The UNITE Group plc
Annual Report and
Accounts 2003
Uniting Individuals Thousands of individuals
one great community
UNITE is meeting a need that is
greater than ever. We provide
good value, purpose built,
rented accommodation in the
best locations for students and
key workers. Working together
with our partners, we aim to
create accommodation of
higher quality, faster and more
cost effectively. We market and
manage our nationwide portfolio
with the aim of being the ﬁrst
choice for our customers. 2003 2002
£m £m
Net assets 326.8 308.1
The investment property portfolio 948.8 709.6
Net debt 593.9 410.0
Turnover 48.1 32.9
Loss before tax and goodwill amortisation 5.2 20.2
Loss before tax 10.8 25.6
Key ratios
Net asset value per share 302p 286p
Loss per share before goodwill amortisation 4.8p 23.6p
Loss per share 10.0p 30.0p
Net debt as percentage of 182% 133%
shareholders funds
A united vision - the ﬁrst choice
for students and key workers
Overview and
highlights 2003
Contents
Group at a glance 02
Chairman’s statement 04
Chief Executive Ofﬁcer’s review 08
Our people 14
Group Finance Director’s report 16
Market insight 20
The Board of Directors 22
Directors’ report 24
Corporate governance 27
Directors’ remuneration report 32
Independent auditors’ report 37
Consolidated balance sheet 38
Consolidated proﬁt 39
and loss account
Consolidated statement of total 39
recognised gains and losses
Company balance sheet 40
Consolidated cash 41
ﬂow statement
Reconciliation of net cash 41
ﬂow to movement in net debt
Note of consolidated historical 42
cost proﬁts and losses
Reconciliations of movements 42
in shareholder’s funds
Notes to the ﬁnancial statements 43
Notice of the Annual 59
General Meeting
Five year record 60
Company information 61
Net asset value per
share (pence per share)
99
99p 192p 297p 286p 302p
00 01 02 03 99
£2.8m £6.6m £18.8m £32.4m £48.1m
00 01 02 03
Rental income
(£m)
Total completed
beds
10,337 14,778 21,215
01 02 03
Completed portfolio 
value
£288.6m £541.8m £788.3m
01 02 03
Overview and highlights 01
Adjusted to include 100% of Peabody UNITE 02   Group at a glance
Achieving scale in our
nationwide portfolio
Group at a
glance
We have core competencies in
acquiring and developing quality
student accommodation in prime
locations. By encouraging non-
adversarial partnering
relationships with leading
construction companies and
design consultancies, we are
adding to our expertise to ensure
schemes are developed to their
optimum potential. Our project
management teams and the
innovative off-site modular
construction techniques we
employ mean that we can deliver
completed schemes in a
controlled, cost effective and
timely manner.
Uniquely in the sector, we retain,
market and manage our
accommodation, aiming to provide
our customers with the highest
standards of service and value.
UNITE has created an exciting new market sector for student
accommodation. We have set out to deﬁne our own future,
developing an unrivalled range of accommodation and customer
support services.
Customer proﬁle
1 Postgraduates 8%
2 First years 39%
3 Other undergraduates 53%
1
2
3
1 Overseas students 20%
2 UK students 80%
1
2
We seek to build upon the
services we can offer to our
customers through the training
and development of our people.
Together this is a powerful
combination for improving
shareholder returns. Group at a glance 03
New accommodation
opened in 2003
Aberdeen
Bristol
Cardiff
Edinburgh
Glasgow
Leeds
Leicester
Liverpool
London
Loughborough
Portsmouth
Preston
Southampton
New accommodation
opening in 2004
Bath
Bristol
Birmingham
Cardiff
Leeds
Leicester
Liverpool
London
Loughborough
Plymouth
Southampton
Completed portfolio
by agreement type*
1 Direct let 55%
2 Lease 21%
3 Nominations 24%
*bed numbers
1
2
3
Grand Central, Liverpool
Our top ten markets
City Completed Total Student Projected
Beds Dec 04 Numbers Market share 
(Actual)
1Bristol 2,849 29,765 9.6%
2 Liverpool 2,832 33,215 8.5%
3 Manchester 2,345 48,905 4.8%
4 London* 2,173 168,575 0.7%
5Portsmouth 1,402 12,715 11.0%
6 Aberdeen 1,303 17,195 7.6%
7 Shefﬁeld 1,203 37,210 3.2%
8 Plymouth 1,101 18,595 5.9%
9 Glasgow 1,068 44,415 2.4%
10 Leeds 1,061 41,100 2.6%
17,337 451,690 3.8%
*Approximately half of the beds are let to key workers in London 2003 was a year of substantial
progress in building our platform,
such that we are now
approaching an appropriate level
of scale to enable us to focus
greater attention on increasing
returns, reducing costs and
improving quality standards, 
in products and services.
By September 2004, we will be
serving the accommodation
needs of over 26,000 students in
28 cities, an increase of over 75%
since January 2003. T aking into
account our investments over this
period, we consider that the
business is, as planned, now
reaching a scale commensurate
with its infrastructure. As a result
the Board now intends to move
the emphasis of its strategy away
from the debt funded annual roll
out of a targeted number of beds
to focus on optimising the value
of UNITE's unique portfolio. 
This will be done through
maximising the rental potential of
our properties; through focusing
future developments on those
cities where we consider the
opportunities within a balanced
portfolio to be most attractive;
and through seeking funding
opportunities other than
straightforward debt ﬁnance, for
example through selective asset
disposals and joint ventures. In
line with our market opportunity
our annual roll out programme will
still be signiﬁcant; in addition to
the 5,104 bed spaces to be
delivered in 2004, we anticipate a
similar number being delivered in
2005. We believe that this
strategy will provide the most
attractive returns to shareholders
over time.
An important objective in 2003
was to put in place the ﬁnal
elements of funding for our
development programme, without
further recourse to equity markets.
I am pleased to report that this
was achieved. With the recent
establishment of a new £100
million warehouse facility in
addition to our existing borrowing,
UNITE is now fully funded to build
out and reﬁnance its development
commitments. In light of this
increase in bank facilities and the
lower capital requirements of our
revised strategy, the Board does
not consider it necessary to
undertake a major capital
recycling transaction at this time.
We remain committed to the
undertaking made at the time of
the last equity fund raising in 2002
not to raise further equity to
ﬁnance expansion.
With our large and increasing
customer base, UNITE's mission
has evolved to becoming the ﬁrst
choice in the student
accommodation market. T o that
end, we have set out three
imperatives on which to be
judged, namely to provide:
■ our customers with great value
and service;
■ our people with challenging,
meaningful and rewarding
careers; and
■ our shareholders with
continually improving 
ﬁnancial returns.
A clear strategy to maximise
the value of our portfoilio
Chairman’s
statement
Since the listing of UNITE on
the London Stock Exchange
in 1999, the Company has
grown signiﬁcantly, thereby
achieving its initial objective
of becoming unquestionably
the UK's leading provider of
student accommodation.
04   Chairman’s statement
2001 2002 2003 Built-out
Completed portfolio value
200
0
400
600
800
1,000
1,200
1,400
Value (£million)
288.6
541.8
788.3
1,300 “It’s great to know that
help from UNITE is always
on hand if I need it”
Ross Sylvester
Media Law student
and Lifeguard
Chairman’s statement   05 06   Chairman’s statement
Living spaces 
designed for the needs
of our customers
Financial Results
Against the background of stable
growth, I am pleased to report an
encouraging improvement in our
ﬁnancial performance over the year.
Net asset value increased by 5.6%
to 302 pence per share (2002: 286
pence), with uplifts from our
development activity contributing
£32.3 million (29.8 pence per
share). Our completed portfolio is
now worth £788.3 million, with a
further £160.5 million in the course 
of development.
Built out, the portfolio will be worth
approximately £1.3 billion. From a
valuation perspective, the initial
yield applied to our completed
portfolio has increased to an
average of 6.61%, up from 6.20%
a year ago, and is now higher than
the reference Investment Property
Databank initial yield for the entire
property sector of 6.55% at 
31 December 2003.
Losses in 2003 (before goodwill
amortisation) fell sharply to £5.2
million from £20.2 million in 2002,
representing a loss per share of
4.8 pence (2002: 23.6 pence).
Importantly, the proﬁt generated
by our portfolio, after servicing
interest, increased by 255% to
£3.9 million, driven largely by an
increase in both rents and margin.
Rental income increased strongly
by 48% to £48.1 million (2002:
£32.4 million) with like for like
revenues up 7.6%, and the
portfolio operating margin
increased to 60.5% (2002: 58.8%)
with related overheads static at
£6.1 million. Occupancy across
the portfolio at the year end 
was 96%.
New borrowing associated with
portfolio growth contributed to the
increase in net interest costs to
£25.2 million (2002: £17.6 million).
Pre-contract costs fell to 
£3.7 million (2002: £6.2 million)
following a scaling back of
development resource in October
2002. Finally, goodwill of 
£5.6 million has been amortised
through the proﬁt and loss
account (2002: £5.5 million); 
the remaining goodwill relating to
development proﬁts will be
amortised in 2004.
Dividend
In line with our stated policy, the
Board is pleased to recommend a
ﬁnal dividend of 1.67 pence per
share, making a total dividend of
2.5 pence per share for the year
(2002: 2.5 pence). The dividend
will be paid on 14 May 2004 to
shareholders on the register on 
16 April 2004.
Business Performance
The UNITE team delivered 6,437
new beds across 17 properties
and in 13 cities in the autumn of
2003, increasing the number of
operating beds to 21,215 in 28 Chairman’s statement   07
cities. The 2003 property openings
proved to be the greatest
challenge yet faced by the
business, which few similar
organisations could have
contemplated. There were lessons
to be learnt from this signiﬁcant
programme of openings, which
are being incorporated into our
processes for 2004 and beyond.
As an increasing proportion of our
portfolio is now direct let, we have
been strengthening our sales
team to market our
accommodation much earlier in
the year. We have also been
investing in the continuous
improvement of our systems for
handling larger volumes, as well
as in strengthening our ﬁeld based
teams to undertake more work in-
house; the aim is to achieve
consistent improvements in
services and costs. The
Accommodation Services Division
is already delivering improvements
in margin upon which we will
continue to build.
As the market leader, we focus
particular attention on
understanding our customers.
Following recent research, 
a number of initiatives are 
being taken to improve 
services and facilities within 
our accommodation.
Like all companies in our sector,
build cost inﬂation is an important
issue, which we have clear plans
to address. As we have a
reasonably standard range of
products, compared with much of
the industry, we are better placed
than many to address these
issues. We have continued
successfully to develop
partnerships with construction
contractors, consultants and other
providers, with the aim of
addressing cost, quality and
speed of delivery, largely through
better on and off site processes
and reduced material costs. 
Our manufacturing facility is
already demonstrating material
cost savings, and produced 1,500
units during the year, with weekly
production rates increasing from
ﬁve modules in January to 50
modules by the year end. 
As production volumes increase
we expect to beneﬁt from greater
build cost savings, both at the
factory and on site.
The Board and People
The Board made a number of
important appointments during the
year. Mark Allan, who has been
with the Company for over four
years, was promoted to
Group Finance Director when
Simon Bernstein stepped down.
We are grateful to Simon for his
energetic and diligent input at an
important stage in UNITE's history.
Andrew Lee, our Human
Resources Director since 2001,
also joined the Board, conﬁrming
the importance we attach to the
development of our people in what
is an increasingly customer
orientated business.
After the year end, Stuart Beevor, a
member of the Board and Group
Fund Management Director of
Grosvenor Group Limited, joined
the Board as a Non-Executive
Director, bringing a breadth of
knowledge of the property
industry. Stuart takes the place of
Baroness Usha Prashar, who
retired after the completion of her
three-year term of appointment.
We thank Usha for her wise
counsel and sense of balance in
encouraging the Company to
pursue clear commercial and
public service objectives.
With UNITE's increasing scale, a
greater level of accountability and
appropriate resource was
successfully transferred to our
operating divisions, namely
Development, Manufacturing and
Accommodation Services. At this
point we would like to recognise
all our people. There is signiﬁcant
energy for personal development,
delivery for our customers and
teamwork and we warmly
appreciate the dedication 
and commitment of everyone 
in the business.
Prospects
During 2003, signiﬁcant progress
was made in establishing a
platform of sufﬁcient scale to
enable us to be fully cost and
service competitive in our target
markets. Our portfolio is beginning
to see the beneﬁts of scale and
operating proﬁts are improving as
a result.
Looking forward, the Group will be
moving away from a purely debt-
funded capital expenditure
programme and is beginning to
explore other effective sources of
capital. Our investment decisions
will be driven by the creation of
shareholder value for the long
term and, with a strengthened
team and stable ﬁnancing base,
we have every conﬁdence of
achieving our objectives and
moving into proﬁt. We entered 2003 with a clear
objective to deliver scale in our
portfolio. With 6,437 new beds
we achieved that target,
delivering more new student
beds than all other specialist
providers combined. This has
delivered a genuine platform of
scale upon which we will
continue to build. We will no
longer set speciﬁc bed number
targets, but we will concentrate
upon the quality of the products
and services which our
customers demand.
The market in which we operate
has been in sharp focus
throughout the year. On the
demand side, acceptances for
university and college places
were up by 1.7% on average for
2003/04, with overseas student
numbers increasing by 30%.
Over the past ﬁve years,
compound growth has been over
5%, although a number of
universities have performed
appreciably better than this
average – for example, the city of
Leeds has seen growth exeeding
20% in its student population
over the same period. Data such
as that is key to the formulation
of our investment policy.
In terms of accommodation
supply, competition for
appropriate development sites
within our chosen markets
remains intense, whilst build cost
increases continue to outpace
inﬂation. We have continued to
concentrate on implementing
measures to combat these
changes, to ensure we secure
the right sites, at the right time,
for the right price. 
Listening to our customers,
people and shareholders
Chief Executive
Ofﬁcer’s review
With 2004 in prospect, we
have a clear focus to cement
our position as the ﬁrst choice
for student accommodation.
UNITE’s ﬁrst modular
scheme, built with
components from its
advanced off-site
manufacturing facility
Portfolio performance
This year, the Accommodation
Services team handled our largest
number of new property openings
to date. 6,437 new beds across
17 properties in 13 cities were
opened in the Autumn of 2003
with the division now managing
21,215 beds across 28 cities
nationwide. Opening 44% more
rooms than in 2002 with broadly
the same infrastructure has
placed demands on all parts of
the Division. Our teams have
demonstrated excellent teamwork
and dedication in meeting such a
demanding target and I thank
everyone involved for their
commitment to the growth of
our business.
The key deliverable for the
Division was to focus on returns,
substantially increasing portfolio
proﬁt. At £3.9 million for the year,
against £1.1 million in 2002, this
was emphatically achieved.
Rental income increased strongly
by 48% to £48.1 million (2002:
£32.4m) and overheads were
held at £6.1million.
08   Chief Executive Ofﬁcer’s review
St Martins House, Leicester “My room is in a great
location, close to all the
best clubs”
Sup Roda
Business Studies
student and DJ
Chief Executive Ofﬁcer’s review   09 Rental growth was again strong.
Average increases for the same
room on the same tenancy terms
was 3.7% across the estate
although, by improving asset
utilisation over the summer
months, like for like revenues
were, in fact, 7.6% higher
than those for 2002.
An important advancement
during 2003 has been the
increased number of longer, 50+
week tenancies across our direct
let estate. This maximises asset
utilisation and offers students a
year-round option (particularly
meeting demand from overseas
and post graduate students).
16% of our portfolio was let on
these longer tenancies in 2003.
Customer Service
Our approach is directed ﬁrst and
foremost by our customers and
we are committed to improving
our customer service and care.
Market research has always
played a vital role for UNITE and
this year we will continue to use
the invaluable research from the
UNITE Student Living Report,
conducted by MORI. Combined
with this, we have a regular
customer research programme
which is helping us to better
understand the broader student
market and identify continuous
improvement opportunities, which
reﬂect customer demand 
and aspiration.
Broadband is one such
opportunity. During 2003, we
undertook a full review of our
communications package for
customers. As a result, we intend
to introduce a comprehensive
new broadband package, which
will be announced later in 2004.
We will also be launching more
frequent payment options to help
our customers spread the cost of
accommodation according to
their needs. Likewise we have set
up new processes, to make sure
that our customers receive
returned deposits more promptly. 
With an increased percentage of
our portfolio comprising direct let
properties, we are adding to our
sales team, who begin marketing
10   Chief Executive Ofﬁcer’s review
660
new beds in UNITE’s
second Glasgow scheme
Leisure room, Buchanan View, Glasgow our accommodation and services
from January each year. In this
way we aim to facilitate customer
choice for earlier room
reservations. Recommendation is
also a powerful marketing tool
and results from our independent
research suggest that some 80%
of our customers said that they
would recommend UNITE. We
intend to make the most of this
during 2004 by incentivising
recommendations which translate
into bookings. 
Managing the growth of the
business on our existing
operating platform is testimony to
the careful planning which has
taken place during the past few
years. However, in recognising
that Accommodation Services
has a much larger footprint, the
ﬁnal part of the divisional
reorganisation has been the
appointment of a senior team of
Operations Directors. These
internal promotions are evidence
of our commitment to improving
our service to customers and
university partners by ensuring a
senior dedicated resource to lead
the training and development
required in the ﬁeld. In managing
over 21,000 rooms during 2003
we have also expanded our call
centre and improved training to
handle ﬂuctuations in demand.
The team handles some 200,000
calls per year. This investment in
the continuous improvement of
our systems will remain a theme
for 2004.
