REG - Empiric Student Prop - Results for Year Ended 31 December 2022
16/03/2023 07:00
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RNS Number : 1283T Empiric Student Property PLC 16 March 2023
Empiric Student Property plc
("Empiric" or the "Company" or, together with its subsidiaries, the "Group")
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2022
Business transformation delivering operational and valuation outperformance
Empiric Student Property plc (ticker: ESP), the owner and operator of premium,
studio-led student accommodation across the UK, is pleased to report its
preliminary results for the year ended 31 December 2022.
Duncan Garrood, Chief Executive Officer of Empiric Student Property plc, said:
"2022 has been another year of razor-sharp focus on our strategic priorities,
with significant progress made across all key metrics. The steps we have taken
over the last five years to transform the operations of the business, improve
our brand and focus on clusters of high quality accommodation are delivering
tangible results, evidenced by the record revenue occupancy, significant
growth in earnings and improved operating margin that the business achieved in
the year."
"The business is now well positioned for growth and we continue to recycle the
proceeds of non-core sales into our pipeline of developments and
refurbishments. We operate in a resilient sector, and we continue to see high
levels of demand for our product for the 2023/24 academic year which underpins
our confidence in the outlook for the business and our commitment to our
customer-first philosophy."
Financial highlights
31 December 2021 31 December 2022
Change
Income statement
EPRA earnings (£m) 9.9 20.6 +108.1%
EPRA earnings per share (p) 1.6 3.4 +112.5%
Gross margin (%) 58.8 67.1 +8.3% pts
Dividend per share (p) 2.5 2.75 +10.0%
Balance sheet
Total accounting return (%) 4.6 10.5 +5.9% pts
EPRA NTA per share (p) 106.7 115.4 +8.2%
Portfolio valuation (£m) 1,021.3 1,078.9
Cash and undrawn committed facilities (£m) 81.0 95.8(1)
Property loan-to-value (%) 33.1 31.1 -2.0% pts
(1) Including £20.0 million secured post year end
Significant earnings growth underpins strong financial performance
· Revenue increased 30% to £73.0m (2021: £56.0m)
· EPRA EPS increased 113% to 3.4p (2021: 1.6p)
· Portfolio valuation £1,078.9 million up 7.3% like-for-like (2.4% net of
capex), demonstrating sectors resilience.
· Net initial yield of 5.2% (2021: 5.3%)
· EPRA NTA per share increased 8.2% to 115.4p (2021: 106.7p)
· Total dividend paid and payable for the year of 2.75p, ahead of commitment
· Total accounting return of 10.5% (2021: 4.6%)
Operational performance driven by record revenue occupancy
· Like-for-like rental growth of 5.2% for academic year 2022/23, supported by
dynamic pricing
· 99% revenue occupancy achieved for academic year 2022/23, a record for the
business
· 90% revenue occupancy for financial year 2022 (2021: 71%)
· Operational transformation completed, with all activities directly managed and
controlled
· Clustering strategy driving improved operating margins
Actively managing the property portfolio
· Non-core disposal programme generates £53.1m from the sale of seven
properties in line with book value with proceeds redeployed into the core
portfolio investment programme
· Completed the sale of a further property post year end, generating £2.6m
· Acquisition of Market Quarter Studios in Bristol for £19.0m adding 92 beds to
our Bristol cluster
Progressing developments and refurbishments
· Developed or refurbished 263 beds for the 2022/23 academic year, including a
state-of-the-art development at St Mary's in Bristol
· Successful launch of Post-Grad accommodation pilot in Edinburgh, providing a
platform for further growth
· Over 250 refurbished beds expected to be delivered for the 2023/24 academic
year
Robust balance sheet
· Property loan to value at 31.1%, in line with long-term target of 35%
· Weighted average cost of debt 4.0% (2021: 3.0%), 89% with interest rate
protection
· Cash and undrawn committed facilities of £95.8m
Delivering consistent customer service
· Completed roll out of our student app across all locations to improve service
offer and customer engagement
· Hello Student awarded Best Student Well-being (UK and Ireland) at Global
Student Living Awards 2022
· Continued improvement in Global Student Living Index Net Promoter Score from
22 to 27, which compares favourably against purpose built student
accommodation average of 14 and 9 for university halls
Responsible business
· Net Zero strategy launched, targeting net zero by 2033 with £10.0 million
earmarked for investment in green initiatives over the next two years
· Further £7.0m invested in fire safety works in 2022, with £14.5m ring-fenced
for investment in 2023
Positive outlook for academic year 2023/24 supported by resilience of the PBSA
sector
· Strong bookings launch, with revenue occupancy of 65% currently secured, ten
weeks ahead of prior year
· Like-for-like rental growth in excess of 6% now anticipated
· Targeting revenue occupancy >97%
Results presentation at 09.00 (GMT) today
To access the live webcast, please register in advance here:
https://stream.brrmedia.co.uk/broadcast/63b7f236d908a85f58e0d796
(https://stream.brrmedia.co.uk/broadcast/63b7f236d908a85f58e0d796)
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 located in high-demand
university towns and cities across the UK. 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 is 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 and was admitted to
trading on the main market for listed securities of the London Stock Exchange
in June 2014.
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
2022 has been another year of razor-sharp focus on our strategic priorities,
with significant progress made across all key metrics. The steps we have taken
over the last five years to transform the operations of the business, improve
our brand and focus on clusters of high quality accommodation are delivering
tangible results, evidenced by the record revenue occupancy, significant
growth in earnings and improved operating margin that the business achieved in
the year.
We have delivered a strong performance in 2022, with key metrics above
pre-pandemic levels. The year saw us achieve a record level of occupancy at 99
per cent for academic year 2022/23, alongside strong like-for-like rental
growth of 5.2 per cent. We recorded good growth in the portfolio valuation, up
2.4 per cent on a like-for-like basis, particularly in the first half of the
year following the removal of a COVID related adjustment of £6.2 million and
a combination of yield compression and rental growth. The 31 December 2022
valuations have remained materially in line with the half year, with strong
rental growth offsetting marginal outward yield shift in the second half of
the year. The balance sheet remains strong with property loan-to-value modest
at 31.1 per cent, comfortably in line with our long-term target of 35 per
cent. Including dividends paid during the year of 2.5 pence, we have delivered
a total accounting return of 10.5 per cent for the year.
Operationally the business has had an active year. We have now completed the
transformation of our operating platform, with all operations now internally
managed, creating value through greater control, transparency, data management
and agility. We continued to strengthen the Hello Student brand, launching our
student app; embedded our new revenue management and dynamic pricing platform;
and made significant steps towards becoming a more sustainable business. We
also welcomed a number of new people into our leadership team during the year.
Driving performance through data analytics
The transformation of our operational capabilities has provided us access to
richer and more timely information. We are able to react to trends and
changing demands at pace and target our customer mix with much greater
flexibility.
For academic year 2022/23, as a result of targeted marketing during the period
of the pandemic, half of our customers were from the UK, an increase of one
third from pre-pandemic levels. Although our Chinese customer base remains
strong, this now represents just under 30 per cent of our students. We
continue to target markets where we are underweight relative to the
opportunity available, for example Indian students, where we have recently
experienced strong growth.
Our revenue pricing model coupled with our direct-let model, allows us to
maximise revenue relative to demand dynamics on a city by city basis but also
down to site specific room types. Not only did we achieve record occupancy for
the academic year 2022/23, but overall like-for-like rental growth of 5.2 per
cent was comfortably ahead of base uplift pricing of 1.9 per cent.
We have used historical booking and amendment data to review and simplify our
room categorisation, more than halving the categories, making the customer
choice very much simpler to navigate.
Actively managing the property portfolio
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.
Properties included in the disposal programme were typically either not of a
size or configuration which could easily be converted to our brand standard,
outside the catchment area of a top quality university or a single standing
building in a city where the opportunity to implement our clustering strategy
is challenged.
By 31 December 2022, we had disposed of or contracted to dispose of assets
generating £71.3 million, of which £53.1 million was generated from the
disposal of seven properties during 2022. Despite recent market disruption, we
successfully disposed of two properties above book value in the final quarter
of 2022, demonstrating the continued attractiveness and resilience of the
purpose built student accommodation sector. More recently, discussions have
advanced and a further £50 million remains under offer or in advanced
discussions.
Proceeds from disposals have, to date, largely been deployed into our core
portfolio investment programme. Opportunities are evaluated before proceeds
are redeployed, including debt prepayment or reinvestment in new developments
or acquisitions to grow our core Hello Student portfolio.
In February we announced our first acquisition since 2018, the 92 bed Market
Quarter Studios scheme in Bristol which we acquired for £19.0 million. This
acquisition, together with the opening of St Mary's, Bristol has more than
doubled the number of beds we provide in the city to 404 beds, with four well
located, high quality sites within a ten minute walk of each other and the
University campus. This provides a great example of our clustering strategy in
action, where we have been able to maintain our boutique proposition whilst
improving our margin in the city from 69 per cent to 76 per cent.
Progressing developments and refurbishments
In September, in time for the start of the 2022/23 academic year, we opened St
Mary's, Bristol. This former Victorian hospital has been thoughtfully
converted into a 153 bed scheme a stone's throw from the University of
Bristol. The property provides first class accommodation together with a suite
of student well-being initiatives and strong sustainability credentials, with
a BREEAM Excellent accreditation expected. The property has delivered an IRR
in excess of 20 per cent.
In November, our first bespoke Post-Grad project was completed at Southbridge,
Edinburgh. An extensive refurbishment of the property delivered this 59 bed
scheme adjacent to the University of Edinburgh. Largely pre-let upon
completion, we welcomed our first Post-Grad customers in late November.
