REG - Empiric Student Prop - PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DEC 2023
14/03/2024 07:00
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RNS Number : 7726G Empiric Student Property PLC 14 March 2024
Empiric Student Property plc
("Empiric" or the "Company" or, together with its subsidiaries, the "Group")
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2023
Transformation plan delivering sector leading operating metrics &
attractive returns
Empiric Student Property plc (ticker: ESP), the owner and operator of premium,
studio-led student accommodation aligned to top-tier universities, is pleased
to report its preliminary results for the year ended 31 December 2023.
Duncan Garrood, Chief Executive Officer of Empiric Student Property plc, said:
"During what has been another record year for the Company, we have delivered
strong rental growth and filled our rooms earlier than ever before. Customer
satisfaction improved further and continues to be amongst the highest in the
sector with our Hello Student brand awarded Platinum Operator certification by
the industry-recognised Global Student Living. Combined with ongoing
undersupply of high quality, well located student accommodation in prime
cities, this dynamic continues to drive increased re-bookings and greater
demand for our rooms. This momentum has continued into the new sales year, and
positions us well for growth".
Financial highlights
31 December 2022 31 December
2023
Change
Income statement
EPRA earnings (£m) 20.6 24.1 +17.0%
EPRA earnings per share (p) 3.4 4.0 +17.6%
Gross margin (%) 67.1 68.7 +1.6% pts
Dividend per share (p) 2.75 3.5 +27.3%
Balance sheet
Total accounting return (%) 10.5 7.6 -2.9% pts
EPRA NTA per share (p) 115.4 120.7 +4.6%
Portfolio valuation (£m) 1,078.9 1,097.9 +3.0% LfL
Cash and undrawn committed facilities (£m) 95.8(1) 82.5 -13.9%
EPRA LTV (%) 32.7 30.6 -2.1% pts
(1) Including £20.0 million secured post 31 December 2022
Earnings growth delivers 27% increase in full year dividend
· Revenue increased 10.3% to £80.5m (2022: £73.0m)
· EPRA EPS increased 17.6% to 4.0p (2022: 3.4p)
· Portfolio valuation of £1,097.9m up 3.0% like for like (net of capex)
· Net initial yield of 5.5% (2022: 5.2%)
· EPRA NTA per share increased 4.6% to 120.7p (2022: 115.4p)
· Total dividend paid and payable for the year of 3.5p, ahead of initial
target
· Total accounting return of 7.6% (2022: 10.5%)
Operational performance underpinned by best ever rebooker campaign
· Like for like rental growth of 10.5% for academic year 2023/24,
supported by dynamic pricing
· 99% revenue occupancy achieved for academic year 2023/24
· 99% revenue occupancy for financial year 2023 (2022: 90%)
· Clustering strategy continuing to drive improved operating margins,
which increased to 68.7% (2023: 67.1%)
Actively managing the property portfolio
· Non-core disposal programme materially completed with £43.4m
generated from the sale of six properties in line with book value and over
£30.0m under offer
· Acquisition completed post year end of former office block in central
Bristol for £5.6m anticipated to add a further 50+ beds to this key cluster
city for academic year 2025/26
· 556 newly refurbished rooms and associated amenity space delivered for
academic year 2023/24, with a further 350 refurbished rooms planned for
academic year 2024/25
· Successful launch of second exclusive Postgrad site in Nottingham and
continued progress on a potential joint venture as a means to accelerate the
roll out of this product and the release of equity for growth
Robust balance sheet
· EPRA loan to value at 30.6% (2022: 32.7%), comfortably within
long-term target of 35%
· Weighted average cost of debt 4.3% (2022: 4.0%), 88% with interest
rate protection
· Cash and undrawn committed facilities of £82.5m
· Weighted average debt maturity to be extended from 3.9 years to 5.7
years following refinancing
Delivering outstanding customer service
· Hello Student awarded Platinum Operator certification at Global
Student Living Awards 2023
· Continued improvement in Net Promoter Score from +27 to +30.5, which
compares favourably against purpose built student accommodation average of +13
and +8 for university halls
Responsible business
· Implementation of net zero strategy commenced with four carbon neutral
properties completing in early 2024 and ambitious plans in place for the year
ahead
· Further £6.9m invested in fire safety works in 2023, with 69% of the
portfolio EWS1 certified
· Over 50% of portfolio now rated EPC B or better, a level achieved a
year earlier than targeted
Momentum continues for academic year 2024/25 sales cycle
· Strong bookings launch, with revenue occupancy in excess of 60%
currently secured,
· Like for like rental growth in excess of 6% anticipated
· Targeting revenue occupancy >97%
Results presentation at 09.00 (GMT) today
To access the live webcast, please register here:
https://stream.brrmedia.co.uk/broadcast/65956576b012a6d30b47471d
(https://stream.brrmedia.co.uk/broadcast/65956576b012a6d30b47471d)
FOR FURTHER INFORMATION ON THE COMPANY, PLEASE CONTACT:
Empiric Student Property plc (via FTI Consulting below)
Duncan Garrood (Chief Executive Officer)
Donald Grant (Chief Financial & Sustainability Officer)
Jefferies International Limited 020 7029 8000
Tom Yeadon
Andrew Morris
Peel Hunt LLP 020 7418 8900
Capel Irwin
Carl Gough
FTI Consulting 020 3727 1000
Dido Laurimore empiric@fticonsulting.com (mailto:empiric@fticonsulting.com)
Eve Kirmatzis
The Company's LEI is 213800FPF38IBPRFPU87.
Further information on Empiric can be found on the Company's website at
www.empiric.co.uk (http://www.empiric.co.uk/) .
Notes:
Empiric Student Property plc is a leading provider and operator of modern,
predominantly direct-let, premium student accommodation serving key UK
universities. Investing in both operating and development assets, Empiric is a
fully integrated operational student property business focused on premium
studio-led accommodation managed through its Hello Student operating platform,
that is attractive to affluent growing student segments.
The Company, an internally managed real estate investment trust ("REIT")
incorporated in England and Wales, listed on the premium listing segment of
the Official List of the Financial Conduct Authority, was admitted to trading
on the main market for listed securities of the London Stock Exchange in June
2014. The Company is classified as a commercial company listed under chapter 6
of the UK Listing rules and as such is not an alternative investment fund
("AIF") for the purposes of the Alternative Investment Fund Managers Directive
("AIFMD") and is not required to provide investors with a Key information
Document ("KID") in accordance with the Packaged Retail and Insurance-based
Investment Products ("PRIIPs") regulations.
Disclaimer
This release includes statements that are forward looking in nature.
Forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements
of Empiric Student Property plc to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Any information contained in this release on the
price at which shares or other securities in Empiric Student Property plc have
been bought or sold in the past, or on the yield on such shares or other
securities, should not be relied upon as a guide to future performance.
Chief Executive Officer's Review
Building on 2022, the business has again delivered a year of record
achievements, culminating in a very strong financial and operational
performance. Fuelled by the acute undersupply of well located, high quality
student accommodation in key university towns and cities across the UK, we
successfully filled our rooms quickly and through our dynamic pricing
capability we achieved upper quartile rental growth performance.
2023 saw our best ever rebooker campaign, with 22 per cent of rooms sold to
students who were already staying with us; a tangible validation of customer
satisfaction and the value inherent in our service proposition. Overall, we
achieved occupancy above 99 per cent for academic year 2023/24 and this
momentum has continued into the start of the sales programme for the
forthcoming academic year.
Outstanding like for like rental growth of 10.5 per cent was secured,
surpassing expectations multiple times during the sales cycle. This is
testament to our strategy of selling rooms on a direct-let basis and our now
well embedded dynamic pricing system. Underpinned by strong rental growth,
our portfolio valuation grew a further three per cent like for like. The
balance sheet is in good shape with a prudent level of gearing, comfortably in
line with our long-term target, and refinancing risk has been well managed.
We've been pleased to grow our shareholder distributions by 27 per cent year
on year, and deliver a total accounting return of 7.6 per cent.
Strong market fundamentals continue
Demand and supply imbalance continues unabated. Participation rates in the
UK's higher education sector remains historically high with over 2.2 million
full-time students. China remains the dominant domicile of international
students, but shifting demographic trends demonstrate the attractiveness of a
relatively affordable UK higher education to a growing number of students from
other international markets, particularly India. The UK remains a very
attractive high quality, and affordable higher education destination of
choice.
A clear flight to quality is continuing, with higher tariff, typically Russell
Group, universities experiencing year on year growth in acceptances to the
detriment of medium and lower tariff universities. This validates our strategy
of focusing our portfolio on these cities, which deliver growth and encourage
investment.
The take up of postgraduate studies has grown considerably, aided by the
student loan system, visa changes and the desire for further qualifications,
while meeting the need of UK universities to generate additional revenue. One
quarter of all students now study at postgraduate level full time.
The year saw a net increase in Purpose Built Student Accommodation ("PBSA")
beds of only 8,760, the lowest in a decade. This highlights the challenges
faced, including planning, construction costs and increased interest rates.
Legislative changes have driven more than 400,000 private rental properties
from the market, contributing to a decline in HMOs, our main competitive
market. This has driven more students, particularly domestic students, towards
PBSA operators like ourselves.
Driving occupancy and rental growth
The investment in our operational capabilities, completed over the past couple
of years, continues to deliver results.
Internalising our capabilities has allowed us to put our customers first and
deliver a high quality experience, which has been paramount in the development
of our strategic priorities and improved rent performance. Our key performance
indicator in this regard is the Global Student Living Index's Net Promoter
Score. This year our operating brand, Hello Student, successfully achieved a
further improvement to +30.5 (2022: +27), significantly outperforming the
benchmark All Private Halls score which scored +13. In addition, Global
Student Living awarded Hello Student the accolade of Platinum Operator, only
awarded to a very small number of PBSA operators, a certification standard we
are extremely proud to have achieved and a reflection of our commitment to a
personal, high quality, customer service proposition. We strive to help our
customers make the most of their university experience by making their lives
as simple and fulfilling as possible.
Great customer service drives demand for our rooms. 22 per cent of our rooms
for academic year 2023/24 were sold to students who were already staying with
us, helping create a sense of community and allowing us to eliminate costs
associated with customer acquisition and associated costs of turnaround for a
quarter of our rooms. This is a great achievement considering at least a third
of students complete their higher education journey each year.
The strategic shift in the portfolio away from secondary locations in favour
of clustering premium quality properties in prime, undersupplied cities within
close proximity to top-tier universities, positioned the portfolio well to
capitalise on our dynamic pricing capability, maximising revenue relative to
underlying demand.
As academic year 2023/24 began, we had sold over 99 per cent of our rooms
achieving like for like rental growth of 10.5 per cent, materially ahead of
our base pricing uplift of seven per cent.
We continue to attract a greater proportion of UK students than in pre-Covid
years. For academic year 2023/24, UK students represent 49 per cent of all
bookings, the balance comprising 32 per cent Chinese and 19 per cent other
international. Notwithstanding the UK governments rhetoric in respect to
restricting visa applications for international students, and in particular
their dependants, this demographic has changed little over the past three
years underlining our focus on top-tier universities and the studio-led nature
of our accommodation.
We will continue to target those international markets where we are
underweight relative to the opportunity available.
Active property management
In early 2021 we set out a plan to dispose of a modest portfolio of non-core
assets. At the time those assets identified for disposal represented
approximately 10 per cent of the portfolio, a little over £100 million by
value. In addition, 16 per cent of the portfolio was earmarked for extensive
refurbishment to bring the standard of accommodation in line with what is
considered to offer an on-brand customer experience.
By the end of 2023, we had disposed of properties valued at £101.2 million,
of which six properties valued at £43.4 million were sold during 2023, with
over £30.0 million remaining under offer. In aggregate, disposals completed
to date were achieved at a four per cent premium to their respective book
value at the point of sale. With this programme now materially concluded, we
expect to see a more normalised churn in the portfolio going forward.
Proceeds from the disposal programme have largely been deployed into our core
portfolio, either to fund the refurbishment programme, acquisitions, our
ongoing programme of fire safety works or toward debt prepayment pending
substitution.
In 2021 we outlined a five year refurbishment plan with an estimated cost of
£36 million. At 31 December 2023, those properties earmarked for extensive
refurbishment had reduced to eight per cent of the portfolio by value, with
£21.4 million invested to date. The annual refurbishment programme is
ongoing, targeting the delivery of between 250 and 350 beds annually. The
refurbishment cycle for 2023 was completed to plan, delivering 254 fully
refurbished beds and associated amenity areas across six core locations in
advance of the new academic year, with a further 220 rooms receiving a light
refurbishment. In addition, our second Postgrad exclusive site at Talbot
Studios in Nottingham was completed and welcomed students from September
2023.
One of our larger properties, Brunswick Apartments, Southampton has been
closed for the duration of the 2023/24 academic year for refurbishment. This
173 bed property will reopen to students from September 2024 following a full
room and amenity refurbishment, alongside fire safety, energy efficiency and
Net Zero related works.
A variety of acquisition opportunities were at various stages of negotiation,
including under offer at 31 December 2023. These acquisitions are
complementary to our core strategy, in locations where we have an existing
operational presence and will be accretive to earnings. In February 2024 we
were pleased to complete on the acquisition of a former office building in
Bristol, which is located firmly in the centre of our existing cluster within
the city. This building will be reconfigured to provide high quality student
accommodation which we expect to deliver for academic year 2025/26.
Acquisition properties valued at over £20.0 million remain under offer in
Top Tier university cities.
Having spent considerable time in 2023 performing due diligence on the
postgraduate market across our key cities and identifying an appropriately
aligned seed portfolio, conversations with a small selected number of
interested parties commenced in late 2023. The objective of these
conversations was to establish the depth of appetite to form a joint venture
as a means to accelerate the roll out of this product and in turn grow our
business. These conversations continue, including visits to sites and
management meetings, as we now progress toward identifying the party with whom
we may enter a period of exclusive negotiation and due diligence. We will
continue to keep investors informed of progress.
Supporting our customers and delivering consistent service
Every area of our business is encouraged, and motivated, to provide a customer
first philosophy. We remain acutely aware that with rising rents our customers
expect an increasingly high quality experience and value.
Our Student app has continued to provide a platform for greater and more
timely customer engagement and a means to improve our service offer. We are
able to respond to customer service requests in a more timely and structured
manner. Students have the ability to monitor our progress toward resolution of
issues raised, receive site related information, be notified when parcels are
available for collection, when social events are arranged or to facilitate
networking. In addition, this year during the annual turnaround of customers,
the app was key to facilitating the check in process, removing considerable
administrative time and improving overall customer experience. Pleasingly, we
have been nominated for the award of Best Check-in Experience in 2024.
The most substantive evidence of customer service and the benchmark we use
within our business is the Global Student Living Index's Net Promoter Score.
We are proud to report that our NPS score has improved again this year, from
+27 to +30.5. To put this in context, the latest NPS score for all private
purpose built student accommodation was +13, whilst the score for university
halls was +8. Of our customers, 85 per cent rate us good or very good, which
benchmarks very well against some of the highest performing UK service
providers.
The wellbeing of our customers is of paramount importance to us. Hosting young
adults during what for most is a highly challenging time of their life, is a
responsibility we have to both customers and their parents alike. To further
support our service provision in this important area, we have appointed a
Wellbeing Manager who brings expertise as an accredited Mental Health First
Aid Instructor and Sexual Violence Liaison Officer and will be pivotal to
embedding mental health first aid training across all our sites. We take the
welfare of our team and customers extremely seriously.
We were proud to see our efforts in the area acknowledged when we were
certified as a Platinum Operator by Global Student Living in June 2023.
Developing our people
At the heart of our business are the people that design, support and deliver
great customer experience and buildings. By rewarding, training and developing
our people we ensure our brand remains at the leading edge of customer service
and experience.
There is good rationale for focussing on employee development, retention and
engagement. During the year we increased our retention rate to 85 per cent,
which is extremely high in the service industry, whilst internal promotions
accounted for over 50 per cent of all non-entry level vacancies.
We are proud members of the Real Living Wage Foundation, meaning our lowest
paid employees are paid above the minimum wage and received salary increases
mitigating inflation. During a time of increased pressures on cost-of-living
we were pleased to be in a position to support our employees, with average
compensation increases of 4.4 per cent in 2024.
