09760806)** LDC (St Pancras Way) Holdings Limited (07360734)

LDC (Greetham Street) Limited (08895825)** LDC (St Pancras Way) Limited Partnership**

LDC (Gt Suffolk St) GP1 Limited (07274156) LDC (St Pancras Way) Management Limited Partnership**

LDC (Gt Suffolk St) GP2 Limited (07274000) LDC (St Vincent's) Limited (10218310)**

LDC (Gt Suffolk St) Holdings Limited (07353946) LDC (Swindon NHS) Limited (04207502)**

LDC (Gt Suffolk St) Limited Partnership** LDC (Tara House) Limited (09214177)

LDC (Gt Suffolk St) Management GP1 Limited (07354719) LDC (Thurso Street) GP1 Limited (07199022)

LDC (Gt Suffolk St) Management GP2 Limited (07354728) LDC (Thurso Street) GP2 Limited (07198979)

LDC (Gt Suffolk St) Management Limited Partnership** LDC (Thurso Street) GP3 Limited (07434001)

LDC (Hampton Street) Limited (06415998) LDC (Thurso Street) GP4 Limited (07434133)

LDC (Hillhead) Limited (06176554) LDC (Thurso Street) Limited Partnership**

LDC (Holdings) Limited (02625007)* LDC (Thurso Street) Management Limited Partnership**

LDC (Imperial Wharf) Limited (04541678)** LDC (Ventura) Limited (04444628)

LDC (International House) Limited (10131352)** LDC (Vernon Square) Limited (06444132)

* Held directly by the Company.

** Company is exempt from the requirements of the Companies Act relating to the audit of individual financial statements by virtue of

s479A for the financial year ended 31 December 2021.

243

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Section 9: Company subsidiaries and joint ventures continued

Registered office and principal place of business: South Quay House, Temple Back, Bristol, United Kingdom, BS1 6FL

LDC (Kelham Island) Limited (05152229) LDC (William Morris II) Limited (05999281)**

LDC (Leasehold A) Limited (04066933)** Liberty Atlantic Point (Liverpool) Limited (03885187)**

LDC (Leasehold B) Limited (05978242)** Liberty Heights (Manchester) Limited (07399622)**

LDC (Loughborough) Limited (04207522)** Liberty Living (HE) Holdings Limited (10977869)**

LDC (Magnet Court Leasehold) Limited (05140255)** Liberty Living (LH Manchester) Limited (07120141)**

LDC (Millennium View) Limited (09890375)** Liberty Living (Liberty AP) Limited (03633307)**

LDC (MTF Portfolio) Limited (05530557)** Liberty Living (Liberty PP) Limited (03991475)**

LDC (Nairn Street) GP3 Limited (07808933) Liberty Living (LP Bristol) Limited (07242607)**

LDC (Nairn Street) GP4 Limited (07808919) Liberty Living (LP Coventry) Limited (04330729)**

LDC (Nairn Street) Holdings Limited (07579402)** Liberty Living (LP Manchester) Limited (04314013)**

LDC (New Wakefield Street) Limited (10436455)** Liberty Living (LQ Newcastle) Limited (04302869)**

LDC (Newgate) Limited (08895869)** Liberty Living (LQ2 Newcastle) Limited (07298853)**

LDC (Old Hospital) Limited (09702143)** Liberty Living Finance PLC (10979349)**

LDC (Oxford Road Bournemouth) Limited (04407309)** Liberty Living Group Limited (BR020813)*/**

LDC (Portfolio 100) Limited (07989369)** Liberty Living Investments 1 Limited Partnership**

LDC (Portfolio 20) Limited (08803996)** Liberty Living Investments 2 Limited Partnership**

Liberty Living Investments 3 Limited Partnership** Unite Finance One (Accommodation Services) Limited (04332937)

Liberty Living Investments GP1 Limited (09375866)** Unite Finance One (Holdings) Limited (04316207)**

Liberty Living Investments GP2 Limited (09375868)** Unite Finance One (Property) Limited (04303331)**

Liberty Living Investments GP3 Limited (10518849)** Unite FM Limited (06807562)

Liberty Living Investments II Holdco 2 Limited (09574059)** Unite For Success Limited (05157263)

Liberty Living Investments II Holdco Limited (08929431)** Unite Holdings Limited (03148468)*/**