Following extensive customer research our Post-Grad product aims to address
the specific requirements of the more mature Post-Grad student, providing
amenity-lite accommodation with fully self-contained apartments, which are
typically 20 per cent larger on average than our Under-Grad apartments and
command a rental premium of 20 per cent to our undergraduate offer in the
City. We believe there is a significant opportunity for a tailor made
proposition for post-graduates under our new brand "Post-Grad by Hello
Student", since this segment makes up nearly 25 per cent of all UK University
students.
Strong market fundamentals continue
Student applications continued to grow into the 2022/23 academic year, and
UCAS and HESA data illustrates that demand for UK higher education remains
robust with both undergraduate and post-graduate applications forecast to
continue growing.
For academic year 2022/23, undergraduate applications from UK domestic
students grew 1.3 per cent, while applications from non-EU students grew 13.5
per cent. UCAS predict overall undergraduate applications will increase by
nearly 30 per cent over the next five years. The number of post-graduates has
climbed to 820,000 for academic year 2022/23, an increase of 10.4 per cent
from 2021/22, the highest annual increase experienced in the past five years.
The agency StuRents predicts the UK could have a shortfall of 450,000 student
beds by 2025, exacerbated by a potential contraction in the HMO market which
would drive more students towards the PBSA sector. Customer demand for purpose
built student accommodation has never been so strong.
Supporting our customers and delivering consistent service
Core to our values is a customer-first philosophy. Every area of our business
is encouraged, and motivated, to live these values. We are aware with rising
rents that our customers expect an increasingly high quality experience and
value for their money. Their experience is therefore paramount to the
development of our strategic priorities.
Prior to the start of the 2022/23 academic year, we launched our new student
app. The app has provided a platform for greater and more timely customer
engagement and a means to further improve our service offer. Amongst other
functions, the app provides students the ability to report issues and monitor
progress toward resolution, receive site related information in a timely
manner, be notified when parcels are available for collection and arrange
social events. The app has been a resounding success with great feedback
received. We currently have over 7,000 active users and numbers continue to
grow.
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
("NPS"). We are proud to report that our NPS score improved again this year,
from 22 to 27. To put this in context, the latest NPS score for all private
purpose built student accommodation was 14, whilst the score for university
halls was 9.
Behind the data, the most important factors for students when selecting
accommodation were proximity to their place of study, feeling safe and secure
and the size, condition and quality of their accommodation. These are all
aspects at the very heart of our studio based brand proposition. The mental
health and well-being of our customers remains a priority. Of our customers
responding to the survey, 71 per cent said our accommodation had a positive
impact on their well-being, with 73 per cent responding to say they felt our
accommodation teams cared about their well-being. This is an extremely
encouraging result following the investment we have made in training our
people to identify potential issues and assist students to source the
professional support they may require, particularly at times of stress such as
during examinations.
Developing our people
At the heart of any service business is the people that design, support and
deliver great customer experience. It remains a priority to invest in and
motivate talent. Through rewarding, training and developing our people we
ensure our brand remains at the leading edge of customer service and
experience.
At a time when hiring talent is very competitive, there is particularly strong
rationale for focussing on employee retention and development. During the year
we improved our retention rate to almost 80 per cent, whilst internal
promotions accounted for nearly 40 per cent of all non-entry level vacancies.
We invested in a number of our 'rising stars' this year, with 25 of our middle
managers having been sponsored to complete an accredited leadership programme.
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
in line with inflation. During a time of increased cost-of-living pressures we
were pleased to support our employees, with average compensation increases
exceeding eight per cent. Employer pension contributions were also
standardised this year, with all eligible employees now entitled to receive
7.5 per cent.
Having invested in a programme of well-being and engagement initiatives, we're
pleased to report that our colleague engagement score of 84 per cent continues
to compare favourably to the national average of 70 per cent.
Portfolio safety
Safety will always remain of paramount importance to our business. We have a
responsibility to ensure that everyone who is living, working in or visiting
our buildings is kept safe. This is also a key consideration for our
customers. We ensure that our buildings comply with all relevant regulations
and also with industry best practice. A summary of progress and key
achievements this year is set out below.
Fire safety
There was considerable focus on fire safety again this year. Having allocated
£37 million toward fire safety initiatives in 2021, we continued to progress
our five-year programme of works, prioritised according to risk. In 2022 we
invested a further £7.0 million, primarily on internal fire stopping while
ensuring the appropriate solutions were investigated and permission sought,
allowing works to start in the first half of 2023 on the external works.
Our buildings continue to be inspected on a regular basis to ensure that we
identify and eliminate hazards. To assess the buildings, we engaged specialist
consultants to undertake thorough assessments of general safety, hazards, fire
risks and prevention and water systems and treatment against legionella.
During the year we employed a new fire risk assessor, established a clear and
comprehensive fire risk management system and conducted fire marshal training,
fire drills and student fire safety awareness campaigns across our entire
business and all its sites.
Health and Safety
Key achievements in 2022 included a full review of the health and safety
policy and introduction of new blueprint standards that are more user friendly
and manageable. We implemented a new contractor management standard and
launched SafetyNet to help us manage accident, incident and fire risk
assessments. With a dedicated Health, Safety & Fire Manager in place, we
have a busy period ahead with a clear focus on training and audit.
Becoming a more sustainable business
In August we published our full Net Zero strategy and set out seven key
performance indicators to allow us to track our progress towards our 2033
commitment. The journey is set out in three clear phases with the first
focussed on engagement and training.
I'm pleased to report that the Board has allocated significant capital to
green initiatives in 2023 and 2024 which should allow us to accelerate the
programme and deliver tangible benefits to all stakeholders sooner. A detailed
pathway to decarbonisation is being established this year with the aim of
reducing energy consumption and managing future EPC risk. Further details are
set out in the ESG report which will accompany the annual report when
published.
Strategy and outlook
We remain confident in the outlook for our business and the wider purpose
built student accommodation sector. Our focus is on continuing to drive
operational efficiencies through acquiring or developing new sites in cities
that are close to well-located existing sites and top performing universities.
Our clustering strategy is delivering benefits through scale, whilst enabling
us to maintain the more boutique, personalised experience associated with the
Hello Student proposition.
Having already secured 65 per cent revenue occupancy for the 2023/24 academic
year, a level reached some ten weeks earlier than in the prior year, we are
confident of achieving another successful year from an occupancy perspective.
In October 2022 we issued guidance that we anticipated achieving like-for-like
rental growth in excess of five per cent for academic year 2023/24, however
our direct-let model and dynamic pricing capability provides management with
confidence that like-for-like growth of at least six per cent can now be
achieved.
Given this strong performance, the Board is increasingly confident in its
progressive dividend strategy and will target a minimum dividend payment of
3.25 pence per share for the 2023 financial year, having paid and declared
dividends totalling 2.75 pence per share for the 2022 financial year.
Although significant progress continues to be made, recent investment market
turbulence has delayed our disposal programme aspirations and, it now looks
increasingly likely that we will continue to hold a number of non-core assets
beyond the original 18-month timeline set out in 2021. As demonstrated in the
financial review on page 11, this will have an impact on gross margin into
2023, as non-core properties are typically less efficient and located in
single asset cities where the benefits of clustering cannot be realised.
Nevertheless, we expect the programme to be materially complete by the end of
2023.
The business is now well positioned for growth and we continue to recycle the
proceeds of non-core asset sales into our pipeline of developments and
refurbishments. We operate in a resilient sector, and we continue to see high
levels of demand for our product for the 2023/24 academic year which underpins
our confidence in the outlook for the business and our commitment to our
customer-first philosophy.
DUNCAN GARROOD
Chief Executive Officer
16 March 2023
Operating review
Our focus on clustering premium quality properties in prime, undersupplied
cities within close proximity to top-tier universities continues to deliver
strong results. Our brand proposition, studio-led focus and personalised
service offer continues to excel comparators.
Overview
We have continued to experience strong post-pandemic demand for our
properties, with the academic year 2022/23 seeing record occupancy of 99 per
cent. The Company's direct-let strategy, which allows us to capture rental
growth and inflation in a more timely manner than a nomination led strategy,
delivered like-for-like rental growth of 5.2 per cent.
The broadened appeal of our brand proposition is reflected in strong feedback
from our customers, allowing Hello Student to surpass all key benchmarks. A
high level of customer satisfaction resulted in a re-booker rate of 18.5 per
cent for academic year 2022/23, with an expectation this will exceed 20 per
cent for academic year 2023/24.
Demand has continued to grow from both domestic and international students,
with university applications increasing 2.1 per cent in 2022. Domestic student
numbers have been fuelled by a demographic increase in 18 year olds coupled
with a perception of a weakening economy and employment market, whilst
post-graduate numbers increased 10 per cent between 2021 and 2022. The
growth in demand for the PBSA sector may be further exacerbated by a
contraction in the HMO market.
Our marketing and sales strategy has continued to target domestic students as
well as international markets where our brand is underweight, for example
India and Nigeria which have seen some of the strongest growth in
international student numbers. Demographically, for academic year 2022/23, 50
per cent of our students were UK nationals, 29 per cent Chinese with 21 per
cent other international.
Dynamic pricing has enabled demand and data led pricing decisions to be made
in a manner which considers price sensitivity not only in cities but also down
to exact room types. For academic year 2022/23 our average inflationary
increase was 2.1 per cent, but with 3.1 per cent additional benefit captured
by dynamic pricing, we were able to deliver like-for-like revenue growth in
excess of 5 per cent. Although affordability remains a key concern in pricing
decisions, dynamic pricing has been particularly important during the high
inflationary period recently experienced.
Portfolio overview
The 2022 financial year saw continued focus on repositioning the portfolio.
