CREATING A HOME FOR SUCCESS FOR STUDENTS
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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.
STRATEGIC REPORT GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
01
FINANCIAL HIGHLIGHTS
37.1p 29.0p 14.4%
34.1p 13.2%
30.3p 11.7%
27.6p 22.7p 22.1p 10.2%
24.0p
12.75p
10.25p
2017 2018 2019 -3.4% 2021
2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 2020
ADJUSTED EARNINGS PER SHARE1, 2 (P) DIVIDEND PER SHARE (P) TOTAL ACCOUNTING RETURN1 (%)
27.6p 22.1p 10.2%
95p 882p 37%
91p 86p 34%
847p 31%
29% 29%
818p
790p
2017 2018 -32p -32p 2021
720p
2019 2020 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021
IFRS BASIC EARNINGS PER SHARE (P) EPRA NTA PER SHARE1, 3 (P) LOAN-TO-VALUE RATIO1 (%)
86p 882p 29%
OPERATIONAL HIGHLIGHTS
• Recovery in 2021/22 and strong student • Balance sheet positioned for growth
demand for 2022/23
• Committed to being a responsible
• Record development pipeline, funded and resilient business
through active capital recycling
• Best-in-class platform supporting
attractive financial returns
CONTENTS
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
01 Highlights 90 Chair’s introduction to 174 Independent auditor’s report
02 Our Annual Report at a glance Governance 184 Consolidated income statement
04 Being purpose-led 92 Board of Directors 184 Consolidated statement of
06 Why invest in Unite 96 Board statements comprehensive income
08 Our business model 99 Board leadership and purpose 185 Consolidated balance sheet
08 Who we are 106 Division of responsibilities 186 Company balance sheet
10 How we operate 109 Board activities 187 Consolidated statement of
12 The value we create 117 Nomination Committee changes in shareholders’ equity
15 Section 172 statement 120 Audit Committee 4 188 Company statement of changes
126 Sustainability Committee in shareholders’ equity
18 Chair’s statement
130 Health & Safety Committee 189 Statements of cash flows
20 Chief Executive’s review
134 Remuneration Committee 190 Notes to the financial
27 Market overview
statements
30 Our strategy 136 Directors’ Remuneration policy
32 Key performance indicators 153 Annual Report on Remuneration
OTHER INFORMATION
168 Directors’ Report View our 2021 Annual Report &
34 Sustainability report
249 Financial record Accounts online at: unite-group.co.uk/
50 TCFD 171 Statement of Directors’
250 Glossary investors/reports-and-presentations
56 Operations review Responsibilities
253 Company information
62 Property review
70 Financial review
74 Risk management Page references are shown throughout
76 Principal risks and uncertainties for links to important content
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.
02 THE UNITE GROUP PLC | Annual Report and Financial Statements 2021
OUR ANNUAL REPORT AT A GLANCE
OUR
PURPOSE
Read more
04 Our purpose,
Home for Success,
provides the right
environment for
students living with
us to engage, learn
and thrive.
WHY INVEST
IN UNITE
Read more
06
We are the UK’s largest owner,
manager and developer of purpose-
built student accommodation,
serving the UK’s world-leading
BUSINESS Higher Education sector.
MODEL
Read more
08
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.
STRATEGIC REPORT GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
03
CHIEF
EXECUTIVE’S
REVIEW We have seen positive recovery
in our performance in 2021 and
20
are positioned for growth. The
outlook for the business and
UK Higher Education sector
is strong, driven by rising
participation rates, demographic
Read more growth and increasing numbers
of international students.
We have a record development
pipeline and balance sheet
capacity to pursue new
growth opportunities.
SUSTAINABILITY
REPORT
We are a responsible
and sustainable business.
Our Sustainability
Strategy helps us prioritise
areas of focus and our Read more
34
stakeholder materiality
review, undertaken in
2020, continues to inform
our actions.
CORPORATE
GOVERNANCE
Read more
89 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.
04 THE UNITE GROUP PLC | Annual Report and Financial Statements 2021
BEING PURPOSE-LED
HOME FOR SUCCESS
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.
Strategic Objectives
Delivering for our Attractive A responsible
customers and returns for and resilient
universities shareholders business
Read more about our three strategic objectives on pages 30–31
Sustainability Strategy
Net zero Resource Health & Opportunities Raising
carbon efficient wellbeing for all standards
Read more about our Sustainability Strategy on pages 34–49
Brand Promises
Provide a space to Provide a place Be there when
grow and thrive to belong you need us
Values
Keeping Creating room Doing what’s Raising the
us safe for everyone right bar together
STRATEGIC REPORT GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
05
OUR PURPOSE IN ACTION DURING COVID-19
Student University Employee
Wellbeing Partnerships Inclusion
The Covid pandemic amplified We work closely with our We are committed to providing
the need to support students, University partners. During the opportunities for all our team
particularly those who were far pandemic this relationship was members, whatever their
away from home or were unable strengthened by the actions we background, gender or ethnicity.
to travel home due to distance or took to support students. With the Covid pandemic creating
personal circumstances. extra pressures for our teams, we
In addition, we regularly provide focused on keeping employees
We have invested in our city research and insight to the safe through the provision of PPE,
teams ensuring they are there higher education sector about providing regular operational
for students when needed. student trends and sentiment Covid-19 updates and providing
Our student support teams are which informs their thinking flexibility for those employees
available in all cities and, working and planning. Our Class of 2021 who needed to work from home.
together with our Resident research highlighted student Throughout the pandemic we
Ambassadors, provide a valuable concerns about the 2021/22 have engaged with our teams
support network for all students academic year. Concerns primarily through a range of tools and
living with us. related to being ready, leaving channels, surveyed how they are
the safety of sixth form and their feeling and provided forums by
• Over £100m in financial mental health whilst being away which to hear their feedback.
support to students during from home. In response to this,
Covid-19 pandemic we have enhanced our focus on • Weekly Covid updates
• All properties remained creating supportive communities to teams throughout
open and operational in our properties with people on the Covid pandemic
during Covid-19 providing hand to support.