Working towards our objective of
improved customer service, we
have strengthened our area
management team and increased
in house maintenance resources.
This will allow us to provide a
more responsive service; and
realise further economies of scale
and greater shareholder returns.
Growing our portfolio
In Autumn 2003, UNITE
completed 6,437 new beds in 13
cities, ﬁve of which were new
markets where UNITE opened
accommodation for the very ﬁrst
time. In 2004, UNITE will
commission some 5,000 new
beds, all of which are located
within UNITE’s existing markets.
By the end of 2004, there will be
11 cities in which we operate over
1,000 beds. T ogether, those cities
will account for 70% of the total
completed portfolio – a clear
demonstration of the scale we are
beginning to build.
Even in our largest markets we
have not yet reached market
saturation point, leaving
considerable scope for future
growth. More importantly there
are a number of established
university cities, with large student
populations, where we do not yet
have scale of 1,000 plus beds.
Hence there are many
opportunities for future investment.
The unprecedented scale of our
2003 deliveries resulted in
considerable pressures, delaying
the opening of some beds,
particularly in Liverpool. The costs
associated with resolving these
issues have been charged to the
proﬁt and loss account and action
plans have been developed to
help minimise the risk of a
recurrence in the future.
According to UNITE’s business
cycle, the ﬁnal quarter of 2003 and
the ﬁrst two quarters of 2004
represent the principal acquisition
phase for projects to be opened in
2005. Although the supply of
appropriate development
opportunities remains competitive,
we are targeting those towns and
cities where we consider the
Group can take advantage of the
market opportunity.
Chief Executive Ofﬁcer’s review   11
Rank 5 year historic
Forecast completed Total student growth in full-time
beds Dec 04 numbers student numbers
1 Bristol 2,849 29,765 11%
2 Liverpool 2,832 33,215 13%
3Manchester 2,345 48,905 4%
4 London 2,173 168,575 18%
5Portsmouth 1,402 12,715 0%
6 Aberdeen 1,303 17,195 4%
7 Shefﬁeld 1,203 37,210 11%
8 Plymouth 1,101 18,595 4%
9 Glasgow 1,068 44,415 3%
10 Leeds 1,061 41,100 21%
17,337 451,690 3.8%
Growing our portfolio
James Craig Court, Edinburgh 2003 Modular
Production Output
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
We are helped in this endeavour
by our increasing expertise in
planning and design and, in that
respect, the team has accrued
signiﬁcant experience with the
planning authorities in our core
towns and cities. In 2003 we
achieved 17 planning consents.
With our roll-out programme in
place, we will procure some £165
million worth of construction
services in 2004. In working to
mitigate build cost inﬂation, it is
important to facilitate close, non
adversarial business
relationships with our contractors
and consultants. In Scotland, our
partnership with Carillion was
particularly beneﬁcial, enabling
the timely completion of a
signiﬁcant scheme delayed by
the receivership of the initial non-
partner contractor.
On an organisational level, the
planned strengthening of our
regional project management
and ﬁnance resources, has been
completed. UNITE’s team of
project managers, who oversee
the construction projects from
start to ﬁnish, have been
integrated more closely with our
modular construction operation
to further improve lead-times and
communication, continually
driving down build costs and
enhancing product quality.
Modular Construction 
Our investment in modular
construction is playing an
important role in our campaign to
counter build cost inﬂation,
improve completion schedules
and control quality. The division
has achieved important
milestones in its ﬁrst full year of
operation, having established an
advanced manufacturing facility,
which aims to radically change
the approach to off-site
manufacturing within the UK.
Production at the facility began in
January 2003, steadily increasing
its productivity to over 50 fully
ﬁtted bedroom units per week. A
total of 1,500 units were produced
by the end of the year.
The ﬁrst building using this
advanced modular technology,
St Martins House, Leicester, was
opened in September 2003.
The 2004 pipeline features the
utilisation of modular
construction within schemes
located in Liverpool, Birmingham,
Bath and Plymouth.
Responding to the environment
of build cost inﬂation, our key
priorities for the manufacturing
and project management teams
are to increase production in line
with internal targets, and further
improve our supply chain
process. In so doing, we will
seek to improve relationships
and communications with
contractors to ultimately deliver
reductions in build time and cost
combined with improving quality.
12   Chief Executive Ofﬁcer’s review
Marketgate, Bristol
250
300
200
150
100
50
0 Looking forward
2004 will mark another year of
sustained growth, achieving
genuine scale in many of our core
markets. In many ways we have
now ‘grown’ into the business
infrastructure we have put into
place during the last two years
and the focus of our activities
going forward must now shift.
2004 will see us focus on
maximising the return from our
existing portfolio, as well as
ensuring that the schemes in
which we invest are well located
and will add shareholder value for
the long term.
Evolution of our ﬁnance strategy
is another key step in the
progress of the business. We
intend not only to borrow against
strong existing investments to
fund further growth, but also to
have a range of ﬁnancing
solutions available which offer a
greater degree of ﬂexibility and
do not hinder the ﬁnancial
performance of existing assets.
2004 is already proving to be an
exciting year, building on the
themes of stability and growth.
Our mission is to enhance our
position as the ﬁrst choice provider
of student accommodation
through a total commitment to our
customers and our people, which
together will deliver greater
shareholder returns.
Chief Executive Ofﬁcer’s review   13
68%
of our customers have internet
facilities and there is signiﬁcant
demand for broadband
James Baillie Park, Leeds, bedroom Challenging, meaningful
and rewarding careers
Our people
Personal development is
encouraged through extensive
training and development
activities. During 2003 that
included the development of ﬁrst
line and senior management
leadership programmes with year
long interventions. Core
management competencies have
been developed to ensure that the
senior management team has the
skills to select, develop, recognise
and retain their teams. During
2003 the Group also launched a
national training framework for
property based employees and a
year long personal and
professional development
programme for members of the
Development Division.
The correlation between
employee satisfaction and
customer satisfaction is ﬁrmly
established. By focusing on the
development and retention of our
people, we can provide long-term
careers, greater customer loyalty
and recommendation and
increasing shareholder returns.
As at 31 December 2003 the
Group had 643 employees across
its three Divisions and central
support teams. The proportion of
employees with over one year’s
service has increased by 7% to
58% during 2003. 
UNITE also conducted its third
annual employee opinion survey. 
The results maintained an overall
employee satisfaction score of
60% and we have developed a
further detailed programme of
actions to improve these results as
part of our focus on customers,
people and shareholders.
The priorities for 2004 will be
focused on supporting the
continuous development and
succession of the senior teams
and creating the environment to
breed sucess. We will continue
our Group-wide evolution towards
becoming a truly customer
focused organisation, aligning
processes, systems and
behaviours to deliver our strategic
objectives and improve
shareholder returns.
UNITE is committed to providing
equal opportunities to all
employees regardless of age,
gender, race, religion, ethnic
origin, sexual orientation or
disability. We also make our
social, environmental and ethical
responsibilities clear. Business
risks in these areas have been
evaluated as follows:
Providing our people with
challenging, meaningful
and rewarding careers at
UNITE is at the very core
of our strategy.
Stakeholder Risk Opportunity
Shareholders Poor alignment of shareholder perception with Engagement of shareholders through improved
UNITE’s strategy and operations communications
Employees Consistent approach to our objective of improving Communications and personal development
customer focus is not achieved interventions to ensure we focus on providing value
and service for our customers
Partners and Suppliers Failure to meet objectives set out in non-adversorial To adopt appropriate best practice for environmental
partnering contracts policies, health and safety and ethical strategies
Clients Students choosing alternative choices such Maximising opportunities from the increased
as e-university, living at home or part time differentiation of universities and their marketing activities
courses not requiring accommodation
Customers Customer requirements for great value Listening to our customers to ensure we provide
and service not being fulﬁlled the right products and services at the right price
Competitors Undermining the reputation of the industry Support for licensing of Houses in Multiple Occupation
through poor performance to improve standards across the industry
Community Stereotypical perceptions of students and their Continuing to engage in dialogue with appropriate 
accommodation requirements by communities community groups and stakeholders throughout
and planning departments the planning process
Social, Environmental and Ethical risks and opportunities
14   Our people Health and Safety
UNITE fully recognises the
importance of health and safety
and risk management in all 
its operations. 
UNITE strives to:
■ Ensure timely and effective
communications on matters
necessary to ensure the
health and safety of 
its employees.
■ Exceed minimum legislative 
requirements.
■ Provide adequate training to 
maintain the competencies
of employees.
■ Provide adequate resources 
to ensure a robust safety 
management system.
■ Work with partners,
contractors and service
providers to ensure 
health and safety is
appropriately managed.
■ Proactively manage 
signiﬁcant ﬁre risks.
In 2002 an independent audit
was undertaken to examine
compliance issues and to identify
areas in which Group’s health
and safety and risk management
procedures could improve. As a
result of that audit, the following
initiatives were implemented:
■ The Development Division
included consideration of
health and safety issues as
part of its evaluation of 
potential acquisitions.
■ The Accommodation Services
Division introduced
campaigns to reduce
unintended ﬁre alarm
activations and educate 
our customers.
■ The Manufacturing Division
appointed a full time Health
and Safety Ofﬁcer.
A further audit was
commissioned in 2003, the
results of which indicate a
signiﬁcant improvement, and are
testimony to UNITE’s
commitment to continual
improvement. Nevertheless,
UNITE is not complacent and
continues to look for ways to
build upon its success.
Our people   15
Training and
development 
to enhance
customer service 2003 was also the ﬁrst year in
UNITE’s life as a quoted
company during which its
signiﬁcant development
programme was ﬁnanced without
recourse to the equity markets.
With ﬁnancial results unaffected
by share issuance, net asset
value per share rose by 5.6% to
302 pence (2002: 286 pence) and
is now higher than at the time of
the Group’s last, dilutive, share
placing in August 2002. We
remain committed to funding our
continued expansion by means
other than share issues. 
Our investment portfolio
At 31 December 2003 our
completed portfolio comprised
21,215 beds across 85 properties
and was independently valued at
£788.3 million. Including
development properties when
built out, the portfolio will be worth
approximately £1.3 billion. The
table on page 18 sets out, for the
ﬁrst time, details of the Group’s
completed portfolio together with
those projects scheduled for
delivery in 2004; a total of 26,319
beds across 28 cities.
Encouragingly the defensive, non-
cyclical characteristics of the
student sector, and its unique
rental growth record are beginning
to achieve a higher proﬁle in the
Real Estate sector at large and
growing interest in the residential
sector is also adding to an
increasingly positive sentiment.
Nonetheless valuing a portfolio
such as ours remains challenging
– there is little, although increasing,
reference transactional evidence
and the operational and residential
aspects of the properties add
further complexity. 
With this in mind we appointed 
a new valuer in 2003, CBRE, 
to work in conjunction with our
existing valuers, King Sturge 
and this has provided important
reassurance on the appropriate
valuation methodology.
Valuation yields across our
portfolio moved out during 2003.
The average initial yield of our
completed portfolio stood at
6.61% at the year-end, up from
6.20% a year earlier, and is now
higher than the reference
Investment Property Database
initial yield of 6.55% as of
December 2003. Initial yields for
the majority of our portfolio now
range from 5.8% for a property
leased long-term to a strong
institution to 7.5% for a tertiary-
located direct let property,
although there are a small number
of properties which fall outside of
A sound platform to deliver
scale and ﬁnancial returns
Group Finance
Director’s report
2003 saw an important period of growth and stability for
UNITE, following the changing environment of the
previous twelve months. Operating proﬁts from our
portfolio increased by 53% to £29.1 million and pre-tax
losses (before goodwill amortisation) fell sharply to £5.2
million (2002: £20.2 million). 
that range due to near-term
reversionary factors. The equated
yield proﬁle of the portfolio is even
stronger, ranging from 7.0% to
11.0% and averaging 9.2%.
Proﬁt and loss account
Portfolio proﬁt (operating proﬁts
from our portfolio less interest
expense) increased by 255% to
£3.9 million for the year (2002: £1.1
million). Rental income for 2003
was £48.1 million, an increase over
2002 (restated to include a full year
of the Peabody UNITE joint
venture) of 48%. This reﬂects the
signiﬁcant increase in the number
of operational beds in our portfolio
– 14,778 were operational for the
full year, with a further 6,437 beds
being opened for the 2003/04
academic year. Importantly, we
were able to contain the Group’s
portfolio-related overhead to 
£6.1 million, despite this signiﬁcant
increase in operations, and
consequently our portfolio
operating margin improved to
60.5% from 58.8% in 2002.
New borrowing associated with
portfolio growth and the entirely
debt-funded development
programme contributed to an
increase in the Group’s net
interest charge before
exceptionals to £25.2 million for
the year (2002: £17.6 million). 
16   Group Finance Director’s report “Having everything
I need under one
roof makes life so
much easier”
Helen Smirthwaite
Psychology student
and musician
Group Finance Director’s report   17 ■ £1.2 million of unrecovered
overhead relating to our
manufacturing facility which
was expensed in the ﬁrst half
of the year, as disclosed in 
our interim statement. 
All manufacturing overhead 
in the second half of the 
year was fully recovered
against increasing 
production volumes.
■ Pre-contract development
costs fell sharply to £3.7
million from £6.2 million in the
previous year, reﬂecting the
full year impact of the scaling
back of these activities
effected in October 2002.
■ £5.4 million of goodwill has
been amortised in relation to
development proﬁts.
After taking the above items into
account the Group reported a
basic loss per share of 10.0
pence, representing a signiﬁcant
improvement from the 30.0 pence
loss reported for 2002.
Capital expenditure
and ﬁnancing
Capital expenditure for 2003
totalled £218 million (2002: £190
million) and, as anticipated, was
funded purely through new
development debt and increased
borrowings against our
completed portfolio.
Consequently, gearing increased
to 182% from 133% at 31
December 2002.
Whilst our April 2002 securitisation
has demonstrated the ability of
our assets to sustain high levels
of debt, ﬁnancing our equity
contribution to new developments
purely through increasing
borrowing against completed
assets is initially dilutive to
earnings. As the Group sees early
stage scale in its portfolio, we are
beginning to explore other
sources of development capital
which are not as earnings dilutive.
However, interest cover improved
– net interest was covered 1.2
times by net rental income (2002:
1.1 times) and 0.9 times after
deducting corporate and
pre-contract development costs
(2002: 0.5).
Other proﬁt and loss
account items
Below portfolio proﬁt the 
Group proﬁt and loss account
also includes the following:
18   Group Finance Director’s report
Number of Beds
Rank City 2001 2002 2003 2004 Total No. of
+ Prior Properties
1 Bristol 1,957 - 716 176 2,849 14
2 Liverpool 972 - 1,209 651 2,832 9
3 Manchester 2,123 222 - - 2,345 9
4 London 1,120 436 158 459 2,173 12
5Portsmouth 676 - 726 - 1,402 3
6 Aberdeen - 598 705 - 1,303 4
7 Shefﬁeld 765 438 - - 1,203 3
8 Plymouth 112 224 - 765 1,101 5
9 Glasgow 408 - 660 - 1,068 2
10 Leeds - - 563 498 1,061 2
11 Leicester - - 369 652 1,021 3
12 Southampton - - 431 560 991 2
13 Newcastle 419 457 - - 876 4
14 Preston - 424 438 - 862 2
15 Birmingham - 175 - 575 750 2
16 Loughborough - 378 103 262 743 4
17 Bath 423 - - 316 739 5
18 Huddersﬁeld 427 200 - - 627 2
19 Cardiff - - 253 190 443 2
20 Dundee 400 - - - 400 2
21 Stoke - 345 - - 345 1
22 Nottingham - 301 - - 301 1
23 Coventry 153 100 - - 253 2
24 Exeter 218 - - - 218 1
25 Swindon - 143 - - 143 1
26 Aberystwyth 110 - - - 110 1
27 Edinburgh - - 106 - 106 1
28 Luton 54 - - - 54 1
10,337 4,441 6,437 5,104 26,319 100
2004 Completed Portfolio Notwithstanding such initiatives,
the Group remains very active in
the debt markets. During 2003,
the Group successfully arranged
£336 million of new bank facilities,
introducing four new lenders and
taking its overall bank facilities to
£731 million. Whilst the maximum
available loan to value ratios
under these facilities was
maintained, 2003 was generally a
more difﬁcult year for real estate
borrowers and the average
margin for our facilities increased
by approximately 20 basis points
when compared to earlier
borrowing. Despite this our overall
cost of debt fell to 6.3% as the
Group ﬁxed into historically low
long term swap rates.
Following the arrangement of
these new facilities, the Group
had £380 million of undrawn bank
facilities available to it at the year-
end, of which £180 million was
available for investment
properties. This headroom is
sufﬁcient to fully reﬁnance those
projects scheduled for completion
in 2004 and, with its existing
development facilities in place,
the Group is fully funded to meet
its development commitments.
Group Finance Director’s report   19
With our 2004 debt funding
requirements now fully in place
our attention is turning towards
requirements for 2005 and
beyond. With the ﬁrst of our
warehouse facilities scheduled for
repayment in July 2005, and the
ongoing requirement to reﬁnance
assets as they complete in order
to free up borrowing capacity for
continued development, we are
now exploring reﬁnancing options
for a proportion of our assets in
order to release capacity in the
bank markets.
In the past this has been
achieved through the
securitisation of income
generating assets and the
issuance of long-dated ﬁxed rate
bonds. We now consider this to
be only one of a number of
available alternatives, including
selective asset disposals, sale
and leaseback transactions and
other types of debt instruments,
all of which offer potential
solutions for the Group.