Notwithstanding challenging investment market conditions, particularly in the
second half of the year, we disposed of or contracted to dispose of seven
properties for £53.1 million. A further non-core property was sold post year
end generating £2.6 million.
Proceeds from disposal have largely been directed toward an extensive
refurbishment and capital programme targeting fire safety compliance alongside
the elimination of Segment B and the conversion of Segment C properties, as
outlined below.
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 well located, appropriately configured
and on-brand
· Segment B: Properties that fundamentally meet our key criteria but
require extensive refurbishment to become on-brand
· Segment C: Well-located properties which are configured in a manner
that lend themselves better to a conversion to our new brand Post-Grad 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't easily be realised and/or are not aligned to a top-tier
university.
Total market value (£m)
Strategic segmentation Segment A (£m) Segment B (£m) Segment C (£m) Segment D (£m) NIY (%)
Operational portfolio 724.2 122.0 139.8 70.5 1,056.5 5.2
Commercial portfolio 7.4 5.6 3.7 2.5 19.2 7.8
Development portfolio - - - 3.2 3.2
Total 731.6 127.6 143.5 76.2 1,078.9
% 67.8 11.8 13.3 7.1 (1) 100.0
(1) Adjusting for sales exchanged pending completion or exchanged and
completed post year end, Segment D now represents 5.6 per cent of the
portfolio
Valuers quality segmentation Properties Operational beds Market value (£m) Market value (%)
Super prime regional 26 2,590 478.2 44.3
Prime regional 48 4,651 512.0 47.5
London 2 151 29.0 2.7
76 7,392 1,019.2 94.5
Secondary 10 1,141 59.7 5.5
Total 86 8,533 1,078.9 100.0
Adjusting for acquisitions, disposals and properties undergoing development,
the like-for-like portfolio increased in value by 2.4 per cent during 2022.
This is almost entirely attributable to underlying income growth assumptions
which average 6 per cent. The completion of our two main developments, St
Mary's, Bristol, and Southbridge, Edinburgh collectively delivered £18.4
million in valuation gain, net of capital expenditure.
Capital expenditure programme
Our programme of refurbishment, fire safety works and green initiatives
continues at pace. We have allocated £8.0 million from our original
refurbishment plan in favour of an acceleration of green initiatives targeting
a reduction in energy consumption and managing future EPC risk. Given recent
volatility in energy costs, our targeted return hurdle of 9% to 11% IRR
remains appropriate.
In respect to our programme of fire safety works, all properties have now been
surveyed with 61 per cent of the portfolio is now certified.
Refurbishment Fire safety works Green initiatives
(£m) (£m) (£m)
Five year Plan (2021 - 2025) 44.1 37.0 4.0
Reallocation (8.0) - 8.0
Revised plan 36.1 37.0 12.0
Invested to date 4.7 10.3 0.5
Forecast 2023 investment 6.0 14.5 5.0
In addition to the above, ongoing capital life cycling works require around
£4.0 million per annum.
Commercial portfolio
We have continued to actively manage the 42-unit commercial estate that
generally sits below our operational portfolio, with a number of value
creating projects completed. Notable deals include a five year lease with a
café operator on a long-term vacant unit in Cardiff. A five-year lease
renewal was secured in Bristol and two further five year renewals were
completed in Lancaster.
A number of asset management initiatives are planned for 2023 to drive value
and enhance the student offering. We have agreed terms with a convenience
store operator to take a lease, subject to planning, on a parade of shops in
Manchester. Planning has also been submitted for the conversion of another
vacant unit in Newcastle for further student accommodation, adding bedspaces
and improving student amenities. In Bristol, terms have been agreed for the
part letting of one vacant unit where we have an opportunity to also create a
new gym amenity in the remaining space, leaving only one vacant unit in the
portfolio where there are advanced discussions ongoing.
Acquisitions and developments
In February 2022 we acquired the 92 bed Market Quarter scheme in Bristol. The
property was pre-let on acquisition and has been extremely well received by
our customers. The property was fully occupied for the academic year 2022/23
and is in high demand from re-bookers for the recently launched 2023/24
academic year. Since acquisition, the property has delivered an IRR in excess
of 20 per cent.
Also in Bristol, our 153 bed St Mary's development opened to students at the
start of the 2022/23 academic year. The property, a former Victorian hospital,
has been lovingly developed in to best-in-class student accommodation which is
well located only a few minutes' walk from the University of Bristol. The
development has delivered an IRR in excess of 20 per cent.
Together with the acquisition of Market Quarter, the Group more than doubled
its bed offer in Bristol during 2022, allowing the benefits of clustering to
be realised. Gross margin has improved from 69 per cent to 76 per cent, a
seven percentage point increase, whilst enabling a better quality service
offer for our Bristol based customers.
In late November 2022, our first post-graduate scheme at Southbridge,
Edinburgh opened to students. The 59 bed property was developed to pilot a
unique offer aimed exclusively at port-graduates, delivering a bespoke product
aimed at a growing segment of the market. The property has delivered an yield
on cost of 6.0 per cent and IRR above 12 per cent.
Refurbishment pipeline
Looking ahead to 2023, we have allocated £6.0 million from our five year
refurbishment programme toward major refurbishment activity encompassing over
250 beds. Most significant of which is at our St. Mark's, Leeds property,
Brook Studios in Birmingham and Summit House in Cardiff. Two of these schemes
are currently within Segment B and are expected to be moved to our on-brand
Segment A.
Works are typically completed over the summer, following a short selling or
via rolling refurbishment programme throughout the year, with no more than
25-30 beds impacted at any one time.
For academic year 2023/24 we have taken the decision to close our 173 bed
Brunswick House scheme in Southampton. This is to facilitate an extensive
refurbishment of the scheme alongside fire safety works. As above, Brunswick
House is currently a Segment B property, which we expect will reopen to
students as a Segment A property for the start of academic year 2024/25.
We continue to target an IRR of 9-11 per cent on all refurbishment works.
Global Student Living Index
Our Hello Student brand delivered an improved net promoter score of +27 in the
2022 Global Student Living Index survey. This score, up from +22 at December
2021, compares very favourably with University Halls which scored +9 and
Private Halls of +14.
Proximity to place of study, feeling safe and secure and the condition and
quality of accommodation remain the most important factors for students
selecting their accommodation. Overall a stronger retention intent has been
received, with a significant increase in students saying they plan to stay in
their accommodation.
Over 70 per cent of students responding said that their accommodation had a
positive impact on their well-being and that our people care about their
well-being. In 2022 Hello Student were proud winners of the Global Student
Living Index's award for student well-being.
Financial review
I'm delighted to present my first financial review as successor to Lynne
Fennah, who left the business in October 2022. I would like to thank her for a
thorough handover, but also for her sound stewardship of the business during
her tenure.
Overview of the year
The business achieved record revenue occupancy for academic year 2022/23, with
99 per cent now achieved following January letting activity. Capitalizing on
strong post-pandemic demand, our brand and service proposition, coupled with
the implementation of our demand-led pricing model delivered like-for-like
growth in revenues of 5.2 per cent, and revenue for the financial year to 31
December 2022 of £73 million. This is a great result given the continued
effects of the pandemic on academic year 2021/22, which impacted eight months
of the 2022 financial year. Gross margin improved to 67 per cent, in line with
guidance.
Rising interest rates and cost inflation created challenges, however, having
fixed utility costs through to September 2024 we are able to mitigate this
pressure on a significant cost line in our income statement.
One third of our debt structure was exposed to rising interest rates, which
exposed the income statement to some volatility, particularly in the final
quarter of the year. Finance costs totalled £15.0 million, roughly 15 per
cent higher than we had originally anticipated. Although the Group's weighted
average cost of debt has significantly increased, long-term rates have
softened providing an opportunity to secure further interest rate protection
post year end.
IFRS profit for the year was £67.7 million, including a £45.6 million
valuation uplift, whilst EPRA earnings, our measure of recurring earnings,
were £20.6 million, representing 3.4 pence per share.
Total accounting return, including both dividends paid in the year of 2.5
pence per share plus growth in EPRA Net Tangible Asset value being 8.7 pence,
was 10.5 per cent.
Income statement
Core portfolio Non-core (bucket D)
2022 2021
£m £m £m £m
Revenue 66.3 6.7 73.0 56.0
Property expenses (20.1) (3.9) (24.0) (23.1)
Gross profit 46.2 2.8 49.0 32.9
Gross margin 70% 42% 67% 59%
Administrative expenses (13.4) (10.6)
Operating profit 35.6 22.3
Revaluation 45.6 17.6
Gains on disposals 1.5 1.7
Net finance costs (15.0) (12.4)
IFRS Profit 67.7 29.2
Weighted average ordinary shares (m) 603.3 603.2
IFRS EPS (pence) 11.2 4.8
EPRA EPS (pence) 3.4 1.6
Revenue has increased 2.7 per cent like-for-like for the financial year of
2022. Revenue occupancy for the current 2022/23 academic year is strong at
99 per cent, resulting in 90.5 per cent occupancy across the financial year.
The Group seeks to achieve a gross margin of greater than 70 per cent. For
2022 we achieved 67 per cent, in line with guidance and largely due to the
poorer margins achieved on our non-core portfolio, as set out above.
Pleasingly, gross margin on our core portfolio achieved 70 per cent in 2022.
The delay in our disposal programme does, however, mean achieving greater than
70 per cent across the Group in 2023 will be challenging, as non-core assets
are typically located in single asset cities where the benefits of clustering
cannot be realized.
Administrative expenses were £13.4 million, representing 18.4 per cent of
revenue. This has increased from £10.6 million in 2021. The Group has
undergone a transformation of its operating capabilities, to position itself
for growth and has invested in its people and processes in order to deliver
this. However, most administrative cost lines are also exposed to inflationary
pressures, which contributed to the increase. We expect the cost base as a
percentage of revenue to decrease as the business targets growth.