• Recruitment of EDI &
support for students Wellbeing lead
• Over 60 partnerships
• Six dedicated student with Higher Education • Launch of new employee
support teams across institutions engagement forum,
the UK Culture Matters
• Over half of beds sold under
• Over 190 Resident nomination agreements • Employee engagement
Ambassadors recruited score of 75 (2020: 74)
• Four student and
in year
parent research reports
published during 2020/21
academic year
06 THE UNITE GROUP PLC | Annual Report and Financial Statements 2021
WHY INVEST IN UNITE
SUSTAINABLE GROWTH
Sector leader in UK student accommodation
with strong returns
STRUCTURALLY HIGH-QUALITY BEST-IN-CLASS
GROWING PORTFOLIO OPERATING
SECTOR PLATFORM
Demographic growth Aligned to the strongest Over 60 University partnerships
The UK’s 18-year-old population is set universities We are the partner of choice for a
to grow by 22% by 2030, supporting Our portfolio is increasingly large number of the UK’s leading
demand for an additional c.200k focused on the UK’s leading universities, reflecting our track
undergraduate places at current universities, where we see the record, focus on student welfare and
participation rates. strongest prospects for student our high-quality, affordable products
number growth, through our new and services.
Rising HE participation investment activity and disciplined
2021/22 saw a record share of capital recycling. Passionate frontline teams
18-year-olds accepting a place at Front-line service excellence
university, reflecting young people’s Investing to enhance our is monitored throughout the
recognition of the life experience that operational estate year through the Net Promoter
university provides. Multi-year asset management Score which drives greater
opportunity to create value customer advocacy.
Growing international demand by enhancing rents and
The UK Government is targeting reducing operational costs Sector-leading operating margins
further growth in International through investments in our We drive cost efficiencies through
student numbers with a particular customer proposition. our scale using our PRISM
focus on attracting more students technology platform. Management
from Africa, the Middle East and fees from joint ventures and
Asian countries outside of China. funds also cover c.67% of our
annual overheads.
18-YEAR-OLD PARTICIPATION % OF THE RENTAL PORTFOLIO BY SHARE OF BEDS LET UNDER
RATE IN 2021/22 VALUE IN RUSSELL GROUP CITIES NOMINATION AGREEMENTS
FOR 2021/22
38.3% 90% 51%
See pages 27–29 for more information See pages 62–69 for more information See pages 56–61 for more information
STRATEGIC REPORT GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
07
HIGH VISIBILITY SUBSTANTIAL LEADERSHIP IN
OVER RETURNS GROWTH SUSTAINABILITY
OPPORTUNITIES
Targeting attractive total Market share gains Net zero carbon
returns of 8.5–10% p.a. from HMO sector Becoming a net zero carbon for both
Achieved through recurring Almost one million students live our operations and developments
earnings, rental growth and in houses of multiple occupancy, by 2030.
development profits. providing a significant opportunity.
Unite Foundation
Development of 1,500–2,500 Providing support for estranged
Sustainable rental growth
beds per annum and care experienced students
of 3.0–3.5% p.a.
Investment focused on strongest throughout the course of
Underlying rental growth driven by
8–10 markets in the UK, with growing their studies.
student demand and contracted
opportunities in London and major
increases through multi-year
regional cities. Leapskills
university nomination agreements,
supported by asset management Helping young people prepare
New University partnerships for independent living.
initiatives.
Opportunities for new developments
on and off-campus as well as Improved index rating
6,000-bed development pipeline
partnerships for the transfer of Maintained a GRESB 4-star rating
Secured pipeline of £967 million,
their existing accommodation stock and improved score to 85.
which is expected to add 78p to NTA
to unlock operating efficiencies
and 10p to EPRA EPS on delivery.
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.
TOTAL ACCOUNTING RETURNS OVER FULL-TIME STUDENTS LIVING TARGET REDUCTION IN
THE PAST 10 YEARS IN UNIVERSITY-OWNED OPERATIONAL ENERGY
ACCOMMODATION OR HMOS CONSUMPTION BY 2030
13.5% pa 1.4 million 28%
See pages 70–73 for more information See pages 20–26 for more information See pages 34–55 for more information
08 THE UNITE GROUP PLC | Annual Report and Financial Statements 2021
BUSINESS MODEL
WHO WE ARE
We are the UK’s largest owner, manager
and developer of purpose-built student
accommodation
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.
Aberdeen
We are committed to raising standards in the
student accommodation sector for our customers,
investors and employees.