Having invested in our people, their wellbeing and various engagement
initiatives, we are pleased to report that our colleague engagement score was
85 per cent, which continues to compare favourably to the national average.
Safety
We are responsible for ensuring that everyone who is living, working in or
visiting our buildings is kept safe. We ensure that our buildings comply with
not only all relevant regulations but also with best practice within the
industry.
There has been considerable focus on fire safety again this year. Having
allocated £46 million toward a five year programme of fire safety
initiatives, we have continued to progress works on a risk based basis. In
2023 we invested a further £6.9 million towards attainment of the latest EWS1
certification standard, bringing total investment to date in this area to
£24.5 million, an investment which is fully reflected within property
valuations. By 31 December 2023, 69 per cent of the portfolio had achieved
EWS1 certification and we remain on track to meet the objectives outlined in
the five year plan.
Our buildings continue to be inspected on a regular basis to ensure that we
identify and eliminate hazards. To assess the buildings, we have engaged with
specialist consultants to undertake thorough assessments of general safety,
hazards, prevention of fire risks and water systems.
In response to concerns surrounding the use of Reinforced Autoclaved Aerated
Concrete ("RAAC"), we commissioned external surveyors and structural engineers
to assist with a portfolio wide review based on construction type and building
age. Onsite inspections did not identify this material at any of our medium or
high risk properties.
Becoming a sustainable business
Following the 2022 publication of our full Net Zero strategy, the year has
seen a number of building blocks put in place to facilitate the implementation
of this plan.
The Board agreed an initial capital allocation of £12.0 million towards green
initiatives, focused primarily on decarbonisation, EPC risk management and
driving behavioural change. The Company tendered and appointed energy advisers
during 2023 as well as appointing an energy Project Manager, who brings
extensive prior experience implementing decarbonisation initiatives at
operational sites. In early 2024, four further decarbonised sites were
delivered with a further four in progress. Good progress has been made in the
management of EPC risk, with 51 per cent of our sites now rated EPC B or
better, a target achieved over a year earlier than was envisaged in our Net
Zero strategic plan, showing our focus on delivery.
The business remains committed to achieving Net Zero by 2033. As part of this
journey, our plan including interim targets for the next two years, will be
subject to an advisory shareholder vote at the forthcoming Annual General
Meeting.
Strategy and outlook
As we move forward into 2024, the outlook for our business and the wider
sector looks very strong. Having already secured over 60 per cent revenue
occupancy for the 2024/25 academic year, we are confident of achieving another
successful year from an occupancy perspective. As inflation tempers, so would
we expect rental growth, however we believe like for like rental growth in
excess of six per cent can be achieved this year.
Our strategic focus now shifts to driving operational efficiencies through
growth. Acquiring or developing new sites in top-tier cities that are close to
well-located existing sites will enable us to exploit our clustering strategy
and realise further the benefits of scale. In addition, we continue to explore
opportunities to accelerate the roll out of our postgraduate product.
In line with the continuous focus on improving customer experience, we expect
to invest in a new end to end ERP system and associated customer facing
website upgrade in 2024. This will improve the booking experience further and
make it easier for customers to secure a room with us. Further, we'll continue
to invest in our people to ensure stability and engagement is retained and
more time will be spent on talent mapping to underpin our future. Finally, we
will continue the roll out of our brand across key locations, which helps
drive down the cost of customer acquisition and improved operational margins.
Having increased the dividend target in the final quarter of 2023 to 3.5 pence
per share, and today declaring a dividend in line with that plan, the Board
remains confident in targeting a minimum dividend of 3.5 pence per share for
the 2024 financial year.
Duncan Garrood
Chief Executive Officer
13 March 2024
Operating review
Overview
Current market conditions are the strongest we've experienced in recent years.
New supply of high quality, well located accommodation, particularly in prime
cities, is limited and has been unable to keep pace with increased student
participation. Demand has been exacerbated recently by the decline in HMO
provision, which when coupled with the ongoing pressure on the cost of living,
makes our all-inclusive fixed price model increasingly attractive.
The lettings cycle for academic year 2023/24 tracked eight to ten weeks ahead
of prior year during the first half of 2023, with our rooms filling quicker
than we've ever experienced. Unprecedented demand, coupled with our direct-let
model, enabled us to capture rental growth inflation during the entire letting
period. Like for like growth of 10.5 per cent was achieved, surpassing
expectations on multiple occasions during the sales cycle.
A strong rebooker programme contributed significantly to the speed at which we
filled our rooms and provided the platform to benefit from dynamic pricing. At
the start of the year we targeted 20 per cent for academic year 2023/24. In
total, 22 per cent of our rooms were sold to students already living with us,
with some of our strongest locations achieving rates in excess of 30 per cent.
Portfolio overview
A summary of the Group's portfolio is set out below, segmented in line with
our valuer's view of quality. Almost 95 per cent of the portfolio is now
aligned to Prime or Super Prime locations.
Since 31 December 2022, the portfolio has grown in value by three per cent,
like for like. This is as a result of the continued income growth achieved for
the 2023/24 academic year, offset by a weakening of yields, primarily in
secondary locations and an increased cost of fire safety works. Overall, the
portfolio's net initial yield has increased by 30 basis points to 5.5 per
cent. This yield movement reflects reduced investment market activity, which
is mainly due to an increased cost of capital, together with the valuer taking
a more cautious approach to future income growth until it is sufficiently
secured. With a reversionary yield of 5.7 per cent, confidence exists that as
the letting cycle advances for the new 2024/25 academic year, this risk
premium should be removed.
Reflected within the like for like growth of three per cent, is a £9.0
million adjustment made during the first half of the financial year to reflect
the increased cost of fire safety works. This followed an extensive tendering
exercise for our larger properties where works are required to be carried out
on their external wall systems ("EWS"). The increase was primarily due to high
demand for specialist contractors, the rising cost of scaffolding and
revisions required following further intrusive investigations. In arriving at
the portfolio's market value, the valuer has applied a pound for pound
deduction for the forecasted cost of these works. Like many other real estate
investors, we have started compensation claims against a number of lead
contractors. Given the conversion and refurbishment nature of a large number
of our properties, the likelihood of success is more uncertain and no
deduction has been assumed against the costs of remediation.
Valuers quality segmentation Properties Operational beds Market value £m Market value %
Super prime regional 25 2,473 500.5 45.6
Prime regional 45 4,331 520.5 47.4
London 1 79 19.7 1.8
71 6,883 1,040.7 94.8
Secondary 9 1,025 57.2 5.2
Total 80 7,908 1,097.9 100.0
A portfolio segmentation review was carried out in early 2021 with each
property assigned a strategic segment reflecting the Group's investment style,
as follows:
· Segment A: Properties that are appropriately configured and on-brand
and aligned to top-tier universities.
· Segment B: Properties that fundamentally meet our key criteria but
require extensive refurbishment to become on-brand. If extensive refurbishment
is not expected to deliver our IRR return hurdle of 9-11 per cent, then the
property is earmarked for sale.
· Segment C: Well-located properties clustered around a Segment A property
which are configured in a manner that lend themselves better to a conversion
to our new brand Postgrad by Hello Student, this is typically based on room
mix, size and amenity.
· Segment D: These properties are typically not of a size or
configuration that lend themselves to become a core Segment A or Segment C
scheme, are typically located in a single asset city whereby the benefits of
clustering can not easily be realised and/or are not aligned to a top-tier
university. These are therefore considered non-core, and earmarked for
disposal.
We have seen activity in the investment market return following a period of
disruption in the final quarter of 2022, allowing us to progress our non-core
disposal programme at pace, particularly in the first half of the year.
We successfully concluded the disposal of six properties during the year,
generating £43.4 million, with pricing marginally above their respective book
values, in aggregate. The sales cumulatively represent 620 operational beds
and have reduced by one the cities in which the Company has an operational
presence.
At 31 December 2023, further properties valued at over £30.0 million remain
under offer, which once complete will conclude the non-core sales programme
which began in March 2021 and has generated gross proceeds of £101.2 million
to date.
As we recycle capital from secondary locations or cities where we do not have
sufficient scale, we aim to drive operational performance and improved returns
through clustering. Progress made over the last 12 months has enabled us to
improve our Gross Margin a further two percentage points this year from 67 per
cent in the year to 31 December 2022 to 69 per cent.
Strategic segmentation Segment A £m Segment B £m Segment C £m Segment D £m Total NIY %
Market value £m
Operational portfolio 794.2 84.7 154.3 45.9 1,079.1 5.5
Commercial portfolio 9.7 1.4 1.4 3.3 15.8 7.7
Development portfolio - - - 3.0 3.0
Total 803.9 86.1 155.7 52.2 1,097.9
31 December 2023 (%) 73.2 7.8 14.2 4.8 100.0
31 December 2022 (%) 67.8 11.8 13.3 7.1 100.0
Refurbishment and development
Our annual refurbishment programme continues to target the delivery of between
250 and 350 beds annually, with the investment into the refurbished rooms
typically delivering IRRs of between 9-11 per cent.
This year's annual cycle delivered 231 fully refurbished rooms and associated
amenity areas across four core locations ready for the start of the 2023/24
academic year in September, with a further 325 rooms receiving a light
refurbishment. Ongoing rolling refurbishments continued into the fourth
quarter of 2023 at our sites in Leeds, Cardiff and Birmingham.
In September 2023, we delivered our second postgraduate exclusive site at
Talbot Studios in Nottingham. This follows the success of our pilot scheme
which opened in Edinburgh in November 2022.
As previously announced, we took the decision to close one of our larger
properties, Brunswick Apartments, Southampton for the duration of the
2023/24 academic year. Works began in September 2023 on this 173 bed property,
which will reopen to students from September 2024 following a full room
refurbishment and the addition of a new amenity provision, alongside fire
safety, energy efficiency and Net Zero works. The property is selling well for
academic year 2024/25 with aggregate pricing currently ahead of expectations.
Capital expenditure programme
Progress against our five year programme of refurbishment, fire safety works
and green initiatives is set out below. The revised plan reflects the
increased cost of EWS works as announced in the first half of 2023. In respect
to our programme of fire safety works, all properties have been surveyed and
69 per cent of the portfolio has been certified.
Refurbishment Fire safety works Green initiatives
£m
£m
£m
Five year plan (2021 - 2025) 36.1 37.0 12.0
Revision to cost forecast for EWS works - 9.0 -
Revised plan 36.1 46.0 12.0
Invested to date 21.4 24.5 1.7
Forecast 2024 investment 13.5 14.2 6.0
In addition to the above, ongoing capital life cycling works continue to
require around £4.0 million per annum.
Commercial portfolio
We have continued to actively manage the 35-unit commercial estate that
generally sits below our operational portfolio, with a number of
value-creating projects completed. Notable deals include finalising an
agreement for lease with an Asian supermarket operator on a ten year term in
Bristol. This deal will also facilitate the development of new gym amenity
space to the rear of the unit. A five year lease renewal was secured with a
national bakery chain in Liverpool, at passing rent.
Several asset management initiatives are planned for 2024 to drive value and
enhance the student offering onsite. In late 2023 a 12-month lease renewal in
Bristol was agreed to ensure an existing tenant could continue trading before
taking occupation of a neighbouring commercial space within the estate. Upon
achieving vacant possession of this larger unit, we have terms agreed with a
Korean restaurant to take a 15-year lease which will facilitate the addition
of a new student reception and study zone.
We will continue to seek to regear all qualifying leases where the tenant
covenant is strong, namely with our national convenience store tenants.
Acquisitions and developments
A number of attractive acquisition opportunities remain under offer at 31
December 2023 in top tier university cities which are complementary to our
core strategy and will be accretive to earnings.
Subsequent to the year end, we were pleased to complete on one of these
opportunities, a former office block in Bristol. The extremely well located
property sits firmly in the centre of our existing cluster within the city.
This building will be reconfigured to provide over 50 high quality new PBSA
beds which we expect to deliver for academic year 2025/26.
With the non-core disposal programme now materially completed, we expect to
see further selective growth through acquisitions during the first half of
2024.
In early 2024 we plan to submit a planning application in respect to our
Victoria Point, Manchester site. The city continues to suffer an acute under
supply of PBSA beds and has consistently performed well for us from an
occupancy and rental growth perspective. The masterplan, if approved, provides
for a full refurbishment of the existing asset together with an over 200 bed
extension.
Financial review
2023 was a strong year for the Group across key financial metrics. Revenue
surpassed £80.0 million, supported in part by a 10.5 per cent like for like
rent increase for the 2023/24 academic year, with the estate effectively full
for the second academic year running. Gross margin increased to 69 per cent
and administrative costs have been held within guidance levels at £14.0
million, continuing to improve as a proportion of revenue.
The balance sheet is in sound shape with EPRA LTV falling to 30.6 per cent and
refinancing risk managed through to 2028.
Dividends paid and declared during the year, coupled with a growth in EPRA Net
Tangible Asset value of 5.3 pence per share, delivered a total accounting
return of 7.6 per cent.
Income statement
Core portfolio Non-core (bucket D) 2023 2022
£m £m £m £m
Revenue 74.7 5.8 80.5 73.0
Property expenses (22.1) (3.1) (25.2) (24.0)
Gross profit 52.6 2.7 55.3 49.0
Gross margin 70% 47% 69% 67%
Administrative expenses (14.0) (13.4)
Operating profit 41.3 35.6
Revaluation 30.1 45.6
(Losses)/gains on disposals (0.6) 1.5
Derivative mark to market loss (0.2) -
Net finance costs (17.2) (15.0)
IFRS Profit 53.4 67.7
EBITDA 42.1 36.3
Weighted average ordinary shares (m) 603.4 603.3
IFRS EPS (pence) 8.8 11.2
EPRA EPS (pence) 4.0 3.4
Revenues increased by £7.5 million or 10.3 per cent. Combined occupancy for
2023 was 99 per cent and the year benefited from blended like for like rental
growth of 7.0 per cent. Disposal of non-core assets reduced revenue by £2.2
million.
Sound progress was made toward achieving a gross margin of 70 per cent, with a
two percentage point improvement in gross margin to 69 per cent. Non-core
assets did continue to adversely impact gross margin during the year, but as
demonstrated above, excluding these assets, a 70 per cent gross margin was
achieved.
Although cost inflation pressure has continued, utility costs remained fixed
throughout 2023, mitigating volatility on a key operational cost line.
Utility costs remain fully fixed until September 2024, following which we
currently have price certainty across 50 per cent of assumed consumption from
October 2024 until March 2026, a level we will seek to extend and increase as
opportunities arise.
Administrative expenses increased by £0.6 million or 4.5 per cent, broadly in
line with CPI for the year, comfortably covered by strong rental growth.
Finance costs increased as anticipated, with floating rates closing the year
some 170 basis points higher than at 31 December 2022. Of the Group's drawn
debt, 12 per cent remains exposed to interest rate volatility.
Rental growth underpinned a portfolio valuation uplift of £30.1 million, a
significant contributor to the IFRS profit for the year of £53.4 million.
Balance sheet
2023 2022
£m £m
Property (market value) 1,097.9 1,078.9
Bank borrowings drawn (360.3) (391.2)
Cash on hand 40.5 55.8
Net debt (319.8) (335.4)
Other net liabilities (43.9) (42.7)
Net assets 734.2 700.8
Diluted number of shares 608.0 607.2
EPRA NTA per share (pence) 120.7 115.4
Property LTV 29.1% 31.1%
EPRA LTV 30.6% 32.7%
Strong rental growth underpinned a £30.1 million portfolio revaluation gain
for the year. This was attributed to strong rental growth in key Russell
Group aligned university cities, most notably Manchester, York, Newcastle,
Bristol and Edinburgh, all of which experienced at or near double digit
valuation growth. Net asset value increased by 5.3 pence per share or 4.6
per cent, primarily due to the valuation movement, with the residual
attributed to earnings, net of dividends paid.