Balance sheet
2022 2021
£m £m
Property (market value) 1,078.9 1,021.3
Cash on hand 55.8 37.1
Bank borrowings drawn (391.2) (375.0)
Other net liabilities (42.7) (35.8)
Net assets 700.8 647.6
Diluted number of shares 607.2 606.6
EPRA NTA per share (pence) 115.4 106.7
Property LTV 31.1% 33.1%
EPRA LTV 32.7% 34.3%
Strong valuation gains were recorded on development properties, most notably
St Mary's, Bristol and Southbridge, Edinburgh, both of which have now
completed and are operational for academic year 2022/23. The Group's net
asset value increased 8.2 per cent in 2022 primarily due to an increase in the
value of our properties of £45.6 million and retained current year EPRA
earnings (net of dividend paid) as set out below.
Evolution of net asset value £m
31 December 2021 647.6
EPRA earnings 20.6
Like-for-like revaluation 22.9
Non-like-for-like revaluation 22.7
Dividends (15.2)
Other 2.2
31 December 2022 700.8
Portfolio valuation
2022 2021 Gain/(loss)(1) Change
£m £m £m %
Like-for-like property portfolio 990.5 952.8 22.9 2.4
Acquisitions 25.9 - 6.4 24.7
Disposals - 39.8 (2.1) (5.3)
Developments 62.5 28.7 18.4 29.5
Portfolio valuation 1,078.9 1,021.3 45.6
(1) net of capital expenditure and head lease amortisation
In 2022, the like-for-like ("LfL") portfolio increased by £22.9 million or
2.4 per cent with non-LfL properties (most notably development properties)
increasing £22.7 million. The portfolio net initial yield was 5.2 per cent,
stable since June with a 10 basis point contraction on December 2021. The
reversionary yield stands at 5.5 per cent. This was a strong valuation
performance in a challenging year when many other sectors experienced
considerable outward yield shift, particularly in the second half of 2022,
demonstrating the sub-sector's resilience and strong demand led income
underpin.
Market Quarter Studios, a strategically aligned high quality asset in Bristol,
was acquired during the year for £19.3 million. Since acquisition its
valuation has increased by £6.4 million (25.2 per cent, net of capex).
Six assets were disposed during the year. Disposal proceeds were £39.7
million, resulting in a profit of £1.5 million, after costs. Contracts were
exchanged for a further property disposal, Emily Davies, Southampton, was
exchanged pre year end with completion targeted for April 2023.
Capital expenditure for the year on both the LfL and development portfolio was
£30.4 million.
Debt
Bank borrowings drawn at 31 December 2022 was £391.2 million, of which 71 per
cent is at a fixed rate. Fixed rate debt carries a weighted average term to
maturity of 5.7 years and a weighted average cost of 3.4 per cent. Floating
rate debt of £114.0 million carries a weighted average cost of debt of 5.4
per cent and weighted average term to maturity of 2.5 years. Since year end,
with the stabilisation of longer term interest rates, we have extended
interest rate protection to cover 89 per cent of drawn debt by putting in
place an interest rate cap on an additional £67.4 million of floating rate
debt.
The overall weighted average cost of debt at 31 December 2022 was 4.0 per cent
and average term to maturity was 4.8 years.
Property loan to value was 31.1 per cent at the year end, below our longer
term target of 35 per cent, primarily due to valuation gains. Cash reserves at
31 December 2022 totalled £55.8 million, earmarked for working capital,
dividend payments and capital expenditure. Undrawn committed facilities were
£20.0 million at the balance sheet date, increasing to £40.0 million post
year end following the refinancing of an unsecured facility which was repaid
in late 2022. The Group has no further refinancing risk in 2023, with £64.0
million maturing in 2024. See note 1.4 for further information.
All loan covenants were fully compliant during the year.
Cashflow
2022 2021
£m £m
Operating cash flow 43.6 42.4
Property acquisitions and capital expenditure (49.1) (16.6)
Property disposals 39.7 17.9
Net cash flows from investing activities (9.4) 1.3
Dividends paid (16.7) (13.6)
Net borrowings drawn/(repaid) 14.6 (15.1)
Finance costs (13.4) (11.8)
Financing cash flows (15.5) (40.5)
Net cash flow 18.7 3.2
Strategic capital recycling continued with proceeds from the disposal of
non-core assets directed into acquisitions aimed at advancing our clustering
strategy in key cities, or into our core portfolio development, refurbishment
and remediation programme.
Cash paid in relation to dividends includes the payment of 2022 dividends and
resulting withholding tax, but also the withholding tax settled in early 2022
arising on the 2021 dividend paid to shareholders in the final quarter of that
year.
In respect of financing cashflows, £25.0 million was drawn from our revolving
credit facility, largely to fund acquisitions and £11.2 million of
development financing in relation to works at St Mary's, Bristol. £20.0
million was repaid in December 2022 towards settling a facility due to mature
in March 2023, on which no early termination fees were due.
Finance costs paid have increased in line with further borrowings and
increasing interest rates charged on the Group's floating rate debt.
Going concern
The Board continues to place 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, the Directors have concluded that, in reasonably possible
adverse scenarios, adequate resources and mitigants remain available to
continue to operate for the period to 31 December 2024. 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 2022.
Attention is drawn to note 1.4 of the financial statements and to the
Company's statement in respect of viability as set out within the annual
report, once published, for further details surrounding the conclusion
reached.
Dividends
A final interim dividend of 0.875 pence per share has been declared for the
final quarter of 2022, bringing total dividends paid and payable in respect of
2022 to 2.75 pence. This represents an 81 per cent pay out on EPRA earnings
per share. The dividend will be paid as a Property Income Distribution on 14
April 2023 to shareholders on the register at 31 March 2023.
DONALD GRANT
Chief Financial & Sustainability Officer
16 March 2023
EPRA and other alternative performance measures
Analysing our performance in line with industry standard measures
EPRA disclosures
The following is a summary of the EPRA performance measure 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.
Note/ reference 2021
EPRA Measure Definition of measure 2022
Earnings (£m) The companies underlying earnings from operational activities 8 20.6 9.9
Net tangible assets (NTA) The underlying value of the company assuming it buys and sells assets 9 115.4 106.7
Net disposal value (NDV) The value of the company assuming assets are sold, and the liabilities are 9 117.9 104.4
settled, not held to maturity.
Net reinstatement value (NRV) The value of the assets on a long-term basis, assets and liabilities are not 9 121.8 112.4
expected to crystallise under normal circumstances.
Net initial yield Rental income less operating costs divided by the market value of the Below 5.2% 5.3%
property, increased with purchasers costs.
Cost ratio (incl. direct vacancy costs) Administrative & operating costs including costs of direct vacancy divided Below 51% 60%
by gross rental income.
Cost ratio (excl. direct vacancy costs) Administrative & operating costs excluding costs of direct vacancy divided Below 47% 46%
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 5.2% 2.6%
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 2.4% 3.0%
controlled by the Group and both balance sheet dates, net of capital
expenditure and excluding development properties
Loan to value(1) below 32.7% 34.3%
Ratio of net debt, including net payables, to the sum of the net assets,
including net receivables, of the Group, expressed as a percentage
(1) EPRA LTV is a new measure introduced by EPRA in the current period. The
EPRA measure differs from the Property LTV presented in Note 31 as it includes
net payables and receivables. EPRA LTV was not presented in the financial
statements at 31 December 2021 as the measure had not yet been introduced.
EPRA LTV would have been presented as 34.3% at 31 December 2021.
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.
Note/ reference 2021
Measure Definition of measure 2022
Total Return Growth in EPRA NTA plus dividends paid as a percentage of opening EPRA NTA 31 10.5% 4.6%
Net debt (£m) Borrowings less cash and cash equivalents 31 335.4 337.9
Property loan to value Net debt divided by property market value 31 31.1% 33.1%
Dividend cover EPRA earnings relative to dividends declared for the year 31 124% 64%
Dividend pay-out ratio Dividends declared relative to EPRA earnings 31 81% 156%
Group
EPRA Net Initial Yield and topped-up NIY Year ended Year ended
31 December 31 December
2022 2021
£'m £'m
Investment Property 1,078.9 1,021.3
Less: development (3.3) (28.7)
Completed property portfolio 1,075.6 992.6
Allowance for purchases cost 38.5 34.2
Grossed up completed property portfolio valuation 1,114.1 1,026.8
Annualised cash passing rental income 81.6 77.5
Property outgoings (24.0) (23.1)
Annualised net rents 57.6 54.4
Add: notional rent expiration of rent-free periods or other lease incentives 0.1 0.2
Topped-up net annualised rent 57.7 54.6
EPRA NIY 5.2% 5.3%
EPRA "topped-up" NIY 5.2% 5.3%
EPRA Cost ratios
Operating expense line per IFRS income statement 24.0 23.1
Administration costs 13.4 10.6
Ground rent costs - -
EPRA Costs (including direct vacancy costs) 37.4 33.7
Direct vacancy costs (3.2) (8.1)
EPRA Costs (excluding direct vacancy costs) 34.2 25.6
Gross Rental Income less ground rents - per IFRS 73.0 56.0
Less: service fee and service charge costs components of Gross Rental - -
Gross Rental Income 73.0 56.0
EPRA Cost Ratio (including direct vacancy costs) 51% 60%
EPRA Cost Ratio (excluding direct vacancy costs) 47% 46%
EPRA Loan to Value ("LTV")
Bank borrowings drawn 391.2 375.0
Net payables 17.8 12.2
Less cash held at the year end (55.8) (37.1)
Net borrowings 353.2 350.1
Investment property at fair value 1,061.9 966.7
Property held for sale 13.7 25.9
Property under development 3.3 28.7
Property value 1,078.9 1,021.3
EPRA LTV 32.7% 34.3%
Statement of Directors' responsibilities
The statement of Directors' responsibilities has been prepared in relation to
the Group's Annual Report 2022. 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 16 March 2023.
