41061 Unite AR22 HI-RES WEB-READY - Flipbook - Page 230
228
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
NOTES TO THE FINANCIAL STATEMENTS continued
Section 5: Working capital continued
5.2 Trade and other receivables continued
Movements in the Group’s expected credit losses of trade receivables can be shown as follows:
At 1 January
Expected credit loss charged to the income statement in the year
2022
£m
2021
£m
14.9
12.2
1.7
3.3
Receivables written off during the year (utilisation of expected credit loss)
(1.0)
(0.6)
At 31 December
15.6
14.9
The loss allowance for trade receivables is estimated as an amount equal to the lifetime expected credit loss (ECL).
This loss has been estimated using the Group’s history of loss for similar assets and takes into account current and
forecast conditions.
The impact of credit losses is not considered significant in respect of the financial statements.
5.3 Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations. It arises principally from the Group’s cash balances, the Group’s receivables from customers and
joint ventures and loans provided to the Group’s joint ventures.
At the year-end, the Group’s maximum exposure to credit risk was as follows:
Cash
Note
2022
£m
2021
£m
5.1
38.0
109.4
Trade receivables
5.2
31.8
27.9
Amounts due from joint ventures
5.2
46.9
56.8
116.7
194.1
5.3a) Cash
The Group operates investment guidelines with respect to surplus cash. Counterparty limits for cash deposits are largely
based upon long-term ratings published by credit rating agencies and credit default swap rates. Deposits were placed with
financial institutions with A- or better credit ratings.
5.3b) Trade receivables
The Group’s customers can be split into two groups – (i) students (individuals) and (ii) commercial organisations including
universities. The Group’s exposure to credit risk is influenced by the characteristics of each customer.
5.3c) Joint ventures
Amounts receivable from joint ventures fall into two categories – working capital balances and investment loans. The
Group has strong working relationships with its joint venture partners, and the joint ventures themselves have strong
financial performance, retain net asset positions and are cash generative, and therefore the Group views this as a low
credit risk balance. No impairment has therefore been recognised in 2022 or 2021.