Looking forward
From a ﬁnance perspective, 2004
promises to be a challenging
and rewarding year for the
Group. Our portfolio is beginning
to see the beneﬁts of scale and
operating proﬁts are improving
as a result. The Group will be
moving away from a purely debt-
funded capital expenditure
programme and is beginning to
explore other effective sources of
capital. This is undoubtedly
helped in part by greater investor
interest in our sector, perhaps
fuelled by the potential
introduction of Real Estate
Investment Trusts (REITs) and a
greater understanding of
residential assets.
2004 will also see the quoted
Real Estate sector come to terms
with the implications of the
recently published International
Accounting Standards. They
promise a signiﬁcant shift in
ﬁnancial reporting methodology
for the whole sector and we are
currently examining the likely
impact on UNITE.
Finally, with a portfolio valued at
£1.3 billion when built out, an
increased focus on yield
enhancement will be important.
We will be examining our portfolio
closely and ensuring that, both
through existing holdings and
new developments, our capital is
put to work where it can earn the
best returns and add the greatest
shareholder value.
Foundry Court, Preston UNITE has been credited with
creating an entirely new asset
class for rented accommodation
which has shown itself resilient to
economic conditions. Within this
broad market context, we can
look to positive prospects ahead.
The numbers up!
Government policy appears set to
continue to drive increases in
student numbers. Furthermore
there is also early evidence that a
new inﬂux of prospective students
has applied to UK universities
from the European countries
joining the EU on 1 May 2004.
The Higher Education Policy
Institute suggests, in its research
‘Supply and Demand to 2010,’
that there could be a demand for
up to 250,000 more higher
education places from school
leavers qualiﬁed with two A-levels
by the end of the decade. 
Of those, 150,000 will arise from
demographic growth and the
remainder as a result of increases
in participation. This analysis has
not been challenged and is widely
regarded as the deﬁnitive
projection to the end of 
the decade. 
Furthermore, the University and
Colleges Admissions Services
(UCAS) ﬁgures show that the
number of full-time students
accepted by UK universities and
colleges in Autumn 2003 was up
by 1.7% on the previous year. 
A total of 374,307 applicants 
were accepted onto full-time
undergraduate courses 
compared with 368,115 in 2002. 
Overseas student numbers are
also increasing – up by 30% in
2001/02. Indeed, as well as an
increase in EU student
Unlocking the potential
of a growing market
Market insight
The sector in which we operate could not have been more prominent in
recent months with high-level debates concerning the Higher Education Bill
and announcements from the Chancellor on stamp duty and REIT’s. Also of
signiﬁcance to UNITE is the Housing Bill, which proposes licensing of Houses
in Multiple Occupation and the Planning and Compulsory Purchase Bill,
which aims to speed up planning and also puts more emphasis on the
community consultation process. 
applications, the number of non-
EU international students
entering higher education rose by
a record 23% last year with the
intake from China and India up
by 80%. 
Will increasing debt deter
prospective students? The Higher
Education Bill introduces top-up
fees but abolishes the current 
up-front fee paying from 2006
allowing some ﬁnancial pressure
to be deferred and providing
more maintenance support. The
UNITE Student Living Report
2004, undertaken by MORI,
shows that students seem to be
roughly divided into two camps
regarding their attitudes towards
debt. One group is seriously
worried about the debts they will
incur during their time at
university, while the other camp is
putting off thinking about their
Age group cohorts of overall
UK population - 1985 to 2015
Source DFES
85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15
200
400
600
800
1000
18 year olds 20 year olds 22 year olds 24 year olds
Population ‘000’s
20   Market insight
Full time
student numbers
Source UNITE/HESA
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
1.4m
1.3m
1.2m
1.1m
1m
900k
800k
700k
600k
500k
400k debts until they have a job. It may
be that their acceptance of a
wider debt-based culture has 
also made this group slightly 
less sensitive to the cost of 
their education.
A worthwhile investment 
Despite high levels of debt,
almost all students think of
university as a worthwhile
investment. According to the 2004
UNITE Student Living Report, nine
in ten agree that the money they
are spending on their education is
a good investment in their future.
To help pay their way, two in ﬁve
of students work part-time,
earning an average of £83 per
week for an average 14 hours
work. The majority of students
(85%) also receive ﬁnancial
support from their parents 
and families.
Market dynamics
Student rented accommodation
has proved resilient to the
prevailing economic conditions,
with rental values demonstrating
steady increases over the last 20
years. However, an entirely robust
assessment of the situation
cannot be made due to the
changes in the nature of this
accommodation during this time.
Other factors for consideration
include build cost inﬂation and the
competitive market for suitable,
well-located sites. Those factors
continue to provide a challenging
context and signiﬁcant barriers to
entry for the provision of
affordable accommodation.
Impact on Student
Accommodation
The university sector has severely
limited resources with which to fund
the construction of new
accommodation, especially bearing
in mind its need to carry out some
£700m remedial work. It is therefore
unlikely that this will be a signiﬁcant
source of new developments to
suppress rental growth.
Market insight   21
Snow Island, Huddersﬁeld
This leaves the private sector to
manage supply. It is estimated
that professional landlords in the
private sector are providing 75%
of proposed new projects. For
smaller investors, the Housing Bill,
if and when enacted, could
represent another barrier to entry.
The Bill is due for debate in the
current parliamentary session and
includes the proposal for the
licensing of the vast majority of
Houses in Multiple Occupation.
Already in existence in Scotland,
its introduction in England would
affect a great deal of student
accommodation, subjecting
landlords to potentially  higher
costs and tighter regulations.
Understanding our market in
detail is central to our ability to
sense and respond to changes
ahead of time. For example, it is
acknowledged that there is
evidence of a trend towards more
students living at home, rather
than going away to study. Yet on
the other hand, there is a
recognition by universities that
living away from home enhances
the student experience and
increases satisfaction with
university life. Students, too,
believe that moving away is an
integral aspect of university life,
although one that absorbs a
signiﬁcant proportion of a
student’s budget. According to
the 2004 UNITE Student Living
Report, students who live at home
are less happy than those who
live away from home, perhaps
missing out on some important
elements of student life. Six in ten
students believe that those living
at home do not gain the full
beneﬁt of being a student. 22   The Board of Directors
Geoffrey Maddrell,
Chairman
Aged 67. Geoffrey has a long-
standing strategic interest in
building-related activities, initially
on the Board of Bowater where he
was responsible for developing
their building product business.
He is Chairman of a leading
housebuilder, Westbury plc, and
of BuildStore Limited, which
serves the self-build market: in this
sector he is also on the Board of
Goldcrest Homes plc.
Geoffrey is also a Civil Service
Commissioner and Chairman of
the Ivory & Sime ISIS Trust Plc.
He has recently stepped down
as Chairman of Glenmorangie
PLC following the completion of
its reorganisation and as
Chairman of LDV Limited, the
van specialist following a
successful reﬁnancing, where he
remains a Director.
Nicholas Porter,
Chief Executive Ofﬁcer
Aged 34. Nicholas is founder of
UNITE and has overall
operational responsibility for the
Group. He is Chairman of its
Operations Board and was
instrumental in implementing its
revised divisional structure.
Nicholas is also responsible for
the development of Group
strategy, and, with his in-depth
knowledge of the higher
education sector, he continues to
steer the business development
and communications of the
Group. He also spearheads key
issues at Government level.
Nicholas is driving UNITE’s
strategy to be ﬁrst choice for
customers, people and
shareholders.
The Board of Directors
Left to right from top
1 Geoffrey Maddrell
2 Nicholas Porter
3 Mark Allan
4 Andrew Lee
5Nigel Hall
6 Baroness Prashar of Runnyede CBE
7 Stuart Beevor
12
34
5
7
6 Mark Allan,
Group Finance Director
Aged 31. Mark joined UNITE in
1999, having previously qualiﬁed
as a Chartered Accountant with
KPMG. Prior to his appointment
as Group Finance Director in
November 2003, Mark held
various positions within the
Group including those of
Corporate Finance Director and
Commercial Director. Mark now
has overall responsibility for the
Group's ﬁnances, including
portfolio and valuation strategies,
as well as its e-business
infrastructure. He has recently
developed and continues to
oversee UNITE’s divisional
ﬁnance platform, ensuring that
each Division has in place robust
ﬁnancial controls and dedicated
ﬁnance and accounting teams. 
Andrew Lee, 
Human Resources Director
Aged 35. Andrew has previously
worked in Europe and the US
with companies including Marks
and Spencer, Marriott, McKinsey,
BAA, Whitbread and PWC. He
holds a number of post-graduate
qualiﬁcations, including a
doctorate in Organisational
Change. Andrew’s focus
continues to be on the
development of all UNITE
employees, ensuring that they
are provided with challenging,
rewarding and meaningful
careers, thus enabling the Group
to more effectively achieve its
commercial objectives.
Nigel Hall, Non-Executive
Director and Chairman of
Audit Committee
Aged 48. Nigel, who qualiﬁed as
a Chartered Accountant in 1980
with Price Waterhouse, was
Group Finance Director of
Arcadia Group plc (formerly The
Burton Group plc) until February
2003. He joined The Burton
Group in 1984 and was
appointed to its Board in 1997,
becoming Group Finance
Director in November of that year.
Nigel is also Chairman of BRC
Trading Limited, the trading arm
of the British Retail Consortium
and is a trustee of the Textile
Industry Children’s Trust. With his
considerable experience of
ﬁnance and operations in a
complex multi-site retail business,
Nigel provides valuable
experience to the Board and
strong leadership of the 
Audit Committee.
Baroness Prashar of Runnyede
CBE, Non-Executive Director
Aged 55. Baroness Usha Prashar
was Executive Chairman of the
Parole Board for England and
Wales from October 1997 to
2000. In August 2000 she
became First Civil Service
Commissioner. In 1995, she was
awarded the CBE for public
service and community relations
and in June 1999, she was
created a life peer. She sits in
the House of Lords as a cross
bencher. Baroness Prashar
resigned from the Board on 
1 March 2004 having served her
three year term of appointment.
Stuart Beevor,
Non-Executive Director
Aged 47. Stuart is a member of
the Board and Group Fund
Management Director of
Grosvenor Group Limited, the
international property group,
which he joined in 2002. Prior to
joining Grosvenor, he was
Managing Director at Legal and
General Property Limited, having
previously held a number of
roles dealing with development,
investment, property
management and unitised funds
at Norwich Union. Stuart is a
representative of the Investment
Property Forum and the RICS on
the UK REIT industry working
group and is a Trustee of the
Investment Property Forum;
Educational Trust. He is past
Chairman of the Investment
Property Forum, a past member
of the Property Advisory Group
of the Ofﬁce of the Deputy Prime
Minister and, previously, a
member of the external
examination board of the College
of Estate Management. 
With his breadth of knowledge of
the property industry, Stuart’s
input to the Board will be
particularly valuable in
developing the Group’s strategy
to maximise the value of 
its portfolio.
The Board of Directors   23 The Directors present their
annual report and audited
accounts for the year ended 
31 December 2003.
The principal activities of the
Group during the year were the
construction, holding and
management of student and NHS
key worker residential
accommodation in the United
Kingdom. Details of the
Company’s subsidiaries are set
out on page 47.
Operating and Financial Reviews
Reviews of the Group’s
operations and ﬁnancial affairs
are set out on pages 8 to 19 of
this report.
Proﬁt and Dividends
The Group loss for the year
attributable to shareholders
amounted to £10.8 million (2002:
loss of £25.6 million). The Directors
recommend the payment of a ﬁnal
dividend of 1.67 pence per
ordinary share (2002: 1.67 pence
per ordinary share) making a total
dividend for the year of 2.5 pence
per share (2002: 2.5 pence per
share) leaving a retained loss of 
£13.5 million to be transferred to
reserves (2002: retained loss of
£28.3 million). Subject to approval
at the Annual General Meeting of
the Company, which has been
convened for 6 May 2004 (the
“ Annual General Meeting”), the
recommended ﬁnal dividend will
be payable on 14 May 2004 to
shareholders on the register at the
close of business on 16 April 2004.
Directors
Each of Mr G K Maddrell, Mr N A
Porter and Baroness Prashar
served as Directors throughout
the year. Mr N P Hall was
appointed as an additional Non-
Executive Director on 6 March
24   Directors’ report
2003, whilst Mr M C Allan and Dr
A Lee were appointed as
additional Executive Directors on
17 November 2003. Messrs D F
Naish, D P Ransome and S L
Bernstein resigned as Directors
on 25 March 2003, 30 June 2003
and 17 November 2003
respectively. Mr Maddrell acted
as Chairman of the Board
throughout the period.
On 1 March 2004, Baroness
Prashar stepped-down as a Non-
Executive Director of the
Company having served her
three year term of appointment. 
In her place, Mr S R H Beevor
was appointed as an additional
Non-Executive Director on 1
March 2004. Mr Beevor, together
with Mr M C Allan and Dr A Lee,
offer themselves for re-election at
the Annual General Meeting, as
do Messrs N A Porter and N P
Hall, both of whom retire by
rotation. Brief biographies of all
the Directors, including those
standing for re-election, are set
out on pages 20 and 21. 
Those biographies describe 
the reasons why those of the
Directors standing for re-election
should be re-elected.
Directors’ report
for the year ended 31 December 2003
Ordinary Shares Ordinary Shares
of 25p each of 25p each
Directors 31 December 2003 31 December 2002
N A Porter 14,674,367 14,674,367
M C Allan - -
A Lee - -
G K Maddrell 278,487 278,487   
N P Hall 5,128 -
Baroness Prashar of Runnymede - -
1. Mr Porter’s interests include his
interest in (a) 1,146,000 ordinary
shares held by the trustees of The
Porter Family Discretionary Trust, the
beneﬁciaries of which are his two
children; (b) 253,140 ordinary
shares held by the trustees of the
Jane Louise Discretionary
Settlement Trust, the beneﬁciaries of
which are his two children; and (c)
125,000 ordinary shares held by the
trustees of The Redshoes Charitable
Trust, one of whom is Mr Porter.
2. Mr Maddrell’s interests include 
his interest in 12,250 ordinary 
shares held by his wife, Winifred 
Maddrell, and 201,237 ordinary 
shares held by the trustees of the
Geoffrey Maddrell Jersey Trust, 
the beneﬁciaries of which include
himself, his wife and his three 
children.
Directors’ Interests
The interests of the Directors and their families in the ordinary shares of
the Company are set out below. Details of Directors’ share options are
set out in the Directors’ Remuneration Report.
None of the Directors has a beneﬁcial interest in the shares of any other
Group company. Since 23 February 2004, there have been no changes
in the Directors’ interests in shares. Directors’ report   25
Changes in Share Capital
On 1 August 2003 the Company
allotted and issued 605,963
ordinary shares of 25 pence each
pursuant to the exercise of
conversion rights attaching to
£855,686 in nominal value of the
Company’s 8% Cumulative
Unsecured Loan Stock 2004
at a conversion price of 
141.21 pence per share.
On 2 October 2003, the Company
allotted and issued 1,452 ordinary
shares of 25 pence each at an
issue price of 120.5 pence per
share pursuant to an option
granted under The UNITE Group
plc Savings-Related Share 
Option Scheme.
On 20 November 2003, the
Company allotted and issued
1,245 ordinary shares of 25 pence
each at an issue price of 
155.5 pence per share pursuant
to an option granted under The
UNITE Group plc Savings-Related
Share Option Scheme.
Substantial Interests in the Share
Capital of the Company
As at 23 February 2004 those
shareholders, other than
Directors, who had notiﬁed the
Company of a disclosable interest
amounting to 3% or more of the
ordinary share capital of the
Company were as follows:
Donations
The Group made no political
donations during the course of
the year but made charitable
donations amounting to £50,000
to Uniaid Foundation 
(2002: £50,000).
Policy and Practice on Payment
of Creditors
During the year the Company
maintained its policy of agreeing
and abiding by supplier payment
terms. The Group has not
followed any recognised code for
payment practice. As at 31
December 2003, the Group’s
trade creditors were equivalent to
30 days’ purchases (2002: 30
days). The Company does not
have any trade creditors 
(2002: nil).
Health and Safety
The Group’s policy is to provide
and maintain safe and healthy
working conditions, equipment
and systems of work for all its
employees and to provide such
information, training and
supervision as they need for this
purpose. Further details of the
Group’s Health & Safety
Management System are set out
on page 15.
Employment Policies
The Company encourages
employee involvement and
consultation and places
emphasis on keeping its
employees informed of the
Group’s activities and ﬁnancial
performance. The UNITE Group
plc Approved Company Share
Option Scheme, The UNITE
Group plc Unapproved Share
Option Scheme and The UNITE
Group plc Savings-Related Share
Option Scheme are intended to
help develop employees’ interest
in the Company’s performance.
The Company operates a non-
discriminatory employment
policy. Full and fair consideration
is given to applicants for
employment from the disabled
where they have the appropriate
skills and abilities and to the
continued employment of staff
who become disabled. The
Company encourages the
continuous development and
training of its employees and the
provision of equal opportunities
for the training and career
development of disabled
employees. Further details of the
Group’s personal development
programme for employees are
set out on page 14, in the
section ‘Our people’.
Environmental and
Ethical policies
The Group has always
recognised the importance of
protecting and enhancing the
environment in which it operates
and is fully committed to
implementing and monitoring
policies reﬂecting the statement
set out below.