Evolution of net asset value £m
31 December 2022 700.8
EPRA earnings 24.1
Like for like revaluation 30.8
Dividends paid (20.7)
Other (0.8)
31 December 2023 734.2
Portfolio valuation
2023 2022 Gain(1) Change
£m £m £m %
Like for like property portfolio 1,097.9 1,035.3 30.6 3.0
Disposals - 43.6 (0.5)
Portfolio valuation 1,097.9 1,078.9 30.1
(1)Net of capital expenditure and headlease amortisation
On a like for like basis, excluding disposals and capital expenditure, the
portfolio increased in value by £30.6 million. The net initial yield moved
outward from 5.2 per cent to 5.5 per cent with the valuer applying a more
prudent approach in 2023 and not applying core yields to future income until
it is sufficiently secured. The reversionary yield has moved out to 5.7 per
cent, demonstrating the valuation growth potential inherent in the portfolio.
Notwithstanding this, the outward yield shift was offset by the significant
rental growth achieved.
In the 2024 Spring budget, the UK Government announced the abolition of
Multiple Dwellings Relief ("MDR") by repealing Schedule 6B of the Finance Act
2023. The removal of MDR will increase purchaser cost assumptions applied to
valuations of the Group's English property portfolio. Full purchaser cost
assumptions are already in place in respect of a number of the Group's
property valuations and this change does not currently apply to Scottish or
Welsh properties. On the assumption that in time it will, the estimated impact
of this change is a £35 million reduction in the portfolio's aggregate
valuation as at 31 December 2023.
The disposal programme was materially completed during the year. In total,
£43.4 million was generated from assets disposed of during 2023. After
disposal costs, a net loss on disposals of £0.6 million was realised.
Capital expenditure during the year amounted to £32.5 million, primarily
related to refurbishment works and the ongoing programme to enhance fire
safety.
Debt
Drawn borrowings decreased by £30.9 million during the year, primarily
following the application of disposal proceeds, pending substitution. At the
balance sheet date the weighted average cost of debt was 4.3 per cent and the
weighted term to maturity 3.9 years.
The first of a two tranche £124.9 million refinancing completed post year
end. This first tranche refinanced all near term, primarily floating rate debt
maturities. The second tranche is anticipated to complete in the second
quarter of 2024 extending the 2025 expiry to 2031. Once completed, the Group
will be 100 per cent protected against interest rate volatility, with an
anticipated weighted cost of debt of 4.6 per cent and a weighted term to
maturity of 5.7 years. Refinancing risk will then be mitigated until 2028.
Property loan to value was 29.1 per cent, down from 31.1 per cent at the prior
year end, reflecting the valuation performance and the application of surplus
cash in prepayment of flexible debt facilities. EPRA LTV, which includes net
payables, also decreased two per cent to 30.7 per cent and will be the Group's
primary LTV measure going forward.
Net debt to EBITDA was 7.6, down from 9.2 at 31 December 2022, with cash and
available committed facilities of £82.5 million.
All loan covenants were fully compliant during the year.
Cashflow
2023 2022
£m £m
Operating cash flow 43.7 43.6
Capital expenditure (34.0) (49.1)
Property disposals 42.6 39.7
Finance income 0.2 -
Net cash flows from investing activities 8.8 (9.4)
Dividends paid (20.2) (16.7)
Net borrowings (repaid)/drawn (31.0) 14.6
Finance costs (16.6) (13.4)
Financing cash flows (67.8) (15.5)
Net cash flow (15.3) 18.7
The disposal programme of non-core assets continued into 2023, generating
proceeds net of disposal costs of £42.6 million. These were largely
reinvested into the core-portfolio refurbishment and fire safety programme,
with the balance applied toward prepayment of flexible debt facilities.
Cash paid toward funding dividend payments excludes £0.5 million of
withholding tax which was paid to HM Revenue & Customs in January 2024.
Cash outflows related to the settlement of finance costs have increased in
line with interest rates applicable to the Group's residual floating rate debt
facilities.
Going concern
The Board places particular focus on the appropriateness of adopting the going
concern assumption when preparing the Group's consolidated financial
statements.
In light of the Group's liquidity position, its modest level of gearing and
capital commitments of £1.7 million, the Directors have concluded that, in
reasonably possible adverse scenarios, there remains adequate resources and
mitigants available to continue to operate until at least 31 December 2025,
being a period of not less than 12 months from the date of approval of these
financial statements. The Directors therefore concluded that it remains
appropriate to adopt the going concern basis of preparation when compiling the
Annual Report and Accounts for the year ended 31 December 2023.
Attention is drawn to Note 1.4 to the financial statements and to the
Company's statement in respect to viability for further details surrounding
the conclusion reached.
Dividends
A final interim dividend of 0.9375 pence per share has been declared for the
final quarter of 2023, bringing total dividends paid and payable in respect of
2023 to 3.5 pence. This represents an 87.5 per cent pay-out on EPRA EPS. The
dividend will be paid as a Property Income Distribution on 19 April 2024 to
shareholders on the register at 5 April 2024.
Donald Grant
Chief Financial & Sustainability Officer
13 March 2024
EPRA and other alternative performance measures
Our performance in line with industry standard measures
EPRA disclosures
The following is a summary of the EPRA performance measures included in the
Group's results. As defined by the EPRA Best Practice Recommendations, these
are a set of standard disclosures for the property industry designed to drive
consistency in reporting.
EPRA measure Definition of measure Note/ reference 2023 2022
Earnings (£m) The companies underlying earnings from operational activities 8 24.1 20.6
Net tangible assets (NTA) The underlying value of the company assuming it buys and sells assets 9 120.7 115.4
Net disposal value (NDV) The value of the company assuming assets are sold, and the liabilities are 9 122.5 117.9
settled, not held to maturity
Net reinstatement value (NRV) The value of the assets on a long-term basis, assets and liabilities are not 9 126.8 121.8
expected to crystallise under normal circumstances
Net initial yield Rental income less operating costs divided by the market value of the Below 5.0% 5.2%
property, increased with purchasers costs
Cost ratio (incl. direct vacancy costs) Administrative & operating costs including costs of direct vacancy divided Below 49% 51%
by gross rental income.
Cost ratio (excl. direct vacancy costs) Administrative & operating costs excluding costs of direct vacancy divided Below 48% 47%
by gross rental income
Like for like rental income (in respect of academic year) Compares the growth in rental income that has been in operation and not under Financial review 10.5% 5.2%
development, throughout both the current and comparative year
Like for like capital Compares the growth in capital values of the Group's portfolio which was Financial review 3.0% 2.4%
controlled by the Group and both balance sheet dates, net of capital
expenditure and excluding development properties
Loan to value Ratio of net debt, including net payables, to the sum of the net assets, Below 30.6% 32.7%
including net receivables, of the Group, expressed as a percentage
Vacancy rate Estimated Market Rental Value (ERV) of vacant space divided by ERV of the Below 0.8% 3.1%
whole portfolio
Other alternative performance measures
An alternative performance measure ("APM") is a financial measure of
historical or future financial performance, financial position or cash flows
of an entity which is not a financial measure defined or specified in
International Financial Reporting Standards ("IFRS").
APM's are presented to provide useful information to readers and have been, or
are still, consistent with industry standards. The table below sets out the
additional non-EPRA derived APM's included within the Annual Report and
Accounts.
Measure Definition of measure Note/ reference 2023 2022
Total return Growth in EPRA NTA plus dividends paid as a percentage of opening EPRA NTA 31 7.6% 10.5%
Net debt (£m) Borrowings less cash and cash equivalents 31 319.8 335.4
Property loan to value Net debt divided by property market value 31 29.1% 31.1%
Dividend cover EPRA earnings relative to dividends declared for the year 31 114% 124%
Dividend pay-out ratio Dividends declared relative to EPRA earnings 31 88% 81%
Group
EPRA Net Initial Yield ("NIY") and topped-up NIY Year ended Year ended
31 December 2023 31 December 2022
£m £m
Investment property 1,097.9 1,078.9
Less: development property (3.0) (3.3)
Completed property portfolio 1,094.9 1,075.6
Allowance for purchases cost 37.1 38.5
Grossed up completed property portfolio valuation 1,132.0 1,114.1
Annualised cash passing rental income 81.7 81.6
Property outgoings (25.2) (24.0)
Annualised net rents 56.5 57.6
Add: notional rent expiration of rent-free periods or other lease incentives 0.1 0.1
Topped-up net annualised rent 56.6 57.7
EPRA NIY 5.0% 5.2%
EPRA topped-up NIY 5.0% 5.2%
EPRA cost ratios
Operating expense line per IFRS income statement 25.2 24.0
Administration costs 14.0 13.4
Ground rent costs - -
EPRA costs (including direct vacancy costs) 39.2 37.4
Direct vacancy costs (0.4) (3.2)
EPRA costs (excluding direct vacancy costs) 38.8 34.2
Gross rental income less ground rents - per IFRS 80.5 73.0
Less: service fee and service charge costs components of gross rental - -
Gross rental income 80.5 73.0
EPRA cost ratio (including direct vacancy costs) 49% 51%
EPRA cost ratio (excluding direct vacancy costs) 48% 47%
EPRA loan to value ("LTV")
Bank borrowings drawn 360.3 391.2
Net payables 16.8 17.8
Less cash held at the year end (40.5) (55.8)
Net borrowings 336.6 353.2
Investment property at fair value 1,072.5 1,061.9
Property held for sale 22.4 13.7
Property under development 3.0 3.3
Intangible assets 3.1 1.9
Property value 1,101.0 1,080.8
EPRA LTV 30.6% 32.7%
EPRA capital expenditure analysis
2023 2022
£m £m
Acquisitions - 19.3
Development 0.3 -
Investment properties
Incremental lettable space - 15.2
No incremental lettable space 32.2 15.2
Total capex 32.5 49.7
Conversion from accrual to cash basis (0.1) (2.5)
Total capex on cash basis 32.4 47.2
EPRA vacancy rate
2023 2022
Estimated rental value of vacant space (£m) 0.7 2.6
Estimated rental value of whole portfolio (£m) 86.2 83.6
EPRA vacancy rate (%) 0.8% 3.1%
Statement of Directors' responsibilities
The statement of Directors' responsibilities has been prepared in relation to
the Group's Annual Report 2023. Certain parts of the Annual Report are not
included in this announcement.
We confirm to the best of our knowledge:
· the Group financial statements, which have been prepared in accordance
with IFRS, give a true and fair view of the assets, liabilities, financial
position and profit of the Group; and
· the strategic report includes a fair review of the development and
performance of the business and the position of the Group.
Signed on behalf of the Board on 13 March 2024 by:
DONALD GRANT
Director
Consolidated Statement of Comprehensive Income
Note Year ended Year ended
31 December 31 December
2023 2022
£m £m
Continuing operations
Revenue 2 80.5 73.0
Property expenses 3 (25.2) (24.0)
Gross profit 55.3 49.0
Administrative expenses 4 (14.0) (13.4)
Change in fair value of investment property 11 30.1 45.6
Operating profit 71.4 81.2
Finance costs 5 (17.4) (15.0)
Finance income 5 0.2 -
Derivative fair value movement (0.2) -
Net (loss)/gain on disposal of investment property (0.6) 1.5
Profit before income tax 53.4 67.7
Corporation tax 7 - -
Profit for the year and total comprehensive income 53.4 67.7
Earnings per share expressed in pence per share 8
Basic 8.8 11.2
Diluted 8.8 11.1
Consolidated Statement of Financial Position
Note At At
31 December
31 December
2023
2022
£m
£m
ASSETS
Non-current assets
Investment property - Operational Assets 11 1,072.7 1,062.4
Investment property - Development Assets 11 3.0 3.3
Property, plant and equipment 13 0.8 1.1
Intangible assets 12 3.1 1.9
Right of use asset 1.2 1.3
Total non-current assets 1,080.8 1,070.0
Current assets
Trade and other receivables 14 6.5 7.0
Assets classified as held for sale 15 22.4 13.7
Cash and cash equivalents 16 40.5 55.8
Derivative fair value 0.1 -
Total current assets 69.5 76.5
Total assets 1,150.3 1,146.5
LIABILITIES
Current liabilities
Trade and other payables 17 23.4 24.8
Borrowings 18 56.5 -
Lease liability 0.1 0.1
Deferred income 17 34.9 33.1
Total current liabilities 114.9 58.0
Non-current liabilities
Borrowings 18 300.2 386.5
Lease liability 1.0 1.2
Total non-current liabilities 301.2 387.7
Total liabilities 416.1 445.7
Total net assets 734.2 700.8
Equity
Called up share capital 19 6.0 6.0
Share premium 20 0.3 0.3
Capital reduction reserve 21 424.1 444.7
Retained earnings 303.8 249.8
Total equity 734.2 700.8
Total equity and liabilities 1,150.3 1,146.5
Net Asset Value per share basic (pence) 9 121.7 116.1
Net Asset Value per share diluted (pence) 9 120.8 115.4
EPRA NTA per share (pence) 9 120.7 115.4
These financial statements were approved by the Board of Directors on 13 March
2024 and signed on its behalf by:
DONALD GRANT
Director
Company Statement of Financial Position
Note At At
31 December 31 December
2023 2022
£m £m
Fixed assets
Investments in subsidiaries 30 222.6 222.6
Property, plant and equipment 13 0.7 1.0
Intangible assets 12 3.1 1.9
Right of use asset 1.2 1.3
Total fixed assets 227.6 226.8
Current assets
Amounts due from Group undertakings 14 391.4 400.5
Trade and other receivables 14 0.7 0.3
Cash and cash equivalents 16 2.4 4.3
Total current assets 394.5 405.1
Current creditors
Amounts due to Group undertakings 17 111.0 87.8
Trade and other payables 17 3.4 3.1
Lease Liability 0.1 0.1
Total current creditors 114.5 91.0
Total assets less current liabilities 507.6 540.9
Net current assets 280.0 314.1
Non-current creditors
Lease liability 1.0 1.2
Total non-current creditors 1.0 1.2
Total net assets 506.6 539.7
Capital and reserves
Called up share capital 19 6.0 6.0
Share premium 20 0.3 0.3
Capital reduction reserve 21 424.1 444.7
Retained earnings 76.2 88.7
Total capital and reserves 506.6 539.7
The Company made a loss for the year of £13.1 million (2022: profit of £45.9
million).