Liberty Living Investments II Limited (09680931)** Unite Homes Limited (05140262)

Liberty Living Investments Limited (09375870)** Unite Integrated Solutions PLC (02402714)

Liberty Living Investments Nominee 1 Limited (09375846)** Unite Modular Solutions Limited (05140259)

Liberty Living Investments Nominee 2 Limited (09375849)** Unite Rent Collection Limited (05982935)

Liberty Living Investments Nominee 3 Limited (10519085)** Unite Student Living Limited (06204135)

Liberty Living Limited (04055891)** USAF GP No 11 Management Limited (07351883)

Liberty Living SpareCo Limited (04616115)** USAF LP Limited (05860874)**

Liberty Living UK Limited (06064187)** USAF Management Limited (05862721)

Liberty Park (Bristol) Limited (07615601)** USAF Management 6 Limited (06225945)

Liberty Park (US Bristol) Limited (07615619)** USAF Management 8 Limited (06387597)

Liberty Plaza (London) Limited (07745097)** USAF Management 10 Limited (06714695)

Liberty Point (Coventry) Limited (04992358)** USAF Management 11 Limited (07082782)

Liberty Point (Manchester) Limited (04828083)** USAF Management 12 Limited (07365681)

Liberty Point Southampton (Block A) Limited (10314954)** USAF Management 14 Limited (09232206)

Liberty Prospect Point (Liverpool) Limited (04637570)** USAF Management 18 Limited (10219775)

Liberty Quay (Newcastle) Limited (05234174)** USAF Management GP No.14 Limited (09130985)**

Liberty Quay 2 (Newcastle) Limited (07376627)** USAF Management GP No.15 Limited (09749946)**

Liberty Severn Point (Cardiff) Limited (04313995)** USAF Management GP No.16 Limited (09750068)**

Liberty Village (Edinburgh) Limited (10323566)** USAF Management GP No.17 Limited (09750061)**

LL Midco 2 Limited (08998308)** USAF Management No.18 Limited Partnership

LSAV (Angel Lane) GP3 Limited (08646359)** LDC (Capital Cities Nominee No.1) Limited (05347228) (50.0%)

LSAV (Angel Lane) GP4 Limited (08646929)** LDC (Capital Cities Nominee No.2) Limited (05359457) (50.0%)

LSAV (Aston Student Village) GP3 Limited (10498217) LDC (Capital Cities Nominee No.3) Limited (08792780) (50.0%)

LSAV (Aston Student Village) GP4 Limited (10498484) LDC (Capital Cities Nominee No.4) Limited (08792688) (50.0%)

* Held directly by the Company.

** Company is exempt from the requirements of the Companies Act relating to the audit of individual financial statements by virtue of

s479A for the financial year ended 31 December 2021.

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

24 4

NOTES TO THE FINANCIAL STATEMENTS continued

Registered office and principal place of business: South Quay House, Temple Back, Bristol, United Kingdom, BS1 6FL

LSAV (Stapleton) GP3 Limited (08646819)** LDC (Capital Cities) Limited (05347220) (50.0%)

LSAV (Stapleton) GP4 Limited (08647019)** LDC (Ferry Lane 2) GP1 Limited (07359448) (50.0%)

LSAV (Stratford) GP3 Limited (08751654)** LDC (Ferry Lane 2) GP2 Limited (07359481) (50.0%)

LSAV (Stratford) GP4 Limited (08751629)** LDC (Ferry Lane 2) Limited Partnership (50.0%)

LSAV (Wembley) GP3 Limited (08725127)** LDC (Ferry Lane 2) Management Limited Partnership (50.0%)

LSAV (Wembley) GP4 Limited (08725235)** LDC (Stratford) GP1 Limited (07547911) (50.0%)

LSAV Rent Collection Limited (08496230)** LDC (Stratford) GP2 Limited (07547994) (50.0%)

Stardesert Limited (04437102) LDC (Stratford) Limited Partnership (50.0%)

The Unite Foundation LDC Capital Cities Two (GP) Limited (08790742) (50.0%)

Unite Accommodation Management Limited (06190905)** LSAV (Angel Lane) GP1 Limited (08593689) (50.0%)

Unite Accommodation Management 2 Limited (05193166)** LSAV (Angel Lane) GP2 Limited (08593692) (50.0%)