Shareholder Percentage of
share capital
Schroder Investment 7.26%
Management Limited
Fidelity International 5.42%
Limited/FRM Corp Limited
Canada Life 3.02%
Marketing Group
Legal & General 3.01%
Investment
Management Limited
In all aspects of its business, the Group
considers the impact of its activities on the
environment. It is concerned for the
environmental well being of the communities in
which it invests and complies with all relevant
environmental legislation and regulations. It
strives to protect the health and safety of its
employees and promotes environmental
awareness amongst them, its customers,
contractors, tenants and suppliers. 26   Directors’ report
Mr N A Porter, Chief Executive
Ofﬁcer of the Group, has
responsibility for ensuring that the
policy described above is
observed. The Board, as a whole,
regularly reviews implementation
of such policy and considers any
amendments thought necessary
or desirable.
Initiatives implemented include
the introduction of waste re-
cycling schemes at the Group’s
ofﬁce locations and at its
accommodation blocks. In
addition, the increasing use by
the Group of modular
construction has resuled in a
signiﬁcant reduction in waste,
compared with traditional
construction methods. 
The basic tenet of the 
UNITE Code of Ethics
(the full text of which can be
found on the Company’s web-
site), is that the Group seeks at all
times to conduct its business in
accordance with, and to ensure
that each of its employees and
directors adheres to, the highest
standards of business and
personal ethics. Employees,
customers and contractors of the
Group are all made aware of the
provisions of this Code.
Auditors
In accordance with Section 384 of
the Companies Act 1985, a
resolution for the re-appointment
of KPMG Audit Plc as auditors of
the Company is to be proposed
at the forthcoming Annual
General Meeting.
Annual General Meeting
The Annual General Meeting of
the Company will be held at The
Herbert Morrison Room, London
Marriott Hotel, County Hall,
Westminster Bridge Road,
London SE1 7PB at 9.30 a.m. on
6 May 2004. Formal notice of the
meeting is given on page 59.
In addition to the ordinary
business of the meeting, an
1 Observing all local environmental control policies and relevant 
environmental regulations.
2 Reviewing all proposed developments to assess the presence of 
any contamination and the means of remediation, if required.
3 Inspecting all land and buildings owned by the Group to 
ascertain whether environmental damage has occurred or is at 
risk of occurring.
4 Informing tenants of good energy management practices.
In building, design and construction the following
measures are applied:
1 Re-developing brown-ﬁeld sites where practicable.
2 Striving to eliminate the use of materials containing CFC and 
HCFC as alternatives become available.
3 Conserving energy through improved insulation and the use of 
energy efﬁcient heating and lighting systems.
4 Specifying, where practicable, that building materials and 
furnishings come from sustainable sources.
5 Applying effective waste management procedures to ensure 
that developments do not cause an increase in air, water or
ground pollution.
6 Enhancing landscaping and external aspects in harmony with 
existing surroundings.
7 Adopting best health and safety at work practices.
8 Limiting nuisance from noise, dust and hazards.
9 Endeavouring to limit waste generation, discharges and 
emissions and handling wastes in a responsible manner.
10 Adopting measures to protect workers, visitors and the public 
from exposure to unacceptable risks and hazards.
In its internal operations, the Company will:
1 Be responsive to public attitudes and concerns.
2 Ensure all building, maintenance and service operations are 
optimised to save energy, water and waste.
3 Return used materials for re-cycling.
4 Ensure that Company vehicles are maintained regularly to reduce
exhaust emissions and economise on fuel usage.
5 Maintain a safe and healthy working environment for the well 
being of employees.
The statement on the previous page forms the framework of the Group’s environmental policy. The policy is implemented through:
ordinary resolution will be
proposed to authorise the
Directors to allot up to £9,024,796
in nominal value of the authorised
but unissued share capital of the
Company (representing one third
of the issued share capital of the
Company as at 23 March 2004).
The Board has no current
intention of exercising that
authority. A special resolution will
also be proposed to dis-apply
statutory pre-emption rights in
respect of the allotment of shares
for cash in connection with any
rights issue or other issue by way
of rights and otherwise up to an
aggregate nominal amount of
£1,353,719 (representing ﬁve per
cent of the issued share capital 
of the Company as at 23 March
2004). Again the Board has no
current intention of exercising 
that authority.
By order of the Board
A D Reid
Secretary
23 March 2004 Corporate governance
for the year ended 31 December 2003
However, responsibility for day to
day operations is delegated to the
Group’s Operations Board, which
comprises the Executive Directors
from the full Board, together with
the heads of each of the Group’s
operating Divisions, namely
Development, Accommodation
Services and Manufacturing. 
Terms of reference have been set
by the Board for its various
committees and for the Chairman
and the Chief Executive Ofﬁcer.
The terms of reference for the
Chairman and the Chief Executive
are such as to clearly establish
the division of responsibility
between the two roles. In
addition, all Directors have
access to the advice and services
of the Company Secretary, whilst
procedures are in place allowing
for individual Directors to take
independent legal advice at the
Company’s expense. Directors
attend relevant training
programmes, as appropriate.
The current Board complement
consists of three Executive
Directors, namely a Chief
Executive Ofﬁcer (Mr N A Porter),
a Group Finance Director (Mr M C
Allan) and Human Resources
Director (Dr A Lee), as well as the
Chairman (Mr G K Maddrell) and
two Non-Executive Directors
(Messrs N P Hall and S R H
Beevor). Mr Beevor was
appointed as an additional Non-
Executive Director on 1 March
2004, on which date Baroness
Prashar stepped-down as a Non-
Executive Director following the
expiration of her three year term
of appointment.
During the course of the year the
Company complied (except as
speciﬁcally set out below) with
the principles of best practice set
out in the Combined Code
issued by the Hampel
Committee on Corporate
Governance in June 1998
(the “Combined Code”).
Following the publication by the
Financial Reporting Council in
July 2003 of its new Combined
Code on Corporate Governance
(the "New Combined Code"), the
Company reviewed its corporate
governance procedures and set
out below is a summary of those
procedures, as amended in light
of the requirements of the New
Combined Code. Such
procedures were adopted by the
Board in October 2003.
Board of Directors
The Company’s corporate
governance procedures provide
that the full Board of Directors
shall meet at least six times a
year. During 2003 there were
nine meetings of the full Board,
all of which were attended by
each of the Directors then
appointed, other than two
meetings, one of which Baroness
Prashar was unable to attend,
whilst Mr D F Naish was unable
to attend one meeting.
The Board receives regular
reports from each of the Group’s
operating Divisions, but itself
retains full and effective control
of the Group’s activities, with a
formal schedule of matters
speciﬁcally reserved for decision
by the full Board. In particular, the
full Board sets the strategic
objectives, business plan and
annual budgets for the Group,
with major investment decisions
also requiring Board approval.
As a smaller company (i.e. one
that is outside the FTSE 350), the
Company meets the requirement
of the New Combined Code that
it should have at least two Non-
Executive Directors. However, in
view of the size of the Board, no
Director has been designated as
senior independent Non-
Executive Director and in that
respect, the Company does not
comply with the Combined Code
or the New Combined Code.
Each of the existing Non-
Executive Directors is
independent of management
and free from any personal,
business or other relationships
with the Group, save for the
receipt of Directors’ fees and
interests in shares of the
Company. However, Mr D F
Naish (who until 25 March 2003
was a Non-Executive Director of
the Company), was, until 31
October 2002, a partner in The
David Naish Partnership, to
which the Company paid fees (in
relation to tax advisory services)
of £110,000 in the year to 
31 December 2003.
Each of the Executive Directors
has a written service contract,
whilst each of the Non-Executive
Directors has a formal letter of
engagement. Executive Directors
have rolling contracts of
employment with twelve months
notice periods, whilst Non-
Executive Directors are
appointed by the full Board for a
term not exceeding three years.
The letters of appointment
relating to the Non-Executive
Directors are available for
inspection at the Company’s
registered ofﬁce during normal
business hours and for 15
minutes prior to and during the
Annual General Meeting.
Corporate governance    27 The Board has appointed an
Audit Committee, a
Remuneration Committee and a
Nominations Committee. The
terms of reference for each such
committee are published on the
Company’s website and set out
below are summaries of the work
of those committees in
discharging their respective
responsibilities.
Audit Committee
During the year the Audit
Committee comprised 
Mr G K Maddrell, Baroness
Prashar, Mr D F Naish (until his
resignation from the Board on 
25 March 2003) and Mr N P Hall
(as from his appointment to 
the Board on 5 March 2003). 
Mr S R H Beevor was appointed
as a member of the Audit
Committee on 18 March 2004
following his appointment to the
Board on 1 March 2004 and the
resignation on that date of
Baroness Prashar. 
Mr Maddrell acted as Chairman
of the Audit Committee until 1
July 2003 when the chairmanship
of the Committee was assumed
by Mr N P Hall. Mr Hall has
extensive recent ﬁnancial
experience, being a Chartered
Accountant and, until February
2003, ﬁnance director of Arcadia
Group plc (formerly The Burton
Group plc).
During the year the Audit
Committee met on three
occasions, with each meeting
being attended by each of its
then members.
The Audit Committee meets with
the Group Finance Director and
with the external auditors and
reviews the annual accounts and
the preliminary and interim
ﬁnancial results announcements
prior to submission to the Board.
The Audit Committee also
reviews compliance with
accounting standards, the scope
and extent of the external audit
programme and the
appointment, independence and
remuneration of the auditors. The
chairman of the Audit Committee
reports to the Board on matters
discussed at meetings of the
Audit Committee. 
During the course of the year the
Audit Committee reviewed the
need for an internal audit
function within the Group. 
The conclusion of that review
was that, in view of the existing
controls in place, the
implementation of an
Accommodation Services self-
audit regime and the size of the
Group, a Group internal audit
function was not required.
However, the position is being
kept under review.
The Audit Committee has
established a formal policy with
regard to the Company’s
appointment of the external audit
ﬁrm for the supply of non-audit
services. In addition, the Audit
Committee reviews any potential
threat to the objectivity and
independence of the external
auditor, including, in particular,
those potential threats identiﬁed
by the Institute of Chartered
Accountants in England and
Wales in its independence
guidelines. The Committee
determines and then reports to
the Board, whether or not it is
satisﬁed that the independence
of the external auditor is not
jeopardised, taking into account
the external auditor’s own
submissions to the Committee
and/or the Board. 
During the course of 2003 the
only non-audit services provided
to the Group by the external
audit ﬁrm were tax advisory.
Remuneration Committee
During the year the
Remuneration Committee
comprised Mr G K Maddrell (who
again acted as Chairman),
Baroness Prashar, Mr D F Naish
(until his resignation from the
Board on 25 March 2003) and 
Mr N P Hall (as from his
appointment to the Board on 
6 March 2003). Mr S R H Beevor
was appointed a member of the
Remuneration Committee on 
18 March 2004 following his
appointment to the Board on 
1 March 2004 and the
resignation on that date of
Baroness Prashar.
The Committee determines
remuneration policy and advises
the Board accordingly. In
particular, the Committee makes
recommendations regarding the
terms of employment of
executive directors and senior
managers, including terms of
remuneration, the award of share
options and other incentives. 
Mr N A Porter is invited to attend
meetings of the Remuneration
Committee but takes no part in
the discussions concerning his
own remuneration and does not
attend those parts of the
meetings of the Committee that
consider that issue. The
Directors’ Remuneration Report
is set out on pages 32 to 36. 
During the course of 2003 ﬁve
meetings of the Remuneration
Committee were held, all of
which were attended by each 
of the then current members of
the Committee.
28   Corporate governance Corporate governance    29
Nominations Committee
The Nominations Committee is
chaired by Mr G K Maddrell.
However, the exact composition
of the committee is variable,
provided that each meeting has
a majority represented by
independent Non-Executive
Directors. During the course of
2003 six meetings of the
Nominations Committee were
held, each of which was
attended by Mr G K Maddrell,
Baroness Prashar and Mr N A
Porter. Mr D F Naish also
attended those meetings of the
Committee held prior to his
resignation, whilst Mr N P Hall
attended those meetings of the
Committee held subsequent to
his appointment to the Board. 
The Committee is responsible for
making recommendations to the
Board on any appointment or
re-appointment to the Board and
at senior executive level. It is also
responsible for ensuring that
plans are in place for an orderly
succession of appointments to
the Board and at senior
management level so as to
maintain an appropriate balance
of skills and experience within the
Company and on the Board. 
Following determination by the
Board that a new Non-Executive
Director should be appointed,
the Nominations Committee
draws-up a personal and
professional proﬁle of the ideal
candidate it would like to see
appointed in order that a
recruitment and selection
process can be undertaken.
The Committee then appoints an
independent search and
selection agency to approach
potential candidates who it
identiﬁes as meeting the
speciﬁcation supplied by the
Nominations Committee. Initial
interviews are conducted by the
search agency, which then
compiles a short list of
appropriate candidates to be
interviewed by the Nominations
Committee. A recommendation
of a proposed candidate is then
made following those second
round interviews. Following a
recommendation from the
Committee for the appointment
of a candidate to the Board, the
Chairman may be requested by
the Board to approach the
nominated candidate to agree
terms for the appointment
according to the criteria set out
in the Group’s remuneration
policies. The above procedure
was followed in the case of the
recent appointment to the Board
of Mr S R H Beevor.
Consideration of the appointment
of an internal candidate to the
position of Executive Director will
follow a request from the Chief
Executive to the Nominations
Committee that the appropriate
candidate be considered for
nomination. This will only follow a
record of successful
achievement in the candidate’s
current role and the gathering of
data from an independent
external assessment centre that
the candidate will have been
asked to attend. At that centre,
the proposed candidate is
assessed in the areas of
commercial and strategic ability,
leadership; technical ability;
ability to build peer relations; and
values and behaviours. The
results of those assessments are
compared against a global norm
group of highly performing
directors and senior managers.
After gathering the assessment
data the Nominations Committee
interviews the proposed
candidate, following which it may
recommend his or her
appointment to the Board. If the
Board accepts the
recommendation of the
Committee it will, through the
Chairman and Chief Executive,
invite the proposed candidate to
join the Board according to
terms and conditions of service
agreed by the Remuneration
Committee. That follows an
external benchmarking of
remuneration for the role. The
above procedures were followed
in the cases of the recent
appointments to the Board of Mr
M C Allan and Dr A Lee.
For the appointment of external
candidates to the role of
Executive Director, the process
outlined above in relation to Non-
Executive Directors is followed,
with the addition that such
external candidates are, as is the
case with internal candidates,
required to attend an external
assessment centre prior to ﬁnal
interviews by the Nominations
Committee.
Performance Evaluation
of Directors
The process for evaluating the
performance of the Executive
Directors ﬂows from the setting
of the overall business strategy
for the Group. Once agreed by
the Board, the Executive
Directors produce Divisional
strategies and milestone action
plans designed to deliver the
agreed overall strategy. Such
strategies and plans, which are
challenged and may be revised
prior to being ratiﬁed by the
Board, then form the basis of
personal objectives that are set
for each of the Executive
Directors. The personal
objectives of the Chief Executive Ofﬁcer are agreed between him
and the Chairman as part of the
annual Performance Development
Programme (“PDP”) cycle. The
other Executive Directors agree
their objectives with the Chief
Executive Ofﬁcer, again as part of
the PDP process. Progress in
achieving objectives is monitored
at least monthly through one to
one meetings between the
Chairman and the Chief Executive
Ofﬁcer and between the Chief
Executive Ofﬁcer and the other
Executive Directors. Progress
reviews are also carried out at
Board level through the review of
key performance indicators. 
Formal performance
measurement is undertaken
through half-year PDP reviews of
progress made against
milestones, key performance
indicators and other personal
objectives. The annual PDP
review of performance takes
place shortly after the year-end.
That review considers
performance against objectives,
including key performance
indicators, and the Group’s
values and behaviours. The key
performance indicators, which
include ﬁnancial performance and
customer and employee
satisfaction also form the basis of
the bonus formulae as set out in
the Directors’ Remuneration
Report. 
In line with the New Combined
Code, the performance of the
Non-Executive Directors is to be
reviewed annually by the
Chairman, whilst the performance
of the Chairman is to be
considered annually by the Non-
Executive Directors (in the
absence of the Chairman) in both
cases taking account of the views
of the Executive Directors. The
ﬁrst such reviews will be
conducted in June 2004. The
Chairman and the Non-Executive
Directors (also on an annual
basis), meet to consider the
overall effectiveness of the Board
and its Committees. Those
meetings are then followed by full
Board review meetings, which are
attended by all members of the
Board. Such meetings have been
the normal practice of the Board
over recent years.
Internal Control
The Board has overall
responsibility for the Group’s
system of internal control.
However, such a system is
designed to achieve business
objectives and can only provide
reasonable and not absolute
assurance against material
misstatement. The provisions of
both the Combined Code and the
New Combined Code in respect
of internal controls require that
directors review all controls
including operational, compliance
and risk management, as well as
ﬁnancial control. Through reports
from the Group’s Operations
Board, the Board has reviewed
the effectiveness of the Group’s
system of internal controls for the
period covered by the annual
report and accounts. 
The Company has an established
framework of internal controls
which, amongst other things,
includes the following:
Financial Reporting
The Group has a comprehensive
budgeting system with an annual
business plan approved by the
Board. Operating results and
cash ﬂows are reported on
monthly and compared against
budget. Forecasts are reviewed
throughout the year and revised
as necessary. The Company
reports to shareholders on a half-
yearly basis.
Investment Appraisal
The Company has clearly deﬁned
guidelines for capital expenditure.
These include annual budgets,
detailed appraisal and review
procedures, levels of authority
and due diligence requirements
where investment or development
properties are being acquired.
Post-investment appraisals are
performed for major investments.