DONALD GRANT
Director
Group Statement of Comprehensive Income
Note Year ended Year ended
31 December 31 December
2022 2021
£ m £ m
Continuing operations
Revenue 2 73.0 56.0
Property expenses 3 (24.0) (23.1)
Gross profit 49.0 32.9
Administrative expenses 4 (13.4) (10.6)
Change in fair value of investment property 11 45.6 17.6
Operating profit 81.2 39.9
Finance cost 5 (15.0) (12.4)
Net gain on disposal of investment property 1.5 1.7
Profit/(loss) before income tax 67.7 29.2
Corporation tax 7 - -
Profit for the year and total comprehensive income 67.7 29.2
Earnings per share expressed in pence per share 8
Basic 11.2 4.8
Diluted 11.1 4.8
Group Statement of Financial Position
Note At At
31 December 31 December
2022 2021
£ m £ m
ASSETS
Non-current assets
Investment property - Operational Assets 11 1,062.4 967.2
Investment property - Development Assets 11 3.3 28.7
Property, plant and equipment 13 1.1 0.4
Intangible assets 12 1.9 1.3
Right of use asset 1.3 1.0
Total non-current assets 1,070.0 998.6
Current assets
Trade and other receivables 14 7.0 7.8
Assets classified as held for sale 15 13.7 25.9
Cash and cash equivalents 16 55.8 37.1
Total current assets 76.5 70.8
Total assets 1,146.5 1,069.4
LIABILITIES
Current liabilities
Trade and other payables 17 24.8 20.0
Borrowings 18 - 44.7
Lease liability 0.1 0.1
Deferred income 17 33.1 29.9
Total current liabilities 58.0 94.7
Non-current liabilities
Borrowings 18 386.5 326.2
Lease liability 1.2 0.9
Total non-current liabilities 387.7 327.1
Total liabilities 445.7 421.8
Total net assets 700.8 647.6
Equity
Called up share capital 19 6.0 6.0
Share premium 20 0.3 0.3
Capital reduction reserve 21 444.7 459.9
Retained earnings 249.8 181.4
Total equity 700.8 647.6
Total equity and liabilities 1,146.5 1,069.4
Net Asset Value per share basic (pence) 9 116.1 107.4
Net Asset Value per share diluted (pence) 9 115.4 106.7
EPRA NTA per share (pence) 9 115.4 106.7
These financial statements were approved by the Board of Directors on 16 March
2023 and signed on its behalf by:
DONALD GRANT
Director
Company Statement of Financial Position
Note At At
31 December 31 December
2022 2021
£ m £ m
ASSETS
Fixed assets
Investments in subsidiaries 30 222.6 187.6
Property, plant and equipment 13 1.0 0.3
Intangible assets 12 1.9 1.3
Right of use asset 1.3 1.0
Total fixed assets 226.8 190.2
Current assets
Amounts due from Group undertakings 14 400.5 369.0
Trade and other receivables 14 0.3 0.3
Cash and cash equivalents 16 4.3 2.0
Total current assets 405.1 371.3
Total assets 631.9 561.5
CREDITORS
Current creditors
Amounts due to Group undertakings 17 87.8 27.2
Trade and other payables 17 3.1 5.1
Lease Liability 0.1 0.1
Total non-current creditors 91.0 32.4
Non-current creditors
Borrowings 18 - 19.9
Lease liability 1.2 0.9
Total non-current creditors 1.2 20.8
Total creditors 92.2 53.2
Total net assets 539.7 508.3
Capital and reserves
Called up share capital 19 6.0 6.0
Share premium 20 0.3 0.3
Capital reduction reserve 21 444.7 459.9
Retained earnings 88.7 42.1
Total capital and reserves 539.7 508.3
The Company made a profit for the year of £45.9 million (2021: £8.7 million
loss).
These financial statements were approved by the Board of Directors on 16 March
2023 and signed on its behalf by:
DONALD GRANT
Director
Group Statement of Changes in Equity
Year ended 31 December 2022 Called up Share Capital Retained Total
share capital premium reduction earnings equity
£ m £ m reserve £ m £ m
£ m
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
Balance at 1 January 2021 6.0 0.3 475.0 152.0 633.3
Profit for the year - - - 29.2 29.2
Total comprehensive income for the year - - - 29.2 29.2
Share-based payments - - - 0.2 0.2
Dividends - - (15.1) - (15.1)
Amounts recognised directly in equity - - (15.1) 0.2 (14.9)
Balance at 31 December 2021 6.0 0.3 459.9 181.4 647.6
Company Statement of Changes in Equity
Year ended 31 December 2022 Called up Share Capital Retained Total
share capital premium reduction earnings equity
£ m £ m reserve £ m £ m
£ m
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 profit 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
Balance at 1 January 2021 6.0 0.3 475.0 50.6 531.9
Loss for the year - - - (8.7) (8.7)
Total comprehensive loss for the year - - - (8.7) (8.7)
Share-based payments - - - 0.2 0.2
Dividends - - (15.1) - (15.1)
Amounts recognised directly in equity - - (15.1) 0.2 (14.9)
Balance at 31 December 2021 6.0 0.3 459.9 42.1 508.3
Group Statement of Cash Flows
Year ended Year ended
31 December 31 December
2022 2021
£ m £ m
Cash flows from operating activities
Profit before income tax 67.7 29.2
Share-based payments expense 0.7 0.2
Depreciation and amortisation 0.6 0.5
Finance costs 15.0 12.4
Gain on disposal of investment property (1.5) (1.7)
Change in fair value of investment property (45.6) (17.6)
36.9 23.0
Decrease in trade and other receivables 0.2 6.7
Increase in trade and other payables 3.3 3.5
Increase in deferred rental income 3.2 9.2
6.7 19.4
Net cash flows generated from operations 43.6 42.4
Cash flows from investing activities
Purchases of tangible fixed assets (1.0) (0.4)
Purchases of intangible assets (0.9) (0.5)
Purchase and development of investment property (47.2) (15.7)
Proceeds on disposal of asset held for sale, net of selling costs 26.7 -
Proceeds on disposal of investment property, net of selling costs 13.0 17.9
Net cash flows from investing activities (9.4) 1.3
Cash flows from financing activities
Dividends paid (16.7) (13.6)
Bank borrowings drawn 36.2 -
Bank borrowings repaid (20.0) (15.0)
Loan arrangement fee paid (1.6) (0.1)
Lease liability paid (0.1) -
Finance cost (13.3) (11.8)
Net cash flows from financing activities (15.5) (40.5)
Increase in cash and cash equivalents 18.7 3.2
Cash and cash equivalents at beginning of year 37.1 33.9
Cash and cash equivalents at end of year 55.8 37.1
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 2022 to 31 December 2022.
The consolidated financial statements of the Group for the year ended 31
December 2022 comprise the results of Empiric Student Property plc (the
"Company") and its subsidiaries and were approved by the Board for issue on 16
March 2023. 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
2022 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 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 profit after taxation of £45.9 million (2021: loss of £8.7
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 2022 or the year
ended 31 December 2021 but is derived from those accounts. The Group's
statutory accounts for the year ended 31 December 2021 have been delivered to
the Registrar of Companies. The Group's statutory accounts for the year ended
31 December 2022 will be delivered to the Registrar of Companies in due
course. The Auditor has reported on both the December 2022 and December 2021
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 2022, the Group's cash and undrawn committed facilities were
£75.8 million and its capital commitments were £2.3 million. Subsequent to
the year end, a further £20.0 million committed facility was secured.
Occupancy is a key driver of profitability and cash flows, and at 16 March
2023 occupancy, based on forward reservations for the upcoming 2023/24
academic year was 65 per cent, compared to 36 per cent for the 2022/23
academic year at 2 March 2022.
At the year end three facilities fell due for repayment during the going
concern period:
- £20.0 million with Canada Life due to expire in March 2024
- £32.8 million with AIB due to expire in October 2024
- £11.2 million with NatWest due to expire in December 2024.
It is intended that these will be refinanced at maturity and good
relationships are maintained with all lenders, discussions have been initiated
and lender appetite for the sector remains strong.
In February 2023 an interest rate cap was put in place on the £70.0 million
drawn Lloyds facility, capping SONIA at 5 per cent. At time of signing these
financial statements the Group had £44.0 million of floating rate debt.
As part of the Group's going concern and viability modelling, certain
scenarios are considered to model the impact on liquidity. All of the groups
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 25 per 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.
Interest cover ratios in place across the Group's debt facilities could
currently withstand a 2.5 per cent increase in interest rates before a breach
would occur.
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 as to minimise any potential 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 2024. The Directors have considered, in
particular:
- a material reduction in revenue, both in terms of occupancy and
growth rate;
- inflation remains high, at eight per cent;
- utilities costs increase by 1.5 times current market expectation;
- interest rates increase by 1.5 per cent over current forecasts,
impacting the Group's floating rate debt;
- an immediate valuation shock of minus 15 per cent in property
valuations; and
- rates at which the expiring debt facilities totalling £64.0 million in
the period, could be refinanced. These were assumed to be refinanced at
floating rates applicable at the point of expiry and subject to an interest
rate uplift of 1.5 per cent.
In addition, the Directors 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 2024. 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. 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 Significant Accounting Policies
Basis of Consolidation
The consolidated financial statements comprise the financial statements of the
Company and its subsidiaries as at 31 December 2022. 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.