Unite Accommodation Management 6 Limited (05077346)** LSAV (Angel Lane) Limited Partnership (50.0%)

Unite Accommodation Management 9 Limited (06190863)** LSAV (Angel Lane) Management Limited Partnership (50.0%)

Unite Accommodation Management 16 Limited (07061314)** LSAV (Aston Student Village) GP1 Limited (10498478) (50.0%)

Unite Accommodation Management 18 Limited (08328484)** LSAV (Aston Student Village) GP2 Limited (10498481) (50.0%)

Unite Accommodation Management 19 Limited (08790504) LSAV (Aston Student Village) Limited Partnership (50.0%)

Unite Accommodation Management 20 Limited (08790642) LSAV (Aston Student Village) Management Limited Partnership (50.0%)

Unite Accommodation Management One Hundred Limited (07989080)** LSAV (Stapleton) GP1 Limited (08593695) (50.0%)

Unite Construction (Angel Lane) Limited (08792704)** LSAV (Stapleton) GP2 Limited (08593699) (50.0%)

Unite Construction (Stapleton) Limited (09023406) LSAV (Stapleton) Limited Partnership (50.0%)

Unite Construction (Wembley) Limited (09023474) LSAV (Stapleton) Management Limited Partnership (50.0%)

Unite Finance Limited (04353305)*/** LSAV (Stratford) Management Limited Partnership (50.0%)

LSAV (Wembley) GP1 Limited (08635735) (50.0%) USAF GP No 6 Limited (05897755) (13.3%)

LSAV (Wembley) GP2 Limited (08636051) (50.0%) USAF GP No 8 Limited (06381914) (13.3%)

LSAV (Wembley) Limited Partnership (50.0%) USAF GP No 10 Limited (06714734) (13.3%)

LSAV (Wembley) Management Limited Partnership (50.0%) USAF GP No 11 Limited (07075210) (13.3%)

UNITE Capital Cities Holdings Limited (08801242) (50.0%) USAF GP No 12 Limited (07368735) (13.3%)

Unite Capital Cities Limited Partnership (50.0%) USAF GP No 14 Limited (09089977) (13.3%)

Unite Capital Cities Two Limited Partnership (50.0%) USAF GP No 15 Limited (09585201) (13.3%)

USAF Management 16 Limited (07735741) (22.2%)** USAF GP No.15A Limited (12644211) (22.0%)

USAF Management 17 Limited (05591986) (22.2%)** USAF GP No.16A Limited (12644210) (22.0%)

USAF Management No. 14 Limited Partnership (22.0%) USAF GP No.17A Limited (12644208) (22.0%)

USAF Management No. 15 Limited Partnership (22.2%) USAF GP No 18 Limited (10219336) (13.3%)

USAF Management No. 16 Limited Partnership (22.2%) USAF Holdings B Limited (06324325) (13.3%)

USAF Management No. 17 Limited Partnership (22.2%) USAF Holdings C Limited (06381882) (13.3%)

USAF No.1 Limited Partnership (22.0%) USAF Holdings H Limited (09089805) (13.3%)

USAF No.6 Limited Partnership (22.0%) USAF Holdings I Limited (09581882) (13.3%)

USAF No.8 Limited Partnership (22.0%) USAF Holdings J Limited (10215997) (13.3%)

USAF No.10 Limited Partnership (22.0%) USAF Holdings Limited (05870107) (13.3%)

USAF No.11 Limited Partnership (22.0%) USAF Nominee No.1 Limited (05855598) (13.3%)

USAF No.12 Limited Partnership (22.0%) USAF Nominee No.1A Limited (05835512) (13.3%)

USAF No.14 Limited Partnership (22.0%) USAF Nominee No.6 Limited (05855599) (13.3%)

USAF No.15 Limited Partnership (22.2%) USAF Nominee No.6A Limited (05885802) (13.3%)

USAF No.15A Limited Partnership (22.0%) USAF Nominee No.8 Limited (06381861) (13.3%)

* Held directly by the Company.

** Company is exempt from the requirements of the Companies Act relating to the audit of individual financial statements by virtue of

s479A for the financial year ended 31 December 2021.