Business Risk Assessment
The Group has developed a
comprehensive risk management
system whereby strategic threats
to the business are identiﬁed and
the management and control of
those threats prioritised. As a
result of this system, the Board is
satisﬁed with the high level
controls in place, although all
areas of the business are kept
under review and new controls
introduced as appropriate.
30   Corporate governance Social Responsibility
Following the issue by the
Association of British Insurers in
October 2001 of its guidelines in
relation to socially responsible
investment, the Company
reviewed its policies in relation to
that issue and formalised its
procedures for considering the
signiﬁcance to the business of
the Company of social,
environmental and ethical (SEE)
matters. As a result, SEE matters
are now considered as part of
the Group’s existing risk
management system (referred to
above in relation to Business
Risk Assessment). The results of
the benchmarking reviews which
form part of that system (which
are carried out by the Group’s
Operations Board) are reported
to and considered by the full
Board on a six monthly basis.
Details of the SEE risks and
opportunities that are considered
most signiﬁcant to the Group are
set out on page 14. In light of the
above, the Board believes that it
has in place appropriate
procedures to identify and
assess the signiﬁcant risks to the
Company’s short and long-term
value arising from SEE matters,
as well as opportunities to
enhance value that may arise
from an appropriate response. In
that respect, the Board considers
that it receives adequate
information to make those
assessments and that the
Company has in place effective
measures for managing
signiﬁcant risks. 
Account is taken of SEE matters in
relation to the training of Directors.
Investor Relations
The Executive Directors have a
programme of meetings with
institutional shareholders and
analysts. Feedback from such
meetings regarding shareholder
opinion is provided to the Board
as a whole. In addition, Non-
Executive Directors are available
to meet with major shareholders if
requested. The Company’s
Annual General Meeting provides
an opportunity, which the Board
encourages, for private investors
to communicate with the
Company.
Going Concern
After making enquiries the
Directors have a reasonable
expectation that the Group and
the Company have adequate
resources to continue in
operational existence for the
foreseeable future. For this 
reason they continue to adopt 
the going concern basis in
preparing the accounts.
Statement of Directors’
Responsibilities
Company law requires the
Directors to prepare ﬁnancial
statements for each year which
give a true and fair view of the
state of affairs of the Company
and the Group and of the proﬁt or
loss for that period.
In preparing those ﬁnancial
statements the Directors are
required to:
1 select suitable accounting 
polices and then apply them 
consistently;
2 make judgements and 
estimates that are reasonable
and prudent;
3 state whether applicable 
accounting standards have 
been followed, subject to any
material departures disclosed
and explained in the ﬁnancial 
statements; and
4 prepare the ﬁnancial 
statements on the going 
concern basis unless it is 
inappropriate to presume 
that the Group will continue 
in business.
The Directors are responsible for
keeping proper accounting
records which disclose with
reasonable accuracy at any time
the ﬁnancial position of the
Company and which enable
them to ensure that the ﬁnancial
statements comply with the
Companies Act 1985. They have
general responsibility for taking
such steps as are reasonably
open to them to safeguard the
assets of the Group and to
prevent and detect fraud and
other irregularities.
Corporate governance    31 The Regulations require the
auditors to report to the
Company’s members on the
“auditable part” of the Directors’
Remuneration Report and to state
whether, in their opinion, that part
of the Report has been properly
prepared in accordance with the
Companies Act 1985 (as
amended by the Regulations).
The Report has therefore been
divided into separate sections for
the unaudited and audited
information. Within the unaudited
section the Report deals with the
remuneration policy that is to be
followed in 2004; summarises the
results of remuneration surveys
that have been undertaken and
describes arrangements which
applied during 2003.
Remuneration Committee
During the year the Remuneration
Committee of the Board
consisted of the Chairman of the
Board (Mr G K Maddrell) and the
Non-Executive Directors of the
Company, namely Baroness
Prashar, Mr D F Naish (until his
resignation from the Board on 
25 March 2003) and Mr N P Hall
(as from his appointment to the
Board on 6 March 2003).
Subsequent to Baroness
Prashar’s resignation from the
Board and the Committee on 
1 March 2004, Mr S R H Beevor,
who was appointed an additional
Non-Executive Director of the
Company on 1 March 2004, was
appointed to the Remuneration
Committee in place of Baroness
Prashar on 18 March 2004. Mr N
A Porter is invited to attend
meetings of the Committee, which
is chaired by Mr Maddrell. 
The Committee is required
annually to consider and review
all aspects of the Executive
Directors’ employment,
performance and remuneration
and the Group’s policies on those
matters. Mr Porter takes no part in
the discussions concerning his
own remuneration, nor does he
attend those parts of the meetings
of the Committee which discuss
that issue. 
The Committee is able to obtain
independent professional advice
from remuneration and other
consultants in order to carry out its
duties. During the year such
advice was received from
PricewaterhouseCoopers LLP .
PricewaterhouseCoopers LLP
provided no other services to the
Group during the course of the
year. In addition, Dr A Lee, the
Group Human Resources Director
(who was appointed to the Board
on 17 November 2003) provided
advice and services to the
Committee during the course of
the year. The members of the
Committee attend the Company’s
Annual General Meeting and are
available to answer shareholders’
questions about the Directors’
remuneration.
Policy on Remuneration of
Executive Directors and Senior
Executives
The policy in respect of Directors’
remuneration for the following and
subsequent years is to ensure that
the remuneration packages it
offers are competitive and
designed to attract, retain and
motivate Executive Directors and
senior executives of an appropriate
calibre. Performance-related
reward policies are operated which
are designed to provide a
signiﬁcant element of “at risk” pay,
which is only available when good
results are achieved. During 2002
a review of executive remuneration
was undertaken on behalf of 
the Committee by
PricewaterhouseCoopers LLP . 
32   Directors’ remuneration report
The Board reports to
shareholders on Directors’
remuneration as set out
below. In preparing this
Report the Remuneration
Committee of the Board (the
“Committee”) has complied
with the Directors’
Remuneration Report
Regulations 2002 (the
“Regulations”) and relevant
requirements of the Listing
Rules of the Financial
Services Authority. The
Report also describes how
the Board has applied the
principles of good
governance in relation to
directors’ remuneration.
A resolution to approve the
Report will be proposed at
the forthcoming Annual
General Meeting.
Directors’ remuneration report
for the year ended 31 December 2003 Directors’ remuneration report   33
That review compared all elements
of remuneration against a group of
20 comparator companies, (mainly
in the property sector) having
regard, amongst other things, to
the size of the business and the
sectors within which the Company
operates. The results of that review
indicated that the base salaries of
the Executive Directors were lower
than the market median, whilst
total remunerations were above the
median but below the upper
quartile. In the light of those
ﬁndings, the Committee agreed
the principle that base salaries for
executives should be set broadly in
line with the median, but that
directors should have the
opportunity of achieving total
remuneration at the upper quartile
level when justiﬁed by strong
performance. Accordingly, since its
original report in 2002,
PricewaterhouseCoopers LLP has
been commissioned to undertake
further tracker surveys to ensure
that the above referred to principle
is adhered to.
The main components of the
Directors’ remuneration 
packages are:
Basic Salary
The basic salary of each Director
has been ﬁxed taking into account
advice from independent sources
on the rates of salary for similar
roles in selected groups of
comparable companies and the
performance of the relevant
individual. As stated above, the
Company has agreed the
principle that base salaries should
be set broadly in line with the
market median.
Performance Related Bonus
The Group operates an annual
performance related bonus
scheme which is designed to
reward contributions and
encourage the achievement of
targeted levels of performance
over the short term. The maximum
potential bonus payment is, in the
case of each of the Executive
Directors, equivalent to 100 per
cent of his base salary. However,
achievement of any bonus
payment is subject to stretching
performance criteria, linked to both
the individual performance of the
Director and that of the Group. In
2003 individual performance
targets (which accounted for 60
per cent of a Director’s maximum
potential bonus payment) were set
following the Performance
Development Programme reviews
(“PDP’s”) that were carried out for
all employees (including the
Executive Directors) at the start of
the year. The remaining 40 per
cent of the maximum potential
bonus payment, which was
referable to the performance of the
Group, involved the Group
achieving targets in relation to
proﬁtability, increases in net asset
value, customer satisfaction and
employee satisfaction (the latter
two components both being
monitored by independent
organisations). In 2004 the
proportion of the individual and
Group elements of the maximum
bonus potential will change. The
individual performance element
will account for 40 per cent of the
maximum bonus potential and the
remaining 60 per cent will be
determined on the basis of Group
performance according to the
same elements in 2003. This
change in emphasis is designed
to promote an even stronger team
approach amongst the Executive
Directors and senior managers to
delivering the stretching
performance targets of the Group.
The performance related bonus is
not pensionable and Non-
Executive Directors do not
participate in the scheme.
For the year-ended 31 December
2003 Directors’ bonus entitlements
have, subject as stated below,
been paid as to 50 per cent in
cash, with the other 50 per cent
taking the form of a deferred
bonus, which has been satisﬁed by
an allocation of shares in the
Company via an employee share
ownership trust. Shares allocated
by way of deferred bonus do not
vest in the allottee, either legally or
beneﬁcially, until a period of three
years has expired from the date of
original allocation, subject to the
allottee still remaining in the
employment of the Group.
However, where a Director already
holds shares in the Company
equal or greater in value at the time
of a bonus payment to three times
his basic salary, the Director may
take the bonus entirely in cash. In
view of his already signiﬁcant
shareholding in the Company, Mr N
A Porter’s bonus for 2003 will be
taken in cash. In addition the
bonuses paid to Messrs D P
Ransome and S L Bernstein in
respect of the periods from 1
January 2003 to the dates of their
respective resignations from the
Board were paid entirely in cash.
The Group intends, subject to
shareholder approval, to introduce
a share based long term incentive
plan (“LTIP”) to reward strong
performance and to promote equity
participation amongst all
employees. The LTIP , which is
intended to be introduced during
ﬁnancial year beginning 1 January
2005, will replace the employee
share ownership trust as the
mechanism to reward and retain
employees through share based
deferred remuneration. Due to the
phasing out of the employee share
ownership trust, any bonuses for
the Executive Directors for the year
ending 31 December 2004 will be
satisﬁed in cash. The criteria on which LTIP entitlements will be
based will include comparison with
the benchmarked performance of
other companies and the
achievement of the commercial
objective of the Group.
Long-term Incentives
In addition to the annual bonus
referred to above, the Group seeks
to encourage and reward good
long-term performance by
providing incentives linked to the
performance of the Company’s
shares. These incentives have, to
date, been provided in the form of
ordinary share options and details
of all options awarded to the
Directors are set out in the
“auditable part” of this Report.
In August 1999 the Company
adopted The UNITE Group plc
Approved Company Share Option
Scheme (the “ Approved Scheme”)
being a scheme approved by the
Inland Revenue. In April 2000 the
Company also adopted The UNITE
Group plc Unapproved Share
Option Scheme (the “Unapproved
Scheme”). Under the Approved
Scheme, the total market value of
shares, at the date of grant, over
which any participant may be
awarded options is £30,000, whilst
under the Unapproved Scheme,
the total market value, at the date
of grant, of all shares over which
any participant may be awarded
options (including options granted
under other schemes), must not
exceed four times his total
remuneration. The Non-Executive
Directors do not participate in
either the Approved Scheme or the
Unapproved Scheme.
Options previously granted under
the Approved Scheme have not
been made subject to
performance conditions, which is
considered appropriate in view of
the relatively small number of
options that may be granted to
individuals under such schemes.
Options previously granted to
Directors under the Unapproved
Scheme are exercisable as to 50
per cent provided the total
shareholder return for the Company
is such that it is equal to or exceeds
the median total shareholder return
of companies included in the FTSE
Small Companies Index (excluding
investment trusts) over the three
year period from the date of grant.
The remaining 50 per cent are
exercisable provided the
Company’s net asset growth
exceeds the average net asset
growth of companies included in
the FTSE Small Companies Index
(excluding investment trusts) over
the three-year period from the date
of grant. Such performance criteria
were agreed with institutional
shareholders at the time the
Unapproved Scheme was adopted.
Any grant of options made to
Executive Directors under the
Unapproved Scheme after 1
January 2004 will be subject to
revised performance criteria based
solely on total shareholder return,
such that options will be exercisable
only as to 50 per cent if the total
shareholder return for the
Company, over the three year
period from the date of grant, is
such that it is equal to the median
total shareholder return of
companies included in the FTSE
Small Companies Index (excluding
investment trusts) over that period.
If the Company’s performance
would put it in the upper quartile
(upon the basis described above),
100 per cent of the options
awarded will be exercisable.
Between median and upper quartile
performance, the number of options
which may be exercised will be
calculated on a straight line basis.
Service Contracts and 
Notice Periods
In accordance with general market
practice, each of the Executive
Directors has a rolling service
contract requiring twelve months’
notice of termination on either side.
Such contracts contain no speciﬁc
provision for compensation for loss
of ofﬁce, other than an obligation to
pay for any notice period waived
by the Company.
The dates of the executive Directors’
service contracts are as follows:
Messrs D P Ransome and S L
Bernstein, who resigned as Directors
of the Company on 30 June 2003
and 17 November 2003 respectively,
were employed under service
contracts dated 14 January 1999
and 23 March 2001 respectively.
Each of the Non-Executive
Directors have speciﬁc letters of
engagement, the dates of which
are set out below:
Non-Executive Directors are
appointed for an initial term of three
years, subject to normal provisions
as to retirement by rotation.
Subsequent terms of three years
may be awarded. Current
appointments will expire at the
annual general meeting in 2005 in
the case of Mr G K Maddrell; at the
annual general meeting in 2006 in
the case of Mr N P Hall and at the
annual general meeting in 2007 in
the case of Mr S R H Beevor. The
appointment and re-appointment
and the remuneration of Non-
Executive Directors are matters
reserved for the full Board.
34   Directors’ remuneration report
N A Porter 14 January 1999
M C Allan 31 October 1999
A Lee 21 November 2000
G K Maddrell 13 August 1999
N P Hall 6 March 2003
S R H Beevor 20 February 2004 Directors’ remuneration report   35
Total return index
(31 May 1999 - 31 Dec 2003)
May 99 Nov 00 May 02 Dec 03
200.0
100.0
0.0
300.0
400.0
500.0
600.0
UNITE FTSE Real Estate
Total Shareholder Return
The following graph charts the total cumulative shareholder return of the
Company since 31 May 1999 (being the date upon which the Company
was admitted to trading on the Alternative Investment Market) to 
31 December 2003.
Audited Information - Remuneration Summary
Fees Basic Performance Deferred Other T otal T otal
Salaries Bonus* Bonus** Beneﬁts*** Remuneration Remuneration
Compensation 2003 2002
£’s £’s £’s £’s £’s £’s £’s £’s
Executive Directors
N A Porter - 272, 274 221,038 - 16,484 - 509,796 396,783
M C Allan - 18,522 7,474 7,474 1,326 - 34,796 N/A
A Lee - 15,804 6,268 6,268 1,400 - 29,740 N/A
Former Directors
D P Ransome - 95,000 97,507 - 5,971 366,700 565,178 298,276
S L Bernstein - 186,112 168,624 - 10,295 242,522 607,553 314,095
Non Executive Directors (Fees)
G K Maddrell 85,000 ----- 85,000 85,000
N P Hall 25,481 ----- 25,481 -
Baroness Prashar 25,000 ----- 25,000 25,000
D F Naish 6,250 ----- 6,250 25,000
The ﬁgures above in relation to Mr M
C Allan and Dr A Lee reﬂect the
salaries, bonuses and beneﬁts
received in respect of the period
from the date of their appointments
to the Board, being 17 November
2003, to the year-end. Similarly the
ﬁgures for 2003 in relation to Messrs
D P Ransome and S L Bernstein
reﬂect the salaries, bonuses and
beneﬁts received in respect of the
periods from 1 January 2003 to the
dates of their resignations from the
Board, being 30 June 2003 and 17
November 2003 respectively.
On his resignation from the Board due
to redundancy on 30 June 2003, Mr D
P Ransome received a payment in lieu
of 12 months’ notice and beneﬁts in
the amount of £216,700 plus a
payment of £150,000 in respect of
compensation for loss of employment.
Following Mr S L Bernstein’s
resignation from the Board on 17
November 2003, Mr Bernstein
remained an employee of the Group
until 27 February 2004 and
continued to receive salary and
beneﬁts (including pension
contributions) at the same rate as
applied immediately prior to his
resignation from the Board. In
addition, Mr Bernstein received a
severance payment of £196,300; a
payment of £30,000 by way of
compensation for loss of
employment and an additional
payment in respect of pension
contributions £16,222.
Both Mr M C Allan and Dr A Lee
participate in The UNITE Group
Personal Pension Scheme, which is
a money purchase scheme, in
relation to whom the Company
contributed £1,453 and £1,219
respectively in respect of the period
from the date of their appointments
to the Board to the year-end. In
addition, the Company contributed
£7,125 and £13,958 respectively in
relation to Messrs D P Ransome
and S L Bernstein in respect of the
periods from 1 January 2003 to the
dates of their respective
resignations from the Board.
* Payable in cash ** Satisﬁed by an allocation of shares in the Company held in an employee share ownership trust.
*** Beneﬁts receivable consist primarily of car allowance and private health care insurance
Total return (rebased to 100)
Whilst there is no comparator index or
group of companies which truly reﬂects
the activities of the Group, the FTSE
Real Estate Index (the constituent
members of which are all property
holding and/or development companies
within the UK) was chosen as it reﬂects
trends within the UK property market
generally and tends to be the index
against which analysts judge the
performance of the Company. Messrs N A Porter and M C Allan and
Dr A Lee have been awarded options
respectively over 20,477, 17,500 and
10,000 ordinary shares pursuant to 
the Approved Scheme. Messrs D P
Ransome and S L Bernstein were 
also awarded options pursuant to the
Approved Scheme over 10,250 and
8,720 ordinary shares respectively. 
