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Empiric Student Property plc
Annual Report & Accounts 2022
Our purpose
To help students
make the most of their
university life by creating
and managing some
of the highest quality and
most thoughtfully
designed accommodation,
which is secure, modern
and homely.
Underpinned by our values and culture
Values
The Customer comes first
Our customer experience is of paramount importance to the development of our strategic priorities.
We take ownership
We are reliable, respectful, and responsive. We do what we say we will do.
Culture
Our people are key to the delivery of high-quality, personalised service for our customers. We work tirelessly
to create a team who are diverse & inclusive, agile, proactive, thoughtful, and responsive.
Strategic Report
Highlights
Highlights
Increasing demand for higher education has translated into
strengthening demand for high quality PBSA bedspaces and
significant rental pricing increases for the 2023/24 academic
year, with double-digit rental growth in the best locations.
Financial
EPRA Earnings
Per Share1
3.4p
2021 | 1.7p
Change | +113%
Gross Margin (%)1
67.1%
2021 | 58.8%
Change | +8.3% pts
Total Return (%)1
10.5%
2021 | 4.6%
Change | +5.9%
EPRA NTA
Per Share (p)1
115.4p
2021 | 106.7p
Change | 8.2%
Dividend per Share
2.75p
2021 | 2.5p
Change | +10%
Property Valuation
£1.1bn
2021 | £1.0bn
Change | +2.4% (LfL)
Net initial yield1
5.2%
2021 | 5.3%
Change | -0.1% pts
Property Loan
to Value (%)1
31.1%
2021 | 33.1%
Change | -2.0% pts
1. An alternative performance measure. See page 39 for further details.
Significant earnings growth underpins
strong financial performance
– Revenue increased 30% to £73.0m
– Successful launch of Post-Grad
accommodation pilot in Edinburgh,
providing a platform for further growth
(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 sector’s 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
– 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%
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Strategic Report
Business Model
01
Highlights
02 At a Glance
04 Our market
08
10 Our Strategy
12
16
22
26 Operating Review
30
35
39
Principal Risks and Viability
Financial Review
EPRA and other alternative
performance measures
ESG Report
44
Chairman’s statement
Chief Executive Officer’s Review
Key Performance Indicators
Governance Report
68
70
Board of Directors
Chairman’s Introduction
to Corporate Governance
79 Nomination Committee Report
81
84
105 Directors’ Report
107 Directors’ Responsibilities
Audit and Risk Committee Report
Remuneration Committee Report
Financial Statements
108
115
Independent Auditor’s Report
Group Statement
of Comprehensive Income
116 Group Statement of Financial Position
117 Company Statement of Financial Position
118 Group Statement of Changes in Equity
119 Company Statement of Changes in Equity
120 Group Statement of Cash Flows
121 Notes to the Financial Statements
146 Glossary
147
Company Information
and Corporate Advisers
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At a Glance
Home
from
Home
Empiric offers students some of the
highest quality and most thoughtfully
designed accommodation which
is secure, modern and homely,
and enables them to thrive, learn
and succeed.
Our studio-led properties and customer
first philosophy provides some of the best
experiences available to students. Our
boutique proposition allows our people to
get to know our students and provide a more
personalised, responsive service, such that
we can better support students during their
higher-education journey. Our properties
are typically unique and smaller than most,
incorporating a sense of individual character
and heritage. This helps foster a sense of
community, encouraging our students to
stay with us, creating their Home from Home.
At a Glance
Where we
operate
Scotland
1,165
North East
152
Yorkshire
745
North West
2,057
West
Midlands
1,265
As at 31 December 2022:
Revenue Generating
Assets
85
31 December 2021 | 87
Cities and Towns
28
31 December 2021 | 29
Assets Held
86
31 December 2021 | 91
Beds
Wales
519
South West
1,464
South East
1,166
8,533
31 December 2021 | 9,170
The Empiric portfolio is well aligned
to the high-growth locations with
95%by value classified as either London,
Super Prime Regional or Prime Regional
Beds by region as at
31 December 2022
Scale is representative
of beds by region
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Delivering attractive sustainable
shareholder returns
We target a gross margin of over 70% and annualised
total returns of 7%-9%.
Socially and Environmentally
Responsible
We are a company who is socially and environmentally
responsible. We have set an ambitious net zero target of
no later than 2023 and have allocated significant capital
to invest in decarbonisation initiatives aimed at reducing
energy consumption and manage future EPC risk.
Progressive Culture Embedded
by Core Values and Purpose
Our culture and values are embedded in our business
and in our team.
Investment proposition
Differentiated Business
Model within the Popular
PBSA Property Sector
We target investment in prime regional cities which
attract students from the growing pool of affluent
international, postgraduate and returning
undergraduates, whose premium accommodation
requirements are relatively under-served by the PBSA
market. This segmented supply and demand imbalance
drives both occupancy and rental growth, creating
relatively high-yielding investments which provide
attractive total returns.
