41061 Unite AR22 HI-RES WEB-READY - Flipbook - Page 228
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THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
NOTES TO THE FINANCIAL STATEMENTS continued
Section 5: Working capital continued
5.1 Cash and cash equivalents continued
Cash flows consist of the following segmental cash inflows/(outflows): operations £134.1 million (2021: £108.1 million),
property £29.6 million (2021: (£324.8 million)) and unallocated (£235.1 million) (2021: (£12.2 million)).
The unallocated amount includes a net cash outflow of dividends paid of £96.4 million (2021: £64.8 million), an outflow
of £141.0 million due to the acquisition of units in USAF (2021: £nil) and £2.3 million of inflows from other items.
Dividends received by the Company from its subsidiary undertakings totalling £130.0 million (2021: £125.0 million) are
non-cash distributions of reserves.
5.2 Trade and other receivables
Accounting policies
On the basis that trade receivables meet the business model and cash flow characteristics tests, they are initially
recognised at transaction price and then subsequently measured at amortised cost.
The Group applies the IFRS 9 simplified model of recognising lifetime expected credit losses for all trade receivables
as these items do not have a significant financing component.
In measuring the expected credit losses, the trade receivables have been assessed on a collective basis as they possess
shared credit risk characteristics. They have been grouped based on the days past due and also according to whether
the tenant is a commercial organisation (including universities) or an individual student.
The expected loss rates are based on the payment profile for sales by academic year as well as the corresponding
historical credit losses during the period. The historical rates are adjusted to reflect any current and forward-looking
macroeconomic factors affecting the customer’s ability to settle the amount outstanding, however given the short
period exposed to credit risk, the impact of macroeconomic factors has not been considered significant within the
reporting period.
Trade receivables are written off (i.e. derecognised) when there is no reasonable expectation of recovery. Failure to
make payments within a reasonable period from the invoice date and failure to engage with the Group on alternative
payment arrangements, amongst others are considered indicators of no reasonable expectation of recovery.
Other financial asset balances are assessed for expected credit losses based on the underlying nature of the asset,
including maturity and age of the asset such as whether a longer term asset or a short term working capital balance
is subject to regular settlement arrangements, using the 12 month ECL model. No credit losses have been recognised
in respect of these balances.
Financial assets written off may still be subject to enforcement activities under the Group’s recovery procedures,
taking into account legal advice where appropriate. Any recoveries made are recognised in profit or loss.
The Company’s impairment policies in relation to financial assets are consistent with those of the Group, with
additional consideration given to loans to Group undertakings. In this respect, the Company recognises lifetime ECL
when there has been a significant increase in credit risk (such as changes to credit ratings) since initial recognition.
However, if the credit risk on the loans have not increased significantly since initial recognition, the Company measures
the loss allowance for that financial instrument at an amount equal to 12-month ECL.
The Company expects that the loans to Group undertakings will be repaid in full at maturity or when called. If the
Group undertakings were unable to repay loan balances, the Company expects that in such circumstances the
counterparty would negotiate extended credit terms with the Company. As such, the expected credit loss is considered
immaterial. No change in credit risk is deemed to have occurred since initial recognition and therefore a 12-month
expected credit loss has been calculated based on the assessed probability of default.