These financial statements were approved by the Board of Directors on 13 March
2024 and signed on its behalf by:
DONALD GRANT
Director
Consolidated Statement of Changes in Equity
Year ended 31 December 2023 Called up Share premium Capital reduction reserve Retained Total
share capital £m £m earnings equity
£m £m £m
Balance at 1 January 2023 6.0 0.3 444.7 249.8 700.8
Profit for the year - - - 53.4 53.4
Total comprehensive income for the year - - - 53.4 53.4
Share-based payments - - - 0.7 0.7
Reserves transfer - - 0.1 (0.1) -
Dividends - - (20.7) - (20.7)
Amounts recognised directly in equity - - (20.6) 0.6 (20.0)
Balance at 31 December 2023 6.0 0.3 424.1 303.8 734.2
Balance at 1 January 2022 6.0 0.3 459.9 181.4 647.6
Profit for the year - - - 67.7 67.7
Total comprehensive income for the year - - - 67.7 67.7
Share-based payments - - - 0.7 0.7
Dividends - - (15.2) - (15.2)
Amounts recognised directly in equity - - (15.2) 0.7 (14.5)
Balance at 31 December 2022 6.0 0.3 444.7 249.8 700.8
Company Statement of Changes in Equity
Year ended 31 December 2023 Called up Share premium Capital Retained Total
Share £m reduction earnings equity
capital
reserve £m £m
£m
£m
Balance at 1 January 2023 6.0 0.3 444.7 88.7 539.7
Loss for the year - - - (13.1) (13.1)
Total comprehensive income for the year - - - (13.1) (13.1)
Share-based payments - - - 0.7 0.7
Reserves transfer - - 0.1 (0.1) -
Dividends - - (20.7) - (20.7)
Amounts recognised directly in equity - - (20.6) 0.6 (20.0)
Balance at 31 December 2023 6.0 0.3 424.1 76.2 506.6
Balance at 1 January 2022 6.0 0.3 459.9 42.1 508.3
Profit for the year - - - 45.9 45.9
Total comprehensive income for the year - - - 45.9 45.9
Share-based payments - - - 0.7 0.7
Dividends - - (15.2) - (15.2)
Amounts recognised directly in equity - - (15.2) 0.7 (14.5)
Balance at 31 December 2022 6.0 0.3 444.7 88.7 539.7
Consolidated Statement of Cash Flows
Year ended Year ended
31 December 31 December
2023 2022
£m £m
Cash flows from operating activities
Profit before income tax 53.4 67.7
Share-based payments expense 0.9 0.7
Depreciation and amortisation 0.8 0.6
Finance costs 17.4 15.0
Finance income (0.2) -
Loss/(gain) on disposal of investment property 0.6 (1.5)
Change in fair value of investment property (30.1) (45.6)
Change in fair value of derivative 0.2 -
43.0 36.9
(Increase)/decrease in trade and other receivables 0.3 0.2
(Decrease)/increase in trade and other payables (2.0) 3.3
Increase in deferred rental income 2.4 3.2
0.7 6.7
Net cash flows generated from operations 43.7 43.6
Cash flows from investing activities
Purchases of tangible fixed assets - (1.0)
Purchases of intangible assets (1.6) (0.9)
Purchase and development of investment property (32.4) (47.2)
Proceeds on disposal of asset held for sale, net of selling costs 13.6 26.7
Proceeds on disposal of investment property, net of selling costs 29.0 13.0
Finance income 0.2 -
Net cash flows from/(used in) investing activities 8.8 (9.4)
Cash flows from financing activities
Dividends paid (20.2) (16.7)
Bank borrowings drawn - 36.2
Bank borrowings repaid (30.9) (20.0)
Loan arrangement fee paid (0.1) (1.6)
Lease liability paid (0.3) (0.1)
Interest rate cap premium (0.3) -
Finance costs (16.0) (13.3)
Net cash flows used in financing activities (67.8) (15.5)
(Decrease)/increase in cash and cash equivalents (15.3) 18.7
Cash and cash equivalents at beginning of year 55.8 37.1
Cash and cash equivalents at end of year 40.5 55.8
Notes to the Financial Statements
1. ACCOUNTING POLICIES
1.1 Period of Account
The consolidated financial statements of the Group are in respect of the
reporting period from 1 January 2023 to 31 December 2023.
The consolidated financial statements comprise the results of Empiric Student
Property plc (the "Company") and its subsidiaries and were approved by the
Board for issue on 13 March 2024. The Company is a public limited company
incorporated and domiciled in England and Wales. The Company's ordinary shares
are admitted to the official list of the UK Listing Authority, a division of
the Financial Conduct Authority, and traded on the London Stock Exchange. The
registered address of the Company is disclosed in the Company information.
1.2 Basis of Preparation
The consolidated financial statements of the Group for the year to 31 December
2023 comprise the results of Empiric Student Property plc (the "Company") and
its subsidiaries (together, the "Group"). The Group and Parent Company
financial statements have been prepared on a going concern basis. The Group
financial statements have been prepared in accordance with UK adopted
international accounting standards. The Parent Company financial statements
have been prepared in accordance with FRS 101, Financial Reporting Standards
Reduced Disclosure Framework.
The Group's financial statements have been prepared on a historical cost
basis, except for investment property and derivative financial instruments
which have been measured at fair value. The consolidated financial statements
are presented in Pounds Sterling which is also the Company and the Group's
functional currency.
The Company has applied the exemption allowed under section 408(1b) of the
Companies Act 2006 and has therefore not presented its own Statement of
Comprehensive Income in these financial statements. The Group profit for the
year includes a loss after taxation of £13.1 million (2022: profit of £45.9
million) for the Company, which is reflected in the financial statements of
the Company.
The financial information contained within this release does not constitute
the Group's statutory accounts for the year ended 31 December 2023 or the year
ended 31 December 2022 but is derived from those accounts. The Group's
statutory accounts for the year ended 31 December 2022 have been delivered to
the Registrar of Companies. The Group's statutory accounts for the year ended
31 December 2023 will be delivered to the Registrar of Companies in due
course. The Auditor has reported on both the December 2023 and December 2022
accounts; the reports were unqualified, did not include a reference to any
matters to which the Auditor drew attention by way of emphasis without
qualifying their report and did not contain any statement under Section 498 of
the Companies Act 2006.
1.3 Disclosure Exemptions Adopted
In preparing the financial statements of the Parent Company, advantage has
been taken of all disclosure exemptions conferred by FRS 101. The Parent
Company financial statements do not include:
· certain comparative information as otherwise required by international
accounting standards;
· a statement of cash flows;
· the effect of future accounting standards not yet adopted; and
· disclosure of related party transactions with other wholly owned
members of the Group headed by Empiric Student Property plc.
In addition, and in accordance with FRS 101, further disclosure exemptions
have been adopted because equivalent disclosures are included in the
consolidated financial statements of Empiric Student Property plc. The Parent
Company financial statements do not include certain disclosures in respect of:
· Financial instruments (other than certain disclosures required as a
result of recording financial instruments at fair value); and
· Fair value measurement (other than certain disclosures required as a
result of recording financial instruments at fair value).
1.4 Going Concern
At 31 December 2023, the Group's cash and undrawn committed facilities were
£82.5 million and its capital commitments were £1.7 million.
Occupancy is a key driver of profitability and cash flows, and at 13 March
2024 occupancy, based on forward reservations for the upcoming 2024/25
academic year was 61 per cent compared to 65 per cent for the 2023/24 academic
year at 16 March 2023.
As part of the Group's going concern and viability modelling, certain
scenarios are considered to model the impact on liquidity. All of the Group's
covenants are currently compliant and we envisage compliance can continue to
be achieved in a reasonably severe downside scenario. The Group's portfolio
could currently withstand a 24 per cent decline in property valuations before
a breach in any loan to value covenants are triggered. The Group's average
interest cover ratio across all facilities is 2.0 times, whereas gross profit
is currently 3.2 times total finance costs, providing a good degree of
comfort.
At 31 December 2023 the Group had four facilities totalling £103.1 million
falling due during the going concern period. Of this amount, £57.7 million,
representing three separate facilities, were due to expire in 2024 with £45.4
million due to mature in November 2025. On 7 March 2024, the Group signed a
new seven year facility agreement (the "New Facility") and drew an initial
£44.4 million. The proceeds from this initial utilisation together with a
cash payment of £13.7 million refinanced all 2024 expiries. The New Facility
makes provision for a non-binding commitment to draw down a further £80.5
million which is expected to occur in May 2024, the proceeds from which will
refinance the November 2025 maturity. In the highly unlikely event the Group
is unable to draw the New Facility's non-binding commitment, alternative
refinancing arrangements will be made to address the November 2025 expiry
closer to the time. The New Facility will be fully hedged, mitigating exposure
to interest rate volatility. Once concluded, there will be no further debt
maturities until April 2028.
The Group regularly models forward looking covenant tests across all its debt
facilities. Any future concerns would be discussed with lenders in advance of
a potential covenant breach, with facilities renegotiated insofar as factors
are within the control of the Group. Facility agreements typically contain
cure provisions providing for prepayment, cash deposits or security
enhancement as may be required to mitigate a potential breach. The Group's
borrowings remain spread across a range of lenders and maturities, so as to
minimise concentration of risk.
The Directors have considered the Group's principal risks and severe but
plausible downside scenarios in assessing the Group's and Company's going
concern for the period to 31 December 2025. The Directors have considered, in
particular:
· a material reduction in revenue, both in terms of occupancy and growth
rate;
· inflation running at 5 per cent, significantly above the Bank of
England target rate of 2 per cent;
· utilities costs increase by 1.5 times current market expectation
(where price fixing arrangements are not in place);
· the likelihood of the New Facility concluding as planned, refinancing
all expiring debt facilities in 2024 and 2025;
· floating interest rates increase by 1.0 per cent over current
forecasts, in early 2024, before refinancing transactions are completed;
· an immediate valuation shock of minus 10 per cent in property
valuations;
· individually, the level at which banking covenants would come under
pressure; and
· temporary suspension of dividends
In addition, the Directors have considered potential mitigants to the downside
scenario which include, but are not limited to, utilising existing liquidity
reserves, further asset disposals, pledging as security ungeared properties
and suspending non committed capital expenditure.
Having made enquiries, the Directors have reasonable expectation that the
Group and Company have adequate resources to continue in operational existence
for the period to 31 December 2025. In addition, having reassessed the Group
and Company's principal risks, the Directors considered it appropriate to
adopt the going concern basis of accounting in preparing these financial
statements.
1.5 Significant Accounting Estimates and Judgements
The preparation of the Group's financial statements requires management to
make estimates and judgements that affect the reported amounts of revenues,
expenses, assets and liabilities, and the disclosure of contingent
liabilities, at the reporting date. However, uncertainty about these estimates
and judgements could result in outcomes that require a material adjustment to
the carrying amount of the asset or liability affected in future periods.
Estimates
In the process of applying the Group's accounting policies, management has
made the following estimates, which have the most significant effect on the
amounts recognised in the consolidated financial statements:
(a) Fair Valuation of Investment Property
The market value of investment property is determined, by an independent
external real estate valuation expert, to be the estimated amount for which a
property should exchange on the date of the valuation in an arm's length
transaction. Properties have been valued on an individual basis. The valuation
experts use recognised valuation techniques and the principles of IFRS 13.
The valuations have been prepared in accordance with the RICS Valuation -
Global Standards (incorporating the International Valuation Standards) and the
UK national supplement (the "Red Book"). Factors reflected include current
market conditions, net underlying operational income, periodic rentals, lease
lengths and location, as well as estimated costs to be incurred as part of the
Group's EWS programme. The significant methods and assumptions used by valuers
in estimating the fair value of investment property are set out in Note 11.
For properties under development, the fair value is calculated by estimating
the fair value of the completed property using the income capitalisation
technique less estimated costs to completion and an appropriate developer's
margin.
Judgements
In the process of applying the Group's accounting policies, management has
made the following judgements, which have the most significant effect on the
amounts recognised in the consolidated financial statements:
(b) Operating Lease Contracts - the Group as Lessor
The Group has investment properties which have various categories of leases in
place with tenants. The judgements by lease type are detailed below:
· Student leases: As these leases all have a term of less than one year,
the Group retains all the significant risks and rewards of ownership of these
properties and so accounts for the leases as operating leases.
· Commercial leases: The Group has determined, based on an evaluation of
the terms and conditions of the arrangements, particularly the lease terms,
insurance requirements and minimum lease payments, that it retains all the
significant risks and rewards of ownership of these properties and so accounts
for the leases as operating leases.
Summary of Material Accounting Policies
Basis of Consolidation
The consolidated financial statements comprise the financial statements of the
Company and its subsidiaries as at 31 December 2023. Subsidiaries are those
investee entities where control is achieved when the Group is exposed, or has
rights, to variable returns from its involvement with the investee and has the
ability to affect those returns through its power over the investee.
Specifically, the Group controls an investee if, and only if, it has:
(a) power over the investee (i.e. existing rights that give it the
current ability to direct the relevant activities of the investee);
(b) exposure, or rights, to variable returns from its involvement with
the investee; and
(c) the ability to use its power over the investee to affect its
returns.
The Group reassesses whether or not it controls an investee if facts and
circumstances indicate that there are changes to one or more of the three
elements of control. Consolidation of a subsidiary begins when the Group
obtains control over the subsidiary and ceases when the Group loses control of
the subsidiary.
The financial statements of the subsidiaries are prepared for the same
reporting period as the Parent Company, using consistent accounting policies.
All intra-Group balances, transactions and unrealised gains and losses
resulting from intra-Group transactions are eliminated in full.
Financial Assets
The Group classifies its financial assets into one of the categories discussed
below, depending on the purpose for which the asset was acquired.
Fair Value Through Profit or Loss
These are carried in the Statement of Financial Position at fair value with
changes in fair value recognised in the Statement of Comprehensive Income in
the finance income or expense line. The Group does not have any assets held
for trading nor does it voluntarily classify any financial assets as being at
fair value through profit or loss.
Amortised Cost
These assets are primarily from the provision of goods and services to
customers (e.g. trade receivables). They are initially recognised at fair
value plus transaction costs that are directly attributable to their
acquisition or issue and are subsequently carried at amortised cost using the
effective interest rate method, less provision for impairment.
Impairment provisions for trade receivables are recognised based on the
simplified approach within IFRS 9 using the lifetime expected credit losses.
During this process the probability of the non-payment of the trade receivable
is assessed. This probability is then multiplied by the amount of the expected
loss arising from default to determine the lifetime expected credit loss for
the trade receivables. For trade receivables, which are reported net of
impairment provisions, such provisions are recorded in a separate provision
account with the loss being recognised within cost of sales in the Statement
of Comprehensive Income. On confirmation that the trade receivable will not be
collectable, the gross carrying value of the asset is written off against the
associated provision.
Impairment provisions for intercompany receivables are recognised based on a
forward-looking expected credit loss model. The methodology used to determine
the amount of the provision is based on whether there has been a significant
increase in credit risk since initial recognition of the financial asset. For
those where the credit risk has not increased significantly since initial
recognition of the financial asset, 12-month expected credit losses against
gross interest income are recognised. For those where the credit risk has
increased significantly, lifetime expected credit losses along with the gross
interest income are recognised. For those that are determined to be credit
impaired, lifetime expected credit losses along with interest income on a net
basis are recognised.
From time to time, the Group elects to renegotiate the terms of trade
receivables due from customers with which it has previously had a good trading
history. Such renegotiations will lead to changes in the timing of payments
rather than changes to the amounts owed and, in consequence, the new expected
cash flows are discounted at the original effective interest rate and any
resulting difference to the carrying value is recognised in the Statement of
Comprehensive Income (operating profit).
The Group's financial assets measured at amortised cost comprise trade and
other receivables and cash and cash equivalents in the Statement of Financial
Position.
Cash and cash equivalents includes cash held on deposit with banks.
Financial Liabilities
The Group classifies its financial liabilities into one of two categories,
depending on the purpose for which the liability was acquired.
Fair Value Through Profit or Loss
These are carried in the Statement of Financial Position at fair value with
changes in fair value recognised in the Statement of Comprehensive Income.
Other Financial Liabilities
Other financial liabilities include the following items:
· Bank borrowings, which are initially recognised at fair value net of
any transaction costs directly attributable to the issue of the instrument.
Such interest-bearing liabilities are subsequently measured at amortised cost
using the effective interest rate method, which ensures that any interest
expense over the period to repayment is at a constant rate on the balance of
the liability carried in the Consolidated Statement of Financial Position. For
the purposes of each financial liability, interest expense includes initial
transaction costs and any premium payable on redemption, as well as any
interest or coupon payable while the liability is outstanding.
· Trade payables and other short-term monetary liabilities, which are
initially recognised at fair value and subsequently carried at amortised cost
using the effective interest method.
Intangible Assets
Intangible assets are initially recognised at cost and then subsequently
carried at cost less accumulated amortisation and impairment losses.
Amortisation has been charged to the Consolidated Statement of Comprehensive
Income on a straight-line basis over ten years.
Investment Property
Investment property comprises property that is held to generate rental income
or for capital appreciation. This includes property under development rather
than for sale in the ordinary course of business.
Investment property is measured initially at cost including transaction costs
and is included in the financial statements on unconditional exchange.
Transaction costs include transfer taxes, professional fees and initial
leasing commissions to bring the property to the condition necessary for it to
be capable of operating.
Once purchased, investment property is stated at fair value. Gains or losses
arising from changes in fair value are included in the Consolidated Statement
of Comprehensive Income in the period in which they arise.
A property ceases to be recognised as investment property and is transferred
at its fair value to property held for sale when it meets the criteria of IFRS
5. Under IFRS 5 the asset must be available for immediate sale in its present
condition subject only to the terms that are usual and customary for sales of
such assets and its sale must be highly probable.
Investment property is derecognised when it has been disposed of, or
permanently withdrawn from use, and no future economic benefit is expected
from its disposal. The investment property is derecognised upon unconditional
exchange. The difference between the net disposal proceeds and the carrying
amount of the asset would result in either gains or losses at the retirement
or disposal of investment property. Any gains or losses are recognised in net
gain/(loss) on disposal of investment property in the Consolidated Statement
of Comprehensive Income in the period of retirement or disposal.