When the Group has less than a majority of the voting or similar rights of an
investee, the Group considers all relevant facts and circumstances in
assessing whether it has power over an investee, including:
(a) the contractual arrangement with the other vote holders of the
investee;
(b) rights arising from other contractual arrangements; and
(c) the Group's voting rights and potential voting rights.
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, 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 borrowing is 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 the fair values 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.
The criteria for a sale being highly probable per IFRS 5 are as follows:
· management is committed to a plan to sell;
· the asset is available for immediate sale;
· an active programme to locate a buyer has been initiated;
· the sale is highly probable (within twelve months of classification
as held for sale unless circumstances are beyond the control of the Group);the
asset is being actively marketed for sale at a sales price reasonable in
relation to its fair value; and
· actions required to complete the plan indicate that it is unlikely
that plan will be significantly changed or withdrawn
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 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:
15% per annum; 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
- IAS 8 Definition of Accounting Estimates
- IAS 1 IFRS Practice Statement 2 - Disclosure of Accounting
policies
- IAS 12 Deferred Tax related to Assets and Liabilities arising
from a Single Transaction
- IFRS 7/9 Application and Comparative Information
- 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
2022 2021
£'m £'m
Student rental income 71.4 56.0
Student rental refunds* - (1.8)
Commercial rental income 1.6 1.5
Other income - 0.3
Total revenue 73.0 56.0
*These were Covid-19 related concessions in the prior year. No such
concessions were offered in 2022.
3. PROPERTY EXPENSES
Group
Year ended Year ended
31 December 31 December
2022 2021
£'m £'m
Direct site costs (income generating properties) 5.7 7.0
Technology services 0.6 0.7
Site office and utilities 12.2 10.4
Cleaning and service contracts 3.3 3.0
Repairs and maintenance 2.2 2.0
Total property expenses 24.0 23.1
4. ADMINISTRATIVE EXPENSES
Group
Year ended Year ended
31 December 31 December
2022 2021
£'m £'m
Salaries and Directors' remuneration 7.4 5.3
Legal and professional fees 2.3 2.3
Other administrative costs 1.6 1.5
Depreciation and amortisation 0.6 0.5
IT expenses 0.8 0.5
12.7 10.1
Auditor's fees
Fees payable for the audit of the Group's annual accounts 0.4 0.3
Fees payable for the review of the Group's interim accounts - -
Fees payable for the audit of the Group's subsidiaries 0.1 0.1
Total auditor's fees 0.5 0.4
Abortive acquisition costs 0.2 0.1
Total administrative expenses 13.4 10.6
5. NET FINANCE COST
Group
Year ended Year ended
31 December 31 December
2022 2021
£'m £'m
Finance costs
Interest expense on bank borrowings 14.0 11.6
Amortisation of loan transaction costs 1.0 0.8
Net finance cost 15.0 12.4
6. EMPLOYEES AND DIRECTORS
Company Group
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2022 2021 2022 2021
£'m £'m £'m £'m
Wages and salaries 4.4 3.5 10.7 8.8
Pension costs 0.2 0.1 0.5 0.4
Cash bonus 0.5 - 0.9 0.1
Share-based payments 0.7 0.2 0.7 0.2
National insurance 0.6 0.5 1.1 0.9
6.4 4.3 13.9 10.4
Less: Hello Student(®) employee costs included within property expenses - - (6.5) (5.1)
Amounts included in administrative expenses 6.4 4.3 7.4 5.3
The average monthly number of employees:
Management - Company 8 8 8 8
Administration - Company 52 49 52 49
Operations - Hello Student Management Limited - - 280 238
60 57 340 295
Group
Directors' remuneration Year ended Year ended
31 December 31 December
2022 2021
£'m £'m
Salaries and fees 1.1 1.0
Pension costs 0.1 0.1
Cash bonus 0.3 0.1
Share-based payments 0.6 0.2
2.1 1.4
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
2022 2021
£'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 67.7 29.2
Profit before tax multiplied by the rate of corporation tax in the UK of 19% 12.9 5.5
(2021: 19%)
Exempt property rental profits in the year (6.4) (4.1)
Exempt property revaluations in the year (8.7) (3.3)
Effects of:
Non-allowable expenses 0.2 0.1
Capital allowances - (1.1)
Gain on disposal not taxable - 0.3
Unutilised current year tax losses 2.0 2.6
Total current income tax charge in the income statement - -
No deferred tax asset has been recognised in respect of gross tax losses of
£34.5 million (2021: £20.6 million), accelerated capital allowances of £2.7
million (2021: £2.5 million) and share based payments of £1.5m (of which
£901k relates to the profit and loss account and £619k relates to equity)
(2021: £0.6 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 £9.7 million (2021: £5.2
million) has not been recognised in respect of such timing differences.
The current tax rate used for the year is 19% based on rates already enacted
in previous periods. An increase in the UK corporation rate from 19% to 25%
(effective 1 April 2023) was substantively enacted on 24 May 2021. 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 2022
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 earnings per share is calculated by dividing the earnings attributable
to ordinary shareholders by the weighted average number of ordinary shares
outstanding during the year.
Diluted earnings per share 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 Calculation Calculation Calculation
of basic of diluted of EPRA of EPRA
EPS EPS basic EPS 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:
Changes in fair value of investment properties (Note 11) - - (45.6) (45.6)
Gain on disposal of investment property - - (1.5) (1.5)
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
Year to 31 December 2021
Earnings per IFRS statement of comprehensive income 29.2 29.2 29.2 29.2
Adjustments to remove:
Gain/loss on disposal of investment property - - (1.7) (1.7)
Changes in fair value of investment properties (Note 11) - - (17.6) (17.6)
Earnings 29.2 29.2 9.9 9.9
Weighted average number of shares (m) 603.2 603.2 603.2 603.2
Adjustment for employee share options (m) - 0.3 - 0.3
Total number shares (m) 603.2 603.5 603.2 603.5
Earnings per share (pence) 4.8 4.8 1.6 1.6
9. NET ASSET VALUE PER SHARE
The principles of the three EPRA measures are set out below:
EPRA Net Reinstatement Value: Assumes that entities never sell assets and aims
to represent the value required to reinstate entity assets.
EPRA Net Tangible Assets: Assumes that entities buy and sell assets, which
crystalises unavoidable deferred tax.
EPRA Net Disposal Value: 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 primary NAV measure.
A reconciliation of the three EPRA NAV metrics from IFRS NAV is shown in the
table below.
NAV EPRA NAV measures
EPRA EPRA EPRA
Year ended 31 December 2022 IFRS NTA NRV NDV
£ m £ 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
NAV EPRA NAV measures
Year ended 31 December 2021 IFRS EPRA EPRA EPRA
£ m NTA NRV NDV
£ m £ m £ m
Net assets per Statement of Financial Position 647.6 647.6 647.6 647.6
Adjustments
Fair value of fixed rate debt - - - (14.3)
Purchaser's costs(1) - - 34.2 -
Net assets used in per share calculation 647.6 647.6 681.8 633.3
Number of shares in issue
Issued share capital (m) 603.2 603.2 603.2 603.2
Issued share capital plus employee options (m) 606.6 606.6 606.6 606.6
Net Asset Value per share £ £ £ £
Basic Net Asset Value per share (pence) 107.4
Diluted Net Asset Value per share (pence) 106.7 106.7 112.4 104.4
(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
2022 2021
£ m £ m
Interim dividend of 2.50 pence per ordinary share in respect of the quarter - 15.1
ended 30 September 2021
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
15.2 15.1
As at 31 December 2022 there was no accrual relating to withholding tax on the
2022 dividend (2021: £1.5 million). On 16 March 2023 the Company declared a
dividend of 0.875 pence per share to be paid on 14 April 2023.
11. INVESTMENT PROPERTY
Year ended 31 December 2022 Group
Investment Investment Total Properties Total
properties properties 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
Group
Year ended 31 December 2021 Investment Investment Total Properties Total
properties properties operational under investment
freehold long assets development property
£ m leasehold £ m £ m £ m
£ m
As at 1 January 2021 849.2 132.1 981.3 23.8 1,005.1
Capital expenditure 6.2 1.8 8.0 7.4 15.4
Sale of investment property (16.3) - (16.3) - (16.3)
Transfer to held for sale asset (25.9) - (25.9) - (25.9)
Change in fair value during the year 22.3 (2.2) 20.1 (2.5) 17.6
As at 31 December 2021 835.5 131.7 967.2 28.7 995.9
During the year £15.2 million (31 December 2021: £8.0 million) of additions
related to capital expenditure were recognised in the carrying value of the
operational portfolio.
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 2022, 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. 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 Group 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
2022 2021
£ m £ m
Value per independent valuation report 1,078.9 1,021.3
Add: Head lease 0.5 0.5
Deduct: Assets held for sale (13.7) (25.9)
Fair value per Group Statement of Financial Position 1,065.7 995.9
Fair Value Hierarchy
The following table provides the fair value measurement hierarchy for
investment property:
Quoted
prices Significant Significant
inputs observable unobservable
markets inputs inputs
Total (Level 1) (Level 2) (Level 3)
Date of valuation 31 December 2022 £ m £ m £ m £ m
Assets measured at fair value:
Student properties 1,046.5 - - 1,046.5
Commercial properties 19.2 - - 19.2
As at 31 December 2022 1,065.7 - - 1,065.7
Quoted prices Significant Significant
in active observable unobservable
markets inputs inputs
Total (Level 1) (Level 2) (Level 3)
Date of valuation 31 December 2021 £ m £ m £ m £ m
Assets measured at fair value:
Student properties 976.9 - - 976.9
Commercial properties 19.0 - - 19.0
As at 31 December 2021 995.9 - - 995.9
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 properties 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 £91 per week-£461 per week with a weighted
average weekly rent of £184 (31 December 2021: £85-£387 per week, weighted
average £179).