All other options (other than those
granted under the SAYE Scheme)
have been granted pursuant to the
Unapproved Scheme. All options
(other than those granted under the
SAYE Scheme) have been granted 
for no consideration.
36   Directors’ remuneration report
Share Options
Granted Exercised
As at during during As at Exercise Normal 
Director 31.12.02* the year the year 31.12.03** Price Exercise Dates
N A Porter 393,706 - - 393,706 146.5p 22.10.2005-21.10.2012
D P Ransome 2,741*** - - - 155.5p 01.06.2003-30.11.2003
50,000 - - - 291.0p 19.09.2003-18.09.2010
21,947 - - - 323.5p 21.03.2005-20.03.2012
279,720 - - - 146.5p 22.10.2005-21.10.2012
S L Berstein 150,000 - - 150,000 344.0p 12.09.2004-11.09.2011
19,319 - - 19,319 323.5p 21.03.2005-20.03.2012
308,392 - - 308,392 146.5p 22.10.2005-21.10.2012
M C Allan 17,500 - - 17,500 169.0p 18.04.2003-17.04.2010
32,500 - - 32,500 176.5p 26.04.2003-25.04.2010
11,823 - - 11,823 323.5p 21.03.2005-20.03.2012
150,388 - - 150,388 129.0p 11.10.2005-10.10.2012
A Lee 50,000 - - 50,000 300.0p 21.03.2004-20.03.2011
12,480 - - 12,480 323.5p 21.03.2005-20.03.2012
150,388 - - 150,388 129.0p 11.10.2005-10.10.2012
*17.11.03 in the cases of Mr M C Allan and Dr A Lee, being the date of their appointments to the Board.
**30.06.03 and 17.11.03 respectively in the cases of Messrs D P Ransome and S L Bernstein, being the dates of their respective
resignations from the Board.
***Granted pursuant to The UNITE Group plc Savings Related Share Option Scheme (the "SAYE Scheme").
N.B. Share options are not awarded to any Non-Executive Directors
Details of the performance criteria,
by reference to which options are
exercisable, are set out under the
heading “Long-term incentives”
above. Those details should also
be taken as forming part of the
“auditable part” of this Report.
As at 31 December 2003, the
middle market price for ordinary
shares in the Company was 
179.5 pence per share. During
the course of the year, the market
price of the Company’s shares
ranged from 107 pence to 
182.5 pence per ordinary share.
By order of the Board
G K Maddrell
Chairman of the Remuneration
Committee
23 March 2004
All options granted to Mr D P Ransome
lapsed on or before his resignation
from the Board on 30 June 2003. In
respect of the options granted to Mr S
L Bernstein, the Board has exercised
its discretion pursuant to the rules of
the Unapproved Scheme to allow Mr
Bernstein to exercise 50 per cent of the
options granted to him under that
scheme at any time prior to 31 August
2004 and the remaining 50 per cent at
any time prior to 28 February 2005.
The options granted to Mr Bernstein
under the Approved Scheme lapsed
upon him leaving the employment of
the Group on 27 February 2004.  Independent auditors’ report to 
the members of The UNITE Group plc
We have audited the ﬁnancial statements on pages 38 to 58. We have also audited the information in the directors’ remuneration report that
is described as having been audited.
This report is made solely to the company’s members, as a body, in accordance with section 235 of the Companies Act 1985. Our audit work
has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report
and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
The directors are responsible for preparing the Annual Report and the directors’ remuneration report. As described on page 31, this includes
responsibility for preparing the ﬁnancial statements in accordance with applicable United Kingdom law and accounting standards. Our
responsibilities, as independent auditors, are established in the United Kingdom by statute, the Auditing Practices Board, the Listing Rules of
the Financial Services Authority, and by our profession's ethical guidance. 
We report to you our opinion as to whether the ﬁnancial statements give a true and fair view and whether the ﬁnancial statements and the
part of the directors’ remuneration report to be audited have been properly prepared in accordance with the Companies Act 1985. We also
report to you if, in our opinion, the directors' report is not consistent with the ﬁnancial statements, if the company has not kept proper
accounting records, if we have not received all the information and explanations we require for our audit, or if information speciﬁed by law
regarding directors' remuneration and transactions with the group is not disclosed.
We review whether the statement on pages 27 to 31 reﬂects the company's compliance with the seven provisions of the Combined Code
speciﬁed for our review by the Listing Rules, and we report if it does not. We are not required to consider whether the board's statements on
internal control cover all risks and controls, or form an opinion on the effectiveness of the group's corporate governance procedures or its
risk and control procedures.
We read the other information contained in the Annual Report, including the corporate governance statement and the unaudited part of the
directors’ remuneration report , and consider whether it is consistent with the audited ﬁnancial statements. We consider the implications for
our report if we become aware of any apparent misstatements or material inconsistencies with the ﬁnancial statements.
Basis of audit opinion
We conducted our audit in accordance with Auditing Standards issued by the Auditing Practices Board. An audit includes examination, on a
test basis, of evidence relevant to the amounts and disclosures in the ﬁnancial statements and the part of the directors’ remuneration report
to be audited. It also includes an assessment of the signiﬁcant estimates and judgements made by the directors in the preparation of the
ﬁnancial statements, and of whether the accounting policies are appropriate to the group's circumstances, consistently applied and
adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide
us with sufﬁcient evidence to give reasonable assurance that the ﬁnancial statements and the part of the directors’ remuneration report to be
audited are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the
overall adequacy of the presentation of information in the ﬁnancial statements and the part of the directors’ remuneration report to be audited.
Opinion
In our opinion:
■ the ﬁnancial statements give a true and fair view of the state of affairs of the company and the group as at 31 December 2003 and of the
loss of the group for the year then ended; and 
■ the ﬁnancial statements and the part of the directors’ remuneration report to be audited have been properly prepared in accordance with the
Companies Act 1985.
KPMG Audit Plc 23 March 2004
Chartered Accountants 
Registered Auditor
London
Independent auditors’ report 37 Consolidated balance sheet
at 31 December 2003
Fixed assets
Intangible assets 3 5,140 10,710
Tangible assets
Investment and development properties 4 948,792 709,595
Other tangible ﬁxed assets 5 19,726 21,713
968,518 731,308
973,658 742,018
Current assets
Stocks 7 2,769 1,551
Debtors 8 20,072 18,509
Cash at bank and in hand 24,980 10,258
47,821 30,318
Creditors: amounts falling due within one year
Short term build loans and other borrowings
(including convertible debt) 9 (107,664) (74,359)
Other creditors 9 (75,823) (41,426)
(183,487) (115,785)
Net current liabilities (135,666) (85,467)
Total assets less current liabilities 837,992 656,551
Creditors: amounts falling due after more than one year
Long term borrowings 10 (511,200) (345,886)
Other creditors 10 - (2,547)
Net assets 326,792 308,118
Capital and reserves
Called up share capital 13 27,054 26,901
Share premium account 14 136,936 136,233
Revaluation reserve 14 161,786 135,654
Merger reserve 14 40,177 40,177
Proﬁt and loss account 14 (39,161) (30,847)
Equity shareholders’ funds 326,792 308,118
Net asset value per share 302p 286p
These ﬁnancial statements were approved by the Board of Directors on 23 March 2004 and were signed on its behalf by:
NA Porter MC Allan
Director Director
2003 2002
Note £000 £000 £000 £000
38   Consolidated balance sheet Consolidated proﬁt and loss account
for the year ended 31 December 2003
Group turnover and share of joint venture 48,055 33,872
Less: share of turnover of joint venture - (999)
Group turnover 2 48,055 32,873
Cost of sales (12,848) (8,388)
Gross proﬁt 35,207 24,485
Administrative expenses - ordinary (15,110) (16,583)
- exceptional 18 - (1,303)
- goodwill amortisation 3 (5,570) (5,472)
(20,680) (23,358)
Group operating proﬁt 14,527 1,127
Share of results of joint venture - 299
(Loss)/Proﬁt on disposal of investment properties (125) 461
Proﬁt on ordinary activities before interest and taxation 14,402 1,887
Interest receivable 20 681 581
Interest payable and similar charges - group - ordinary 21 (25,871) (18,148)
- exceptional 18 - (9,744)
- joint venture 21 - (211)
Loss on ordinary activities before taxation, 
goodwill amortisation and exceptional items (5,218) (9,116)
Loss on ordinary activities before taxation (10,788) (25,635)
Taxation 22 - -
Loss on ordinary activities after taxation (10,788) (25,635)
Dividends paid and proposed 23 (2,702) (2,685)
Retained loss for the ﬁnancial period 14 (13,490) (28,320)
Loss per share
Basic 24 10.0p 30.0p
Excluding goodwill amortisation and exceptional items 24 4.8p 10.7p
Diluted 24 10.0p 30.0p
All of the above activities relate to continuing operations.
2003 2002
Note £000 £000
Consolidated statement of total recognised gains and losses
for the year ended 31 December 2003
Proﬁt/(Loss) for the ﬁnancial year
Group (10,788) (25,723)
Share of joint venture - 88
(10,788) (25,635)
Unrealised surplus on revaluation of properties 14 31,308 59,732
Unrealised surplus on revaluation of joint venture - 221
Unrealised loss on trading with joint venture - (33)
Total recognised gains and losses for the ﬁnancial year 20,520 34,285
2003 2002
Note £000 £000
Consolidated proﬁt and loss account 39 Company balance sheet
at 31 December 2003
Fixed assets
Investments 6 184,733 166,919
Current assets
Debtors 8 382,219 297,714
Cash at bank and in hand 8,293 8,183
390,512 305,897
Creditors: amounts falling due within one year
Short term borrowings (including convertible debt) 9 (14,229) (10,639)
Other creditors 9 (234,224) (149,613)
(248,453) (160,252)
Net current assets 142,059 145,645
Total assets less current liabilities 326,792 312,564
Creditors: amounts falling due after more than 
one year 10 - (4,446)
Net assets 326,792 308,118
Capital and reserves
Called up share capital 13 27,054 26,901
Share premium account 14 136,936 136,233
Revaluation reserve 14 119,110 101,284
Merger reserve 14 40,177 40,177
Proﬁt and loss account 14 3,515 3,523
Equity shareholders’ funds 326,792 308,118
These ﬁnancial statements were approved by the Board of Directors on 23 March 2004 and were signed on its behalf by:
NA Porter MC Allan
Director Director
2003 2002
Note £000 £000 £000 £000
40   Company balance sheet Consolidated cash ﬂow statement
for the year ended 31 December 2003
Cash ﬂow from operating activities 25 23,513 5,987
Returns on investments and servicing of ﬁnance 26 (32,062) (28,323)
Acquisitions and disposals 26 - (1,210)
Capital expenditure 26 (172,127) (193,187)
Equity dividends paid (2,689) (2,131)
Cash outﬂow before ﬁnancing (183,365) (218,864)
Financing 26 192,767 223,138
Increase in cash in the year 9,402 4,274
2003 2002
Note £000 £000
Reconciliation of net cash ﬂow to movement in net debt
for the year ended 31 December 2003
Increase in cash in the year 9,402 4,274
Cash ﬂow from increase in debt and lease ﬁnancing (192,766) (168,114)
Change in net debt resulting from cash ﬂows (183,364) (163,840)
Debt acquired in subsidiary undertaking - (54,807)
Loan stock converted into ordinary shares 856 -
Amortisation of debt issue costs (1,389) (3,039)
Movement in net debt in the year (183,897) (221,686)
Net debt at beginning of year 27 (409,987) (188,301)
Net debt at end of year 27 (593,884) (409,987)
2003 2002
Note £000 £000
Consolidated cash ﬂow statement 41 Note of consolidated historical cost proﬁts and losses
for the year ended 31 December 2003
Reported loss on ordinary activities before taxation (10,788) (25,635)
Realisation of property revaluation gains of previous years 1,422 514
Historical cost loss on ordinary activities before taxation (9,366) (25,121)
Historical cost loss for the year retained after taxation and dividends (12,068) (27,806)
2003 2002
£000 £000
Reconciliation of movements in shareholders’ funds
for the year ended 31 December 2003
(Loss)/Proﬁt attributable to ordinary shareholders (10,788) (25,635) 2,694 2,754
Dividends paid and proposed (2,702) (2,685) (2,702) (2,685)
Retained (loss)/proﬁt for the year (13,490) (28,320) (8) 69
Net surplus on revaluations 31,308 59,920 17,826 31,531
Net proceeds of new share capital subscribed 856 74,460 856 74,460
Net addition to shareholders’ funds 18,674 106,060 18,674 106,060
Opening equity shareholders’ funds 308,118 202,058 308,118 202,058
Closing equity shareholders’ funds 326,792 308,118 326,792 308,118
Group Group Company Company
2003 2002 2003 2002
£000 £000 £000 £000
42   Note of consolidated historical cost proﬁts and losses Notes
(forming part of the ﬁnancial statements)
1. Accounting policies
The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the
Group’s ﬁnancial statements.
Basis of preparation
The ﬁnancial statements have been prepared under the historical cost convention, modiﬁed to include investment and development
properties at valuation and in accordance with the applicable accounting standards and the Companies Act 1985 except as stated under
investment and development properties.
In the Company’s ﬁnancial statements, investments in subsidiary undertakings are revalued annually to the underlying net asset value of
these undertakings. This is considered an appropriate treatment by the Directors, since the activity of the subsidiaries, namely property
investment, is such that net assets are an appropriate valuation method.
Basis of consolidation
The consolidated ﬁnancial statements include the ﬁnancial statements of the Company and its subsidiary undertakings. Unless otherwise
stated, the acquisition method of accounting has been adopted. Under the acquisition method, the results of subsidiary undertakings acquired
or disposed of in the year are included in the consolidated proﬁt and loss account from the date of acquisition or up to the date of disposal.
Under section 230(4) of the Companies Act 1985 the Company is exempt from the requirement to present its own proﬁt and loss account.
Intangible ﬁxed assets 
Purchased goodwill (representing the excess of the fair value of the consideration given and associated costs over the fair value of the
separable net assets acquired) arising on consolidation is capitalised. Goodwill comprises two elements. Firstly, an element relating to
synergy beneﬁts arising from the increased scale of the portfolio which is amortised over 20 years. The second element represents the
anticipated beneﬁts, in the form of future development gains, arising from access to the acquired group’s portfolio of potential projects. 
This further element will be written off to match the recognition of gains on these pipeline projects. Should the value of this goodwill become
recognised as impaired, an impairment charge would be made against operating proﬁt.
Investment and development properties
Development properties comprise both properties in the course of construction and those held as sites for future construction whereas
investment properties are those where construction has been completed. All these properties are held for their long term investment potential.
In accordance with Statement of Standard Accounting Practice No 19 Accounting for investment properties:
i investment properties are revalued annually at market value determined in accordance with the Guidance Notes on the valuation of assets
issued by the Royal Institution of Chartered Surveyors. Surpluses and deﬁcits arising are transferred to the revaluation reserve except that
any impairment in the value of an investment property (to the extent that it is less than cost) is taken to the proﬁt and loss account for the
year; and
ii no depreciation or amortisation is provided in respect of freehold investment properties and leasehold investment properties with over 20
years to run.
This treatment, as regards the Group’s investment properties, may be a departure from the requirements of the Companies Act concerning
depreciation of ﬁxed assets. However, these properties are not held for consumption but for investment and the directors consider that
systematic annual depreciation would be inappropriate. The accounting policy adopted is therefore necessary for the accounts to give a true
and fair view. Depreciation or amortisation is only one of the many factors reﬂected in the annual valuation and the amount which might
otherwise have been shown cannot be separately identiﬁed or quantiﬁed.
Net gains or losses on disposal of investment and development properties are calculated by reference to book value at the date of disposal
and any revaluation surpluses of earlier years are transferred from revaluation reserve to the proﬁt and loss account as a reserve movement.
Properties held for future development and developments in progress are revalued annually based on market value. They are not subject to
depreciation, since the Directors consider that the useful economic life of the assets does not begin until the properties are completed.
The cost of investment and development properties includes amounts relating to interest and attributable overheads, in addition to direct
costs. For this purpose, the interest rate applied to funds provided for property development is arrived at by reference, where appropriate, to
the actual rate payable on borrowings for development purposes and, in regard to that part of the development cost ﬁnanced out of general
borrowings, to the average rate paid by the Group on these borrowings. 
Interest transferred to the cost of properties is applied gross of associated tax relief.
Tangible ﬁxed assets and depreciation
For assets other than investment and development properties, depreciation is provided to write off the cost less the estimated residual value
of tangible ﬁxed assets by equal instalments over their estimated useful economic lives as follows:
Freehold buildings 50 years
Leasehold improvements Life of lease
Fixtures and ﬁttings 4 years
Motor vehicles 4 years
Plant and machinery 4 – 20 years
No depreciation is provided on freehold land.
Interest rate transactions
Interest rate swap and option agreements are used to manage the interest basis of borrowings. Interest receipts and payments under these agreements
are accrued so as to match the net income or cost with the related ﬁnance expense. No amounts are recognised in respect of future periods.
Notes 43 Notes
(continued)
1. Accounting policies (continued)
Borrowings
Borrowings are carried at their nominal value net of any issue costs. Issue costs are written off to the proﬁt and loss account over the
expected life of the borrowing.