Property, Plant and Equipment
All property, plant and equipment is stated at historical cost less
depreciation. Historical cost includes expenditure which is directly
attributable to the acquisition of the asset.
Depreciation has been charged to the Consolidated Statement of Comprehensive
Income on the following basis:
· Fixtures and fittings: straight-line basis over
seven years; and
· Computer equipment: straight-line basis over three
years.
Rental Income
The Group is the lessor in respect of operating leases. Rental income arising
from operating leases on investment property is accounted for on a
straight-line basis over the lease term and is included in gross rental income
in the Consolidated Statement of Comprehensive Income due to its operating
nature.
Tenant lease incentives are recognised as a reduction of rental revenue on a
straight-line basis over the term of the lease. The lease term is the
non-cancellable period of the lease together with any further term for which
the tenant has the option to continue the lease, where, at the inception of
the lease, the Directors are reasonably certain that the tenant will exercise
that option.
Amounts received from tenants to terminate leases or to compensate for
dilapidations are recognised in the Consolidated Statement of Comprehensive
Income when the right to receive them arises.
Where a student requests a rent refund and they meet the necessary criteria,
including leaving the property, the Group recognise no further income in
relation to that tenancy.
Segmental Information
The Directors are of the opinion that the Group is engaged in a single segment
business, being the investment in student and commercial lettings, within the
United Kingdom.
Share-based Payments
Where share options are awarded to employees or Directors, the fair value of
the options at the date of grant is charged to the Consolidated Statement of
Comprehensive Income over the vesting period. Non-market vesting conditions
are taken into account by adjusting the number of equity instruments expected
to vest at each reporting date so that, ultimately, the cumulative amount
recognised over the vesting period is based on the number of options that
eventually vest. Non-vesting conditions and market vesting conditions are
factored into the fair value of the options granted. So long as all other
vesting conditions are satisfied, a charge is made irrespective of whether the
market vesting conditions are satisfied.
Share Capital
Ordinary shares are classified as equity. External costs directly attributable
to the issuance of shares are recognised as a deduction from equity.
Taxation
As the Group is a UK REIT, profits arising in respect of the property rental
business are not subject to UK corporation tax.
Taxation in respect of profits and losses outside of the property rental
business comprise current and deferred taxes. Taxation is recognised in the
Consolidated Statement of Comprehensive Income except to the extent that it
relates to items recognised as a direct movement in equity, in which case it
is also recognised as a direct movement in equity.
Current tax is the total of the expected corporation tax payable in respect of
any non-REIT taxable income for the year and any adjustment in respect of
previous periods, based on tax rates applicable to the periods.
Deferred tax is calculated in respect of temporary differences between the
carrying amount of assets and liabilities for financial reporting purposes and
their tax bases, based on tax rates enacted or substantively enacted at the
balance sheet date.
Deferred tax liabilities are recognised in full except to the extent that they
relate to the initial recognition of assets and liabilities not acquired in a
business combination. Deferred tax assets are only recognised to the extent
that it is considered probable that the Group will obtain a tax benefit when
the underlying temporary differences unwind.
1.6 Impact of New Accounting Standards and Changes in Accounting Policies
At the date of authorisation of these financial statements, the following
accounting standards had been issued which are not yet applicable to the
Group:
· IAS 1 Classification of Liabilities as Current or Non-current
· IFRS 16 Leases: Lease Liability in a Sale and Leaseback
The above standards or interpretations not yet effective are not expected to
have a material impact on these consolidated financial statements of the
Group.
2. REVENUE
Group
Year ended Year ended
31 December 31 December
2023 2022
£m £m
Student rental income 79.0 71.4
Commercial rental income 1.5 1.6
Total revenue 80.5 73.0
3. PROPERTY EXPENSES
Group
Year ended Year ended
31 December 31 December
2023 2022
£m £m
Direct site costs (income generating properties) 5.0 5.7
Technology services 0.7 0.6
Site office and utilities 14.3 12.2
Cleaning and service contracts 3.3 3.3
Repairs and maintenance 1.9 2.2
Total property expenses 25.2 24.0
4. ADMINISTRATIVE EXPENSES
Group
Year ended Year ended
31 December 31 December
2023 2022
£m £m
Salaries and Directors' remuneration 8.8 7.4
Legal and professional fees 1.4 2.3
Other administrative costs 1.3 1.6
Depreciation and amortisation 0.8 0.6
IT expenses 1.0 0.8
13.3 12.7
Auditor's fees
Fees payable for the audit of the Group's annual results 0.3 0.4
Fees payable for the audit of the Group's interim results 0.1 -
Fees payable for the audit of the Group's subsidiaries 0.2 0.1
Total auditor's fees(1) 0.6 0.5
Abortive acquisition costs 0.1 0.2
Total administrative expenses 14.0 13.4
(1)Audit and related fees for the year ended 31 December 2023 includes £0.1
million arising in respect of the audit for the year ended 31 December 2022
5. NET FINANCE COSTS
Group
Year ended Year ended
31 December 31 December
2023 2022
£m £m
Finance costs
Interest expense on bank borrowings 16.2 14.0
Amortisation of loan transaction costs 1.2 1.0
17.4 15.0
Finance income
Interest received on bank deposits 0.2 -
Net finance costs 17.2 15.0
6. EMPLOYEES AND DIRECTORS
Group Company
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2023 2022 2023 2022
£m £m £m £m
Wages and salaries 12.3 10.7 5.2 4.4
Pension costs 0.7 0.5 0.5 0.2
Cash bonus 1.3 0.9 0.9 0.5
Share-based payments 0.9 0.7 0.9 0.7
National insurance 1.4 1.1 0.6 0.6
16.6 13.9 8.1 6.4
Less: Hello Student employee costs included within property expenses (7.7) (6.5) - -
Amounts included in administrative expenses 8.9 7.4 8.1 6.4
The average monthly number of employees:
Management - Company 5 8 5 8
Administration - Company 60 52 60 52
Operations - Hello Student Management Limited 293 280 - -
358 340 65 60
Directors' remuneration Group
Year ended Year ended
31 December 31 December
2023 2022
£m £m
Salaries and fees 1.0 1.1
Pension costs 0.1 0.1
Bonus 0.5 0.3
Share-based payments 0.6 0.6
2.2 2.1
A summary of the Directors' emoluments, including the disclosures required by
the Companies Act 2006 is set out in the Directors' Remuneration Report.
7. CORPORATION TAX
The Group became a REIT on 1 July 2014 and as a result does not pay UK
corporation tax on its profits and gains from its qualifying property rental
business in the UK provided it meets certain conditions. Non-qualifying
profits and gains of the Group continue to be subject to corporation tax as
normal.
In order to achieve and retain REIT status, several conditions have to be met
on entry to the regime and on an ongoing basis, including:
· at the start of each accounting period, the assets of the property
rental business (plus any cash and certain readily realisable investments)
must be at least 75% of the total value of the Group's assets;
· at least 75% of the Group's total profits must arise from the
tax-exempt property rental business; and
· at least 90% of the tax exempt profit of the property rental business
(excluding gains) of the accounting period must be distributed.
In addition, the full UK corporation tax exemption in respect of the profits
of the property rental business will not be available if the profit financing
cost ratio in respect of the property rental business is less than 1.25.
The Directors intend that the Group should continue as a REIT for the
foreseeable future, with the result that deferred tax is not required to be
recognised in respect of temporary differences relating to the property rental
business.
Group
Year ended Year ended
31 December 31 December
2023 2022
£m £m
Current tax
Income tax charge for the year - -
Adjustment in respect of prior year - -
Total current income tax charge in the income statement - -
Deferred tax
Total deferred income tax charge in the income statement - -
Total current income tax charge in the income statement - -
The tax assessed for the year is lower than the standard rate of corporation
tax in the year
Profit for the year 53.4 67.7
Profit before tax multiplied by the rate of corporation tax in the UK of 23.5% 12.5 12.9
(2022: 19%)
Exempt property rental profits in the year (9.1) (6.4)
Exempt property revaluations in the year (7.1) (8.7)
Effects of:
Non-allowable expenses 0.1 0.2
Unutilised current year tax losses 3.6 2.0
Total current income tax charge in the income statement - -
No deferred tax asset has been recognised in respect of gross tax losses of
£48.8 million (2022: £34.5 million), accelerated capital allowances of £3.8
million (2022: £2.7 million) and share based payments of £2.1 million (2022:
£1.5 million) on the basis that the business is not expected to generate
taxable profits in future periods against which these amounts can be applied.
Therefore, a deferred tax asset of £13.1 million (2022: £9.7 million) has
not been recognised in respect of such timing differences.
An increase in the UK corporation rate from 19% to 25% (effective 1 April
2023) was substantively enacted on 24 May 2021, therefore a hybrid rate of
23.5% has been used. By virtue of the Company's status as a UK REIT, this
should not materially increase the Company's future current tax charge. The
deferred tax at 31 December 2023 has been calculated based on these rates,
reflecting the expected timing of reversal of the related temporary
differences.
8. EARNINGS PER SHARE
The number of shares used in the calculation of basic earnings per share is
based on the time weighted average number of shares throughout the year.
Basic EPS is calculated by dividing the earnings attributable to ordinary
shareholders by the weighted average number of ordinary shares outstanding
during the year.
Diluted EPS is calculated using the weighted average number of shares adjusted
to assume the conversion of all dilutive potential ordinary shares.
EPRA EPS, reported on the basis recommended for real estate companies by EPRA,
is a key measure of the Group's operating results, and used by the Board to
assess the Group's dividend payments.
The calculation of each of the measures set out below:
Calculation of basic EPS Calculation of diluted EPS Calculation of EPRA basic EPS Calculation of EPRA diluted EPS
£m £m £m £m
Year to 31 December 2023
Earnings per IFRS statement of comprehensive income 53.4 53.4 53.4 53.4
Adjustments to remove:
Loss on disposal of investment property - - 0.6 0.6
Changes in fair value of investment property - - (30.1) (30.1)
Loss on derivative financial instruments 0.2 0.2
Earnings 53.4 53.4 24.1 24.1
Weighted average number of shares (m) 603.4 603.4 603.4 603.4
Adjustment for employee share options (m) - 4.6 - 4.6
Total number shares (m) 603.4 608.0 603.4 608.0
Earnings per share (pence) 8.8 8.8 4.0 4.0
Calculation of basic EPS Calculation of diluted EPS Calculation of EPRA basic EPS Calculation of EPRA diluted EPS
£m £m £m £m
Year to 31 December 2022
Earnings per IFRS statement of comprehensive income 67.7 67.7 67.7 67.7
Adjustments to remove:
Gain on disposal of investment property - - (1.5) (1.5)
Changes in fair value of investment property (Note 11) - - (45.6) (45.6)
Earnings 67.7 67.7 20.6 20.6
Weighted average number of shares (m) 603.3 603.3 603.3 603.3
Adjustment for employee share options (m) - 3.9 - 3.9
Total number shares (m) 603.3 607.2 603.3 607.2
Earnings per share (pence) 11.2 11.1 3.4 3.4
9. NET ASSET VALUE PER SHARE
The principles of the three EPRA measures are set out below:
EPRA Net Reinstatement Value ("NRV"): Assumes that entities never sell assets
and aims to represent the value required to reinstate entity assets.
EPRA Net Tangible Assets ("NTA"): Assumes that entities buy and sell assets,
which crystalises unavoidable deferred tax.
EPRA Net Disposal Value ("NDV"): Represents the shareholders' value under a
disposal scenario, where deferred tax, financial instruments and certain other
adjustments are calculated to the full extent of their liability, net of any
resulting tax. As the Group is a REIT, no adjustment is made for deferred tax.
The Group considers EPRA NTA to be the most relevant measure and this is used
as the Group's primary NAV measure.
A reconciliation of the three EPRA NAV metrics from IFRS NAV is shown in the
table below.
Year ended 31 December 2023 NAV EPRA NAV measures
IFRS EPRA EPRA EPRA
£m NTA NRV NDV
£m £m £m
Net assets per Statement 734.2 734.2 734.2 734.2
of Financial Position
Adjustments
Fair value of fixed rate debt - - - 10.5
Derivative fair value - (0.1) (0.1) -
Purchaser's costs(1) - - 37.1 -
Net assets used in per share calculation 734.2 734.1 771.2 744.7
Number of shares in issue
Issued share capital (m) 603.4 603.4 603.4 603.4
Issued share capital plus employee options (m) 608.0 608.0 608.0 608.0
Net Asset Value per share
Basic Net Asset Value per share (pence) 121.7
Diluted Net Asset Value per share (pence) 120.8 120.7 126.8 122.5
Year ended 31 December 2022 NAV EPRA NAV measures
IFRS EPRA EPRA EPRA
£m NTA NRV NDV
£m £m £m
Net assets per Statement of Financial Position 700.8 700.8 700.8 700.8
Adjustments
Fair value of fixed rate debt - - - 15.3
Purchaser's costs(1) - - 38.5 -
Net assets used in per share calculation 700.8 700.8 739.3 716.1
Number of shares in issue
Issued share capital (m) 603.4 603.4 603.4 603.4
Issued share capital plus employee options (m) 607.2 607.2 607.2 607.2
Net Asset Value per share
Basic Net Asset Value per share (pence) 116.1
Diluted Net Asset Value per share (pence) 115.4 115.4 121.8 117.9
1 EPRA NTA and EPRA NDV reflect IFRS values which are net of purchaser's
costs. Any purchaser's costs deducted from the market value are added back
when calculating EPRA NRV.
10. DIVIDENDS PAID
Group and Company
Year ended Year ended
31 December 31 December
2023 2022
£m £m
Interim dividend of 0.625 pence per ordinary share in respect of the quarter 3.8
ended 31 December 2021
Interim dividend of 0.625 pence per ordinary share in respect of the quarter 3.8
ended 31 March 2022
Interim dividend of 0.625 pence per ordinary share in respect of the quarter 3.8
ended 30 June 2022
Interim dividend of 0.625 pence per ordinary share in respect of the quarter 3.8
ended 30 September 2022
Interim dividend of 0.875 pence per ordinary share in respect of the quarter 5.3
ended 31 December 2022
Interim dividend of 0.8125 pence per ordinary share in respect of the quarter 4.9
ended 31 March 2023
Interim dividend of 0.8125 pence per ordinary share in respect of the quarter 4.9
ended 30 June 2023
Interim dividend of 0.9375 pence per ordinary share in respect of the quarter 5.6
ended 30 September 2023
20.7 15.2
As at 31 December 2023, £0.5 million relating to withholding tax on the
dividend in respect of the quarter ended 30 September 2023 was recorded in
trade payables (2022: £nil). On 13 March 2024 the Company declared a dividend
of 0.9375 pence per share to be paid on 19 April 2024.
11. INVESTMENT PROPERTY
Year ended 31 December 2023 Group
Investment Investment Total operational assets Property under development Total
property property £m £m investment
freehold long leasehold property
£m £m £m
As at 1 January 2023 920.4 142.0 1,062.4 3.3 1,065.7
Capital expenditure 29.7 2.8 32.5 - 32.5
Sale of investment property (12.0) (18.2) (30.2) - (30.2)
Transfer to held for sale asset (22.4) - (22.4) - (22.4)
Change in fair value during the year 24.3 6.1 30.4 (0.3) 30.1
As at 31 December 2023 940.0 132.7 1,072.7 3.0 1,075.7
Year ended 31 December 2022 Group
Investment Investment Total Property Total
property property operational under investment
freehold long assets development property
£m leasehold £m £m £m
£m
As at 1 January 2022 835.5 131.7 967.2 28.7 995.9
Capital expenditure 12.9 2.3 15.2 15.2 30.4
Property acquisitions 19.3 - 19.3 - 19.3
Reclassification (8.6) 8.6 - - -
Transfer of completed developments 52.9 - 52.9 (52.9) -
Sale of investment property (11.8) - (11.8) - (11.8)
Transfer to held for sale asset (13.7) - (13.7) - (13.7)
Change in fair value during the year 33.9 (0.6) 33.3 12.3 45.6
As at 31 December 2022 920.4 142.0 1,062.4 3.3 1,065.7
In accordance with IAS 40, the carrying value of investment property is their
fair value as determined by independent external valuers. This valuation has
been conducted by CBRE Limited, as external valuer, and has been prepared as
at 31 December 2023, in accordance with the Appraisal & Valuation
Standards of the RICS, on the basis of market value. Properties have been
valued on an individual basis. This value has been incorporated into the
financial statements.