Responsible and Industry-
Leading Operating Brand
Hello Student®, our operating brand, has become one
of the most effective, responsible and recognisable
in the sector. In the 2022 Global Student Living Index,
Hello Student® outperformed all benchmarks for student
satisfaction, exceeding the average for university and
private halls. We achieved a positive NPS score of 27;
a higher score compared to the NPS benchmarks for
private halls of 14. We pride ourselves on high quality
customer service and amenities.
Sustainable Long-Term
Business Model
There has been consistently strong growth in student
numbers over the past decade, with strong growth set
to continue for the foreseeable future.
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Financial snapshot
As at 31 December 2022
Portfolio valuation
£1.1bn
2022
2021
£1.1bn
£1.0bn
EPRA NTA1
115.4p
2022
2021
EPRA EPS1
3.4p
2022
2021
115.4p
104.6p
3.4p
1.7p
Total Return1
+10.5%
2022
2021
+4.6%
Dividend per share
2.75p
2022
2021
Property LTV1
31%
2022
2021
+10.5%
2.75p
2.5p
31%
33%
1 An alternative performance measure. See page 39
for further details.
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Our market
Our market
UK PBSA continues
to demonstrate
underlying resilience
Capital value growth
outperformance of
9.1%on 2021
Later in the year, economic uncertainty and rising debt costs
saw yield softening across all UK real estate sectors. However,
as mainstream commercial yields experienced considerable
outward yield shifts, PBSA was less impacted. In the fourth
quarter, prime industrial yields softened 100 bps to 5.0 per
cent and Regional Offices softened 100 bps to 6.0 per cent.
While PBSA yields also softened in the fourth quarter, the
sub-sector was able to show unprecedented rental growth
prospects for academic year 2023/24 that other sectors
could not. This growth has held capital values relatively flat
across the sector with the best in class assets still increasing
in value. The sector continues to be a resilient counter-
cyclical market with a sustained undersupply of high quality
beds caused by significant increase in demand and low new
supply. Student demand continues to strengthen, fuelled by
burgeoning non-EU international student numbers wanting
to study in the UK. Higher Education remains one of the
UK’s most significant exports, with international students
contributing £25.9b to the economy each year and 89 UK
universities placing in the 2023 QS World Rankings, second
only to the US.
Will Atkinson | Property Director
Despite unforeseen market turmoil in the second half
of 2022, the PBSA sector experienced a record setting
year, with the highest investment volumes to date. CBRE
report that £6.7b of PBSA assets traded in 2022 across
70 deals as investors sought to diversify into residential
markets. In the year to September 2022, CBRE report that
PBSA delivered higher total returns and higher capital
growth than the ‘All Commercial Property’ index. CBRE’s
PBSA Index 2022 reports total returns of 16.7 per cent,
with results based on 48,800 beds across 175 assets. This
compares to returns of 7.7 per cent reported in 2021.
Capital value growth (11.3 per cent) was strong in the year,
an outperformance of 9.1 per cent on 2021, driven by
wider market yield compression following the acquisition
of the Student Roost portfolio.
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As often seen in economically uncertain times,
postgraduate numbers have grown significantly. HESA’s
latest dataset reports that an extra 69,800 full-time
postgraduates are studying at UK universities for
the 2021/22 academic year, growth of 10 per cent on
academic year 2020/21. Comparatively, in the same period
undergraduate numbers rose 1 per cent. This growth is
also a continuation of trends seen since the introduction
of the Postgraduate Master’s Loan system in academic
year 2016/17 and the ongoing efforts from universities to
improve research capabilities.
70,000
Growth in Postgraduates AY 2021/22
+10%
Student Demographics
Applicants
Acceptances
Domicile
2021
2022
Change
%
Change
2021
2022
Change
%
Change
UK
EU
Non-EU
Total
604,010
611,900
7,890
1.3%
492,005
489,360
-2,645
-0.5%
31,475
24,015
-7,460
-23.7%
15,770
11,365
-4,405
-27.9%
110,835
125,820
14,985
13.5%
54,285
62,455
746,120
761,740
15,415
2.1%
562,060
563,180
8,170
1,120
15.1%
0.2%
Source: UCAS End of Cycle Report 2022
Growing
demand for
accommodation
Increased demand for higher education has translated into
strengthening demand for high-quality PBSA bedspaces
and significant rental pricing increases for the 2023/24
academic year, with double-digit rental growth seen in
the best locations. In UCAS’s latest End of Cycle Report,
statistics for the 2022 admissions cycle were published.
