Annual Report and Accounts 2016 | Unite Group

1 THE Unite Group PLCANNUAL Report AND Accounts 2016 STRONGFOUNDATIONSFOR THE FUTURETHE Unite Group PLC Annual Report AND Accounts 2016 HIGHLIGHTSPROVIDING HOMES FOR OVER 49,000 STUDENTSDELIVERED BY 1,450 PASSIONATE PEOPLEOPERATING 140 PROPERTIESWE WORK CLOSELY WITH 60 UNIVERSITIES ACROSS THE UKFOCUSING ON 24 UNIVERSITY TOWNS AND CITIES rExcellent financial performance rVisible earnings growth outlook rGrowth prospects remain strong rPositive reservations and rental outlook for 2016 /17 rDevelopment pipeline remains strongEarnings per share1.

2 2pence28p12131415161014172328 Dividend per asset value1pence per share646p1213141516350382434579646 Total accounting return%15%12131415161110153715 Profit before tax m 201m121314151612677108388201 Loan-to-value ratio%34%121314151652494335341 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.

3 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 adjusted EPRA earnings* A full reconciliation of the financial statements signed under IFRS to the EPRA performance measures is set out in note of the financial Read more on our frequently used terms: GlossaryCELEBRATING25 YEARS1992We open our first property in Bristol where we remain head-quartered and now have 140 properties, housing 49,000 students for the 2016 /17 academic year1994We acquire more properties in Bristol and start specialist property management services1998We open our first London properties2000We are floated on London Stock Exchange to expand into Manchester, Liverpool and Portsmouth2004We build our 100th property in SheffieldWe launch joint venture with GIC1999We are listed on the Alternative Investment Market (AIM)

4 2006We form Europe s largest unlisted specialist student accommodation investment fund, the Unite UK Student Accommodation Fund (USAF)WE ARE THE LARGEST AND MOST EXPERIENCED PROVIDER OF PURPOSE BUILT STUDENT ACCOMMODATION IN THE UK. 2004We build our 100th property in SheffieldWe launch joint venture with GIC2010We open a new London office which provides a base for our property and development teams2014We launch our business purpose, Home for Success We invest 21 million in improving lighting across all of our buildings to benefit our students and the environment2011We have grown to house 40.

5 000 students in 135 properties across 24 University towns and cities every yearWe are awarded the Investors in People Silver AwardWe launch our employee recognition programme the Stars Awards 2012We found and donate 8 million to the Unite Foundation a charity to support students without family support. Our first 28 students are recruited through four universities and receive scholarships made up of accommodation and a living allowance to support them through their study years We raise 90 million after issuing a retail bondWe launch the London Student Accommodation Vehicle (LSAV)

6 We scoop the Student Accommodation Operator of the Year award at Property Week s RESI awards which celebrate successes in the residential property sector 2009We are voted one of Britain s Top Employers by the CRF Institute 2015We become the first Living Wage Employer in our sectorThe first four Unite foundation scholars graduateThe National Union of Students awards our students 12 Green Impact Awards for their sustainable work while living with us2016We are awarded the Investors in People Gold AwardWe open a sales and marketing office in BeijingWe donate a further 5 million to the Unite Foundation in the form of USAF unitsOur students and employees raise 175,000 for Sport ReliefWe scoop the Student Accommodation Operator of the Year award at Property Week s RESI awards for the third time1/2 MILLION STUDENTS HOUSED SINCE 1991WE LAUNCHED OUR INNOVATIVE TECHNOLOGY SOLUTION, PRISMWE EXPANDED OUR BUSINESS, OPENING AN OFFICE IN CHINA2006We form Europe s largest unlisted specialist student accommodation investment fund, the Unite UK Student Accommodation Fund (USAF)

7 STRONGFOUNDATIONSFOR THE FUTUREMore than half a million students have lived with us during our 25-year history and we continue to grow. In 2016 , we opened five new properties which means we have the privilege of housing our largest ever number of students, 49,000. As the UK s biggest and most established provider of purpose built student accommodation we have learnt a huge amount from our students and the universities with which we is critical to our 1,450 employees that we use our unique experience to continue to develop the most supportive student experience, which delivers for our current and future students, our universities and, of course, for our employees.

8 Our consistently strong performance throughout 2016 and visible development pipeline and operational expertise mean we are well positioned to deliver sustainable earnings growth in the coming years for our investors. 2 For more informationStrategic Report Financial highlights2 Where we operate4 Our purpose5 Business model and strategy12 Relationships14 Chairman s statement15 Chief Executive s review18 Market review20 Key performance indicators22 Risk management26 Principal risks and uncertainties30 Operations review34 Property review40 Financial review44 Responsible business reviewCorporate governance50 Chairman s introduction to governance54 Board of Directors56 Shareholder relations57 Leadership62 Effectiveness64 Nomination

9 Committee report65 Accountability66 Audit Committee Report70 Health & Safety Committee report73 Annual statement of the Chair of the Remuneration Committee77 Directors Remuneration Policy84 Annual Report on remuneration96 Directors report99 Statement of Directors responsibilities in respect of the Annual Report and the financial statementsFinancial statements100 Independent auditor s report105 Introduction and table of contents106 Consolidated income statement106 Consolidated statement of comprehensive income107 Consolidated balance sheet108 Company balance sheet109 Consolidated statement of changes in shareholders equity110 Company statement of changes in shareholders equity111 Statements of cashflows112 Notes to the financial statementsOther information154 Financial record155 Notice of Annual General Meeting161 Glossary163 Company information1 THE Unite Group PLC Annual Report AND Accounts 2016 STRATEGIC REPORTC orporate governanceFinancial statementsOther information20162 01720182019 WHERE WE OPERATEWE OPERATE ACROSS THE UK IN 24 CITIES.

10 WITH OUR TOP TEN MARKETS MAKING UP 75% OF OUR TOTAL BEDS. 47% OF OUR CAPITAL IS INVESTED IN LONDONOur development and forward funds pipelineThis is our development pipeline until 2019. Once complete it will bring 6,965 beds to the openings in 2016 Greetham Street, Portsmouth (Wholly owned)* 836 bedsCausewayend, Aberdeen (Wholly owned) 399 bedsFar Gosford Street, Coventry (Wholly owned)* 286 bedsStapleton House, London (L SAV) 862 bedsOlympic Way, London (L SAV) 699 bedsOpening in 2 017St Leonards, Edinburgh (Wholly owned) 581 bedsMillennium Way, Coventry (Wholly owned) 391 bedsTara House, Liverpool (Wholly owned) 7 76 bedsBeech House, Oxford* (USAF) 167 bedsLutton Court, Edinburgh* (USAF)