41061 Unite AR22 HI-RES WEB-READY - Flipbook - Page 172
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THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
INDEPENDENT AUDITOR’S REPORT continued
To the members of Unite Group PLC
3. Summary of our audit approach
Key audit matters
The key audit matters that we identified in the current year were:
•
Investment property and development property valuation; and
•
Accounting for Joint Ventures.
Within this report, key audit matters are identified as follows:
Newly identified
Increased level of risk
Similar level of risk
Decreased level of risk
Materiality
The materiality that we used for the Group financial statements was £38.0m which was
determined on the basis of net assets. However, we use a lower materiality threshold of
£8.1m for balances which impact EPRA earnings.
Scoping
Our Group audit scope comprises the audit of Unite Group Plc as well as the Group’s joint
ventures: The Unite UK Student Accommodation Fund (USAF) and The London Student
Accommodation Vehicle (LSAV). All audit work was completed by the Group audit team.
Significant changes in
our approach
There were no significant changes to our approach from the prior year.
4. Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate.
Our evaluation of the Directors’ assessment of the Group’s and Parent Company’s ability to continue to adopt the going
concern basis of accounting included:
•
Obtaining an understanding of the relevant controls over the going concern process, including management’s process
to formulate the cashflow forecasts as well as the Board approval process;
•
Understanding the financing facilities available to the Group and Parent Company, including the associated covenants;
•
Assessing the outcome of the reverse stress testing performed by management;
•
Challenging the revenue assumptions, for the outturn of the 2022/23 academic year and the assumptions for the
2023/24 academic year. For the 2023/24 academic year specifically, we assessed the Group’s current forward sales
bookings and UCAS application data to forecast occupancy assumptions for reasonableness;
•
Challenging the cost assumptions within the forecasts, including consideration of previously incurred costs, the impact
of cost inflation, and assumptions made relating to expected future costs associated with climate change legislation;
•
Challenging the likelihood of downside scenarios arising relative to reverse stress tests with reference to the income
and cost assumptions. This included reference to the occupancy rates achieved during the previous academic years
which were negatively impacted by lockdown requirements and restrictions in university in-person teaching;
•
Determining the sufficiency of the Group’s liquidity and headroom positions with reference to borrowing facility
agreements, including the consideration of the availability of undrawn down facilities as well as facilities due to expire
within the going concern period of assessment;
•
Testing the arithmetical accuracy of the models used to prepare the Group’s forecast and related scenarios; and
•
Assessing the appropriateness of the Group’s disclosure concerning the going concern basis of preparation.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt on the Group’s and Parent Company’s ability to continue as a
going concern for a period of at least twelve months from when the financial statements are authorised for issue.
In relation to the reporting on how the Group has applied the UK Corporate Governance Code, we have nothing material
to add or draw attention to in relation to the Directors’ statement in the financial statements about whether the Directors
considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant
sections of this report.