In 2022, 761,740 students applied to higher education
institutions in the UK, 15,415 (+2.1 per cent) higher than 2021.
The strongest growth, being applications from non-EU
domiciled students, rose 13.5 per cent to 125,820 following
a 12.8 per cent increase in 2021. Notably, Indian student
numbers have been boosted by the country’s flourishing
internationally mobile population and the UK’s ‘Post-Study
Work Visa’ policy. From just 0.9 per cent of the full-time
student population in academic year 2015/16, Indian
students grew to 3.5 per cent of students in academic
year 2020/21. Together, Chinese and Indian students now
account for one in four non-EU internationals studying in
the UK. This follows the UK’s original International Education
Strategy which targeted international students to fund UK
universities. In a contradictory vein to this strategy, the UK
government considered restricting international student
numbers particularly at low ranked universities as a short-
sighted mechanism to control migration, but no further
action has been taken following considerable feedback
from Universities.
Applications from UK domiciled students rose in 2022,
explained by the continuing demographic surge in
18-year-olds in the UK and perceptions of a weakening job
market and resulting employment prospects. This trend
is set to continue, with the number of 18-year-olds set to
increase by over 160,000 in the next decade. Offsetting
the growth, applications from EU domiciled students fell
for the second year by 24 per cent to 24,015 after falling
39 per cent in 2021. EU students now account for only 2.8
per cent of the UK student demand pool.
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Our market | continued
Constrained
Development
Pipeline
Despite evolving Government Policy,
any proposed reduction in international
student numbers would not address
the fundamental shortage of PBSA.
There continues to be a deteriorating
undersupply of high-quality
accommodation in the sector for several
reasons, although this is highly nuanced
and location specific. Escalating build
costs, wider inflationary pressures,
skills shortages and financing costs all
represent challenges for developers.
Furthermore, non-professional landlords
have been hit by tougher HMO (Houses in
Multiple Occupation) regulations, stamp
duty changes and reforms to strengthen
renters’ rights. Amid an environment
of ongoing uncertainty academic year
2021/22 saw the delivery of just 24,612
new beds. This was only 677 higher than
academic year 2020/21 and almost 25
per cent lower than the 5-year average
before the pandemic. This compares to
the 90,745 extra full-time students that
enrolled for the 2021/22 academic year
and require accommodation.
Despite a slowdown in supply of new
PBSA beds, proposed development
beyond academic year 2022/23 remains
substantial at 95,000 beds with 69,500
granted planning permission. 24,000
beds have entered the planning system
in the last 12 months, but just five
markets represent half of all beds in the
Investor
Activity and
Transactions
The demand for high-quality PBSA stock
remains at unprecedented levels. In 2022,
PBSA was one of the only real estate
sectors to see a positive increase in total
investment volumes, with a record £6.7b of
assets traded. Over half of this volume was
accounted for by GIC and Greystar’s £3.3b
acquisition of Student Roost, completing
in December following CMA approval
after the deal was agreed in the summer.
The year began with pent-up demand to
deploy capital, culminated in January 2022
being the highest January for transaction
volumes on record by over £250m. Despite
economic headwinds in the second half
of 2022, UK PBSA saw £397m of assets
trade across 13 transactions in the third
quarter. The launch of strong rental pricing
for academic year 2023/24 underpinned
investor confidence in the fourth quarter,
with City Developments Limited investing
£216m in PBSA for 5 regional assets.
However, economic uncertainty caused
£1.5bn of potential deals to be paused or
aborted in the fourth quarter.
A key trend in 2022 was the appearance of
new entrants such as Clearbell, Heitman,
Ares and Apollo. In May 2022, Watkin
Jones sold three forward funding projects
to relative PBSA newcomers EQT Exeter.
Interest from UK institutional funds such
as abrdn, Aviva and M&G continued,
several of which are seeking to invest into
the direct let side of the sector. In 2022,
pipeline with the largest two (London
and Nottingham) making up nearly
a third. Academic year 2023/24 may
see an acceleration in new beds being
delivered to the market again, with 29,000
planned to open across 45 markets. This
number does not reflect the increase in
properties that are being closed every
year to undertake refurbishment and
EWS works which further reduces the
demand. However, forecasts suggest that
an additional 358,000 Higher Education
places could be needed by 2035 if
demographic and participation trends
continue. At the current rate, with the
annual delivery of beds significantly under
the number required to deal with this
demand and falling, undersupply in the
market is projected to worsen.
91,000
extra full time students enrolled
in AY 2021/22
single asset sales for 2022 amounted to
£1.73b, the highest since 2017. In contrast
the forward funding market has seen less
activity. Eight of the deals that traded in
the third quarter of 2022 were for income
producing assets and accounted for 89
per cent of total investment.