Leases
Assets acquired under ﬁnance leases are capitalised and the outstanding future lease obligations are shown in creditors. Operating lease
rentals are charged to the proﬁt and loss account on a straight line basis over the period of the lease.
Stocks and work in progress
Stocks are stated at the lower of cost and net realisable value. For work in progress and ﬁnished goods cost is taken as production cost,
which includes an appropriate proportion of attributable overheads.
Turnover
Turnover represents the amounts (excluding value added tax) derived from the Group’s external activities during the year.
Taxation
The charge for taxation is based on the result for the year and takes account of taxation deferred because of timing differences between the
recognition of certain items for taxation purposes and their recognition in the ﬁnancial statements under the Group’s accounting policies.
In accordance with FRS19, deferred tax is provided in respect of all timing differences that have originated, but not reversed at the balance
sheet date that may give rise to an obligation to pay more or less tax in the future except as otherwise provided by FRS19. Deferred tax is not
recognised when ﬁxed assets are revalued unless by the balance sheet date there is a binding agreement to sell the revalued assets and the
gain or loss expected to arise on sale has been recognised in the ﬁnancial statements. Deferred tax is measured on a non-discounted basis.
Post retirement beneﬁts
The Group operates a deﬁned contribution pension scheme. The assets of the scheme are held separately from those of the Group in an
independently administered fund. The amount charged to the proﬁt and loss account represents the contributions payable to the scheme in
respect of the accounting period.
2. Segmental analysis of operations
Included in the development loss for the period to 31 December 2003 is the loss relating to the under recovery of manufacturing overheads
of £1,246,000, which is not expected to recur.
Included in corporate costs for 2003 are non-recurring costs of £609,000 relating to the cessation of emplyment of two Executive Directors.
2003 2002
£000 £000
Turnover
Investment activities 48,055 31,356
Development activities - 1,517
48,055 32,873
Proﬁt before interest and taxation
Investment activities 29,088 18,741
Development activities - ordinary (4,975) (6,000)
- exceptional - (1,303)
Corporate costs (4,016) (4,540)
(Loss)/Proﬁt on disposal of investment properties (125) 461
Goodwill amortisation - investment activities (150) (150)
- development activities (5,420) (5,322)
14,402 1,887
Net assets
Investment activities 268,336 199,990
Development activities 58,456 108,128
326,792 308,118
44   Notes
Portfolio proﬁt is calculated as follows:-
Proﬁt before interest and taxation on investment activities – as above 29,088 18,741
Net interest payable (25,190) (17,778)
Adjust Peabody UNITE joint venture to 100% - 88
3,898 1,051 Notes
(continued)
3. Intangible ﬁxed assets
Goodwill
£000
Group
Cost
At beginning and end of year 16,257
Amortisation
At beginning of year 5,547
Charged in year 5,570
At end of year 11,117
Net book value
At 31 December 2003 5,140
At 31 December 2002 10,710
4. Investment and development properties
Properties held
Investment Developments in for future
Properties progress development Total
£000 £000 £000 £000
Group
Cost or valuation and net book value
At beginning of year 541,824 143,315 24,456 709,595
Additions 5,419 147,239 63,335 215,993
Disposals (7,635) - (784) (8,419)
Transfers 249,383 (189,893) (59,490) -
Transfer from other tangible ﬁxed assets 315 - - 315
Revaluations (1,002) 23,620 8,690 31,308
At 31 December 2003 788,304 124,281 36,207 948,792
At 31 December 2002 541,824 143,315 24,456 709,595
Included within investment and development properties are the following values in respect of leasehold interests:
Properties held
Investment Developments in for future Total Total
Properties progress development 2003 2002
£000 £000 £000 £000 £000
Cost or valuation and net book value
Long leasehold 115,670 18,980 5,467 140,117 89,570
Short leasehold 11,980 - - 11,980 11,900
127,650 18,980 5,467 152,097 101,470
Notes 45 4. Investment and development properties (continued)
Notes
(continued)
Investment properties were valued as at 31 December 2003, on the basis of “market value” (as deﬁned in the RICS Appraisal and Valuation
Manual issued by the Royal Institution of Chartered Surveyors) by CB Richard Ellis Ltd and Messrs King Sturge, Chartered Surveyors as
external valuers. 
Developments in progress and properties held for future development have been incorporated at valuations by the directors at acquisition or
when planning permission and appropriate pre-let agreements are in place, plus subsequent expenditure. These valuations were based on
completed property valuations by CB Richard Ellis Ltd and Messrs King Sturge, Chartered Surveyors.
CB Richard Ellis Ltd have valued 39% of the portfolio and Messrs King Sturge 61% by reference to completed value.
The total interest included in Group properties at 31 December 2003 was £25,177,350 (2002: £15,710,872). Total internal costs relating to
manufacturing, construction and development costs of group properties, which have been deducted in arriving at the revaluation gains
recognised on these properties, amount to £25,805,000 at 31 December 2003 (2002: £17,215,000).
5. Other tangible ﬁxed assets
Freehold Motor vehicles, Fixtures,
land and Leasehold plant and ﬁttings and
buildings Improvements machinery equipment Total
£000 £000 £000 £000 £000
Group
Cost
At beginning of year 6,813 1,350 1,711 14,985 24,859
Additions 53 69 101 1,434 1,657
Disposals - (127) (43) (1,154) (1,324)
Transfer from/(to) investment properties 596 - (496) (474) (374)
At end of year 7,462 1,292 1,273 14,791 24,818
Depreciation
At beginning of year 48 279 338 2,481 3,146
Charge for year 65 130 492 1,837 2,524
Disposals - - (48) (471) (519)
Transfer to investment properties - - - (59) (59)
At end of year 113 409 782 3,788 5,092
Net book value
At 31 December 2003 7,349 883 491 11,003 19,726
At 31 December 2002 6,765 1,071 1,373 12,504 21,713
The valuation of investment and development properties comprise:
2003 2002
£000 £000
Group
Historical cost 787,006 573,941
Revaluation 161,786 135,654
948,792 709,595
46   Notes Notes
(continued)
5. Other tangible ﬁxed assets (continued)
Included in the above are the following relating to leased assets which are subject to hire purchase agreements.
Fixtures, ﬁttings,
tools and
equipment Motor vehicles Total
£000 £000 £000
Net book value
At 31 December 2003 1,981 25 2,006
At 31 December 2002 2,389 153 2,542
Depreciation charge in year 263 16 279
6. Fixed asset investments
Unlisted subsidiary
undertakings
£000
Company
Cost or valuation
At beginning of year 166,919
Disposals (12)
Revaluation 17,826
At end of year 184,733
At 31 December 2003, the Group owned 100% of the equity share of the following principal subsidiary undertakings:
Subsidiary undertaking Principal activity
LDC (Holdings) plc* Holding company 
UNITE Holdings plc* Holding company
LDC (Portfolio One) Ltd Property investment
LDC (Portfolio Four) Ltd Property investment
LDC (AIB Warehouse) Ltd Property investment
UNITE Integrated Solutions plc Design and Build Contractor + Property management
UNITE Facilities Management Ltd Property management
UNITE Accommodation Management 1 Ltd Property management
UNITE Accommodation Management 2 Ltd Property management
UNITE Accommodation Management 3 Ltd Property management
UNITE FM+ Ltd Property management
Hiremaxi Ltd Property investment
UNITE Finance One plc Property investment
UNITE Finance One (Borrowing) Ltd Property investment
UNITE Finance One (Property) Ltd Property investment
UNITE Finance One (Accommodation Services) Ltd Property management
Except where stated all subsidiaries are registered and operate in England and Wales. All subsidiary undertakings are owned via intermediate
holding companies, except those marked * which are owned by The UNITE Group plc.
A full list of the Group’s companies will be included in the company’s annual return.
Notes 47 8. Debtors
Group Company
2003 2002 2003 2002
£000 £000 £000 £000
Trade debtors 4,138 2,145 - -
Amounts owed by Group undertakings - - 375,132 293,839
Other debtors 11,755 12,588 4,205 1,902
Prepayments and accrued income 4,179 3,776 2,882 1,973
20,072 18,509 382,219 297,714
9. Creditors: amounts falling due within one year
Group Company
2003 2002 2003 2002
£000 £000 £000 £000
Bank loans and overdrafts 14,843 1,068 8,354 -
Build loans 86,445 61,900 - -
8% convertible unsecured loan stock 2004 4,979 5,835 4,979 5,835
Unsecured loan notes 896 4,804 896 4,804
Obligations under ﬁnance leases and hire purchase contracts 501 752 - -
Short term build loans and other borrowings 107,664 74,359 14,229 10,639
Trade creditors 19,540 6,863 418 1,862
Amounts owed to Group undertakings - - 229,735 143,532
Other taxes and social security 3,464 539 43 -
Other creditors 7,957 12,843 1,914 2,116
Accruals and deferred income 43,055 19,393 307 315
Dividend proposed 1,807 1,788 1,807 1,788
Other creditors 75,823 41,426 234,224 149,613
183,487 115,785 248,453 160,252
Notes
(continued)
7. Stocks
Included within other debtors of the Group is £1,850,000 (2002: £1,950,000) due from The Bristol Hotel Group plc, a company under
common inﬂuence (note 29). The loan attracts interest at 9% and is repayable after more than one year. None of the remaining debtors were
due after more than one year.
2003 2002
£000 £000
Group
Raw materials and consumables 453 209
Work in progress 2,316 1,342
2,769 1,551
48   Notes Notes
(continued)
9. Creditors: amounts falling due within one year (continued)
8% convertible unsecured loan stock 2004
The loan stock carries a coupon of 8%, with interest payable half yearly. It is convertible (at the stockholders’ option) in July 2004. The conversion
price is calculated as the greater of 85 pence and 90% of the mean average of the closing middle market price of an ordinary share for the
ten business days immediately preceding the commencement of a conversion period.
The Company has the right to purchase loan stock on any recognised Stock Exchange or by tender available to all stockholders alike at any
price or by private treaty at a price not exceeding 10% above the mean average of the closing middle market prices of any ordinary share for
the ten business days immediately prior to the date of such purchase.
Unless previously converted or purchased by the Company, the loan stock will be repaid at par on 31 August 2004.
Unsecured loan notes
The unsecured loan notes were issued on 28 June 2001 and carry a coupon rate calculated at LIBOR minus 0.5%. The loan notes are
repayable at par on demand and may be redeemed on 30 June or 31 December commencing in 2002 until 30 June 2011. Unless previously
redeemed, the loan notes will be repaid in full at par on 30 June 2011.
Particulars relating to the Group’s ﬁnancing arrangements are disclosed in notes 11 and 30 to the ﬁnancial statements.
10. Creditors: amounts falling due after more than one year
Group Company
2003 2002 2003 2002
£000 £000 £000 £000
Bank loans 510,037 344,325 - 4,446
Obligations under ﬁnance leases and hire purchase contracts 1,163 1,561 - -
511,200 345,886 - 4,446
Other creditors - 2,547 - -
511,200 348,433 - 4,446
11. Analysis of debt
Group Company
2003 2002 2003 2002
£000 £000 £000 £000
Bank loans, other loans and overdrafts fall due:
In one year or less, or on demand 107,163 73,607 14,229 10,639
Between one and two years 125,099 18,821 - 4,446
Between two and ﬁve years 121,103 65,646 - -
In ﬁve years or more 263,835 259,858 - -
617,200 417,932 14,229 15,085
Notes 49 The Group has various borrowing facilities available to it. The undrawn committed facilities available at 31 December 2003 in respect of which
all conditions precedent had been met at that date were as follows:
2003 2002
£000 £000
Expiring in one year or less
Build facilities 47,086 104,373
Other facilities 5,000 5,000
52,086 109,373
Expiring between two and ﬁve years - 2,018
52,086 111,391
In addition, there are further committed facilities available where not all conditions precedent have yet been met amounting to £328m. Of this
amount £180m remains available for completed properties and £148m for development properties.
Security for the Group’s property development and investment ﬁnancing is by way of ﬁrst charges, over the properties to which they relate. 
In certain instances, cross guarantees are provided within the Group.
Fair value of ﬁnancial liabilities
Set out below is a comparison by category of the book value and fair values of the Group’s ﬁnancial liabilities, excluding variable rate loans,
at 31 December 2003:
The fair values of the interest rate swaps and long term ﬁxed rate debt have been determined by reference to prices available from the
markets on which the instruments are traded. All the other fair values have been calculated by discounting future cash ﬂows at prevailing
interest rates.
Book value Fair value
£000 £000
Primary ﬁnancial instruments held or issued to ﬁnance the Group’s operations:
Short term ﬁnancial liabilities and current portion of long term borrowings 1,115 1,152
Long term borrowings 271,611 275,883
272,726 277,035
Derivative and other ﬁnancial instruments held to manage the interest rate proﬁle:
Interest rate swaps - 1,231
At 31 December 2003 272,726 278,266
At 31 December 2002 273,364 293,523
2003 2002
£000 £000
Group
Within one year 596 918
In the second to ﬁfth years 1,260 1,710
Less future ﬁnance charges (192) (315)
1,664 2,313
Notes
(continued)
11. Analysis of debt (continued)
The amounts falling due after more than ﬁve years comprise: £255,712,000 in respect of asset backed bonds with ﬁxed interest rates of
between 5.93% and 8.55% and which are repayable on a sliding scale with ﬁnal repayment in October 2027 and £8,123,000 in respect of
various bank loans repayable by instalments by April 2023 and bearing interest at variable rates between 1.25% and 1.40% above LIBOR. 
Debt is disclosed net of issue costs of £11,627,000 (2002: £11,135,000).
The maturity of obligations under hire purchase agreements is as follows:
50   Notes Notes
(continued)
12. Provisions for liabilities and charges 
The movement on the deferred tax balances and other provisions during the year ended 31 December 2003 were as follows:
Deferred 
taxation 2003 Other 2003 Total 2003 Total 2002
£000 £000 £000 £000
Group
At 1 January 2003 --- -
Capitalised interest 3,544 - 3,544 1,419
Accelerated capital allowances 1,576 - 1,576 2,697
Intra-group proﬁts taxed (4,171) - (4,171) (5,365)
Tax losses (949) - (949) 1,249
At 31 December 2003 - - - - 
Amount Amount not Amount Amount not
provided 2003 provided 2003 provided 2002 provided 2002
£000 £000 £000 £000
Group
Capitalised interest 7,305 - 3,761 -
Accelerated capital allowances 6,765 - 5,189 -
Intra-group proﬁts taxed (12,605) - (8,434) -
Tax losses (1,465) (5,786) (516) (7,561)
Potential tax on property valuation surplus 49,595 - 47,481
At 31 December 2003 - (43,809) - 39,920
Number of shares £000
Authorised
Ordinary shares of 25p each at beginning and end of year 155,000,000 38,750
Allotted, called up and fully paid
At beginning of year 107,604,772 26,901
Loan notes converted 605,963 152
Share options exercised and scrip dividends 2,697 1
At end of year 108,213,432 27,054
The deferred tax balances at 31 December 2003 arose as follows:
No provision has been made for tax arising on the revaluation of properties, since the disposal of properties is not envisaged by the Directors.
Company
The company had no liability to deferred taxation at 31 December 2003 or at the previous year end.
13. Called up share capital
Notes 51 Notes
(continued)
14. Reserves
15. Commitments and guarantees
Group
Annual commitments under non-cancellable operating leases are as follows:
Share 
premium Merger Revaluation Proﬁt and
account reserve reserve loss account
£000 £000 £000 £000
Group
At beginning of year 136,233 40,177 135,654 (30,847)
Premium on issue of ordinary shares 707 - - -
Retained loss for year - - - (13,490)
Revaluation in year:
Group investments and development property - - 31,308 -
Expenses of share issue (4) - - -
Realised on disposal of investment property - - (1,422) 1,422
Transfer in respect of uplifts relating 
to goodwill amortisation - - (3,754) 3,754
At end of year 136,936 40,177 161,786 (39,161)
Company
At beginning of year 136,233 40,177 101,284 3,523
Premium on issue of ordinary shares 707 - - -
Retained loss for year - - - (8)
Revaluation in year - - 17,826 -
Expenses of share issue (4) - - -
At end of year 136,936 40,177 119,110 3,515
16. Contingent liabilities
The Group had no contingent liabilities at 31 December 2003.
2003 2002
Land and Land and
Buildings Other buildings Other
£000 £000 £000 £000
Operating leases which expire:
Within one year -26 46 16
Between one and two years 375 138 100 41
In the second to ﬁfth years inclusive 218 126 472 157
Over ﬁve years 381 3 381 7
974 293 999 221
Company
The company acts as guarantor for a number of its subsidiary companies in respect of certain loan facilities and trade creditors. The amounts
included in the creditors of its subsidiaries which were covered by these guarantees amounted to £229m at 31 December 2003
(2002: £82m).
52   Notes 2003 2002
£000 £000
Proﬁt on ordinary activities before taxation is stated after charging/(crediting):
Auditors’ remuneration 205 145
Fees paid to the auditor in respect of other services 27 106
Depreciation and other amounts written off tangible ﬁxed assets 2,524 1,694
Loss/(proﬁt) on disposal of ﬁxed assets 125 (465)
Amortisation of goodwill 5,570 5,472
Hire of plant and machinery – including rentals payable under operating leases 367 299
Hire of other assets – including rentals payable under operating leases 979 1,024
In 2002, £120,000 was paid to the auditors in respect of equity issue costs, this amount was set off against the share premium account. In
addition, £376,000 was paid to the auditors for audit and tax advice in respect of the securitised bond issue and this amount is included in
issue costs netted off debt.