Edinburgh
Glasgow
2021 COMPLETED
CITY
7 Newcastle rank BEDS (21/22)
Durham
1 London 11,654
2 Liverpool 6,365
5 Leeds 3 Birmingham 5,919
Manchester
Liverpool 4 Manchester 5,620
4 6 Sheffield
2
5 Leeds 5,610
Nottingham
Loughborough 6 Sheffield 4,498
Birmingham 3 10 Leicester
7 Newcastle 3,763
Coventry Bedford 8 Bristol 3,753
Oxford
Cardiff London 9 Cardiff 3,481
Bristol Reading
9 1
8 10 Leicester 3,251
Bath
Medway Top 10 53,914
Southampton
Bournemouth Portsmouth Total 73,907
RANKED PROPERTIES BEDS UNIVERSITY PARTNERS
No. 1 172 74,000 > 60
The largest provider of Work alongside University
Operate in 25 cities and In properties across the UK
student accommodation partners to deliver their
towns across England,
in the UK accommodation needs
Scotland and Wales
STRATEGIC REPORT GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
09
OUR FOCUS
People, Earnings, Development
culture and occupancy and University
relationships and demand partnerships
We have 1,900 employees who are We have high visibility over The quality, location and scale of
committed to the delivery of our our earnings, provide sector our portfolio is a key component
purpose, Home for Success. Our leading margins and operate in our business model and long-
values underpin how they deliver in a structurally growing sector term strategy.
day-in, day-out and we encourage with demographic demand set
We have a development pipeline
open and honest conversations to grow by 22% by 2030.
and balance sheet capacity to
with our employees about how
Occupancy is driven by a mix provide new growth opportunities
we can improve our offering to
of nomination agreements through University partnerships and
students as well as ways to make
with University partners and targeted acquisitions
Unite Students a great place to
direct-let sales.
work. We are a Real Living Wage Our strategy is focused on optimising
employer and provide fair pay to Nomination agreements are our portfolio through capital
our employees. Our commitment contracts between universities and rotation by growing alignment to the
to training and developing provides private accommodation providers strongest universities and focusing
opportunities for progression for the provision of beds for new investment in London and
amongst our teams. students. These can range from prime regional cities.
one year to multi-year contracts up
Our actions are driven by insights We offer a flexible, collaborative
to 30 years providing a guaranteed
from our employees and students and mutually beneficial partnership
number of beds over a fixed period.
and this enables us to work approach to meet the needs of
Over half of these agreements are
collaboratively with our University universities and students delivering
multi-year deals benefiting from
partners across the range of topics accommodation which meets
annual fixed or inflation-linked
including sustainability, inclusion, university and student needs.
rental uplifts.
wellbeing and safety which form
part of student life at university. Our aim is to provide universities
In addition, we market directly
with a level of control over their
to students through our website
capital investment, ongoing costs
and agents enabling us to capture
and student experience.
market share from the houses
of multiple occupancy (HMO) We aim to be a strategic partner to
market, an area where we have the strongest universities to deliver
seen significant progress in the last solutions which work for them and
two years. support their growth ambitions.
NUMBER OF EMPLOYEES AVERAGE LENGTH OF DEVELOPMENT PIPELINE
1,900
NOMINATION AGREEMENTS ALIGNED TO UNIVERSITY
7 years
PARTNERSHIPS
83%10 THE UNITE GROUP PLC | Annual Report and Financial Statements 2021
BUSINESS MODEL continued
HOW WE OPERATE
UNRIVALLED BEST-IN-CLASS
INSIGHT OPERATING PLATFORM
We have a 30-year track record in the UK student We operate and manage 74,000 beds across 25
accommodation sector, having pioneered its early cities and towns in the UK. Our scale and PRISM
development and since created the largest portfolio operating platform allow us to deliver the best all-
in the sector. This knowledge is complemented by round customer experience for students, alongside
a range of data sources and forecasts, which drive sector-leading operating margins.
the evolution of our operating model and capital
Our teams are central to delivering our purpose of
allocation decisions.
providing a ‘Home for Success’ for students. Staff
The customer is at the heart of what we do and training is focused on student welfare with welfare
we invest significant time into understanding the leads in every city and peer support provided by
wants and needs of our customers through regular Resident Ambassadors.
research and insight. In addition, we actively engage
We are leaders in sustainability, health, safety and
with university leaders across the UK to ensure we
student welfare in the student accommodation sector.
can best support their growth ambitions.
Segmented Passionate
customer offer front-line teams
We see opportunities to tailor our As well as overseeing the day-to-day
customer offer to better address the needs running of our properties, our front-line
of different customers as they progress teams are committed to support students
through university and beyond. PBSA during their stay. This includes being
has typically been a first-year orientated available when questions arise, supporting
product and, as a result, the majority their overall welfare and in the case of
of non-first-year and UK postgraduate international students providing cultural
students currently opt to live in the orientation support. Our teams are a much-
HMO sector. valued connection between parents and
students which is key when students first
This presents a significant opportunity
move away from home.