Initially 2023 is likely to bring another
period of ‘pricing discovery’. However,
the lack of quality supply and viability
challenges, combined with underlying
occupational demand should provide
investors with continued confidence as to
resilience of the sector and as a hedge to
broader inflationary pressures.
£6.7bn
2022 investment volumes
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Market Yields
– Best in Class,
Direct Let
Despite the strong fundamentals of the sector, PBSA
yields experienced softening in November 2022. After
yield sharpening in the first half of 2022, a marked
increase in debt costs resulted in a softening of yields in
the fourth quarter, with yields trending weaker into 2023.
CBRE report that between December 2021 and December
2022, Best-In-Class Direct Let Central London and Super
Prime Regional yields softened by 10 bps. Prime Regional
yields remained stable despite movement throughout the
year and Secondary Regional yields softened by 50 bps in
the period, further polarized from the stronger markets.
By comparison, mainstream commercial yields were
impacted more significantly, increasing by between 25
and 50 bps in both October and November. The Empiric
portfolio is well aligned to the best performing locations
with 94 per cent by value classified as either London,
Super Prime Regional or Prime Regional in the December
2022 portfolio valuation.
Despite yield softening and operating costs remaining
subject to inflationary pressures, near double digit rental
growth for the 2023/24 academic year reinforced investor
appetite for high-quality PBSA stock in London and key
regional markets. PBSA continues to represent a good
opportunity for investors to balance their portfolios, with
strong demand feeding through to high occupancy levels
with resilient and growing income streams.
94%by value classified as either Central
London, Super Prime Regional, Prime
Regional, Secondary Regional
Central London
Super Prime Regional
Prime Regional
Secondary Regional
Source: CBRE Student Sector Investment Yields, December 2022.
December 2022
December 2021
Current
Trend
Current
Trend
3.75%
4.75%
5.00%
8.50%
Weaker
Weaker
Weaker
Weaker
3.65%
4.65%
5.00%
8.00%
Stronger
Stronger
Stronger
Stable
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Business Model
Our business model
combines a high-quality,
characterful portfolio of
Purpose-Built Student
Accommodation with
an efficient in-house
operational platform,
designed to grow and
create long-term
sustainable returns
for our Stakeholders.
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Business Model
Key strengths
How we add value
Portfolio
We have an attractive, characterful
portfolio that offers high-quality,
well located accommodation for
our customers.
Our people
Our people are key to our Customer
journey. Our passionate and
committed colleagues allow us
to deliver hassle-free student
accommodation with a sense of
community and belonging that
supports mental health and wellbeing.
Specialist knowledge
We have a knowledge to develop,
acquire and operate high-quality,
sustainable student accommodation.
Brand
Hello Student® is a leading brand
providing clear identity in the
PBSA market.
Data analytics
We drive improvements in customer
experience and performance through
data analytics. We seek to understand
behavioural characteristics using
both geographic and demographic
segmentation.
Financing
We have an appropriately leveraged
balance sheet with strong liquidity
allowing the business to be proactive
and capitalise on opportunities as
they arise
Our culture
Our people and customers are our key focus and
we are here to deliver excellent seamless service
and financial returns through working together.
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Creating
homely, modern,
vibrant
communities
for discerning
customers
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Operat e
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Locations/specifications
We are selective about where we invest, with a
focus on the towns and cities that are home to the
most successful universities and where student
numbers are rising faster than average. We select
sites based on their compatibility with the types
of accommodation we provide and their proximity
to universities and amenities.
Our buildings have on average around 100 beds,
which helps to foster a more homely, collegiate
feeling to living. However, through our clustering
strategy we are able to yield the economies of
scale which are generated from larger buildings.
Develop/acquire
Developing assets allows us to acquire them at
a greater yield on cost than acquiring standing
assets. Forward-funded projects are typically less
complex than direct developments and have a
lower risk profile, as the planning and construction
and risk lies with the third-party developer. These
projects also have lower staffing requirements and
benefit from a forward-funding coupon charged
to the developer. However, we have a strong and
proven track record in direct development too.
We also acquire standing assets when a specific
opportunity arises which complements our
portfolio.
Operate
Our assets are marketed through our Hello
Student® platform, a clear and Identifiable brand.
Encouraging our people to live our values helps
ensure that customers have the best experience
possible, driving improved occupancy and returns.
We have a student welfare programme in place to
ensure that we provide the 24/7 support that our
customers can expect when they stay with us.
Recycle
We invest in our portfolio for the long term,
however we continually review the portfolio to
ensure capital is effectively allocated. Where an
opportunity exists to create improved returns for
shareholders we are unemotive about recycling
capital to create greater value.
Outcome
Customers
Our customers benefit from having a great home to
live in during their studies, at all-in rent that represents
best value.