Notes
(continued)
17. Proﬁt on ordinary activities before taxation
18. Exceptional Items
In 2002, the exceptional administrative expenses of £1,303,000 comprised bid costs relating to the Shefﬁeld PPP Project. In accordance with
the Group’s accounting policy, these costs were expensed to the proﬁt and loss account but were unusually large due to the size and
complexity of the proposed project.
The exceptional interest cost of £9,744,000 in 2002, comprised costs associated with the early termination of loans and related hedging
instruments as a result of the securitised bond issue.
2003 2002
£000 £000
Wages and salaries 15,571 12,613
Social security costs 1,599 1,258
Pension costs 290 310
17,460 14,181
Full details of Directors’ remuneration are disclosed on pages 32 to 36.
Number of employees
2003 2002
Managerial and administration 311 323
Site operatives 188 34
499 357
19. Staff numbers and costs
The average number of persons employed by the Group (including Directors) during the year, analysed by category, was as follows:
The aggregate payroll costs of these persons were as follows:
Notes 53 2003 2002
£000 £000
Interest on bank deposits 504 397
Interest on loans to companies under common inﬂuence 177 184
681 581
20. Interest receivable
22. Taxation
(a) Analysis of charge in the year
There was no liability to taxation in respect of either year.
(b) Factors affecting the tax charge for the year
The tax credit on the loss on ordinary activities has been reduced from the amount that would arise from applying the prevailing
corporation tax rate to the Group’s losses, as follows:
2003 2002
£000 £000
Amounts payable on bank loans and overdrafts
On loans not wholly repayable within ﬁve years 544 231
On loans wholly repayable within ﬁve years 15,213 10,866
On bank overdrafts 106 82
Amounts payable on other loans
On asset backed bonds 18,730 13,527
On convertible unsecured loan stock 433 466
On unsecured loan notes 156 285
Finance charges payable in respect of hire purchase agreements 155 102
35,337 25,559
Transfer to cost of investment and development properties (9,466) (7,411)
25,871 18,148
Share of interest payable by joint venture - 211
25,871 18,359
21. Interest payable and similar charges
2003 2002
£000 £000
UK corporation tax at 30% (3,236) (7,690)
Permanently disallowable expenditure 1,784 198
Intra-group proﬁts taxed 4,175 4,772
Capitalised interest (1,944) (1,419)
Excess tax losses not utilised in year 2,631 6,602
Excess of capital allowances over depreciation (3,410) (2,463)
- -
Notes
(continued)
54   Notes 23. Dividends
2003 2002
£000 £000
Equity
Interim dividend paid of 0.83p (2002: 0.83p) per 25p ordinary share 895 897
Final dividend proposed of 1.67p (2002: 1.67p) per 25p ordinary share 1,807 1,788
2,702 2,685
24. Loss per share
Basic loss per share has been calculated using a weighted average number of shares of 107,859,284 (2002: 85,398,488) as follows:
The share options and convertible loan stock in issue during 2002 and 2003 do not give rise to any dilutive potential ordinary shares and
therefore the basic and diluted loss per share are the same.
Losses EPS
After goodwill Before goodwill After goodwill Before goodwill
amortisation amortisation amortisation amortisation
£000 £000 pence pence
Year ended 31 December 2003
Basic loss (10,788) (5,218) (10.00) (4.84)
Year end 31 December 2002
Basic loss (25,635) (20,163) (30.02) (23.61)
Bond issue – loan cancellation costs 9,744 9,744 11.41 11.41
PPP bid costs written off 1,303 1,303 1.53 1.53
Prior to exceptional costs (14,588) (9,116) (17.08) (10.67)
Notes
(continued)
22. Taxation (continued)
(c) Factors that may affect future tax charges
Deferred taxation balances arising in the Group are set out in detail in note 12.
In accordance with FRS19, the deferred tax in respect of property revaluation surpluses has not been provided.
Notes 55 Notes
(continued)
25. Reconciliation of operating proﬁt to operating cash ﬂows
2003 2002
£000 £000
Group operating proﬁt 14,527 1,127
Depreciation and amortisation charges 8,094 7,166
(Increase)/Decrease in stocks (1,218) 1,532
Increase in debtors (1,563) (805)
Increase /(Decrease) in creditors and provisions 3,673 (3,033)
Net cash inﬂow from operating activities 23,513 5,987
26. Analysis of cash ﬂows
2003 2002
£000 £000
Returns on investment and servicing of ﬁnance
Interest received 681 581
Interest paid (32,743) (21,162)
Exceptional interest paid - (7,742)
Net cash ﬂow from returns on investment and servicing of ﬁnance (32,062) (28,323)
Acquisitions and disposals
Purchase of subsidiary undertaking - (1,541)
Cash balances acquired with subsidiary - 331
Net cash ﬂow from acquisitions and disposals - (1,210)
Capital expenditure
Purchase of tangible ﬁxed assets (178,723) (196,147)
Disposal of tangible ﬁxed assets 6,596 2,960
Net cash ﬂow from capital expenditure (172,127) (193,187)
Financing
Issue of share capital 1 55,024
Movement on bank loans 197,324 171,088
Movement on loan notes (3,909) (4,496)
Capital element of hire purchase payments (649) 1,522
Net cash ﬂow from ﬁnancing 192,767 223,138
56   Notes 30. Financial instruments and derivatives
The Group has taken advantage of the exemption under FRS13 that short term debtors and creditors be excluded from the following disclosures.
The Group holds or issues ﬁnancial instruments for two main purposes:
To ﬁnance the development and subsequent long term retention of investment properties;
To manage the interest rate risks arising from its operations and from its sources of ﬁnance.
In addition, various ﬁnancial instruments – such as trade debtors, trade creditors, accruals and prepayments – arise directly from the Group’s
operations. The majority of ﬁnancial instruments are of sterling denominations. The Group does not trade in ﬁnancial instruments or derivatives.
The Group ﬁnances its development and investment activities through a mixture of retained earnings, borrowings and fresh issues of equity. The
Group borrows from major UK clearing banks and specialist development funding banks at both ﬁxed and ﬂoating rates of interest, using derivatives
where appropriate to generate the desired effective interest rate basis. The derivatives used for this purpose are principally interest rate swaps.
Notes
(continued)
27. Analysis of net debt
At 1 January At 31 December
2003 Cash ﬂow Other changes 2003
£000 £000 £000 £000
Cash at bank and in hand 10,258 14,722 - 24,980
Bank overdraft - (5,320) - (5,320)
10,258 9,402 - 19,660
Financing
Debt due within one year (73,607) (28,616) 380 (101,843)
Debt due after one year (344,325) (164,799) (913) (510,037)
Hire purchase agreements (2,313) 649 - (1,664)
(192,766)
Net debt at end of year (409,987) (183,364) (533) (593,884)
28. Pension scheme
The group operates a deﬁned contribution pension scheme. The pension cost charge for the period represents contributions payable by the
group to the scheme and amounted to £290,262 (2002: £310,000). Contributions amounting to £nil (2002: £2,037) were payable to the
scheme at 31 December 2003 and are included in creditors.
29. Related party disclosures
The Bristol Hotel Group Limited (formerly the Bristol Hotel Group plc)
Mr N A Porter was a Director of the Bristol Hotel Group Limited until 7 August 2003. Mr D P Ransome, a Director of the company until 30
June 2003, remains a Director of the Bristol Hotel Group Limited.
At the year-end, £1,850,000 (2002: £1,950,000) was owed by The Bristol Hotel Group Limited. Interest of £176,653 (2002: £183,514) was
charged during the year. 
Notes 57 Notes
(continued)
30. Financial instruments and derivatives (continued)
The main risks arising from the Group’s ﬁnancial instruments are interest rate risk and market price risk, and to a lesser extent, currency risk.
The Board reviews and agrees policies for managing each of these risks and they are summarised below. 
Interest rate risk
The Group’s exposure to interest rate ﬂuctuations on its borrowings and deposits is managed by using interest rate swaps, interest rate caps
and, in some cases, simple ﬁxed rate borrowing. The Group’s policy is separated into three areas:
i) Development ﬁnance
The majority of the Group’s development borrowing at 31 December 2003 was held at ﬂoating rate reﬂecting the Group’s view of the stability
of the current interest rate environment and the relatively low cost of adverse interest rate ﬂuctuations in the context of the total development
cost. The Group continues to review the appropriateness of this policy on a regular basis. 
ii) Reﬁnancing risk
The Group’s principal exposure to interest rate ﬂuctuations during development relates to movements in longer term interest rates, which
affect the quantum of debt the property income is capable of servicing at completion. Signiﬁcant adverse movements undermine the Group’s
capital recycling strategy.
The Group increasingly manages this risk via a programme of pre-hedging, through the use of forward starting interest rate swaps. At 31 December
2003 approximately £124.4m (2002: £88.2m) of the Group’s anticipated reﬁnancing was hedged for an average term of 20.0 years (2002: 21.7 years).
iii) Medium and long term ﬁnance
The Group holds its medium and long term bank ﬁnance under ﬂoating rate arrangements. The majority of this debt is hedged through the
use of interest rate swap agreements. During 2003, the Group’s policy has been to hedge around 80% of the Group’s exposure for terms of
approximately 20 years. Mandatory break options are included within these arrangements to minimise cost. The Group’s bond issuance
attracts a ﬁxed rate of interest over an average life of 19.4 years.
At 31 December 2003, after taking account of interest rate swaps, 79.2% (2002: 92.4%) of the Group’s medium and long term borrowing was
held at ﬁxed rates.
The Group’s long term ﬁnance (after taking derivatives into account) is ﬁxed at an average rate of 6.68% (2002: 6.63%) over an average
unexpired term of 16.9 years (2002: 21.5 years), again reﬂecting the Group’s bond issuance.
Liquidity risk
With respect to its development activities, the Directors have adopted a policy whereby the Group injects the full amount of equity required
for each development before drawing debt under associated facilities. In this way, the funding requirements of each scheme are substantially
“ring fenced” and secured at the outset of works.
The Group’s medium term banking facilities are fully revolving, allowing the Group to apply its cash surpluses in the temporary reduction of
its debt obligations.
Market price risk
The Group’s primary market price risk is interest rate exposure. It monitors this exposure through a process of sensitivity analysis, estimating
the effect on operating cash ﬂow over various periods of a range of possible changes in interest rates.
The Group’s policy is to accept a degree of interest rate risk, provided the effects of the various potential changes in rates remain with certain
prescribed parameters.
Currency risk
The Group carries on a small amount of trade in Euros. The Directors do not consider the volumes of this trade signiﬁcant enough to warrant
a formal foreign exchange policy. To the extent that this trade increases in the future, the Directors will implement an appropriate policy.
Fair value of ﬁnancial assets and liabilities
The fair value of the Group’s ﬁnancial assets does not differ from the book value. The fair value of the Group’s ﬁnancial liabilities is disclosed
in note 11 to the accounts.
Gains and losses on hedges
At 31 December 2003, the Group had unrecognised losses on hedges of £1,231,000 (2002: losses of £5,954,000). The future recognition of
these losses is dependent upon movement in prevailing interest rates, which the Group has not sought to estimate.
58   Notes Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting of the Company will be held at The Herbert Morrison Room, London Marriott Hotel,
County Hall, Westminster Bridge Road, London SE1 7PB at 9.30 a.m. on 6 May 2004 for the purpose of considering and, if thought ﬁt,
passing the following resolutions which, in the case of resolutions numbered 1 to 10 (inclusive) will be proposed as ordinary resolutions and,
in the case of resolution numbered 11, will be proposed as a special resolution.
Ordinary business
1 To receive and adopt the Directors’ report and ﬁnancial statements for the year ended 31 December 2003.
2 To conﬁrm and declare a ﬁnal dividend on the ordinary shares for the year ended 31 December 2003 of 1.67p per ordinary share payable
to shareholders on the register at the close of business on 16 April 2003.
3 To approve the Directors’ Remuneration Report for the year ended 31 December 2003.
4 To re-appoint Stuart Robert Hartley Beevor as a Director of the Company.
5 To re-appoint Mark Christopher Allan as a Director of the Company.
6 To re-appoint Andrew Lee as a Director of the Company.
7 To re- appoint Nicholas Anthony Porter as a Director of the Company.
8 To re-appoint Nigel Patrick Hall as a Director of the Company.
9 To re-appoint KPMG Audit Plc as auditors in accordance with Section 384 of the Companies Act 1985 to hold ofﬁce until the conclusion 
of the next general meeting of the Company at which accounts are laid and to authorise the Directors to determine their remuneration.
Special business
10 THAT the Directors be generally and unconditionally authorised, in accordance with Section 80 of the Companies Act 1985 (the “Act”), 
to exercise all powers of the Company to allot relevant securities (as deﬁned for the purposes of that Section) up to a maximum nominal
amount of £9,024,796, provided that this authority shall expire on the day ﬁve years after the passing of this Resolution (unless previously
renewed, varied or revoked by the Company in general meeting), save that the Company may, before this authority expires, make an
offer of agreement which would or might require relevant securities to be allotted after it expires and the Directors may allot relevant
securities in pursuance of such an offer or agreement as if this authority had not expired and provided further that this authority shall
supersede and revoke all previous authorities under Section 80 of the Act. 
11 THAT, in accordance with Section 95 of the Act, the Directors be given power to allot for cash equity securities (as deﬁned for the
purpose of Section 89 of the Act) pursuant to the general authority conferred on them by Resolution 10 above as if Section 89(1) of the
Act did not apply to the allotment, but this power shall be limited:
(a) to the allotment of equity securities in connection with an offer or issue to or in favour of ordinary shareholders on the register on a
date ﬁxed by the Directors where the equity securities respectively attributable to the interests of all those shareholders are
proportionate (as nearly as practicable) to the respective numbers of ordinary shares held by them on that date, but the Directors
may make such exclusions or other arrangements as they consider expedient in relation to fractional entitlements, legal or practical
problems under the laws in any territory or the requirements of any relevant regulatory body or stock exchange; and
(b) to the allotment (other than under (a) above) of equity securities having a nominal value not exceeding in aggregate £1,353,719.
and this authority shall expire at the conclusion of the next annual general meeting of the Company after the passing of this
resolution or ﬁfteen months after the passing of this resolution, whichever shall be the sooner, save that the Company may, before
this authority expires, make an offer or agreement which would or might require equity securities to be allotted after it expires and
the Directors may allot equity securities in pursuance of such offer or agreement as if this authority had expired and provided
further that this authority shall supersede and revoke all previous authorities under Section 95 of the Act.
By order of the board
A D Reid
Secretary
Dated 23 March 2004
Registered ofﬁce:
Lawrence House
Lower Bristol Road
Bath
BA2 9ET
Notes
1 A member entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and, on a poll, vote on his/her
behalf. A proxy need not be a member of the Company. A form of proxy is enclosed with this notice for use at the meeting.
2 To be valid, the instrument appointing a proxy (together with the power of attorney or other authority (if any), under which it is signed, 
or a notarially certiﬁed copy of such power or authority), must be completed in accordance with the instructions set out on the form and
deposited at or posted to the ofﬁce of the registrars of the Company, Computershare Investor Services PLC, The Pavilions, Bridgwater
Road, Bristol BS13 3FB so as to be received not later than 9.30 a.m. on 4 May 2004. Completion and return of the form of proxy will not
preclude shareholders from attending or voting at the meeting in person.
3 Pursuant to regulation 34 of the Uncertiﬁed Securities Regulations 1995, members will only be entitled to attend and vote at the meeting if
they are registered on the Company’s register of members 48 hours before the time appointed for the meeting, or any adjournment thereof.
4 Copies of the Directors’ service contracts with the Company are available at the registered ofﬁce of the Company for inspection during
usual business hours on any weekday from the date of this notice until the date of the meeting and also on the day of the meeting at 
The Herbert Morrison Room, London Marriott Hotel, County Hall, Westminster Bridge Road, London SE1 7PB from 9.15 a.m. until the
conclusion of the meeting.
Notice of Annual General Meeting 59 60   
2003 2002 2001 2000 1999
£m £m £m £m £m
Net assets 326.8 308.1 202.1 85.0 25.0
The investment property portfolio 948.8 709.6 373.5 148.7 72.3
Net debt 593.9 410.0 188.3 79.7 48.9
Turnover 48.1 32.9 24.5 30.0 11.1
Loss before tax, exceptionals
and goodwill amortisation 5.2 9.1 2.8 2.3 0.9
Loss before tax 10.8 25.6 2.9 2.3 0.9
Key ratios
Net asset value per share 302p 286p 297p 192p 99p
Loss per share before exceptionals,
goodwill amortisation and deferred tax 4.8p 10.7p 5.0p 5.8p 4.4p
Loss per share 10.0p 30.0p 3.6p 6.4p 4.5p
Net debt as percentage of
shareholders funds 182% 133% 93% 94% 196%
Five year record Company information
Registered ofﬁce
Lawrence House
Lower Bristol Road
Bath
BA2 9ET
Registered number
3199160
Company Secretary
Andrew D Reid
Auditors
KPMG Audit Plc
PO Box 695
8 Salisbury Square
London
EC4Y 8BB
Financial adviser and broker
UBS Ltd
1 Finsbury Square
London
EC2M 2PP
Registrars
Computershare Investor Services PLC
PO Box 82
The Pavillions
Bridgwater Road
Bristol
BS99 7NH
www.unite-group.co.uk The UNITE Group plc
The Tower Building
Twelfth Floor
11 York Road
London SE1 7NX
T 020 7902 5050
F 020 7902 5051
info@unite-group.co.uk
www.unite-group.co.uk