245

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OTHER

INFORMATION

Section 9: Company subsidiaries and joint ventures continued

Registered office and principal place of business: South Quay House, Temple Back, Bristol, United Kingdom, BS1 6FL

USAF No.16A Limited Partnership (22.0%) USAF Nominee No.17 Limited (12644192) (13.3%)

USAF No.17A Limited Partnership (22.0%) USAF Nominee No.17A Limited (12644187) (13.3%)

USAF No.18 Limited Partnership (22.0%) USAF Nominee No.18 Limited (10218595) (13.3%)

USAF No.11 Management Limited Partnership (22.0%) USAF Nominee No.18A Limited (10219339) (13.3%)

Filbert Village Student Accommodation Limited Partnership (22.0%) USAF RCC Limited (05983554) (13.3%)

LDC (Nairn Street) Limited Partnership (22.0%) LSAV (No.1) Limited Partnership (50.0%)**

LDC (Nairn Street) Management Limited Partnership (22.0%) LSAV (No.1) GP1 Limited (013184531) (50.0%)**

Filbert Village GP Limited (06016554) (13.3%) LSAV (No.1) Nominee 1 Limited (013184589) (50.0%)**

LDC (Nairn Street) GP1 Limited (07580262) (13.3%) LSAV (No.1) Management Limited Partnership (50.0%)**

LDC (Nairn Street) GP2 Limited (07580257) (13.3%) LSAV (No.1) GP3 Limited (013184662) **

USAF Finance II Limited (08526474) (13.3%) LSAV (No.1) Nominee 3 Limited (013184656) **

USAF GP No 1 Limited (05897875) (13.3%) LSAV (Arch View) Limited Partnership (50.0%)**

USAF Nominee No.8A Limited (06381869) (13.3%) LSAV (Arch View) GP1 Limited (013210709) (50.0%)**

USAF Nominee No.10 Limited (06714690) (13.3%) LSAV (Arch View) Nominee 1 Limited (013210518) (50.0%)**

USAF Nominee No.10A Limited (06714615) (13.3%) LSAV (Arch View) Management Limited Partnership (50.0%)**

USAF Nominee No.11 Limited (07075251) (13.3%) LSAV (Arch View) GP3 Limited (013210526) **

USAF Nominee No.11A Limited(07075213) (13.3%) LSAV (Arch View) Nominee 3 Limited (013210553) **

USAF Nominee No.12 Limited (07368733) (13.3%) LSAV (Drapery Plaza) Limited Partnership (50.0%)**

USAF Nominee No.12A Limited (07368755) (13.3%) LSAV (Drapery Plaza) GP1 Limited (013209904) (50.0%)**

USAF Nominee No.14 Limited (09231609) (13.3%) LSAV (Drapery Plaza) Nominee 1 Limited (013209904) (50.0%)**

USAF Nominee No.14A Limited (09231604) (13.3%) LSAV (Drapery Plaza) Management Limited Partnership (50.0%)**

USAF Nominee No.15 Limited (12644205) (13.3%) LSAV (Drapery Plaza) GP3 Limited (013210206) **

USAF Nominee No.15A Limited (12644204) (13.3%) LSAV (Drapery Plaza) Nominee 3 Limited (013209979) **

USAF Nominee No.16 Limited (12644201) (13.3%) LSAV Management Holdings Limited (013305327) **

USAF Nominee No.16A Limited (12644197) (13.3%)

* Held directly by the Company.

** Company is exempt from the requirements of the Companies Act relating to the audit of individual financial statements by virtue of

s479A for the financial year ended 31 December 2021.

Registered office and principal place of business: 13 Castle Street, St Helier, Jersey, JE4 5UT

LDC (Gt Suffolk St) Unit Trust LSAV (Aston Student Village) Unit Trust (50.0%)

LDC (St Pancras Way) Unit Trust LSAV (Holdings) Limited (50.0%)

LDC (Thurso Street) Unit Trust LSAV (Trustee) Limited (50.0%)

LSAV (Jersey Manager) Limited LSAV Unit Trust (50.0%)

Unite (Capital Cities) Jersey Limited Unite Capital Cities Unit Trust (50.0%)

USAF Jersey Investments Limited USAF Portfolio 18 Unit Trust (22.2%)

USAF Jersey Manager Limited LDC (Nairn Street) Unit Trust (21.9%)

LDC (Ferry Lane 2) Unit Trust (50.0%) Unite UK Student Accommodation Fund (13.3%)

LDC (Stratford) Unit Trust (50.0%) LSAV (Arch View) Unit Trust (50.0%)

