41061 Unite AR22 HI-RES WEB-READY - Flipbook - Page 220
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THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
NOTES TO THE FINANCIAL STATEMENTS continued
Section 4: Funding continued
4.5 Financial risk factors continued
Hedged items
Nominal amount
Variable rate borrowings
*
Hedging reserve –
continuing
Change in value
Hedging reserve –
discontinued*
2022
£m
2021
£m
2022
£m
2021
£m
2022
£m
2021
£m
2022
£m
2021
£m
–
–
–
(16.2)
–
–
–
1.6
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.
The following table details the effectiveness of the hedging relationship and the amounts reclassified from hedging
reserve to profit or loss:
Hedge
Changes in OCI ineffectiveness
2022
£m
Variable rate
borrowings
–
2021
£m
16.2
2022
£m
–
2021
£m
Line item in
P&L
–
Mark to market
movements on
interest rate
swaps
Reclassified
to P&L –
discontinued
Reclassified
to P&L –
continuing
2022
£m
2022
£m
–
2021
£m
(1.1)
–
2021
£m
Line item in
P&L
–
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 (2021:
SONIA). The Group will settle the difference between the fixed and floating interest rate on a net basis.
At the end of the current year and the previous year, the Group had no cash flow hedges in hedge relationships.
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 2022. 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 2022 would increase by £1.4 million (2021: £4.0 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.