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.STRATEGIC REPORT GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
11
PORTFOLIO UNIVERSITY PARTNER
ENHANCEMENT OF CHOICE
We seek to continuously enhance our portfolio We partner with universities to deliver their long-
through acquisition, asset management and term accommodation strategies. We are proud
disposals to ensure we have the best buildings, of our track record of aligning to the strongest
aligned to the strongest universities. universities. Our track record and commitment
to students has helped us increase the share of
This is complemented by our significant and
beds leased to universities over the long-term,
growing development pipeline focused on high-
increasing visibility over income.
quality, well-located new buildings in the strongest
university cities in the UK. Opportunities are Our Higher Education Engagement team
sourced and delivered by our experienced in-house work closely with universities to identify new
development team. Development activity is funded opportunities for University partnerships.
through capital recycling, debt facilities and equity
issuance for larger opportunities.
High-quality Visibility
pipeline of income
Our secured development pipeline totals We lease over half of our beds to
6,000 beds with a total development cost of universities through nomination
£967 million to be delivered in the period agreements which have an average
to 2026. 100% of the pipeline is aligned to length of seven years.
Russell Group university cities, where we
Over half of these agreements are multi-
see the strongest student demand.
year deals benefiting from annual fixed
We have significantly increased our London or inflation-linked rental uplifts. These
pipeline since our 2020 equity issue and multi-year agreements are expected to
development in London now accounts for see rental increases of around 4% for
78% by value of our secured pipeline. the 2022/23 academic year.12 THE UNITE GROUP PLC | Annual Report and Financial Statements 2021
BUSINESS MODEL continued
THE VALUE WE CREATE
STUDENTS OUR PEOPLE UNIVERSITIES
Key issues Key issues Key issues
• Value-for-money • Training and development • Student welfare
• Customer service • Equality, diversity and inclusion • Operational performance
• Welfare support • Health, safety and wellbeing • Health and safety
How we engaged How we engaged How we engaged
Our front-line property teams engage We provide a range of channels for Through our Higher Education
with students on a day-to-day basis, our teams to feedback. We hold Engagement team, we meet
supplemented by peer-to-peer regular ‘Unite Live’ sessions with regularly with leaders across
support provided by our Resident our CEO and key senior leaders to the UK university sector.
Ambassadors. We also engage with provide business updates with the We engage at various levels in
students using our MyUnite app and opportunity to ask questions. institutions for discussions ranging
social media channels. We conduct regular employee from strategic planning to day-to-day
This is complemented by our engagement surveys with findings operational requirements.
customer research programme shared with our teams to help jointly In addition, we engage actively in
which includes surveys on specific develop action plans the wider higher education sector,
issues, including student views on We also launched our new employee presenting at conferences and
climate change. engagement forum, Culture Matters, contributing to higher education
Value creation in 2021 during the year attended by Non- research.
• Provided 50% rental discounts for Executive Director, Ilaria del Beato. Value creation in 2021
10 weeks between Jan–Mar 2021 Value creation in 2021 • Provided 37,359 beds to
• Offered complimentary four-week • Flexible working policy universities for the 2021/22
tenancy extensions for eligible implemented academic year
students in summer 2021 • Safety enhancements for property • Progressed University partnership
• Increased peer-to-peer support teams including solo protect and developments with University of
for students through our Resident bodycam cameras Bristol and King’s College London
Ambassador programme • EDI training programme provided • Secured two new development
• Helped to provide accommodation to senior leaders sites in London, providing
new affordable housing under
scholarships to 166 students • Investment in the Learning and
nomination agreements
through the Unite Foundation Development team and resources
Priorities for 2022 to support our teams • Enhanced student welfare
We continue to evolve our product Priorities for 2022 services, including support for
offering to reflect the range of students shielding or self-isolating
Our focus is to provide our during Covid-19
customers living with us, as has employees with a great place to work.
been shown through our customer Our EDI strategy will be launched Priorities for 2022
segmentation work undertaken this year and a new training academy We continue to explore opportunities
during 2021. providing support will be operational for new University partnerships,
We continue to engage with students during 2022. where we can work with universities
on a range of issues which impact to unlock operational efficiencies
on their living habits and, during alongside new accommodation.
2022, will be developing proposals to We are also set to deliver 1,351
address student concerns relating to beds in new accommodation for
climate change which we know from the 2022/23 academic year.
our student survey in 2021, is an
important issue for them.STRATEGIC REPORT GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
13
See our s172 statement on page 15
COMMUNITIES SUPPLIERS INVESTORS
Key issues Key issues Key issues
• Trust and transparency • Risk management • Financial performance
• Land use • Human rights • Strategic direction
• Local investment and job creation • Responsible supply chain • Sustainability and risk management
How we engaged How we engaged How we engaged
Our operational teams are active With support from an independent We engaged regularly with investors
in their communities through procurement consultancy, we around our financial results as well as
our Company-wide volunteering undertook a thorough review of our through ad hoc events. In addition,
programme. supplier relationships during 2021. we hosted a Capital Markets Day in
We are relaunching our Positive We continued to ensure our buildings Manchester to update analysts and
Impact programme in 2022, which meet existing and emerging safety investors on our Group strategy.
includes awards for projects regulations, including planned work Value creation in 2021
undertaken by employees aimed for the remediation of cladding • Delivered increased occupancy
at delivering measurable benefits where required. of 94% and 2.3% rental growth
in their local communities. Value creation in 2021
• 15% growth in adjusted EPS
We also engage actively with local • Spent £130 million with suppliers
stakeholders for our development across development activity,
• Total accounting return of 10.2%
projects to ensure the design cladding remediation and • Receipt of £53 million LSAV
of our buildings, public spaces refurbishments performance fee
and community facilities meets
their needs. • Entered into build contracts for • Dividend payout ratio increased
our development at Derby Road, to 80%
Value creation in 2021
Nottingham
• Employment for 1,500 people in • Added c.2,000 new beds to the
local communities
• Supported new renewable secured development pipeline
power generation through our
Priorities for 2022
• Committed to build c.2,000 beds first corporate PPA for a Scottish
of new student accommodation wind farm We are focused on a return to
in our communities full occupancy and 3.0–3.5% p.a.