LSAV (Drapery Plaza) Unit Trust (50.0%)

Registered office and principal place of business: Third Floor, La Plaiderie Chambers, St Peter Port, Guernsey, GY1 1WG

USAF Feeder Guernsey Limited (45.2%) USAF Portfolio 17 Unit Trust (22.2%)

USAF Portfolio 15 Unit Trust (22.2%) USAF 15 NRL Limited (22.2%)

USAF Portfolio 16 Unit Trust (22.2%)

THE UNITE GROUP PLC | Annual Report and Financial Statements 2021

246

NOTES TO THE FINANCIAL STATEMENTS continued

Registered office and principal place of business: Saltire Court, 20 Castle Terrace, Edinburgh, EH1 2 EN

LSAV (GP) Limited (SC431844) (50.0%) LSAV (Property Holdings) Limited Partnership (50.0%)

Registered office and principal place of business: Trident Chambers, Wickhams Cay, P.O. Box 146, Road Town, Tortola, British Virgin Islands

Liberty Park (Bedford) Limited Liberty Plaza (Newcastle) Limited

Registered office and principal place of business: Third Floor, Barclays House, Victoria Street, Douglas, Isle of Man, IM1 2LE

Filbert Street Student Accommodation Unit Trust (21.9%)

Registered office and principal place of business: Room 507, Floor 5, Block 1, Building No. 10, Jintong Road West, Chaoyang District, Beijing,

People’s Republic of China

Unite Students Accommodation (Beijing) Business Service Company Limited

247

FINANCIAL

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STRATEGIC REPORT GOVERNANCE

OTHER

INFORMATION

CONTENTS

249 Financial Record

250 Glossary

253 Company Information

OTHER

INFORMATION

THE UNITE GROUP PLC | Annual Report and FInancial Statements 2021

248

2021 2020 2019 2018 2017

EPRA earnings (£m) 152 97 111 88 71

EPRA earnings per share (pence) 38 26 39 34 30

Adjusted earnings (£m) 110 93 105 88 71

Adjusted earnings per share (pence) 28 24 37 34 30

IFRS profit/(loss) before tax (£m) 342 (120) (101) 246 229

IFRS profit/(loss) per share (pence) 86 (32) (32) 91 95

EPRA net tangible assets (NTA)/net assets (NAV) (£m)

3,532 3,266 3,087 2,085 1,740

EPRA NTA/NAV per share (pence)

882 818 847 790 720

IFRS net assets (£m) 3,528 3,235 3,072 2,073 1,729

IFRS NAV per share (pence) 880 809 845 787 717

LTV (%) 29% 34% 37% 29% 31%

Managed portfolio value (£m) 8,108 7, 838 7,702 4,994 4,612

Total Accounting Return (TAR) 10.2% -3.4% 11.7% 13.2% 14.4%

1. EPRA NTA for 2021, 2020 and 2019. EPRA NAV for 2018 and 2017.

FINANCIAL RECORD

249

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OTHER

INFORMATION

Adjusted earnings An alternative performance measure based on EPRA earnings, adjusted to remove the impact of the

LSAV performance fee which was settled in the year. 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.

Adjusted earnings per

share (Adjusted EPS)

EPRA earnings per share, adjusted to remove the impact of the LSAV performance fee. 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.

Adjusted EBIT The Group’s NOI plus management fees and less overheads. In the opinion of the Directors, adjusted

EBIT is a useful measure to monitor our cost discipline and performance of the Group.

Adjusted EBIT margin The Group’s EBIT expressed as a percentage of rental income. In the opinion of the Directors, adjusted

EBIT margin is a useful measure to monitor our cost discipline and performance of the Group.

Adjusted EPS yield Adjusted EPS as a percentage of opening EPRA NTA (diluted).

Adjusted net debt Net debt per the balance sheet, adjusted to remove IFRS 16 lease liabilities and the unamortised fair

value of debt recognised on the acquisition of Liberty Living.

Basis points (BPS) A basis point is a term used to describe a small percentage, usually in the context of change,

and equates to 0.01%.

Diluted earnings Where earnings values per share are used “basic” measures divide the earnings by the weighted average

number of issued shares in issue throughout the period, whilst the diluted measure also takes into

account the effect of share options which have been granted and which are expected to be converted

into shares in the future.