The valuation of all property assets uses market evidence and includes
assumptions regarding income expectations and yields that investors would
expect to achieve on those assets over time. Those assumptions also reflect
the high level of current interest rates and the high inflationary
environment. Many external economic and market factors, such as interest rate
expectations, bond yields, the availability and cost of finance and the
relative attraction of property against other asset classes, could lead to a
reappraisal of the assumptions used to arrive at current valuations. In
adverse conditions, this reappraisal can lead to a reduction in property
values and a loss in Net Asset Value.
The table below reconciles between the fair value of the investment property
per the Consolidated Statement of Financial Position and investment property
per the independent valuation performed in respect of each year end.
Group
As at As at
31 December 31 December
2023 2022
£m £m
Value per independent valuation report 1,097.9 1,078.9
Add: Head lease 0.2 0.5
Deduct: Assets classified as held for sale (22.4) (13.7)
Fair value per Consolidated Statement of Financial Position 1,075.7 1,065.7
Fair Value Hierarchy
The following table provides the fair value measurement hierarchy for
investment property:
Date of valuation 31 December 2023 Total Quoted Significant Significant
£m prices observable unobservable
inputs inputs inputs
markets (Level 2) (Level 3)
(Level 1) £m £m
£m
Assets measured at fair value:
Student property 1,082.1 - - 1,082.1
Commercial property 15.8 - - 15.8
As at 31 December 2023 1,097.9 - - 1,097.9
Date of valuation 31 December 2022 Total Quoted prices Significant Significant
£m in active observable unobservable
markets inputs inputs
(Level 1) (Level 2) (Level 3)
£m £m £m
Assets measured at fair value:
Student property 1,046.5 - - 1,046.5
Commercial property 19.2 - - 19.2
As at 31 December 2022 1,065.7 - - 1,065.7
There have been no transfers between Level 1 and Level 2 during the year, nor
have there been any transfers between Level 2 and Level 3 during the year.
The valuations have been prepared on the basis of market value which is
defined in the RICS Valuation Standards, as:
"The estimated amount for which a property should exchange on the date of
valuation between a willing buyer and a willing seller in an arm's-length
transaction after proper marketing wherein the parties had each acted
knowledgeably, prudently and without compulsion."
Market value as defined in the RICS Valuation Standards is the equivalent of
fair value under IFRS.
The following descriptions and definitions relate to valuation techniques and
key unobservable inputs made in determining fair values. The valuation
techniques for student property uses a discounted cash flow with the following
inputs:
(a) Unobservable input: Rental income
The rent at which space could be let in the market conditions prevailing at
the date of valuation. Range £96 per week-£493 per week with a weighted
average weekly rent of £219 (31 December 2022: £91-£461 per week, weighted
average £184).
(b) Unobservable input: Rental growth
The estimated average increase in rent based on both market estimations and
contractual arrangements. Assumed rental growth of 6.2% used in valuations (31
December 2022: growth of 5.2%).
(c) Unobservable input: Net initial yield
The net initial yield is defined as the initial net income as a percentage of
the market value (or purchase price as appropriate) plus standard costs of
purchase.
Range: 4.5%-8.9%, with a weighted average of 5.5% (31 December 2022:
4.5%-8.7%, weighted average 5.2%).
(d) Unobservable input: Physical condition of the property
We have indicated we would spend £46.0 million on health and safety works
over a five year period through to 2026. CBREs assumption is that £33.0
million of this cost should now be reflected in the valuation at the year end
in respect of work on external wall systems and fire stopping on buildings
over 11 metres.
(e) Unobservable input: Planning consent
The development site at FISC, Canterbury is pending planning consent for phase
2. CBRE have determined the fair value as the sales price for a development in
progress including a profit margin, discount and risk factors to complete the
project.
(f) Sensitivities of measurement of significant unobservable inputs
The Group's portfolio valuation is subject to judgement and is inherently
subjective by nature. As a result, the following sensitivity analysis has been
prepared by the valuer. For the purposes of the sensitivity analysis, the
Group considers its property portfolio to be one homogeneous group of
properties.
As at 31 December 2023 15% increase -3% change +3% change -0.25% +0.25%
in cost of EWS in rental in rental change change
works income income in yield in yield
£m £m £m £m £m
(Decrease)/increase in the fair value of investment property (4.9) (45.1) 45.0 55.5 (50.5)
As at 31 December 2022 15% increase -3% change +3% change -0.25% +0.25%
in cost of EWS in rental in rental change change
Works income income in yield in yield
£m £m £m £m £m
(Decrease)/increase in the fair value of investment property (3.4) (43.3) 45.6 54.3 (47.2)
(g) The key assumptions for the commercial properties are net initial
yield, current rent and rental growth. An unfavourable movement of 3% in
passing rent and 0.25% in the net initial yield would decrease the investment
property value by £95.6 million or a favourable movement would increase the
investment property value by a total of £100.5 million (2022: £90.5 million
and £99.9 million respectively).
12. INTANGIBLE ASSETS
Year ended 31 December 2023 Group and Company
NAVision development
£m
Costs
As at 1 January 2023 3.0
Additions 1.6
As at 31 December 2023 4.6
Amortisation
As at 1 January 2023 (1.1)
Charge for the year (0.4)
As at 31 December 2023 (1.5)
Net book value
As at 31 December 2023 3.1
Year ended 31 December 2022 Group and Company
NAVision development
£m
Costs
As at 1 January 2022 2.2
Additions 0.8
As at 31 December 2022 3.0
Amortisation
As at 1 January 2022 (0.9)
Charge for the year (0.2)
As at 31 December 2022 (1.1)
Net book value
As at 31 December 2022 1.9
13. PROPERTY, PLANT AND EQUIPMENT
Group Company
Year ended 31 December 2023 Fixtures and Computer Total Fixtures and Computer equipment Total
fittings equipment £m fittings £m £m
£m £m £m
Costs
As at 1 January 2023 1.7 0.6 2.3 1.7 0.3 2.0
Additions 0.1 - 0.1 - - -
As at 31 December 2023 1.8 0.6 2.4 1.7 0.3 2.0
Depreciation
As at 1 January 2023 (0.8) (0.4) (1.2) (0.8) (0.2) (1.0)
Charge for the year (0.3) (0.1) (0.4) (0.2) (0.1) (0.3)
As at 31 December 2023 (1.1) (0.5) (1.6) (1.0) (0.3) (1.3)
Net book value
As at 31 December 2023 0.7 0.1 0.8 0.7 - 0.7
Year ended 31 December 2022 Group Company
Fixtures and Computer Total Fixtures and Computer equipment Total
fittings equipment £m fittings £m £m
£m £m £m
Costs
As at 1 January 2022 0.9 0.4 1.3 0.9 0.2 1.1
Additions 0.8 0.2 1.0 0.8 0.1 0.9
As at 31 December 2022 1.7 0.6 2.3 1.7 0.3 2.0
Depreciation
As at 1 January 2022 (0.6) (0.3) (0.9) (0.6) (0.2) (0.8)
Charge for the year (0.2) (0.1) (0.3) (0.2) - (0.2)
As at 31 December 2022 (0.8) (0.4) (1.2) (0.8) (0.2) (1.0)
Net book value
As at 31 December 2022 0.9 0.2 1.1 0.9 0.1 1.0
14. TRADE AND OTHER RECEIVABLES
Group Company
31 December 31 December 31 December 31 December
2023 2022 2023 2022
£m £m £m £m
Trade receivables 1.4 1.4 - -
Other receivables 1.6 2.2 0.3 0.1
Prepayments 3.3 3.2 0.4 0.1
VAT recoverable 0.2 0.2 - 0.1
6.5 7.0 0.7 0.3
Amounts due from Group undertakings - - 391.4 400.5
6.5 7.0 392.1 400.8
In the Company, amounts owed from Group undertakings are classified as due
within one year due to their legal agreements with the debtor, however, could
be recovered after more than one year should the debtors' circumstance not
permit repayment on demand.
Trade receivables of £1.4 million at 31 December 2023 (2022: £1.4 million)
is shown net of the provision for impairment of trade receivables of £2.1
million (2022: £1.9 million)
Movements on the Group provision for impairment of trade receivables were as
follows:
Group
31 December 31 December
2023 2022
£m £m
At 1 January (1.9) (1.5)
Increase in provision for receivables impairment (0.2) (0.4)
At 31 December (2.1) (1.9)
The provision for impairment of trade receivables is assessed at each
reporting period. Where trade receivables have arisen in the year ended 31
December 2023, a provision for impairment is considered by applying the
historic rate at which trade receivables have been deemed to be irrecoverable,
and applying this to the revenue of that year. Where trade receivables have
arisen in a prior year, a provision for impairment equal to the value of those
trade receivables is recognised.
Provisions for impaired receivables have been included in property expenses in
the income statement. Amounts charged to the impairment provision are
generally written off when there is no expectation of recovery.
The maximum exposure to credit risk at the reporting date is the book value of
each class of receivable mentioned above and its cash and cash equivalents.
The Group does not hold any collateral as security, though in some instances
students provide guarantors.
Management believes that the concentration of credit risk with respect to
trade receivables is limited due to the Group's customer base being broad and
independent of each other, and because they are residing in the Group's
accommodation. As such we have regular communication with them.
At 31 December 2023, there were no material trade receivables overdue at the
year end, and no aged analysis of trade receivables has been included. The
carrying value of trade and other receivables classified at amortised cost
approximates fair value. The Company performed a review of the expected credit
loss on the amounts due from Group undertakings; there was no provision made
during the year (2022: £nil). There are no security obligations related to
these amounts due from Group undertakings.
15. HELD FOR SALE ASSETS
Management considers that three properties (2022: one property) meet the
conditions relating to assets held for sale under IFRS 5: Non-current Assets
Held for Sale. The combined fair value in these financial statements is £22.4
million (2022: £13.7 million). With the assets being actively marketed,
management expects the sales to be completed in 2024.
All assets held for sale fall within 'Level 3' as defined by IFRS. There have
been no transfers within the fair value hierarchy during the year.
16. CASH AND CASH EQUIVALENTS
Group Company
31 December 31 December 31 December 31 December
2023 2022 2023 2022
£m £m £m £m
Cash and cash equivalents 40.5 55.8 2.4 4.3
17. TRADE AND OTHER PAYABLES
Group Company
31 December 31 December 31 December 31 December
2023 2022 2023 2022
£m £m £m £m
Trade payables 1.3 1.9 0.3 0.6
Other payables 4.2 5.4 0.2 0.3
Accruals 17.9 17.5 2.9 2.2
23.4 24.8 3.4 3.1
Amounts owed to Group undertakings - - 111.0 87.8
23.4 24.8 114.4 90.9
The Directors consider that the carrying value of trade and other payables
approximates to their fair value.
Amounts owed to Group undertakings are interest free and repayable on demand.
At 31 December 2023, there was deferred rental income of £34.9 million (2022:
£33.1 million) which was rental income that had been charged that relates to
future periods.
18. BANK BORROWINGS
A summary of the drawn and undrawn bank borrowings in the year is shown below:
Group
Bank Bank Total Bank Bank Total
borrowings borrowings 31 December borrowings borrowings 31 December
drawn undrawn 2023 drawn undrawn 2022
31 December 31 December £m 31 December 31 December £m
2023 2023 2022 2022
£m £m £m £m
At 1 January 391.2 20.0 411.2 375.0 67.5 442.5
Bank borrowings repaid (30.9) 24.6 (6.3) (20.0) (11.3) (31.3)
Part cancellation of revolving credit facility - (22.6) (22.6) - - -
Unsecured facility refinanced - 20.0 20.0 - - -
Bank borrowings drawn in the year - - - 36.2 (36.2) -
At 31 December 360.3 42.0 402.3 391.2 20.0 411.2
At year end the Group had a total of £42.0 million in undrawn borrowings
across two committed credit facilities (2022: one facility of £20 million).
The weighted average term to maturity of the Group's debt as at the year end
is 3.9 years (2022: 4.8 years). See Note 26 for details of a related
refinancing post year end.
Bank borrowings are secured by charges over individual investment properties
held by certain asset-holding subsidiaries. These assets have a fair value of
£1,074.9 million at 31 December 2023 (2022: £1,042.9 million). In some
cases, the lenders also hold charges over the shares of the subsidiaries and
the intermediary holding companies of those subsidiaries.
Any associated fees in arranging the bank borrowings unamortised as at the
year end are offset against amounts drawn on the facilities as shown in the
table below:
Group
Non-current 31 December 31 December
2023 2022
£m £m
Balance brought forward 391.2 330.0
Total bank borrowings in the year - 36.2
Bank borrowings becoming non-current in the year - 45.0
Less: Bank borrowings becoming current in the year (57.7) -
Less: Bank borrowings repaid during the year (30.9) (20.0)
Bank borrowings drawn: due in more than one year 302.6 391.2
Less: Unamortised costs (2.4) (4.7)
Bank borrowings due in more than one year 300.2 386.5
Current Group
31 December 31 December
2023 2022
£m £m
Balance brought forward - 45.0
Total bank borrowings in the year - -
Less: Bank borrowings becoming non-current in the year - (45.0)
Bank borrowings becoming current in the year 57.7 -
Bank borrowings drawn: due in less than one year 57.7 -
Less: Unamortised costs (1.2) -
Bank borrowings due in less than one year 56.5 -
Maturity of Bank Borrowings
Group
31 December 31 December
2023 2022
£m £m
Repayable in less than one year 57.7 -
Repayable between one and two years 45.4 64.0
Repayable between two and five years 206.1 70.0
Repayable in over five years 51.1 257.2
Bank borrowings 360.3 391.2
All of the Group's facilities have an interest charge payable quarterly. Two
of the facilities have an interest charge that is based on a margin above
SONIA whilst other facilities interest charges are fixed at 4.0%, 3.5%, 3.2%,
3.6% and 3.2%. The weighted average rate payable by the Group on its debt
portfolio as at the year end was 4.3% (2022: 4.0%).
Fair value of fixed rate borrowings
The Group considers that all bank loans fall within 'Level 3' as defined by
IFRS 13 'Fair value measurement'. The nominal value of floating rate
borrowings is considered to be a reasonable approximation of fair value.
However, the fair value of fixed rate borrowings at the reporting date has
been calculated by discounting cash flows under the relevant agreements at
indicative interest rates for similar debt instruments using indicative rates
provided by lenders or advisers, which are considered unobservable.
Group
31 December 31 December
2023 2022
£m £m
Carrying value of fixed rate borrowings 270.9 277.2
Fair value adjustment (10.5) (15.3)
Fair value of fixed rate borrowings 260.4 261.9
The Group has bank loans with a total carrying value of £360.3 million,
including the carrying value of fixed rate borrowings of £270.9 million. The
fair value equivalent at the reporting date of the fixed rate debt was £260.4
million (2022: £261.9 million). The discount rate was arrived at after
considering the weighted average cost of capital, an unlevered property
discount rate, the market rate and the loan to value.
An increase in the discount rate by twenty basis points would result in a
decrease of the fair value of the fixed rate borrowings by £1.0 million. A
decrease in the discount rate by twenty basis points would result in an
increase of the fair value of the fixed rate borrowings by £1.0 million.
19. SHARE CAPITAL
Group and Company Group and Company
31 December 31 December 31 December 31 December
2023 2023 2022 2022
Number £m Number £m
Balance brought forward 603,351,880 6.0 603,203,052 6.0
Share options exercised (including dividend equivalence) 85,803 - 148,828 -
Balance carried forward 603,437,683 6.0 603,351,880 6.0
During the year there was an issue of 85,803 shares on 4 August 2023. These
related to exercise of options under the deferred bonus scheme.