Priorities for 2022 rental growth from 2022/23, as
• Invested £3 million in initiatives to Having conducted a review of our well as delivery of our secured
reduce our environmental impact strategic suppliers during 2021, development pipeline.
• 296 hours of employee we will continue to formalise our Investors are also keen to
volunteering in the year approach with our next tier of understand our long-term
suppliers and introduce a new approach to sustainability,
Priorities for 2022
Code of Conduct. and in particular our strategy
In 2022, we are developing a
to address climate-related risks.
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.14 THE UNITE GROUP PLC | Annual Report and Financial Statements 2021
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/creatingvalueSTRATEGIC REPORT GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
15
SECTION 172
Statement by the Directors in accordance with
Section 172(1) of the Companies Act 2006
Meeting the needs and expectations Through measurement against In 2021, we held a Capital Markets Day
of our stakeholders is fundamental long-term objectives, the Board in Manchester where we shared our
to delivery of our purpose, Home monitors how management is acting strategy and approach to longer term
for Success. Acting in the long-term in accordance with the Board’s agreed sustainability, alongside tours of our
interests of the business and all our strategy and the long-term interests of operations in the city with our local
stakeholders, including students, our our key stakeholders. teams. Reflecting requests from investors
people, universities, the communities for greater transparency around the
we operate in, our suppliers and our Our investors costs of environmental initiatives, the
investors, is central to the Board’s presentation provided new disclosure
The Board recognises that acting fairly
decision-making process and shapes around planned investments and EPC
in the interests of all shareholders
the Group’s strategy. Our Board also ratings across the portfolio.
increases investor confidence, reduces
considers the impact of the Company’s
our cost of capital and ensures good
operations on the environment and the Through engagement with investors
governance. This also supports the
risks posed by climate change. and conscious of our values, in
ability of the business to invest and
particular ‘Doing what’s right’, the
grow through access to capital when it is
In all decision making, the potential Board oversaw the renewal of the
required. We provide all investors with
impact on our stakeholders is taken Group’s revolving credit facility which
equal access to information through
into account, together with the likely was converted into a sustainable loan
our public reporting for financial results
consequences of these decisions in the agreement with KPIs linked to our
and trading statements, as well as
long term and also the desirability of environmental and social initiatives.
additional disclosures in areas such as
the Company maintaining a reputation
sustainability through our corporate
for high standards of business conduct The interests of our employees
website. In addition, we engage
(see principal decision making as
regularly with investors at conferences As a service business, providing homes
further detailed on pages 110–114 and
and ad hoc meetings, which address for 74,000 young people, often their
stakeholder engagement on pages
investor groups from a range of markets first time living away from home, the
12–13). These considerations are central
and of differing sizes. Board recognises the importance of our
to delivering our Home for Success
employees and the role they play in our
purpose, which include, for example,
In 2021, the Remuneration Committee business. Engaging with our people has
when we offered rental discounts
conducted a consultation with the been especially important through the
to students (as further detailed on
Company’s twenty largest shareholders pandemic. During 2021, we established
page 21) and the development of our
regarding the renewal of the our new employee engagement forum,
Net Zero Carbon Pathway (as further
Remuneration Policy, which will be Culture Matters, providing a quarterly
detailed on page 26).
presented to shareholders for approval forum where employee feedback and
at the 2022 AGM. The outcome of engagement can be tabled formally. Our
The Board maintains oversight of the
shareholder feedback confirmed Non-Executive Director for Workforce
Company’s performance, and reserves
that the current Remuneration Engagement, Ilaria del Beato, attends the
specific matters for approval, including
Policy in respect of salaries, pension Culture Matters meetings and provides
significant new strategic initiatives
contributions and performance-linked regular updates to the Board, ensuring
and major decisions relating to capital
short and long-term incentives remains consideration is given to employee
raising and allocation.
appropriate and fit-for-purpose, with needs and concerns. The Board also
To help the Board understand our suggested minor refinements to include understands employees’ views through
wider stakeholder relationships and a simplified annual bonus deferral our regular employee surveys as well as
inform the Board’s decision-making, approach. We proposed changing the ‘Unite Live’ sessions with our CEO and
the Board receives regular updates financial metrics of the annual bonus senior leaders enabling employees to
from the Executive team, as well as the from 70% to 60% allowing for an ask questions directly of the CEO and
wider senior leadership team including increase in non-financial ESG metrics leadership team. Our commitment to
the Group People Director, the Group from 30% to 40% however following employee engagement can be seen by
Investment & Sustainability Director, shareholder feedback, the current our employee engagement score of 75
the Group Energy & Environmental 70/30 split of financial and non-financial (2020: 74).