Diluted NTA/NAV Where NTA/NAV per share is used, ”basic” measures divide the NTA/NAV by the number of shares issued

at the reporting date, whilst the diluted measure also takes into account the effect of share options

which have been granted and which are expected to be converted into shares in the future (both for

the additional number of shares that will be issued and the value of additional consideration that will be

received in issuing them).

Direct let Properties where short-hold tenancy agreements are made directly between Unite and the student.

EBITDA The Group’s adjusted EBIT, adding back depreciation and amortisation.

EPRA The European Public Real Estate Association, who produce best practice recommendations for

financial reporting.

EPRA earnings EPRA earnings exclude movements relating to changes in values of investment properties, profits/losses

from the disposal of properties, swap/debt break costs and integration costs.

EPRA earnings

pershare

The earnings per share based on EPRA earnings.

EPRA like-for-like

rentalgrowth

The growth in rental income measured by reference to the part of the portfolio of the Group that

has been consistently in operation, and not under development nor subject to disposal, and which

accordingly enables more meaningful comparison in underlying rental income levels.

EPRA Net Tangible

Assets (NTA)

EPRA NTA includes all property at market value but excludes the mark to market of financial instruments,

deferred tax and intangible assets. EPRA NTA provides a consistent measure of NAV on a going

concernbasis.

EPRA Net Tangible

Assets per share

The diluted NTA per share figure based on EPRA NTA.

EPRA Net

Reinstatement

Value(NRV)

EPRA NRV includes all property at market value but excludes the mark to market of financial instruments,

deferred tax and real estate transfer tax. EPRA NRV assumes that entities never sell assets and

represents the value required to rebuild the entity.

EPRA Net Disposal

Value (NDV)

EPRA NDV includes all property at market value, excludes the mark to market of financial instruments,

but includes the fair value of fixed interest rate debt and the carrying value of intangible assets. EPRA

NDV represents the shareholders’ value in a disposal scenario.

GLOSSARY

250

THE UNITE GROUP PLC | Annual Report and FInancial Statements 2021

EPRA Net Initial Yield

(NIY)

Annualised NOI generated by the Group’s rental property expressed as a percentage of its fair value,

taking into account notional acquisition costs.

EPRA Topped Up

NetInitial Yield

(Toppedup NIY)

EPRA Net Initial Yield adjusted to include the effect of the expiration of rent free periods (or other

unexpired lease incentives such as discounted rent periods or step rents).

EPRA Vacancy Rate The ratio of the estimated market rental value of vacant spaces against the estimated market rental value

of the entire property portfolio (including vacant spaces).

EPRA Cost Ratio The ratio of property operating expenses, overheads and management fees, against rental income,

calculated on an EPRA basis.

ESG Environmental, Social and Governance.

GRESB GRESB is a benchmark of the Environmental, Social and Governance (ESG) performance of real assets.

Gross asset value (GAV) The fair value of rental properties, leased properties and development properties.

The Group Wholly owned balances plus Unite’s interests relating to USAF and LSAV.

Group debt Wholly owned borrowings plus Unite’s share of borrowings attributable to USAF and LSAV.

HMO Houses in multiple occupation, where buildings or flats are shared by multiple tenants who rent their

own rooms and the property’s communal spaces on an individual basis.

IFRS NAV per share IFRS equity attributable to the owners of the parent company from the consolidated balance sheet

divided by the total number of shares of the Parent Company in issue at the reporting date.

Interest cover ratio

(ICR)

Calculated as adjusted EBIT divided by the sum of net financing costs and IFRS 16 lease liability

interestcosts.

Lease Properties which are leased to universities for a number of years.

Like-for-like

capitalgrowth

Like-for-like capital growth is the growth in Gross Asset Value on properties owned throughout the

current and previous years under review.

Loan to value (LTV) Net debt as a proportion of the value of the rental properties, excluding balances in respect of leased

properties under IFRS 16. Prepared on a see-through basis. In the opinion of the Directors, this measure

enables an appraisal of the indebtedness of the business, which closely aligns with key covenants in the

Group’s lending agreements.

LTV post IFRS 16 Net debt as a proportion of the value of the rental properties, including balances in respect of leased

properties under IFRS 16. Prepared on a see-through basis.