20. SHARE PREMIUM
The share premium relates to amounts subscribed for share capital in excess of
nominal value:
Group and Company
31 December 31 December
2023 2022
£m £m
Balance brought forward 0.3 0.3
Balance carried forward 0.3 0.3
21. CAPITAL REDUCTION RESERVE
Group and Company
31 December 31 December
2023 2022
£m £m
Balance brought forward 444.7 459.9
Reserves transfer 0.1 -
Less interim dividends declared and paid per Note 10 (20.7) (15.2)
Balance carried forward 424.1 444.7
The capital reduction reserve account is a distributable reserve.
Refer to Note 10 for details of the declaration of dividends to shareholders.
22. LEASING AGREEMENTS
Future total minimum lease receivables under non-cancellable operating leases
on investment properties are as follows:
Group
31 December 31 December
2023 2022
£m £m
Less than one year 20.1 56.2
Between one and two years 1.2 1.5
Between two and three years 1.1 1.4
Between three and four years 0.9 1.3
Between four and five years 0.7 1.1
More than five years 5.9 6.0
Total 29.9 67.5
The above relates to assured shorthold tenancies (ASTs) and commercial leases
in place as at, and had commenced by, 31 December 2023. As at 31 December
2023, £34.9 million of the future minimum lease payments had been received as
cash, but is not included in the above figures (31 December 2022: £31.1
million of lease payments received as cash included in the less than one year
category).
23. CONTINGENT LIABILITIES
There were no contingent liabilities at 31 December 2023 (31 December 2022:
£nil).
24. CAPITAL COMMITMENTS
The Group was contractually committed to expenditure of £1.7 million at 31
December 2023 (31 December 2022: £2.3 million) for the future development and
enhancement of investment property.
25. RELATED PARTY DISCLOSURES
Key Management Personnel
Key management personnel are considered to comprise the Board of Directors.
Please refer to Note 6 for details of the remuneration for the key management.
Share Capital
On 4 August 2023 85,803 shares were issued to a former Director of the Company
under the Deferred Bonus Scheme.
Share-based Payments
On 14 April 2023, the Company granted nil-cost options over a total of
1,233,081 (Duncan Garrood 722,233 and Donald Grant 510,848) ordinary shares
pursuant to the Empiric Student Property plc Long Term Incentive Plan for the
2023 financial year. Details of the Director share ownership and dividends
received are included in the Directors' Remuneration Report. Details of the
shares granted and exercised are outlined in Note 27.
26. SUBSEQUENT EVENTS
On 8 January 2024, 11 subsidiaries of the Group entered a solvent members
voluntary liquidation in the ordinary course of business. Please refer to
Note 30 for further details.
On 16 February 2024, the Group completed on the acquisition of 32-36 College
House, Bristol for consideration of £5.6 million.
On 6 March 2024, the UK Government announced the abolition of Multiple
Dwellings Relief ("MDR") by repealing Schedule 6B of the Finance Act 2023. The
removal of MDR will increase purchaser cost assumptions applied to valuations
of the Group's Investment and Held for Sale properties. Full purchaser cost
assumptions are already in place in respect of a number of the Group's
property valuations and this change does not currently apply to Scottish or
Welsh properties. On the assumption that it will, the estimated impact of this
change is a £35 million reduction in the aggregate valuation of Investment
and Held for Sale properties at 31 December 2023.
On 6 March 2024, the Group repaid an expiring debt facility of £13.7 million
and on 7 March 2024, the Group completed a refinancing of two further expiring
debt facilities totalling £44.0 million. A new facility, currently drawn to
£44.4 million, will expire in March 2031. Following the acquisition of an
interest rate cap for £1.7 million, the refinancing is anticipated to
increase the Group's weighted average cost of debt from 4.3 per cent to 4.6
per cent.
27. SHARE-BASED PAYMENTS
The Company operates two equity-settled share-based remuneration schemes for
Executive Directors (deferred annual bonus and LTIP schemes) and certain
members of the Senior Leadership Team ("SLT") who participate in the LTIP
scheme. The details of the schemes are included in the Remuneration Committee
Report. The Group also operates a Save As You Earn (SAYE) scheme for
employees.
On 14 April 2023, the Company granted nil-cost options over a total of
1,233,081 (Duncan Garrood 722,233 and Donald Grant 510,848) ordinary shares
pursuant to the Empiric Student Property plc Long Term Incentive Plan for the
2023 financial year.
During the year, the Company granted nil-cost options over a total of 343,885
ordinary shares to members of the SLT pursuant to the Empiric Student Property
plc Long Term Incentive Plan for the 2023 financial year.
During the year, the Company granted options over a total of 183,742 ordinary
shares in relation to the Save As You Earn scheme at an exercise price of
£0.79. The earliest date on which the options will become exercisable is 1
July 2026.
During the year, the Company granted deferred bonus share awards of 125,483 to
Duncan Garrood, Chief Executive Officer.
Of the nil-cost options, 88,273 are currently exercisable. The weighted
average remaining contractual life of these options was 1.2 years (2022: 2.0
years).
During the year to 31 December 2023 the amount recognised relating to these
option plans was £0.7 million (2022: £0.7 million).
The awards have the benefit of dividend equivalence. The Remuneration
Committee will determine on or before vesting whether the dividend equivalent
will be provided in the form of cash and/or shares.
31/12/2023 31/12/2022 31/12/2021 31/12/2020 31/12/2019 31/12/2018
Outstanding number brought forward 3,756,874 3,446,320 2,314,539 1,250,045 1,051,708 1,477,817
Granted during the period 1,886,191 2,430,279 1,725,577 1,064,494 604,134 439,022
Vested and exercised during the period (80,116) (127,492) (35,779) - (129,253) (139,325)
Lapsed during the period (696,850) (1,992,233) (558,017) - (276,544) (725,806)
Outstanding number carried forward 4,866,099 3,756,874 3,446,320 2,314,539 1,250,045 1,051,708
The fair value on date of grant for the nil-cost options under the LTIP Awards
and Annual Bonus Awards were priced using the Monte Carlo pricing model.
The following information is relevant in the determination of the fair value
of the options granted in the year, for those related to market based vesting
conditions:
Deferred bonus shares LTIPs (market based conditions) LTIPs (Total Return conditions) SAYE Award
(a) Share price at grant date of £0.94 £0.94 £0.94 £0.91
(b) Exercise price of £nil £nil £nil £0.79
(c) Vesting period 3 years 3 years 3 years 3 years
(d) Expected volatility of N/A 27.5% N/A 30.2%
(e) Risk-free rate of N/A 3.5% N/A 3.8%
The volatility assumption is based on a statistical analysis of daily share
prices of comparator companies over the last three years.
The TSR performance conditions have been considered when assessing the fair
value of the options.
28. FINANCIAL RISK MANAGEMENT
Financial Instruments
The Group's principal financial assets and liabilities are those which arise
directly from its operations: trade and other receivables, trade and other
payables; and cash and cash equivalents. Set out below is a comparison by
class of the carrying amounts and fair value of the Group's financial
instruments that are shown in the financial statements:
Reconciliation of liabilities to cash flows from financing activities
31 December 31 December
2023 2022
£m £m
Bank borrowings and leasehold liability at start of the year 387.8 372.0
Cash flows from financing activities
Bank borrowings drawn - 36.2
Bank borrowings repaid (30.9) (20.0)
Lease liability paid (0.2) (0.2)
Loan arrangement fees paid (0.1) (1.6)
Non-cash movements
Amortisation of loan arrangement fees 1.2 1.0
Recognition of lease liabilities - 0.4
Bank borrowings and leasehold liability at end of the year 357.8 387.8
Risk Management
The Company and Group is exposed to market risk (including interest rate
risk), credit risk and liquidity risk.
The Board of Directors oversees the management of these risks.
The Board of Directors reviews and agrees policies for managing each of these
risks which are summarised below.
(a) Market Risk
Market risk is the risk that the fair values of financial instruments will
fluctuate because of changes in market prices. The financial instruments held
by the Company and Group that are affected by market risk are principally the
Company and Group bank balances.
(b) Credit Risk
Credit risk is the risk of financial loss to the Company and Group if a
customer or counterparty to a financial instrument fails to meet its
contractual obligations. The Company and Group is exposed to credit risks from
both its leasing activities and financing activities, including deposits with
banks and financial institutions.
The Group has established a credit policy under which each new tenant is
assessed based on an extensive credit rating scorecard at the time of entering
into a lease agreement.
The Group's review includes external rating, when available, and in some cases
bank references.
The Group determines concentrations of credit risk by monthly monitoring the
creditworthiness rating of existing customers and through a monthly review of
the trade receivables' ageing analysis.
Credit risk also arises from cash and cash equivalents and deposits with banks
and financial institutions. For banks and financial institutions, only
independently rated parties with minimum rating "B" are accepted.
Further disclosures regarding trade and other receivables, which are neither
past due nor impaired, are provided in Note 14.
(i) Tenant Receivables
Tenant receivables, primarily tenant rentals, are presented in the
Consolidated Statement of Financial Position net of allowances for doubtful
receivables and are monitored on a case-by-case basis. Credit risk is
primarily managed by requiring tenants to pay rentals in advance and
performing tests around strength of covenant prior to acquisition.
(ii) Credit Risk Related to Financial Instruments and Cash Deposits
One of the principal credit risks of the Company and Group arises with the
banks and financial institutions. The Board of Directors believes that the
credit risk on short-term deposits and current account cash balances are
limited because the counterparties are banks, which are committed lenders to
the Company and Group, with high credit ratings assigned by international
credit rating agencies.
Credit ratings (Moody's) Long-term Outlook
AIB Group A3 Stable
Canada Life Aa3 Stable
Mass Mutual Aa3 Stable
Scottish Widows A2 Stable
Lloyds Bank Plc Aa3 Stable
NatWest Aa3 Stable
(c) Liquidity Risk
Liquidity risk arises from the Company and Group management of working
capital, and going forward, the finance charges and principal repayments on
any borrowings, of which £56.5 million fall due in 2024. It is the risk that
the Company and Group will encounter difficulty in meeting their financial
obligations as they fall due as the majority of the Company and Group assets
are property investments and are therefore not readily realisable. The Company
and Group objective is to ensure they have sufficient available funds for
their operations and to fund their capital expenditure. This is achieved by
continuous monitoring of forecast and actual cash flows by management.
The monitoring of liquidity is also assisted by the quarterly review of
covenants which are ordinarily imposed by lenders, such as loan to value and
interest cover ratios. The loan to value ratio is typically expressed as the
outstanding loan principal as a percentage of a lender approved valuation of
the underlying properties secured under the facility. Interest cover ratio's
reflect the quantum or finance costs (either historic or forecast) as a
multiple of recurring earnings, normally a measure of gross profit. As part of
the Group's viability modelling, certain scenarios are considered to model the
impact on liquidity. All of the Group's covenants are currently compliant and
we envisage compliance to continue to be achieved in a reasonably severe
downside scenario. The Group's portfolio could currently withstand a 24 per
cent decline in property valuations before a breach in loan to value covenants
are triggered. The Group's average interest cover ratio across all facilities
is 2.0 times, whereas gross profit is currently in excess of 3.0 times total
finance costs, providing a good degree of comfort.
Bank borrowings would be renegotiated in advance of any potential covenant
breaches, insofar as factors are within the control of the Group. Facility
agreements typically contain cure provisions providing for prepayment, cash
deposits or security enhancement as maybe required to mitigate any potential
breach. The Group's borrowings are spread across a range of lenders and
maturities so a to minimise any potential concentration of risk.
The following table sets out the contractual obligations (representing
undiscounted contractual cash flows) of financial liabilities:
Group
On demand Less than 3 3 to 12 1 to 5 Greater than 5 years Total
£m months months years £m £m
£m £m £m
At 31 December 2023
Bank borrowings and interest - 17.6 54.8 286.3 54.6 413.3
Trade and other payables - 23.4 - - - 23.4
- 41.0 54.8 286.3 54.6 436.7
Group
On demand Less than 3 3 to 12 1 to 5 Greater than 5 years Total
£m months months years £m £m
£m £m £m
At 31 December 2022
Bank borrowings and interest - 3.9 11.7 178.3 266.4 460.3
Trade and other payables - 24.8 - - - 24.8
- 28.7 11.7 178.3 266.4 485.1
Company
On demand Less than 3 3 to 12 1 to 5 Greater than 5 years Total
£m months months years £m £m
£m £m £m
At 31 December 2023
Bank borrowings and interest - - - - - -
Trade and other payables - 3.4 - - - 3.4
- 3.4 - - - 3.4
Company
On demand Less than 3 3 to 12 1 to 5 Greater than 5 years Total
£m months months years £m £m
£m £m £m
At 31 December 2022
Bank borrowings and interest - - - - - -
Trade and other payables - 3.1 - - - 3.1
- 3.1 - - - 3.1
29. CAPITAL MANAGEMENT
The primary objectives of the Group's capital management are to ensure that it
remains a going concern and continues to qualify for UK REIT status.
The Board of Directors monitors and reviews the Group's capital so as to
promote the long-term success of the business, facilitate expansion and to
maintain sustainable returns for shareholders.
Capital consists of ordinary shares, other capital reserves and retained
earnings.
30. INVESTMENTS IN SUBSIDIARIES
Those entities listed below are considered subsidiaries of the Company at 31
December 2023, with the shares issued being ordinary shares. All subsidiaries
are registered at the following address: 1st Floor Hop Yard Studios, 72
Borough High Street, London, SE1 1XF.
In each case the country of incorporation is England and Wales.
Company
31 December 31 December
2023 2022
£m £m
As at 1 January 222.6 187.6
Additions in the year - 41.4
Disposals - (6.4)
Balance at 31 December 222.6 222.6
During 2022 year there were a number of subsidiaries which moved within the
Group, due to reorganisations relating to debt structures; these were all
non-cash movements whereby the parent company forgave intercompany debt owned
by subsidiaries in return for the issue of further shares.
