41061 Unite AR22 HI-RES WEB-READY - Flipbook - Page 187
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
OTHER INFORMATION
NOTES TO THE FINANCIAL STATEMENTS
Section 1: Basis of preparation
This section lays out the Group’s accounting policies that relate to the financial statements as a whole.
Where an accounting policy is specific to a particular note to the financial statements, the policy is
described in the note to which it relates and has been clearly identified in a box.
Basis of consolidation
The financial statements consolidate those of Unite Group PLC (the “Company”) and its subsidiaries (together referred to
as the “Group”) and include the Group’s interests in jointly controlled entities. The parent company financial statements
present information about the Company as a separate entity and not as a group.
Subsidiaries are those entities controlled by the Company. Control exists when the Company has an existing right that
gives it the current ability to direct the relevant activities of the subsidiary, has exposure or right to variable returns from
its involvement in the subsidiary and has the ability to use its power to affect its returns. The financial statements of
subsidiaries are included in the consolidated financial statements from the date that control commences until the date
that control ceases.
Intra-group balances and transactions, and any unrealised gains and losses arising from intra-group transactions, such as
property disposals and management fees, are eliminated in preparing the consolidated financial statements. Unrealised
gains arising from transactions with joint ventures are eliminated to the extent of the Group’s retained interest in the
entity. Unrealised losses are eliminated in the same way as unrealised gains except where the loss provides evidence of a
reduction in the net realisable value of current assets or an impairment in the value of non-current assets.
Non-controlling interests are shown as a line item within equity and comprise the non-controlling interests in subsidiaries
which are not directly or indirectly attributable to the Group. Non-controlling interests are assigned to one subsidiary as
at both 31 December 2022 and 2021 (see note 3.4).
The parent company financial statements have been prepared in accordance with Financial Reporting Standard 101
– Reduced disclosure framework (FRS 101), and the Group financial statements have been prepared in accordance
with International Financial Reporting Standards as adopted by the United Kingdom (Adopted IFRS), in conformity
with the Companies Act 2006, and approved by the Directors. On publishing the parent company financial statements
here together with the Group financial statements, the Company is taking advantage of the exemption in s408 of the
Companies Act 2006 not to present its individual income statement and related notes. The Company is also taking
advantage of the FRS 101 disclosure exemptions from requirements of IFRS 7, IFRS 13 and IAS 1 including presenting a
Company statement of cash flows.
The accounting policies have been applied consistently to all periods presented in these consolidated financial statements.
The Company is a public company limited by shares and is registered in England, United Kingdom, where it is also domiciled.
Measurement convention
The financial statements are prepared on the historical cost basis except for investment property (owned), investment
property (leased), investment property (under development), investments in subsidiaries and interest rate swaps all of
which are stated at their fair value.
Going concern
In determining the appropriate basis of preparation of the financial statements, the Directors are required to consider
whether the Group can continue in operational existence for the foreseeable future.
The Directors have considered a range of scenarios for future performance through the 2022/23 and 2023/24 academic
years. The impact of our ESG asset transition plans are included within the cash flows which have been modelled. The
assessment includes a base case assuming cash collection and performance for the 2022/23 academic year remains in line
with current expectations and sales performance for the 2023/24 academic year consistent with published guidance; and
a reasonable worst case scenario where income for the 2023/24 academic year is impacted by reduced sales, equivalent
to occupancy of around 90%. Under each of these scenarios, the Directors are satisfied that the Group has sufficient
liquidity and will maintain covenant compliance over the next 12 months. To further support the Directors’ going concern
assessment, a “Reverse Stress Test” was performed to determine the level of performance at which adopting the going
concern basis of preparation may not be appropriate. This involved assessing the minimum amount of income required
to ensure financial covenants would not be breached. Within the tightest covenant, occupancy could fall to approximately
70% before there would be a breach. The Group has capacity for property valuations to fall by 35% before there would be
a breach of the tightest LTV and gearing covenants. Were income or asset values to fall beyond these levels, the Group has
certain cure rights, such that an immediate default could be avoided.
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