LSAV The London Student Accommodation Joint Venture (LSAV) is a joint venture between Unite and GIC, in

which both hold a 50% stake. LSAV has a maturity date of September 2032.

Major regional Properties located in Aberdeen, Birmingham, Cardiff, Durham, Glasgow, Leeds, Leicester, Liverpool,

Newcastle, Nottingham, Sheffield and Southampton.

Net asset value (NAV) The total of all assets less the value of all liabilities at each reporting date.

Net debt (EPRA) Borrowings net of cash. IFRS 16 lease liabilities are excluded from net debt on an EPRA basis. In the

opinion of the Directors, net debt is a useful measure to monitor the overall cash position of the Group.

Net debt per

balancesheet

Borrowings, IFRS 16 lease liabilities and the mark to market of interest rate swaps, net of cash.

Net debt to EBITDA Net debt as a proportion of EBITDA.

251

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OTHER

INFORMATION

Net financing costs

(EPRA)

Interest payable on borrowings less interest capitalised into developments and finance income.

Net operating income

(NOI)

The Group’s rental income less property operating expenses.

Nomination

agreements

Agreements at properties where universities have entered into a contract to reserve rooms for their

students, usually guaranteeing occupancy. The universities usually either nominate students to live in

the building and Unite enters into short-hold tenancies with the students or the university enters into a

contract with Unite and makes payment directly to Unite.

Provincial Properties located in Bedford, Bournemouth, Coventry, Loughborough, Medway, Portsmouth, Reading,

and Swindon.

Prime regional Properties located in Bristol, Bath, Edinburgh, Manchester and Oxford.

Property operating

expenses

Operating costs directly related to rental properties, therefore excluding central overheads

Rental growth Calculated as the year-on-year change in average annual price for sold beds. In the opinion of the

Directors, this measure enables a more meaningful comparison in rental income as it excludes the

impact of changes in occupancy.

Rental income Income generated by the Group from rental properties.

Rental properties Investment properties (owned and leased) whose construction has been completed and are used by the

Operations segment to generate NOI.

Rental properties

(leased) / Sale and

leaseback

Properties that have been sold to a third party investor then leased back to the Group. Unite is also

responsible for the management of these assets on behalf of the owner.

Resident ambassadors Student representatives who engage with students living in the property to create a community and

sense of belonging.

See-through

(also Unite share)

Wholly owned balances plus Unite’s share of balances relating to USAF and LSAV.

TCFD The Taskforce on Climate-related Financial Disclosures develops voluntary, consistent climate-related

financial risk disclosures for use by companies in providing information to investors, lenders, insurers

and other stakeholders.

Total accounting

return

Growth in diluted EPRA NTA per share plus dividends paid, expressed as a percentage of diluted EPRA

NTA per share at the beginning of the period. In the opinion of the Directors, this measure enables an

appraisal of the return generated by the business for shareholders during the year.

Total shareholder

return

The growth in value of a shareholding over a specified period, assuming dividends are reinvested to

purchase additional shares.

USAF/the fund The Unite UK Student Accommodation Fund (USAF) is Europe’s largest fund focused purely on income-

producing student accommodation investment assets.

The fund is an open-ended infinite life vehicle with unique access to Unite’s development pipeline. Unite

acts as fund manager for the fund, as well as owning a significant minority stake.

WAULT Weighted average unexpired lease term to expiry.

Wholly owned Balances relating to properties that are 100% owned by The Unite Group PLC or its 100% subsidiaries.

GLOSSARY continued

252

THE UNITE GROUP PLC | Annual Report and FInancial Statements 2021

The Unite Group PLC

Executive Team

Richard Smith

Chief Executive Officer

Joe Lister

Chief Financial Officer

Registered Office

South Quay House, Temple Back, Bristol BS1 6FL

Registered Number in England

03199160

Company Secretary

Christopher Szpojnarowicz

Auditor

Deloitte LLP

1 New Street Square, London EC4A 3HQ

Financial Advisers

J.P. Morgan Cazenove

25 Bank Street, London E14 5JP

Numis Securities

The London Stock Exchange Building

10 Paternoster Square, London EC4M 7LT

Registrars

Computershare Investor Services plc

PO Box 82

The Pavilions

Bridgwater Road

Bristol

BS99 7NH

Financial PR Consultants

Powerscourt

1 Tudor Street London EC4Y OAH

Find out more online at www.unite-group.co.uk