(b) Unobservable input: Rental growth
The estimated average increase in rent based on both market estimations and
contractual arrangements. Assumed rental growth of 5.22% used in valuations
(31 December 2021: decline of 1.56%).
(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: 4.50%-8.65%, with a weighted average of 5.2% (31 December 2021:
4.25%-8.15%, weighted average 5.3%).
(d) Unobservable input: Physical condition of the property
At the interim we indicated we would spend £37 million on health and safety
works over the next five years. CBREs assumption is that £24.4 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.
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
As at 31 December 2022 £ m £ m £ m £ m £ m
(Decrease)/increase in the fair value of the investment properties (3.4) (43.3) 45.6 54.3 (47.2)
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
As at 31 December 2021 £m £ m £ m £ m £ m
(Decrease)/increase in the fair value of the investment properties (2.4) (41.5) 40.7 48.5 (44.9)
(g) The key assumptions for the commercial properties are net initial
yield, current rent and rental growth. A movement of 3% in passing rent and
0.25% in the net initial yield will not have a material impact on the
financial statements.
12. INTANGIBLE ASSETS
Group Company
Year ended 31 December 2022 Hello Student(®) NAVision Total NAVision Total
website development £'m development £'m
development £'m £'m
£'m
Costs
As at 1 January 2022 0.9 2.2 3.1 2.2 2.2
Additions - 0.8 0.8 0.8 0.8
As at 31 December 2022 0.9 3.0 3.9 3.0 3.0
Amortisation
As at 1 January 2022 0.9 0.9 1.8 0.9 0.9
Charge for the year - 0.2 0.2 0.2 0.2
As at 31 December 2022 0.9 1.1 2.0 1.1 1.1
Net book value
As at 31 December 2022 - 1.9 1.9 1.9 1.9
Group Company
Year ended 31 December 2021 Hello Student(®) NAVision Total NAVision(1) Total
website development £ m development £ m
development £ m £ m
£ m
Costs
As at 1 January 2021 0.9 1.6 2.5 1.6 1.6
Additions - 0.6 0.6 0.6 0.6
As at 31 December 2021 0.9 2.2 3.1 2.2 2.2
Amortisation
As at 1 January 2021 0.8 0.7 1.5 0.7 0.7
Charge for the year 0.1 0.2 0.3 0.2 0.2
As at 31 December 2021 0.9 0.9 1.8 0.9 0.9
Net book value
As at 31 December 2021 - 1.3 1.3 1.3 1.3
13. PROPERTY, PLANT AND EQUIPMENT
Group Company
Year ended 31 December 2022 Fixtures and Computer Total Fixtures and Computer Total
fittings equipment £'m fittings equipment £'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
Group Company
Year ended 31 December 2021 Fixtures and Computer Total Fixtures and Computer Total
fittings equipment £'m fittings equipment £'m
£'m £'m £'m £'m
Costs
As at 1 January 2021 0.5 0.3 0.8 0.5 0.2 0.7
Additions 0.4 0.1 0.5 0.4 - 0.4
As at 31 December 2021 0.9 0.4 1.3 0.9 0.2 1.1
Depreciation
As at 1 January 2021 0.5 0.2 0.7 0.5 0.2 0.7
Charge for the year 0.1 0.1 0.2 0.1 - 0.1
As at 31 December 2021 0.6 0.3 0.9 0.6 0.2 0.8
Net book value
As at 31 December 2021 0.3 0.1 0.4 0.3 - 0.3
14. TRADE AND OTHER RECEIVABLES
Group Company
31 December 31 December 31 December 31 December
2022 2021 2022 2021
£ m £ m £ m £ m
Trade receivables 1.4 2.5 - -
Other receivables 2.2 1.8 0.1 0.1
Prepayments 3.2 2.9 0.1 0.2
VAT recoverable 0.2 0.6 0.1 -
7.0 7.8 0.3 0.3
Amounts due from Group undertakings - - 400.5 369.0
7.0 7.8 400.8 369.3
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.
Movements on the Group provision for impairment of trade receivables were as
follows:
Group
31 December 31 December
2022 2021
£ m £ m
At 1 January (1.5) (1.4)
Increase in provision for receivables impairment (0.4) (0.1)
At 31 December (1.9) (1.5)
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 large,
unrelated and living with us. As such we have regular communication with them.
At 31 December 2022, 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 (2021: £nil). There are no security obligations related to
these amounts due from Group undertakings.
15. HELD FOR SALE ASSETS
Management considers that one property (2021: five properties) meets the
conditions relating to assets held for sale under IFRS 5: Non-current Assets
Held for Sale. Contracts were exchanged for the sale of the Emily Davies
property in Southampton for £13.9 million in December 2022. Completion is
expected within the first half of 2023, subject to satisfactory completion of
works relating to fire doors. The fair value of this property in these
financial statements is £13.7 million (2021: £25.9 million).
All Non-current Assets Held for Sale fall within 'Level 3' as defined by IFRS.
There has 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
2022 2021 2022 2021
£ m £ m £ m £ m
Cash and cash equivalents 55.8 37.1 4.3 2.0
17. TRADE AND OTHER PAYABLES
Group Company
31 December 31 December 31 December 31 December
2022 2021 2022 2021
£ m £ m £ m £ m
Trade payables 1.9 5.1 0.6 3.3
Other payables 5.4 2.1 0.3 0.2
Accruals 17.5 12.8 2.2 1.6
24.8 20.0 3.1 5.1
Amounts owed to Group undertakings - - 87.8 27.2
24.8 20.0 90.9 32.3
At 31 December 2022, there was deferred rental income of £33.1 million (2021:
£29.9 million) which was rental income that had been charged that relates to
future periods.
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.
18. BANK BORROWINGS
A summary of the drawn and undrawn bank borrowings in the year is shown below:
Group
Bank Bank Bank Bank
borrowings borrowings borrowings borrowings
drawn undrawn Total drawn undrawn Total
31 December 31 December 31 December 31 December 31 December 31 December
2022 2022 2022 2021 2021 2021
£ m £ m £ m £ m £ m £ m
At 1 January 375.0 67.5 442.5 390.0 52.5 442.5
Bank borrowings drawn in the year 36.2 (36.2) - - - -
Bank borrowings repaid or cancelled during the year (20.0) (11.3) (31.3) (15.0) 15.0 -
At 31 December 391.2 20.0 411.2 375.0 67.5 442.5
There is an undrawn RCF debt facility available of £20 million at 31 December
2022 (2021: £45 million). The weighted average term to maturity of the
Group's debt as at the year end is 4.8 years (2021: 4.9 years). The Company
repaid a separate facility of £20 million prior to the year end (31 December
2021 balance: £19.9 million). 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
£1,042.9 million at 31 December 2022 (2021: £977.1 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
31 December 31 December
2022 2021
Non-current £ m £ m
Balance brought forward 330.0 390.0
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 - (45.0)
Less: Bank borrowings repaid during the year (20.0) (15.0)
Bank borrowings drawn: due in more than one year 391.2 330.0
Less: Unamortised costs (4.7) (3.8)
Bank borrowings due in more than one year 386.5 326.2
Group
31 December 31 December
2022 2021
Current £ 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 - 45.0
Bank borrowings drawn: due in less than one year - 45.0
Less: Unamortised costs - (0.3)
Bank borrowings due in less than one year - 44.7
Maturity of Bank Borrowings
Group
31 December 31 December
2022 2021
£ m £ m
Repayable in less than one year - 45.0
Repayable between one and two years 64.0 20.0
Repayable between two and five years 70.0 52.8
Repayable in over five years 257.2 257.2
Bank borrowings 391.2 375.0
Each of the Group's facilities has an interest charge which is payable
quarterly. Three 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 4.0% (2021: 3.0%).
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
2022 2021
£ m £ m
Carrying value of fixed rate borrowings 277.2 277.2
Fair value adjustment (15.3) 14.3
Fair value of fixed rate borrowings 261.9 291.5
The Group has bank loans with a total carrying value of £391.2 million,
including the carrying value of fixed rate borrowings of £277.2 million. The
fair value equivalent at the reporting date of the fixed rate debt was £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 £1.3 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 £1.3 million.
19. SHARE CAPITAL
Group and Company Group and Company
31 December 31 December 31 December 31 December
2022 2022 2021 2021
Number £ m Number £ m
Balance brought forward 603,203,052 6.0 603,160,940 6.0
Share options exercised (including dividend equivalence) 148,828 - 42,112 -
Balance carried forward 603,351,880 6.0 603,203,052 6.0
During the year there were two issues of 56,810 and 92,018 shares on 10 July
and 17 August 2022 respectively. These related to exercise of options under
the deferred bonus scheme and save as you earn share plans.
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
2022 2021
£ 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
2022 2021
£ m £ m
Balance brought forward 459.9 475.0
Less interim dividends declared and paid per Note 10 (15.2) (15.1)
Balance carried forward 444.7 459.9
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
2022 2021
£ m £ m
Less than one year 56.2 42.9
Between one and two years 1.5 1.4
Between two and three years 1.4 1.4
Between three and four years 1.3 1.3
Between four and five years 1.1 1.3
More than five years 6.0 7.8
Total 67.5 56.1
The above relates to assured shorthold tenancies (AST's) and commercial leases
in place as at 31 December 2022. The impact of student leases for the
forthcoming academic year signed by 31 December 2022 have not been included as
the certainty of income does not arise until the tenant takes occupation of
the accommodation. As at 31 December 2022, £31.1 million (31 December 2021:
£32.0 million) of the future minimum lease receivables have been received as
cash.
