The Unite Group PLC Annual Report and Accounts 2018 HOME for SUCCESS
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The Unite Group PLC Annual report and accounts 2018 Home for Success The Unite Group PLC Annual report and accounts 2018 HOME FOR SUCCESS Our purpose We are driven by a common purpose – creating a Home for Success for our students. For us, that’s making the best home for all students, helping them grow and succeed at University and beyond. We deliver this through having the best people, the best service and best properties, and working in line with our values. The best home For all students We use our unique insight and A University education represents experience to deliver quality, a significant investment in a person’s secure homes where students future, but it also represents a can develop academically significant financial investment. and socially and feel at home. We believe no one should be denied a University education because Going to University is an exciting of their personal circumstances. time, but the big changes that moving to University brings can be We offer a variety of accommodation stressful. We design our homes and at different price points and with services to ensure the transition is as different payment options enabling smooth as possible. Our research students to choose the right shows that students who feel well accommodation for them. We integrated into their new environment also support the Unite Foundation, are better equipped to manage which provides accommodation the changes University brings and scholarships to people who have are able to get the most from it. been in care or are estranged from their families. Helping them grow At University and succeed and beyond University is where students build We believe that where a the foundation of their future careers. student lives has a material We believe we have an important impact on their academic and role in helping them achieve this. social experience of University, and ultimately, their lives. The interpersonal and self- management skills honed at Through our people, our service University provide a critical bridge and our properties, we are to adulthood. We aim to create a constantly looking for new and safe and secure environment that better ways to support students is both caring and supportive, but to become well-equipped allows our students to develop their individuals, ready for life beyond independence. University. We regularly measure how well we are meeting student needs through customer surveys and focus groups. 4 THE UNITE GROUP PLC ANNUAL REPORT AND ACCOUNTS 2018 Strategic report Strategic report OPERATIONAL AND 01 Operational and financial highlights FINANCIAL HIGHLIGHTS 02 Our buiness at a glance 04 A year of achievement 06 Chairman’s letter 08 Understanding our stakeholders 10 Market drivers 12 Business model and strategy 14 Chief Executive’s statement 20 Strategy at a glance 22 Key performance indicators 24 Risk management Earnings per share1, 2 pence Dividend per share pence 28 Principal risks and uncertainties Strong financial position 32 Operations review Earnings growth underpinned 34.1p 29.0p 36 Property review p01–51 41 Financial review by portfolio and income 341 29.0 44 Responsible business review 303 quality, development pipeline, 27.7 227 231 University partnerships and governance Corporate 1.0 operating efficiency 17. 2 15.0 Corporate governance 112 52 Chairman’s introduction Record level of reservations to governance for 19/20 academic year 56 Board of Directors 58 Board statements supports rental growth outlook 59 Shareholder relations 14 15 16 17 18 14 15 16 17 18 60 Leadership Significant progress with 65 Effectiveness University partnerships 66 Nomination Committee report Total accounting return* % Profit before tax £m 68 Accountability: Audit Committee Report 72 Accountability: Health & Safety 13% £246m Committee report 37 388 74 Annual statement of the Chair of the Remuneration Committee 79 Directors’ Remuneration Policy 86 Annual report on remuneration p52–99 229 246 201 96 Directors’ report 15 15 1 1 99 Statement of Directors’ responsibilities 108 in respect of the annual report and the financial statements Financial statements Financial statements 14 15 16 17 18 14 15 16 17 18 100 Independent auditor’s report 107 Introduction and table of contents 108 Consolidated income statement 1 Net asset value pence per share Loan-to-value ratio* % 109 Consolidated balance sheet 110 Company balance sheet 790p 29% 111 Consolidated statement of 790 changes in shareholders’ equity 20 43 112 Company statement of changes 66 in shareholders’ equity 59 5 34 113 Statements of cash flows 1 29 434 114 Notes to the financial statements p100–155 14 15 16 17 18 14 15 16 17 18 Employee effectiveness % Customer satisfaction information Other Other information 75% 83 155 Financial record 156 Notice of Annual General Meeting 160 Glossary 83 0 1 83 Read more about 5 161 Company information Our Key Performance Indicators on pages 22 and 23 14 15 16 17 18 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 p156–160 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 align to the performance related conditions for Directors’ remuneration.