NPS in the Global Student Living Index
+27
Higher than PBSA private hall average +14
Shareholders
Shareholders benefit from Total Returns which are
underpinned by income and continued rental growth.
Total accounting return
10.5%
Our people
Our people have the opportunity to develop their
careers in an exciting and growing sector.
Colleague Engagement Score
84%
Suppliers
Fostering long-term relationships with high performance,
service-oriented suppliers and service providers who
align with our values.
Communities
The communities in which we operate benefit from
increased employment, reduced pressure on local
housing stock, and from the improvements we fund
to social infrastructure in the surrounding area.
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Our Strategy
Delivering
against our
strategic
objectives.
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Our Strategy
2. Brand
Strategic objective
We want to raise awareness of the Hello
Student® brand among students, to support
our premium accommodation and service
offering. We want to become known as a
responsible provider.
1. Customers
Strategic objective
Our customers are at the heart of what we
do. We want our customers to have a great
experience and stay with us year after year
and to recommend us to their friends. We
aim to achieve customer satisfaction by
creating vibrant communities in our homes
and by giving our customers a sense of safety,
wellbeing and belonging in an environment of
high-quality communal areas and facilities.
We aim to deliver a friendly personalised
service and be there when our customers
need us.
Progress in the year
– Our net promoter score was +27, compared
to PBSA private hall average +14.
– Launched our Hello Student app to
improve engagement and service.
Progress in the year
– Rebranded Hello Student strengthening
our proposition to drive conversion and
retention.
– Launched our Hello Student app.
– Launched our first bespoke post-grad
– Improved further our NPS score.
product.
– Winner of 2022 Best Student Wellbeing
award (UK & Ireland).
– Launched our first bespoke post-grad
product, extending the brand’s reach.
Associated KPIs
Associated KPIs
A
B C D
F
A
B C D G H
Key aims for 2023
– Continue to increase our NPS score.
– Target resolution of service requests
within 72 hours.
– Improve customer safety satisfaction
scores as measured by Global Student
Living Index.
Key aims for 2023
– Develop brand experience proposition
to define what a customer can expect to
experience from Hello Student.
Associated risks
Associated risks
E1
E3
I3
I4
E1
I1
I2
I3
I4
KPI Links
A. Rebooker Rate
B. Net Promoter Score
C. Revenue Occupancy
D.
Safety – Number
of Accidents
E.
F.
Colleague
Engagement
Energy consumed
per bed
G. EPC risk mitigation
H. Gross Margin
I.
EPRA earnings per
share
J. Dividend Cover
K.
EPRA Net Tangible
Assets per share
L. Total Return
Risks Links
External Risks
E1. Revenue Risk
E2. Property Market Risk
E3. Financing risk
E4. Inflation risk
Internal Risks
I1. Health and Safety Risk
I2. Information
technology risk
I3. People Risk
I4. Safe and Sustainable
Buildings Risk
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3. Our People and Operations
Strategic objective
We are committed to making Empiric “a great
place to work” and destination of choice for
candidates wanting to work in the student
accommodation sector; through this we
will be able to deliver a high standard of
customer service.
We will continually enhance our in-house
functions and performance coach our
colleagues to help them provide the best
and most efficient customer service
experience.
4. Building
Strategic objective
We will maximise the value from the asset
portfolio by actively managing the portfolio
to recycle capital and to improve returns and
sustainability. This is achieved by maintaining
a portfolio of well located investments with
attractive yields and rental growth
opportunities.
5. Shareholders
Strategic objective
We want to provide our shareholders
with attractive sustainable returns. This is
achieved through improving the profitability,
performance and scale of our portfolio.
Progress in the year
– Best companies survey, One Star
Accreditation Award.
– Launched leadership development
programme.
– Real Living Wage employer.
– Significant reduction in employee
turnover.
Progress in the year
– Continue non-core asset disposal
programme with over £50 million
generated from sales in 2022.
– Completed acquisition and development
in Bristol, doubling our available beds
in this undersupplied city, improving
gross margins.
Progress in the year
– Restarted quarterly dividend payments
on a fully covered basis.
– Delivered a total accounting return of
10.5% for the year.
– Launched Net Zero strategy.
– Consulted with largest shareholders
regularly throughout the year.
Associated KPIs
Associated KPIs
Associated KPIs
A
B C D
E
A
B C D
F G H
A B C D F G
H
I
J
K
L
Key aims for 2023
– Continue to improve employee
engagement scores.
Key aims for 2023
– Materially complete non-core disposal
Key aims for 2023
– Deliver progressive dividend, targeting
programme.
a minimum payment of 3.25p
(+18% on 2022).
– Focus on growing internal promotions.
– Refurbish over 250 rooms for launch of
– Achieve health & safety compliance
score above 95%.
new academic year.