Manager, the Higher Education metrics will remain. Further information
Director, Head of Fund Management on the Remuneration Policy can be
and the Group Legal Director and found in the Remuneration Committee
Company Secretary. Chair’s Introduction to the Director
Remuneration Policy on page 136. Further information on employee engagement
can be found on pages 99–10216 THE UNITE GROUP PLC | Annual Report and Financial Statements 2021
SECTION 172 continued
The need to foster business Our Higher Education Engagement public spaces and community facilities
relationships with our customers, Team meets regularly with university also meets their needs. Our high-
University partners and suppliers leaders and teams at various levels quality properties provide additional
Customers enabling us to discuss this strategic economic benefit for local businesses
planning as well as day-to-day and development activity helps
Our purpose, Home for Success, is to
operational requirements. This regenerate local areas, deliver public
provide a safe and welcoming home for
feedback is shared with our Board realm improvements and create new
students to engage, learn and thrive
who in turn consider our strategies for community spaces. Our operational
at university, while preparing them
delivering value to universities. Our and property teams actively engage
for life beyond. Our student survey
annual Higher Education Engagement with communities through public
programme provided an opportunity
survey provides the Board with services, local authorities and local
for students to provide direct and frank
key insight into our reputation and businesses. Our Positive Impact
feedback which enabled us to listen
performance with our university programme encourages our teams to
to the student voice to understand
partners as further detailed as part of work with local stakeholders.
what is important to them during their
our Higher Education Trust operational
time living with us and also on wider The environment
KPI on page 33. This helps inform
topics. During 2021, climate change
the way we improve our product and As a responsible business, our wider
was reported as a top priority for our
service. The Board is also regularly stakeholders demand we proactively
customers and accordingly we plan
updated on trends in the Higher manage environmental, social and
to increase engagement with them
Education sector in the UK and globally, governance risks. Moreover, we
on how they can develop sustainable
which inform the Group’s strategy understand the significant contribution
living habits.
around the universities with which it that property makes to global CO2
seeks to partner over the long-term. emissions and how essential it is that
The Board reviews the Net Promoter
Score from our student surveys. This we play our part in the fight against
Suppliers climate change while keeping in mind
helps the Board decide where to invest
in customer service and property We work with a wide range of suppliers the likely consequence of our decisions
enhancements to ensure we deliver across our operations and development in the long-term.
value-for-money for our customers. activities to deliver a high-quality,
affordable customer offer. The Board has oversight of our
Our city teams engage with our environmental impact through review
student customers on a day-to-day Our teams maintained strong of our Sustainability Strategy, which
basis, covering welfare issues which relationships with suppliers and was approved by the Board in 2020
have increased during Covid-19. This throughout Covid-19. This was and launched externally in 2021. This
is complemented by our Resident especially important during Covid-19 new strategy specifies clear targets to
Ambassadors, who provide peer-to- when we initially paused development reduce our environmental impact over
peer support to students, and organise activity at Middlesex Street, London time. In addition, our Net Zero Carbon
activities in our properties to help and Campbell House, Bristol, and Pathway, published in December 2021,
foster like-minded communities. subsequently resumed activity in details our approach to reach net zero
early 2021. The Board recognises the carbon across our operations and
University partners importance of supplier relationships developments by 2030. Engagement
and were provided with regular around environmental impact comes
Universities are key strategic
updates throughout the year which indirectly through feedback from
stakeholders, directly accounting for
included feedback following a investors, students, universities and
around half of our reservations each
thorough review of our supplier local communities, all of which is
year under nomination agreements and
relationships and interviews with considered by the Board. During the
the other half indirectly through their
our twenty-five strategic suppliers. year, the Sustainability Committee
students who book directly with us. The
considered the Group’s approach to
reputation, health and future growth of
Our impact on the community climate disclosures under Task Force
our University partners remains central
and the environment on Climate-related Financial Disclosure
to our business prospects.
(TCFD), providing feedback which
Community
Partnering with the strongest has shaped the enhanced reporting
Home for Success is about creating a included in this Annual Report.
universities helps us provide a range
sense of belonging and community
of different approaches delivering
both in our properties and beyond.
solutions which work for our partners
To maximise the value we create for
and support their growth ambitions.
communities and ensure our ability to
Through this partnering, we can explore
continue to operate and grow within
opportunities for new University Further information on our Sustainability Strategy
them, we seek to build trusted, long-
partnerships, where we can unlock can be found on pages 34–55
term relationships with community
operational efficiencies, alongside new
partners. This can be seen in our
accommodation options. This in turn
development activity where we actively
helps support our improved day-to-day
engage with local communities to
operations and our longer-term growth.
ensure the design of our buildings,STRATEGIC REPORT GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
17
STAKEHOLDER STAKEHOLDER CONCERN OUR RESPONSE
Investors Our investors wanted to understand Our 2021 Capital Markets Day set out the Group’s strategy to deliver on
our business, its resilience its purpose, ‘Home for Success’. The event focused on enhancing the
through Covid-19 and longer term student experience and discussed planned investments in the portfolio to
sustainability, as well as be kept drive rental growth. It also explored the ways in which we are improving
up-to-date with events impacting our environmental and social impact and how we plan to deliver financial
financial returns. 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 We obtained a BSC Covid Secure status to ensure health and safety in our
about the impact of Covid-19 on operations through the pandemic.
their health and wellbeing in their
We are trialling a new Hybrid Flexible Working Policy and expanded the
workplace, its impact on our day-
training and resources we provide to our people around health, safety and
to-day business operations and
wellbeing as well as enhancing mental health provision.
the resilience of our longer term
business. In 2021, we hired a Diversity, Inclusion & Wellbeing lead who is
developing our EDI & Wellbeing strategy and helping us embed equality,
Our employees were concerned
diversity, inclusion and wellbeing into our culture through a learning and
about equality, diversity and
development programme.
inclusivity (EDI).