Company Status Ownership Principal activity
Brunswick Contracting Limited Active** 100% Property Contracting
Empiric (Alwyn Court) Limited Active** 100% Property Investment
Empiric (Baptists Chapel) Limited Active** 100% Property Investment
Empiric (Bath Canalside) Limited Active** 100% Property Investment
Empiric (Bath James House) Limited Active** 100% Property Investment
Empiric (Bath JSW) Limited Active** 100% Property Investment
Empiric (Bath Oolite Road) Limited Active** 100% Property Investment
Empiric (Bath Piccadilly Place) Limited Active** 100% Property Investment
Empiric (Birmingham Emporium) Limited Active** 100% Property Investment
Empiric (Birmingham) Limited Active** 100% Property Investment
Empiric (Bristol St Mary's) Leasing Limited Active** 100% Property Leasing
Empiric (Bristol St Mary's) Limited Active** 100% Property Investment
Empiric (Bristol) Leasing Limited Dormant* 100% Property Leasing
Empiric (Bristol) Limited Active** 100% Property Investment
Empiric (Buccleuch Street) Limited Active** 100% Property Investment
Empiric (Canterbury Franciscans) Limited Active** 100% Property Investment
Empiric (Canterbury Pavilion Court) Limited Active** 100% Property Investment
Empiric (Cardiff Wndsr House) Leasing Limited Dormant 100% Property Leasing
Empiric (Cardiff Wndsr House) Limited Active** 100% Property Investment
Empiric (Centro Court) Limited Active 100% Property Investment
Empiric (Claremont Newcastle) Limited Active** 100% Property Investment
Empiric (College Green) Limited Active** 100% Property Investment
Empiric (Developments) Limited Active 100% Development Management
Empiric (Durham St Margarets) Limited Active** 100% Property Investment
Empiric (Edge Apartments) Limited Active** 100% Property Investment
Empiric (Edinburgh KSR) Leasing Limited Active** 100% Property Leasing
Empiric (Edinburgh KSR) Limited Active** 100% Property Investment
Empiric (Edinburgh South Bridge) Limited Active** 100% Property Investment
Empiric (Exeter Bishop Blackall School) Limited Active 100% Property Investment
Empiric (Exeter Bonhay Road) Leasing Limited* Dormant* 100% Property Leasing
Empiric (Exeter Bonhay Road) Limited Active** 100% Property Investment
Empiric (Exeter City Service) Limited Dormant 100% Property Investment
Empiric (Exeter DCL) Limited Active** 100% Property Investment
Empiric (Exeter Isca Lofts) Limited Active** 100% Property Investment
Empiric (Exeter LL) Limited Active** 100% Property Investment
Empiric (Falmouth Maritime Studios) Limited Active** 100% Property Investment
Empiric (Falmouth Ocean Bowl) Leasing Limited Active** 100% Property Leasing
Empiric (Falmouth Ocean Bowl) Limited Active** 100% Property Investment
Empiric (Glasgow Ballet School) Limited Active** 100% Property Investment
Empiric (Glasgow Bath St) Limited Active** 100% Property Investment
Empiric (Bristol CH) Limited Active 100% Property Leasing
Empiric (Glasgow George Square) Limited Dormant 100% Property Investment
Empiric (Glasgow George St) Leasing Limited Active** 100% Property Leasing
Empiric (Glasgow George St) Limited Active** 100% Property Investment
Empiric (Glasgow) Leasing Limited Active** 100% Property Leasing
Empiric (Glasgow) Limited Active** 100% Property Investment
Empiric (Hatfield CP) Limited Active 100% Property Investment
Empiric (Huddersfield Oldgate House) Leasing Limited Dormant* 100% Property Leasing
Empiric (Huddersfield Oldgate House) Limited Active** 100% Property Investment
Empiric (Huddersfield Snow Island) Leasing Limited Active 100% Property Leasing
Empiric (Lancaster Penny Street 1) Limited Active** 100% Property Investment
Empiric (Lancaster Penny Street 2) Limited Active** 100% Property Investment
Empiric (Lancaster Penny Street 3) Limited Active** 100% Property Investment
Empiric (Leeds Algernon) Limited Active** 100% Property Investment
Empiric (Leeds Mary Morris) Limited Dormant* 100% Property Investment
Empiric (Leeds Pennine House) Limited Active** 100% Property Investment
Empiric (Leeds St Marks) Limited Active** 100% Property Investment
Empiric (Leicester 134 New Walk) Limited Active** 100% Property Investment
Empiric (Leicester 136-138 New Walk) Limited Active** 100% Property Investment
Empiric (Leicester 140-142 New Walk) Limited Active 100% Property Investment
Empiric (Leicester 160 Upper New Walk) Limited Active 100% Property Investment
Empiric (Leicester Bede Park) Limited Active 100% Property Investment
Empiric (Leicester De Montfort Square) Limited Active** 100% Property Investment
Empiric (Leicester Hosiery Factory) Limited Active 100% Property Investment
Empiric (Leicester Peacock Lane) Limited Active** 100% Property Investment
Empiric (Leicester Shoe & Boot Factory) Limited Active 100% Property Investment
Empiric (Leicester West Walk) Limited Dormant* 100% Property Investment
Empiric (Liverpool Art School/Maple House) Limited Active** 100% Property Investment
Empiric (Liverpool Chatham Lodge) Limited Dormant* 100% Property Investment
Empiric (Liverpool Grove Street) Limited Active 100% Property Investment
Empiric (Liverpool Hahnemann Building) Limited Active** 100% Property Investment
Empiric (Liverpool Octagon/Hayward) Limited Active** 100% Property Investment
Empiric (London Camberwell) Limited Active** 100% Property Investment
Empiric (London Francis Gardner) Limited Active** 100% Property Investment
Empiric (London Road) Limited Active** 100% Property Investment
Empiric (Manchester Ladybarn) Limited Active 100% Property Investment
Empiric (Manchester Victoria Point) Limited Active** 100% Property Investment
Empiric (Newcastle Metrovick) Limited Active** 100% Property Investment
Empiric (Northgate House) Limited Active** 100% Property Investment
Empiric (Nottingham 95 Talbot) Limited Active** 100% Property Investment
Empiric (Nottingham Frontage) Leasing Limited Dormant* 100% Property Leasing
Empiric (Nottingham Frontage) Limited Active** 100% Property Investment
Empiric (Oxford Stonemason) Limited Active** 100% Property Investment
Empiric (Picturehouse Apartments) Limited Active** 100% Property Investment
Empiric (Portobello House) Limited Active** 100% Property Investment
Empiric (Portsmouth Elm Grove Library) Limited Active 100% Property Investment
Empiric (Portsmouth Europa House) Leasing Limited Active 100% Property Leasing
Empiric (Portsmouth Europa House) Limited Active 100% Property Investment
Empiric (Portsmouth Kingsway House) Limited Active 100% Property Investment
Empiric (Portsmouth Registry) Limited Active 100% Property Investment
Empiric (Provincial House) Leasing Limited Active** 100% Property Leasing
Empiric (Provincial House) Limited Active** 100% Property Investment
Empiric (Reading Saxon Court) Leasing Limited Active** 100% Property Leasing
Empiric (Reading Saxon Court) Limited Active** 100% Property Investment
Empiric (Snow Island) Limited Active** 100% Property Investment
Empiric (Southampton Emily Davies) Limited Active 100% Property Investment
Empiric (Southampton) Leasing Limited Active** 100% Property Leasing
Empiric (Southampton) Limited Active** 100% Property Investment
Empiric (St Andrews Ayton House) Leasing Limited Active** 100% Property Leasing
Empiric (St Andrews Ayton House) Limited Active 100% Property Investment
Empiric (St Peter Street) Limited Active** 100% Property Investment
Empiric Investments (Eight) Limited Dormant 100% Immediate Holding Company
Empiric (Stirling Forthside) Limited Dormant* 100% Property Investment
Empiric (Stoke Caledonia Mill) Limited Active** 100% Property Investment
Empiric (Summit House) Limited Active 100% Property Investment
Empiric (Talbot Studios) Limited Active** 100% Property Investment
Empiric (Trippet Lane) Limited Active** 100% Property Investment
Empiric (Twickenham Grosvenor Hall) Limited Active** 100% Property Investment
Empiric (York Foss Studios 1) Limited Active** 100% Property Investment
Empiric (York Lawrence Street) Limited Active** 100% Property Investment
Empiric (York Percy's Lane) Limited Active** 100% Property Investment
Empiric Acquisitions Limited Active 100% Property Investment
Empiric Investment Holdings (Two) Limited Active 100% Holding Company
Empiric Investment Holdings (Eight) Limited Active 100% Holding Company
Empiric Investment Holdings (Four) Limited Active 100% Holding Company
Empiric Investment Holdings (Five) Limited Active 100% Holding Company
Empiric Investment Holdings (Six) Limited Active** 100% Holding Company
Empiric Investment Holdings (Seven) Limited Active** 100% Holding Company
Empiric Investments (One) Limited Dormant 100% Immediate Holding Company
Empiric Investments (Two) Limited Active 100% Immediate Holding Company
Empiric Investments (Three) Limited Active** 100% Immediate Holding Company
Empiric Investments (Four) Limited Active 100% Immediate Holding Company
Empiric Investments (Five) Limited Active 100% Immediate Holding Company
Empiric Investments (Six) Limited Active** 100% Immediate Holding Company
Empiric Investments (Seven) Limited Active** 100% Immediate Holding Company
Hello Student Management Limited Active 100% Property Management
Empiric Student Property Trustees Limited Dormant 100% Trustee
* Company in liquidation since 8 January 2024
**These companies are claiming an exemption from audit under sections
489A-479C of the Companies Act 2006
31. ALTERNATIVE PERFORMANCE MEASURES
The below sets out our alternative performance measures.
Gross margin - Gross profit expressed as a percentage of rental income. A
business KPI to monitor how efficiently we are running our buildings.
Group
Gross Margin 31 December 31 December
2023 2022
£m £m
Revenue 80.5 73.0
Property Expenses (25.2) (24.0)
Gross profit 55.3 49.0
Gross Margin calculated as Gross profit/Revenue 68.7% 67.1%
Total accounting return - The growth of EPRA NTA per share plus dividends per
share measured as a percentage. A key business indicator used to monitor the
level of overall return the Group is generating.
Total accounting return Group
31 December 31 December
2023 2022
£m £m
EPRA NTA per share at start of year 115.4 106.7
EPRA NTA per share at end of year 120.7 115.4
EPRA NTA growth per share in period 5.3 8.7
Dividend per share paid in year 3.4 2.5
Dividends plus growth in EPRA NTA 8.7 11.2
Total accounting return calculated as Dividends plus EPRA NTA Growth in year 7.6% 10.5%
per share/ NTA at start of year
Property Loan to value ("LTV") - A measure of gearing. Until 2023, this was
the Group's key measure of gearing, to ensure the group remains in line with
its long-term target of < 35 per cent.
Property Loan to value ("LTV") Group
31 December 31 December
2023 2022
£m £m
Bank borrowings drawn 360.3 391.2
Less cash held at the year end (40.5) (55.8)
Net borrowings 319.8 335.4
Property valuation 1,097.9 1,078.9
Property LTV calculated as net borrowings / property valuation 29.1% 31.1%
Dividend cover - a measure of EPRA earnings relative to dividends declared for
the year. This was 114 per cent for the year (2022: 124 per cent).
Dividend pay-out ratio - a measure of dividends relative to EPRA earnings.
This was 88 per cent for the year (2022: 81 per cent).
Five Year Historical Record
31 December 31 December 31 December 31 December 31 December
2023 2022 2021 2020 2019
£m £m £m £m £m
Revenue 80.5 73.0 56.0 59.4 70.9
Direct costs (25.2) (24.0) (23.1) (22.7) (23.4)
Gross profit 55.3 49.0 32.9 36.7 47.5
Gross margin 68.7% 67.1% 58.8% 61.8% 67.0%
Administrative expenses (14.0) (13.4) (10.6) (9.8) (9.2)
Operating profit 41.3 35.6 22.3 26.9 38.3
Property revaluation 30.1 45.6 17.6 (37.6) 29.2
Net finance costs (17.2) (15.0) (12.4) (13.3) (12.7)
Derivative fair value movement (0.2) - - - -
Gain/(loss) on disposals (0.6) 1.5 1.7 - -
Net profit/(loss) 53.4 67.7 29.2 (24.0) 54.8
EPRA EPS (pence) 4.0 3.4 1.7 2.3 4.2
Portfolio valuation* 1,098.1 1,079.4 995.9 1,005.1 1,029.1
Borrowings (356.7) (386.5) (371.0) (385.3) (349.8)
Other net assets/(liabilities) (7.2) 7.9 22.7 13.5 (14.5)
Net assets 734.2 700.8 647.6 633.3 664.8
EPRA NTA 734.1 700.8 647.6 633.3 664.8
EPRA NTA per share 120.7 115.4 106.8 104.6 110.0
Shares in issue 603,437,683 603,351,880 603,203,052 603,160,940 603,160,940
Weighted average cost of debt 4.3% 4.0% 3.0% 2.9% 3.2%
Weighted average debt maturity 3.9 years 4.8 years 4.9 years 5.9 years 6.6 years
Property LTV 29.1% 31.1% 33.1% 35.4% 32.9%
EPRA LTV 30.6% 32.7%
* Includes properties classified as held for sale and under development
Glossary
Alternative Performance Measures ("APM") - Performance measures to supplement
IFRS to provide users of the Annual Report with a better understanding of the
underlying performance of the Group's property portfolio.
Colleague Engagement - Calculated using the results of our biannual colleague
engagement surveys.
Company - Empiric Student Property plc.
Dividend Cover - EPRA earnings divided by dividends declared for the year.
Dividend pay-out ratio - Dividends declared relative to EPRA earnings.
EPRA - European Public Real Estate Association.
EPRA basic EPS - EPRA Earnings divided by the weighted average number of
ordinary shares outstanding during the period (refer to Note 8).
EPRA diluted EPS - EPRA Earnings divided by the weighted average number of
shares during the period, taking into account all potentially issuable shares.
EPRA Earnings - the IFRS profit after taxation excluding investment and
development property revaluations, gains/losses on investing property
disposals and changes in the fair value of financial instruments.
EPRA Loan to Value - a measure of gearing, calculated as gross borrowings
without deducting unamortised financing costs, less cash and adjusted for net
receivables or payables and intangibles, divided by gross portfolio valuation.
EPRA Net Disposal Value ("NDV") - Represents the shareholders' value under a
disposal scenario, The value of the company assuming assets are sold, and the
liabilities are settled and not held to maturity.
EPRA Net Reinvestment Value ("NRV") - The value of the assets on a long-term
basis, assets and liabilities are not expected to crystallise under normal
circumstances.
EPRA Net Tangible Assets ("NTA") - Assumes the underlying value of the company
assuming it buys and sells assets.
Gross margin - Gross profit expressed as a percentage of revenue.
Group - Empiric Student Property plc and its subsidiaries.
Hello Student - Our customer-facing brand and operating platform.
HMO - Houses in multiple occupation.
IFRS - International Financial Reporting Standards.
IFRS EPS - IFRS earnings divided by the weighted average number of ordinary
shares outstanding during the period.
Like for like rental growth - Compares the growth in rental income for
operational assets, throughout both the current and comparative year, and
excludes acquisitions, disposals and developments.
Like for like valuation (gross) - Compares the growth in capital values of the
Group's standing portfolio from the prior year end to the current year end,
excluding acquisitions and disposals.
Like for like valuation (net) - Compares the growth in capital values of the
Group's standing portfolio from the prior year end to the current year end,
excluding acquisitions, disposals, capital expenditure and development
properties.
Property loan to value or Property LTV - Borrowings net of cash, as a
percentage of portfolio valuation.
Net Asset Value or NAV - Net Asset Value is the net assets in the Statement of
Financial Position.
PBSA - Purpose Built Student Accommodation.
Postgrad - Postgraduate students who have successfully completed an
undergraduate course and are undertaking further studies at a more advanced
level.
RCF - Revolving credit facility.
REIT - Real estate investment trust.
Revenue Occupancy - Calculated as the percentage of our Gross Annualised
Revenue we have achieved for an academic year.
RICS - Royal Institution of Chartered Surveyors.
SONIA - Sterling Over Night Index Average is the effective reference for
overnight indexed swaps for unsecured transactions in the Sterling market. The
SONIA itself is a risk-free rate.
Total accounting return - The growth in EPRA NTA over the period plus
dividends paid for the period expressed as a percentage of opening EPRA NTA.
Weighted average cost of debt - Debt weighted by value multiplied by the
interest rate.
Weighted average debt maturity - The weighted average term of our debt
facilities at the balance sheet date.
Company Information and Corporate Advisers
Empiric Student Property plc
1st Floor Hop Yard Studios
72 Borough High Street
London, SE1 1XF
t +44 (0)20 8078 8791
e info@empiric.co.uk
More information on
www.empiric.co.uk
Company Registration Number: 08886906
Incorporated in the UK
(Registered in England)
Empiric Student Property plc is a public company limited by shares
Registered Office
1st Floor Hop Yard Studios
72 Borough High Street
London, SE1 1XF
DIRECTORS AND ADVISERS
Directors
Mark Pain (Chairman)
Duncan Garrood (Chief Executive Officer)
Donald Grant (Chief Financial and Sustainability Officer)
Alice Avis (Non-Executive Director, Senior Independent Director)
Martin Ratchford (Non-Executive Director)
Clair Preston-Beer (Non-Executive Director)
Broker and Joint Financial Adviser
Jefferies International Ltd
100 Bishopsgate
London, EC2N 4JL
Broker and Joint Financial Adviser
Peel Hunt LLP
7th Floor
100 Liverpool Street
London, EC2M 2AT
Legal Adviser to the Company
Gowling WLG (UK) LLP
4 More London Riverside
London, SE1 2AU
Company Secretary
Apex Secretaries LLP
6th Floor, Bastion House
140 London Wall
London, EC2Y 5DN
Registrar
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol, BA13 6ZZ
External Auditor
BDO LLP
55 Baker Street
London, W1U 7EU
Communications Adviser
FTI Consulting LLP
200 Aldersgate
Aldersgate Street
London, EC1A 4HD
Valuer
CBRE Limited
Henrietta House
Henrietta Place
London, W1G 0NB
Tax Adviser
KPMG
15 Canada Square
London, E14 5GL
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