– Improve overall EPC ratings and energy
– Execute strategy, by clustering buildings
and delivering on our priorities.
intensity of our properties.
– Leverage operational platform for
Associated risks
E1
E3
I1
I2
I3
I4
Associated risks
E1
E2 E4
I1
I2
I4
growth.
Associated risks
E1
E2 E3
E4
I1
I2
I3
I4
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KPI Links
A. Rebooker Rate
B. Net Promoter Score
C. Revenue Occupancy
D.
Safety – Number
of Accidents
E.
F.
Colleague
Engagement
Energy consumed
per bed
G. EPC risk mitigation
H. Gross Margin
I.
EPRA earnings per
share
J. Dividend Cover
K.
EPRA Net Tangible
Assets per share
L. Total Return
Risks Links
External Risks
E1. Revenue Risk
E2. Property Market Risk
E3. Financing risk
E4. Inflation risk
Internal Risks
I1. Health and Safety Risk
I2. Information
technology risk
I3. People Risk
I4. Safe and Sustainable
Buildings Risk
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Chairman’s statement
Chairman’s statement
We have transformed the capability of the business to
deliver a best in class operational platform, positioning
it well for long-term growth. Our direct-let strategy has
contributed to a strong recovery post pandemic and
we remain extremely encouraged by the outlook for the
business and the wider sector in which we operate.
Mark Pain | Non-Executive Chairman
Positioning
for Long-Term
Growth
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The strong recovery in occupancy post pandemic has
continued a pace, with record occupancy achieved for
the academic year 2022/23, and the continued demand
for premium quality accommodation with high levels of
customer service clearly outstripping supply. Our dynamic
pricing model has delivered tangible benefits, allowing us
capitalise on our direct-let model and deliver strong like-
for-like rental growth.
Despite the market volatility, we have continued to
optimise the portfolio to drive improved returns, with a
total accounting return of 10.5 per cent recorded across
the year. The broadened appeal of our proposition allows
us to proactively change student mix when required and
the launch of our bespoke Post-Grad product, “Post-Grad
by Hello Student”, has been a resounding success.
Valuation demonstrates resilience
Fair value gains on the Group’s property portfolio have
been recorded during the year, most notably in the first
half. We are encouraged by the relative resilience of the
purpose built student accommodation sub-sector, which
has supported valuation gains during the second half of
the year, a period when other real estate sub-sectors have
experienced significant outward shift in investment yields
leading to falling valuations. In challenging conditions,
the Group has made reasonable progress in its non-
core disposal programme, which once completed, will
further improve the overall quality and performance of the
portfolio.
Governance
The Board has met regularly throughout the year by
way of formal meetings, informal calls and during an
annual strategy away day. The Board delegates certain
responsibilities to its Committees which also meet
throughout the year. Details of Board operations and the
reports from its various Committees can be found on
pages 73-104.
Building a sustainable business
As can be seen within our ESG report, at the core of our
proposition is a commitment to create a sustainable
business with a social and economic legacy for all
stakeholders.
In August 2022 we published the Group’s Net Zero
strategy. We target to achieve net zero as a business by
2033 and have set out seven key performance indicators
that will enable us to track our progress against this
commitment. We have accelerated our investment in
green initiatives, having allocated up to £5 million in 2023
toward advancing our environmental pathway with the
aim of making our buildings more energy efficient, less
carbon emitting and to further manage future EPC risk
across the portfolio.
The Group continues to champion well-being initiatives
for our customers and employees. Hello Student hosts
a calendar of social events throughout the year and
students also have 24/7 access to our welfare programme.
Separately, employees are able to access resources
aimed at promoting health, personal finance, mindset
and nutrition.
The business has selected Switch 180 as its corporate
charity in 2023. Switch 180 is a national youth charity
targeting children up to young adults of 21 years. The
charity aims to help turn around young people’s lives
by delivering services focusing on physical and mental
health. We’re excited to be starting our relationship with
Switch 180 and there will be opportunities for our teams
and our customers to get involved and raise money for
this worthy cause.
Health and Safety
Health and Safety is a critical area of attention for the
Board. We continue to enhance our monitoring and invest
in prevention and mitigation to ensure our buildings are
as safe and secure as possible. We continue to focus, in
particular, on ensuring that our approach to fire safety takes
full cognisance of current and emerging best practice. We
have recruited an experienced Health and Safety manager
who reports directly to the CEO and oversees all aspects of
fire risk assessment and management.
Students have access to our
welfare programme
24/7
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Chairman’s statement | continued
Board appointments and succession
In early 2022, Stuart Beevor informed the Board of his
intention to retire as a Non-Executive Director and Chair
of the Remuneration Committee and not seek re-election
at the Annual General Meeting in May 2022. Stuart had
served on the Board for over six years, providing valuable
insights and strong leadership of the Remuneration
Committee. It is without question that the Board
benefitted significantly from his expertise, commitment
and wise counsel over the years. Stuart left the business
in May with our sincere thanks and very best wishes for
the future.
