41061 Unite AR22 HI-RES WEB-READY - Flipbook - Page 208
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THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
NOTES TO THE FINANCIAL STATEMENTS continued
Section 3: Asset management continued
3.1 Wholly owned property assets 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:
Fair value at
31 December
2022
£m
+5%
change in
estimated
net rental
income
£m
London
1,212.8
1,272.9
1,152.7
1,138.9
1,297.1
Prime regional
1,105.6
1,160.5
1,051.2
1,049.4
1,168.9
Major regional
1,130.0
1,186.6
1,073.7
1,081.7
1,183.1
103.9
109.2
98.7
100.9
107.2
Class of assets
-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
Provincial
Development properties
London
91.9
95.9
86.6
85.6
97.6
Prime regional
32.4
38.5
35.1
35.0
38.8
Major regional
64.1
67.2
61.0
61.0
67.3
71.1
76.0
68.8
68.1
77.3
Build-to-rent
London
Prime regional
14.3
15.1
13.7
13.6
15.4
Market value
3,826.1
4,021.9
3,641.5
3,634.2
4,052.7
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.
Interests in land
2022
£m
2021
£m
11.4
10.8
Other stocks
1.4
1.3
Inventories
12.8
12.1
At 31 December 2022, the Group had interests in two pieces of land (2021: two pieces of land).