Customers Our customers wanted action on Throughout the year, we engaged with students on a range of issues which
climate change. 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 We increased peer-to-peer support for students through our new Resident
support. 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- We improved our hassle-free, value-for-money offer to attract customers
for-money. 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 Our University partners wanted We maintained regular contact with our university partners updating
partners clarity on the Covid-19 measures in them on the latest Covid-19 measures and working with them to support
place across our properties. students throughout the year. Our properties remained open and
operational throughout the pandemic.
Our University partners wanted
to be supported in their growth We regularly engaged with university teams to offer a range of different
ambitions. 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 To help ensure we have longer term and valuable supplier relationships,
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 Our local communities wanted Throughout 2021 and through our development activity, we employ over
and the to ensure they benefit from our 1,500 roles in local communities. In addition, we invested £3 million in
environment presence in their communities. initiatives to reduce our environmental impact and over 296 hours of
employee volunteering was carried out in the year.
We continue to be aware of the
growing importance on climate A structured community engagement strategy is being developed to
change and environmental, social ensure greater ongoing engagement from the development stage through
and governance issues for all of our to operations.
stakeholders.
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.18 THE UNITE GROUP PLC | Annual Report and Financial Statements 2021
CHAIR’S STATEMENT
A ROBUST PERFORMANCE
We continued to do what’s right for all
stakeholders, in line with our values
“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).STRATEGIC REPORT GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
19
14.4% 3.4% 3.4% 71.3% 71.7%
13.2% 3.2% 67.9%
11.7% 62.1% 62.3%
10.2% 2.3%
2017 2018 2019 -3.4% 2021
2017 2018 2019 -0.6% 2021
2020 2020 2017 2018 2019 2020 2021
TOTAL ACCOUNTING RETURN1 RENTAL GROWTH1 ADJUSTED EBIT MARGIN1
10.2% 2.3% 62.3%
Investor demand for the student This activity will support sustainable I would like to thank Phil for his
accommodation sector remains strong rental growth through our value-for- leadership over many years and his
which, together with rental growth, money offer and margin improvements contribution to the growth of Unite and
supported a 4.6% revaluation uplift in over time. Our secured development making Unite the business it is today.
the property portfolio during the year. pipeline also offers significant visibility I have a strong empathy for Unite’s
This contributed to 8% growth in our over future growth in earnings and ‘Home for Success’ purpose and have
EPRA NTA to 882p (31 December 2020: net assets. been hugely impressed by the talent and
818p) and a return to an IFRS profit commitment of our teams since joining
before tax of £343.1 million (2020: loss A responsible and resilient business the business.
of £120.1 million), equating to IFRS EPS
We are committed to creating a
of 85.9p (2020: loss of 31.8p). We have a strong Board with a mix of
responsible and resilient business, which
complementary skills as well as diversity
delivers for all of our stakeholders over
The balance sheet remains in robust of knowledge, background and gender.
the long term. This commitment has
health with LTV reduced to 29% following As a team, we bring a range of expertise
shaped our response to the pandemic,
£261 million of disposals in the year and from the higher education, real estate,
during which we have acted to protect
receipt of a £53 million performance finance and hospitality sectors. During
the interests of students, our university
fee from our LSAV joint venture. This the year, Richard Akers stepped down
partners, employees and investors.
provides the financial capacity to deliver from the Board in view of his other
We have placed significant focus on
our secured development pipeline and business commitments. Richard was
the health, safety and wellbeing of our
pursue new growth opportunities. a very valuable member of the Unite
customers and our people by reducing
Board with his wealth of experience
Reflecting the improving trading risks in our buildings as far as possible
of the wider property market and his
outlook and the Board’s confidence and supporting those needing to self-
sound judgement. On behalf of the
in the Group’s future outlook, the isolate. Recognising the disruption caused
Board, we wish Richard well.
proposed dividend for the year has to students during the national lockdown
been increased by 73% to 22.1p. in early 2021, we offered additional rental Based on our year end Board
discounts to students unable to use their composition, we meet the Hampton
accommodation. We have now provided Alexander gender target with 33% of
Delivery of our strategy
over £100 million in financial support to the Board being female and will look
Unite is the largest operator of students during the pandemic. The Board to further broaden the diversity of our
purpose-built student accommodation believes this response has strengthened Board in the coming years.
in the UK with 74,000 beds across 25 our reputation with students, parents,
leading university towns and cities and universities and Government.
celebrated its 30th anniversary this Looking forward
year. The business growth to date has Our new Sustainability Strategy, launched There is growing demand for UK
been built on the solid foundations in early 2021, includes stretching Higher Education and an unmet need
of a best-in-class operating platform, new targets for how we will reduce for the high-quality, value-for-money
high-quality portfolio, trusted university our environmental impact, improve accommodation that we provide. These
relationships and in-house development opportunities for employees and raise drivers support strong organic growth,
capability. Our aim is to further develop standards across the student housing underpin demand for our secured
this platform to create a sector-leading sector. We published our Net Zero developments and create opportunities
business, which delivers value for Carbon Pathway at the end of 2021, which for new growth through development,
its customers, attractive returns for sets out the activities and investments strategic partnerships with universities
shareholders and has a positive impact required by the business to meet our and potentially expansion into other
on the environment and wider society. 2030 net zero ambition. Delivery and complementary living sectors to our
development of this strategy is being operating platform and customer focus.