In April, Alice Avis, the Company’s Senior Independent
Director, kindly agreed to assume the Chair of the
Remuneration Committee, having served as a member of
that Committee since joining the Board in 2019.
On 1 July 2022, Clair Preston-Beer was appointed as an
independent Non-Executive Director of the Company. Clair
brings a wealth of experience in leading high performance
retail and hospitality businesses. Clair is currently
managing Director of Greene King Pubs. Previously, Clair
spent 16 years working for the Whitbread PLC group in
a range of senior leadership roles both in the UK and
internationally. It has been a pleasure to welcome Clair
to the Board.
In May 2022, Lynne Fennah advised the Board of her
intention to stand down as the Company’s Chief Financial
and Sustainability Officer in order to pursue other interests.
Following the conclusion of a market wide search across a
number of related sectors and a selection process applied
to a diverse short list, the Board announced in August 2022
that Donald Grant would join the Board in September 2022
as Chief Financial and Sustainability Officer Designate.
Donald is an experienced CFO having held Board and
executive level responsibilities across a breadth of senior
finance roles, primarily within listed real estate companies
and major financial services firms.
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Following an orderly handover, Lynne stepped down from
in Board in October 2022. Lynne leaves with the Board’s
best wishes and thanks for the significant contribution
she made to the business during her five years in post.
Looking ahead
The attractiveness of the UK’s top quality universities
continues to drive growth in student numbers both
domestically and internationally.
The Board evaluation concluded that the Board and its
Committees continued to operate effectively throughout
the year. Please see page 76 for further details.
Dividends
In October 2021, the Board was pleased to announce
its decision to recommence dividend payments which
had been suspended during the COVID-19 pandemic.
Quarterly dividends have since been paid to shareholders.
The final payment in respect of the financial year ending
31 December 2022 will be made to shareholders on 14
April 2023. In total, dividends of 2.75 pence per share have
been paid or declared for the year, ahead of target.
The Board intends to continue to make quarterly
payments to shareholders throughout 2023. It is the
Board’s intention that dividends remain fully covered by
recurring earnings, and are progressive in nature. Given
the strong occupancy and like-for-like rental growth
experienced for the 2022/23 academic year and subject
to normal trading conditions, the Board will target a
minimum dividend payment of 3.25 pence per share for
the financial year to 31 December 2023.
Annual General Meeting
The Annual General Meeting held on 23 May 2022 was well
attended by shareholders and we were pleased
to announce that all resolutions were passed.
The Company’s 2023 Annual General Meeting
will be held on 24 May 2023. We are pleased to be able
to resume physical meetings which provide an
opportunity for shareholders to meet with members of
the Board. Further details about the time and location of
the meeting are provided in the Annual General Meeting
Notice which is published separately and available on
the Company’s website.
In October 2022, we announced record occupancy for
the 2022/23 academic year, and having since experienced
a strong start to the launch of academic year 2023/24,
we are optimistic of achieving occupancy rates above 97
per cent again, our measure of effectively full. Although
inflationary pressures are expected to continue through
2023, the strong demand underpin coupled with energy
costs having been fixed until the end of academic year
2023/24, places the business in a robust position to
continue to grow earnings and deliver progressive
dividends to our shareholders.
Despite recent volatility in financial markets and the
consequential impact on investment markets, the
repositioning of the portfolio and the disposal of non-
core assets, remains on track. 2022 saw the Group’s
clustering strategy developed further in Bristol with
the acquisition of Market Quarter and the opening of
St Mary’s. The success of the Group’s Post-Grad pilot at
Southbridge, Edinburgh, in late 2022 has demonstrated
the depth and potential of this market, and an opportunity
for future value creation.
Finally, on behalf of the Board, I would like to thank our
employees and all stakeholders who have supported the
Company during the year. With your continued support,
we look to the future with optimism.
Mark Pain | Non-Executive Chairman
16 March 2023
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“The attractiveness of the UK’s
top quality universities continues
to drive growth in student
numbers both domestically and
internationally.”
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Chief Executive Officer’s Review
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.
Duncan Garrood | Chief Executive Officer
Delivering
tangible
results
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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.
Like-for-Like rental growth of
5.2%
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Chief Executive Officer’s Review | continued
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 undergraduate 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.
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.
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.
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.
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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 on page 44.
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 36, 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
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Strategy in Action
Strategy in Action
Growing
successful
clusters
The cathedral city of Bristol
has the 10th largest student
population outside of
London, with a high and
increasing number of
domestic and international
students wanting to attend
the fast-growing and
sought after University of
Bristol, a member of the
Russell group, but also
the University of the West
of England, which is also
located in the city.