23. CONTINGENT LIABILITIES
There were no contingent liabilities at 31 December 2022 (31 December 2021:
£nil).
24. CAPITAL COMMITMENTS
The Group was contractually committed to expenditure of £2.3 million at 31
December 2022 (31 December 2021: £8.6 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 10 July 2022 56,810 shares were issued to a former Director and certain
employees under the Save As You Earn scheme.
On 17 August 2022 92,018 shares were issued to Lynne Fennah, a Director, upon
her exercise of options under the Deferred Bonus Scheme.
Share-based Payments
On 24 March 2022, the Company granted nil-cost options over a total of
1,292,559 (Duncan Garrood 721,898 and Lynne Fennah 570,661) ordinary shares
pursuant to the Empiric Long Term Incentive Plan for the 2021 financial year.
Following Lynne Fennah's resignation, 554,784 of her awards lapsed and the
15,877 awards relating to the deferred bonus element remained.
Details of the Director share ownership and dividends received are included
int the Directors' Remuneration Report.
Details of the shares granted and exercised are outlined in Note 27.
26. SUBSEQUENT EVENTS
On 31 January 2023, contracts were exchange for the sale of Bede Park
(Leicester) for £2.6 million. Completion occurred on 14 February 2023.
The renewal of a £20.0 million flexible unsecured loan facility with First
Commercial Bank completed on 3 February 2023.
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 24 March 2022, the Company granted nil-cost options over a total of
1,292,559 (Duncan Garrood 721,898 and Lynne Fennah 570,661) ordinary shares
pursuant to the Empiric Long Term Incentive Plan for the 2021 financial year.
Following Lynne Fennah's resignation, 554,784 of her awards lapsed and the
15,877 awards relating to the deferred bonus element remained.
During the year, the Company granted nil-cost options over a total of 599,281
ordinary shares to members of the Senior Leadership Team ("SLT") pursuant to
the Empiric Long Term Incentive Plan for the 2021 financial year. Following
resignation of two of the SLT members, 188,292 of these options also lapsed
during the year.
During the year, the Company granted options over a total of 213,655 ordinary
shares in relation to the Save As You Earn scheme at an exercise price of
£0.75. The earliest date on which the options will become exercisable is 1
July 2025.
Of the nil-cost options, 168,389 are currently exercisable. The weighted
average remaining contractual life of these options was 2.0 years (2021: 1.7
years).
During the year to 31 December 2022 the amount recognised relating to the
options was £0.7 million (2021: £0.2 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.
31/12/2022 31/12/2021 31/12/2020 31/12/2019 31/12/2018 31/12/2017
Outstanding number brought forward 3,446,320 2,314,539 1,250,045 1,051,708 1,477,817 3,913,420
Granted during the period 2,430,279 1,725,577 1,064,494 604,134 439,022 207,198
Vested and exercised during the period (127,492) (35,779) - (129,253) (139,325) (691,237)
Lapsed during the period (1,992,233) (558,017) - (276,544) (725,806) (1,951,564)
Outstanding number carried forward 3,756,874 3,446,320 2,314,539 1,250,045 1,051,708 1,477,817
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 £0.88 £0.88 £0.88 £0.85
(b) Exercise price of £nil £nil £nil £0.75
(c) Vesting period 3 years 3 years 3 years 3 years
(d) Expected volatility of N/A 30.0% N/A 28.5%
(e) Expected dividend yield of N/A 3.5% 2.8% 4.4%
(f) Risk-free rate of N/A 1.4% 1.4% 1.6%
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
2022 2021
£ m £ m
Bank borrowings and leasehold liability at start of the year 372.0 385.3
Cash flows from financing activities
Bank borrowings drawn 36.2 -
Bank borrowings repaid (20.0) (15.0)
Lease liability paid (0.2)
Loan arrangement fees paid (1.6) (0.2)
Non-cash movements
Amortisation of loan arrangement fees 1.0 0.8
Recognition of lease liabilities 0.4 1.1
Bank borrowings and leasehold liability at end of the year 387.8 372.0
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 Group
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 A2 Stable
Scottish Widows A2 Stable
Lloyds Bank Plc A1 Stable
Natwest A3 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 currently there are none. 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 groups 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 25 per
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
Less than 3 3 to 12 1 to 5
On demand months months years > 5 years Total
£ m £ 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
Group
Less than 3 3 to 12 1 to 5
On demand months months years > 5 years Total
£ m £ m £ m £ m £ m £ m
At 31 December 2021
Bank borrowings and interest - 3.2 54.4 194.2 189.1 440.9
Trade and other payables - 20.0 - - - 20.0
- 23.2 54.4 194.2 189.1 460.9
Company
Less than 3 3 to 12 1 to 5
On demand months months years > 5 years Total
£ m £ 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
Company
Less than 3 3 to 12 1 to 5
On demand months months years > 5 years Total
£ m £ m £ m £ m £ m £ m
At 31 December 2021
Bank borrowings and interest - 0.1 0.4 20.1 - 20.6
Trade and other payables - 5.0 - - - 5.0
- 5.1 0.4 20.1 - 25.6
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 2022, 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
2022 2021
£'m £'m
As at 1 January 187.6 187.6
Additions in the year 41.4 -
Disposals (6.4) -
Balance at 31 December 222.6 187.6
During the current and prior 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 (Glasgow George Square) Leasing Limited Dormant 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 Active 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 (Stirling Forthside) Leasing Limited Dormant 100% Property Leasing
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% Immediate Holding Company
Empiric Investment Holdings (Two) Limited Active 100% Holding Company
Empiric Investment Holdings (Three) 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
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
31 December 31 December
2022 2021
Gross Margin £ m £ m
Revenue 73.0 56.0
Property Expenses (24.0) (23.1)
Gross profit 49.0 32.9
Gross Margin calculated as Gross profit/Revenue 67.1% 58.8%
Total Return ("TR") - 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.
Group
31 December 31 December
2022 ((1)) 2021
Total Return £ m £ m
EPRA NTA per share at start of year 106.7 105.0
EPRA NTA per share at end of year 115.4 107.4
NTA growth per share in period 8.7 2.4
Dividend per share 2.5 2.5
Dividends plus growth in NTA 11.2 4.9
Total return calculated as Dividends plus EPRA NTA Growth in year per share/ 10.5% 4.6%
NTA at start of year
((1) EPRA NTA per share calculated on a fully dilutive basis, in line with
EPRA guidance.)
Property Loan-to-value ("LTV") - A measure of gearing. A business KPI
monitored to ensure the group remains in line with our long-term target of
< 35 per cent.
Group
31 December 31 December
2022 2021
Property Loan to value ("LTV") £ m £ m
Bank borrowings drawn 391.2 375.0
Less cash held at the year end (55.8) (37.1)
Net borrowings 335.4 337.9
Property valuation 1,078.9 1,021.3
Property LTV calculated as net borrowings / property valuation 31.1% 33.1%
Dividend cover - a measure of EPRA earnings relative to dividends declared for
the year. This was 124 per cent for the year (2021: 64 per cent).
Dividend pay out ratio - a measure of dividends relative to EPRA earnings.
This was 81 per cent for the year (2021: 156 per cent).
FIVE YEAR HISTORICAL RECORD
31 December 31 December 31 December 31 December 31 December
2022 2021 2020 2019 2018
£ m £ m £ m £ m £ m
Revenue 73.0 56.0 59.4 70.9 64.2
Direct costs (24.0) (23.1) (22.7) (23.4) (24.5)
Gross profit 49.0 32.9 36.7 47.5 39.7
Gross margin 67.1% 58.8% 61.8% 67.0% 61.8%
Administrative expenses (13.4) (10.6) (9.8) (9.2) (9.1)
Operating profit 35.6 22.3 26.9 38.3 30.6
Property revaluation 45.6 17.6 (37.6) 29.2 22.4
Finance costs (15.0) (12.4) (13.3) (12.7) (12.7)
Gain or loss on disposals 1.5 1.7 - - -
Net profit 67.7 29.2 (24.0) 54.8 40.3
EPRA EPS (pence) 3.41 1.65 2.26 4.22 2.97
Portfolio valuation 1,065.7 995.9 1,005.1 1,029.1 971.0
Borrowings (386.5) (371.0) (385.3) (349.8) (324.3)
Other net assets/liabilities 21.6 22.7 13.5 (14.5) (6.8)
Net assets 700.8 647.6 633.3 664.8 639.9
EPRA NTA 700.8 647.6 633.3 664.8 639.9
EPRA NTA per share 115.4 106.8 104.6 110.0 106.0
Share in issue 603,351,880 603,203,052 603,160,940 603,160,940 602,887,740
Weighted average cost of debt 4.0% 3.0% 2.9% 3.2% 3.3%
Weighted average debt maturity 4.7 years 4.9 years 5.9 years 6.6 years 7.6 years
Property LTV 31.1% 33.1% 35.4% 32.9% 30.6%
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 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 EPS - EPRA Earnings divided by the weighted average number of ordinary
shares.
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 - Homes of multiple occupants.
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 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.
Post-Grad - Post-graduate 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 3828 8700
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
Vintners Place
68 Upper Thames Street
London EC4V 3BJ
Broker and Joint Financial Adviser
Peel Hunt LLP
7th Floor,
100 Liverpool St,
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,
United Kingdom,
EC2Y 5DN
Registrar
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
External Auditor
BDO LLP
55 Baker Street
London W1U 7EU
Communications Adviser
FTI Consulting LLP
200 Aldersgate
Aldersgate Street,
London,
EC1A 4H
Valuer
CBRE Limited
Henrietta House
Henrietta Place
London W1G 0NB
Tax adviser
KPMG
15 Canada Square
London
E14 5GL
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