* 2 2015 and 2016 EPS is based on an adjusted EPRA earnings. A full reconciliation of the financial statements to the EPRA performance measures is set out in note 2.2 of the financial statements. * A full glossary of definitions is available on page 160. THE UNITE GROUP PLC ANNUAL REPORT AND ACCOUNTS 2018 01 Strategic report OUR BUSINESS AT A GLANCE Building quality nationwide Aberdeen Our investment 10 Edinburgh strategy Glasgow Having the right properties, in the right locations, aligned with the best Universities ensures we deliver for our students, Newcastle universities and our shareholders. Durham Read more about Investment strategy on page 12 5 Leeds 8 Manchester 6 Sheffield Liv erpool 3 Nottingham 90% Lo ughborough of our portfolio is aligned to 9 Leicester mid- to high-ranking Universities. Bir mingham 2 Coventry Oxford Our top 10 cities Bristol Full-time Reading 1 Completed student 4 London 2018 beds numbers Market rank City (18/19) (17/18) share Bath 7 1. London 9,406 308,010 3.1% 2. Birmingham 4,508 69,090 6.5% Portsmouth Exeter Bournemouth 3. Sheffield 3,999 52,690 7.6% 4. Bristol 3,494 45,510 7.7% 5. Leeds 3,457 56,125 6.2% 6. Liverpool 3,015 62,490 4.8% 7. Portsmouth 2,706 20,525 13.2% 8. Manchester 2,336 84,040 2.8% 9. Leicester 1,687 38,360 4.4% 10. Edinburgh 1,684 53,185 3.1% Total 36,292 792,025 4.6% Proportion of Unite portfolio 74% 02 THE UNITE GROUP PLC ANNUAL REPORT AND ACCOUNTS 2018 Strategic report New openings What makes us different Our quality properties and unique University 2018 Newgate Court, Newcastle relationships, supported by highly-trained (Wholly owned) people, using a tailor made service 575 beds platform set us apart from the competition. Brunel House, Bristol (Wholly owned) Read more about What makes us different 3,074 246 beds on pages 08 and 09 new beds Chaucer House, Portsmouth p01–51 (Wholly owned) 484 beds St Vincent’s Place, Sheffield (Wholly owned) governance Corporate 598 beds Environmental, social Staniforth House, Birmingham (Wholly owned) impact and governance 586 beds Being a responsible business is central to Rushford Court, Durham (USAF) everything we do at Unite students. 363 beds Houghall Court, Durham (USAF) Read more about Environment, social impact 222 beds and governance on page 46 Our property pipeline Our operating platform Our operating platform continues to improve p52–99 customer service and develop further 2019 Horizon Heights, Liverpool (Wholly owned) efficiencies through: 1,085 beds Parade Green, Oxford Our people Financial statements (Wholly owned) Highly engaged, customer centric 2,390 887 beds teams, with greater levels of beds Battery Park, Birmingham (USAF) ownership and accountability 418 beds Our scale 2020 White Rose View, Leeds (Wholly owned) c.50,000 928 beds beds creates central efficiency Artisan Heights, Manchester (Wholly owned) Our technology 2,209 603 beds PRISM enabled efficiencies, beds First Way, London self-serve and enhanced (Wholly owned) digital services 678 beds p100–155 2021 Old BRI, Bristol (Wholly owned) 370 beds Middlesex Street, London Our values and culture information Other (Wholly owned) 1,330 960 beds It’s not just about what we do, it’s how beds we do it. Our values and culture make Unite a great place to work. 2022 Temple Quay, Bristol (Wholly owned) Work together 650 beds Be better Do what’s right 650 See it through beds Have fun Read more about Our values on pages 08 and 09 Read more about Property review on page 36 p156–160 THE UNITE GROUP PLC ANNUAL REPORT AND ACCOUNTS 2018 03 Strategic report A YEAR OF ACHIEVEMENT Enhanced portfolio 3,074 beds Seven new student residences opened in September in Birmingham, Bristol, Durham (two properties), Newcastle, Portsmouth and Sheffield. Beds are fully let to students attending mid- to high-ranking Universities. 52% of these beds are secured on nomination agreements with an average life of 10 years. £85m 60% Disposal of 14 properties, Improvement in TR*M comprising 3,436 beds, for (our customer satisfaction £180.5 million (Unite share: measure) since 2011, £85 million) completed from 52 to 83. in September 2018. 04 THE UNITE GROUP PLC ANNUAL REPORT AND ACCOUNTS 2018 Strategic report Further progress on strategy to deliver ongoing growth through partnerships with Universities, with successful off-campus University partnerships in London and Oxford.