As outlined at our Capital Markets Day overseen by our new Sustainability As a result, I look forward with great
in October 2021, our stakeholders have Committee, formed during 2021. confidence to the Group delivering
rising expectations around our product, attractive and growing returns to
service and wider business impact on the shareholders over the coming years.
Board changes
environment and society. In response,
our strategy is focused on delivering an This is my first year as Chair, following
Richard Huntingford
enhanced experience for our customers, Phil White stepping down from the Board
with effect from 31 March 2021. Chair
supported by investments in technology 23 February 2022
and our estate and a more segmented
customer offer over time.
1. See glossary for definitions and note 8 for alternative performance measure calculations and reconciliations.20 THE UNITE GROUP PLC | Annual Report and Financial Statements 2021
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 employeesSTRATEGIC REPORT GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
21
37.1p 95p 29.0p
34.1p 91p 86p
30.3p 22.7p 22.1p
27.6p
24.0p
12.75p
10.25p
2017 2018 -32p -32p 2021
2017 2018 2019 2020 2021 2019 2020 2017 2018 2019 2020 2021
ADJUSTED EARNINGS PER SHARE1, 2 (P) IFRS BASIC EARNINGS PER SHARE (P) DIVIDEND PER SHARE (P)
27.6p 86p 22.1p
to ensure their health, safety and gains, disposal proceeds and receipt financial support offered in the Higher
wellbeing. We believe these actions of our LSAV performance fee. This Education sector and reflects our
have enhanced our reputation with provides the financial headroom to commitment to show leadership in
students, parents, universities and deliver our secured development the sector as well as encouraging others
Government and will create further pipeline and pursue new growth to act accordingly.
opportunities in the future. opportunities. Our key financial
performance indicators are set out All our properties remained, and
Return to growth in the table below. continue to remain, open and
operational, employing a range of
The business delivered a strong
Continued support for students measures to reduce transmission of
recovery in financial performance in
and universities Covid-19 where possible. With the
2021 with adjusted earnings of £110.1
removal of the remaining restrictions
million and adjusted EPS of 27.6p, Since the outbreak of Covid-19, we
during the fourth quarter of 2022,
up 15% year-on-year. This reflects have strived to play our part and
students will be able to enjoy the full
an increase in occupancy to 94% for do the right thing for our students
experience of university life.
the 2021/22 academic year (2020/21: and University partners in a fair and
88%) and a lower impact from rental proportionate way. In response to
Positive outlook for 2022/23
discounts when compared to 2020. The the national lockdown announced in
profit before tax of £343.1 million also January 2021, students not living in We see strong demand for
reflects the valuation growth of our their accommodation were able to accommodation this autumn, with
property portfolio during the year. We apply for a ten-week rental discount UCAS applications up 7% on pre-
have announced a dividend of 22.1 p and four-week complimentary pandemic levels. Reservations for the
for the full year, which represents a tenancy extension. 2022/23 academic year are encouraging
payout ratio of 80% of adjusted EPS, at 67%, which is ahead of the prior year
underlining our confidence in future We have now provided over £100 level of 60%. This is underpinned by the
business performance. Total accounting million in financial support to students 50% of beds secured under nomination
returns for the year improved to 10.2%, during the Covid-19 pandemic through agreements for an average term of
reflecting an 8% increase in EPRA NTA a combination of rent waivers and seven years. We expect bookings under
to 882p. Our LTV ratio reduced to 29% flexibility offered to students. We nomination agreements to grow as a
during the year through revaluation believe this is the largest package of percentage of bookings by the end of
the current annual sales cycle and to
increase to 55% of total beds over the
Financial highlights1 2021 2020
next two academic years. This reflects
the opportunity to deepen relationships
Adjusted earnings £110.1m £91.6m with our existing University partners.
Adjusted EPS 27.6p 24.0p
We have recently secured new multi-
IFRS profit/(loss) before tax £343.1m £(120.1)m
year agreements to let 1,000 beds to
IFRS basic EPS 85.9p (31.8)p two Russell Group universities from
Dividend per share 22.1p 12.75p the 2022/23 academic year. We expect
Adjusted EPS yield 3.4% 2.8% strong student demand for 2022/23
from both domestic and international
Total accounting return 10.2% (3.4)%
students. We have maintained our
focus on retaining existing direct-
EPRA NTA per share 882p 818p let customers, which has led to an
IFRS net assets per share 880p 809p increased share of sales to re-bookers.
Loan to value 29% 34% The attractiveness of PBSA over HMO is
being clearly proven.
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 This supports our anticipated return
is set out in note 8 of the financial statements. to 97% occupancy and 3.0–3.5% rental
growth for the 2022/23 academic year.
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.You can also read
