41061 Unite AR22 HI-RES WEB-READY - Flipbook - Page 17
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
OTHER INFORMATION
40.9p
34.1p
37.1p
91p
24.0p
2018
2018
2019
2020
86p
89p
2021
2022
27.6p
2021
2022
2019
2020
-32p
-32p
Adjusted earnings per share1, 2 (p)
IFRS basic earnings per share (p)
40.9p
89p
Positive outlook for 2023/24
We see strong demand for student accommodation, which is
reflected in our excellent progress with reservations for the
2023/24 academic year. Across the Group’s entire property
portfolio, 83% of rooms are now sold for the 2023/24
academic year, significantly ahead of the prior year as well
as pre-pandemic levels (2022/23: 67%).
In our strongest markets, we have seen an increasing
number of students looking to secure accommodation
earlier in the sales cycle than previous years. This early
customer interest reflects the appeal of our all-inclusive,
fixed-price offer and lower availability in the houses in
multiple occupation (HMO) sector as some landlords choose
to leave the market in response to rising costs and increasing
regulation. We have also seen increased demand from
universities, following more cautious behaviour during the
pandemic, who see quality accommodation as a key part of
their proposition to prospective students.
As a result of this strong demand and the need to offset cost
pressures in our business, we now expect to deliver rental
growth of 6–7% for 2023/24 (previously at least 5%).
Value-for-money
We recognise the cost-of-living pressures faced by students
and parents and are confident that our fixed price, allinclusive offer will continue to provide value-for-money
compared to alternative options in the purpose-built student
accommodation (PBSA) and HMO sectors. Our pricing is
comparable in cost to HMOs once bills are included. This
is before allowing for the price certainty on utilities and
additional product and service features that we provide,
such as on-hand maintenance teams and 24/7 security, in
locations close to campus.
Given increases in energy prices, we estimate that students
living in HMO will pay over £900 per year for their utilities,
Wi-Fi and contents insurance. Thanks to our scale and forward
purchasing of utilities, these same services will cost the
Company less than £600 for the 2022/23 academic year. These
savings equate to around two weeks’ rent, which we pass on
to students through a single price, fixed at the time of booking,
giving our customers certainty over their living costs.
We also recently launched our ‘Financial Support to Stay’
pilot in partnership with Aldi supermarket, which will see
food vouchers distributed to students most in need of
financial support, as decided by their university. This pilot
scheme will collaborate with universities, including Liverpool
John Moores University, Middlesex University, Birmingham
City University and the University of Westminster.
Inflation protection
Like many businesses, inflation is creating cost pressures
in parts of our operations and development supply chains.
Yet, the business is well protected from these impacts
through the inflation-hedging characteristics of our income
and risk management through cost hedging.
Our rooms are either resold each year on a direct-let basis
or repriced based on RPI, CPI or fixed rental inflators under
our multi-year nomination agreements. The combination of
these open market and contractual rental increases supports
rental growth of 6–7% across our total portfolio for the
2023/24 academic year.
Our utility costs are fully hedged through 2023 and 65%
for 2024, but costs are increasing as the benefit of cheaper
hedges pre-dating the war in Ukraine expire. We are also
seeing increased pressure on staffing costs for our frontline
teams, driven by competition for staff in similar service
sectors, as well as our commitment to being a Real Living
Wage employer. We have honoured the 10% increase in the
Real Living Wage for 2023 and provided an additional £500
in financial support to our frontline property teams during
2022 in recognition of the cost-of-living challenges facing our
staff. These cost pressures have been partially mitigated by
the restructuring of the Group’s operational business during
the first half of the year, which delivered an annualised
£2 million saving in staff costs.
Despite these cost increases, we have delivered an
improvement in our EBIT margin to 67.9% in 2022 (2021:
62.3%) thanks to our strong income performance. We are
targeting further margin growth to 70% in 2023, driven by
the increase in occupancy secured for the 2022/23 academic
year and a positive outlook for rental growth for 2023/24.
1. The financial statements are prepared in accordance with International Financial Reporting Standards (IFRS). These financial highlights are based on the European Public Real
Estate Association (EPRA) best practice recommendations and these performance measures are published as they are intended to help users in the comparability of these
results across other listed real estate companies in Europe. The metrics are also used internally to measure and manage the business and to align to the performance related
conditions for Directors’ remuneration. See note 8 for calculations and reconciliations.
2. Adjustment made to EPRA EPS to remove the impact of the LSAV performance fee and abortive acquisition costs. Further details are provided in notes 2 and 8.
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