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With strong fundamentals and
increasing demand for well located,
high quality student accommodation,
together with persisting supply
constraints, the city has experienced
robust rental growth that is expected
to continue.
Prior to 2022, we had two properties in the City, providing
159 beds within walking distance of the main University of
Bristol campus.
In early 2022 we acquired Market Quarter Studios, a 92
bed scheme in a prime location on Baldwin Street, a short
walk from our two existing sites. The property is a new
high-quality purpose-built construction behind a retained
façade, with strong ESG and wellbeing credentials.
In September 2022, in time for the start of the current
academic year, we opened a fourth scheme in the
city, a 153 bed former Victorian hospital located in the
Bristol suburb of Clifton. The scheme, which has been
lovingly developed into high quality studio-led student
accommodation, with high quality amenities including
private dining, is both a short walk from our existing sites
and a stones throw from the University of Bristol campus.
These two new schemes have more than doubled the beds
we offer in the city and have both, individually, generated
IRRs in excess of 20 per cent.
Importantly, the four properties are just a short walk
from each other allowing the existing management, and
site teams to service these new properties to improve
overall city operating margins. We can therefore maintain
our smaller, boutique proposition, whilst accessing the
benefits of scale. Having four sites within close proximity
also provides optionality to cluster and upgrade amenity
space, for example gyms, whilst repurposing subscale or
underutilised amenity to private dining, break out rooms
or additional student accommodation. Ultimately it allows
amenity free assets to be added to the existing clusters,
driving returns.
Following our expansion in the City, our gross margin
has improved from 69 per cent to 76 per cent, a seven
percentage point cent improvement, whilst improving
the overall service level on offer for all our Bristol based
customers. An important measure of student satisfaction is
the rebooker rate. Our portfolio rebooker rate is expected
to exceed 20 per cent for academic year 2023/24, but
Bristol itself has materially exceeded this average, with a
rebooker rate exceeding 30 per cent.
We have identified potential sites that meet this criteria
in other Russell Group university cities across the UK,
where we already have a presence. This would provide the
opportunity to replicate the progress in Bristol across our
standing portfolio.
St Mary’s, Bristol
Market Quarter Studios, Bristol
St Mary’s, Bristol
Growing successful clusters
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Key Performance Indicators
Monitoring our
performance
Our key performance indicators are
central to our business and allow
us to monitor our performance
against commitments made to our
stakeholders.
Linked to strategic priorities and
management incentives, these are
designed to align with shareholder
returns and drive accountability.
Jayne | Brunswick Apartments
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Key Performance Indicators
Non-Financial KPIs
Rebooker Rate (%) 19%
A
Revenue Occupancy (%) 99%
C
Performance
2022
2021
19%
16%
Performance
2022/23
2021/22
99%
86%
Purpose
The rebooker rate demonstrates our ability to retain
customers within the Hello Student® brand, which is an
indicator of the quality of service we provide.
How we measure
Percentage of students staying with us in the previous
year who chose to stay with us this year in either the same
room or another room in the same site or city.
Purpose
Occupancy is a key driver of our revenue and
demonstrates the quality and location of our assets,
the strength of our sales process and our ability to
set appropriate rents.
How we measure
Calculated as a percentage of gross annualized revenue
we have secured for a given academic year.
Strategic Link
1 2 3 4 5
Strategic Link
1 2 3 4 5
Net Promoter Score +27
B
Safety – Number of Accidents 0
D
Performance
2022
2021
+27
+22
Performance
2022
2021
0
0
Purpose
Allow us to benchmark against our peers.
How we measure
Calculated by Global Student Living Index from responses
received from students staying with us and submitting
answers to a standardized questionnaire.
Purpose
The number of reportable accidents throughout the
Group each year. This is a key reporting metric to the
Health & Safety Executive as well as a measure of our
health and safety strategy and procedures.
How we measure
The number of reportable incidents throughout the
Group each year.
Strategic Link
1 2 3 4 5
Strategic Link
1 2 3 4 5
Contents Generation – Sub PageContents Generation - Section
Colleague Engagement (%) 84%
E
EPC risk mitigation(EPC B or better) (%) 40%
G
Performance
2022
2021
84%
82%
Performance
Dec 2022
June 2022
43
36
Purpose
Colleague engagement scores provide an insight into
the happiness of our people across a range of topics
regarding their working environment.
How we measure
Satisfaction rated based on a standardized questionnaire
sent to all employees.
This is a new key performance indicator reflecting the
commitment to our principal ESG objectives.
Purpose
A Key Metric to allow us to monitor progress towards the
intention to regulate that all buildings in England and
Wales are EPC B or better by 2030.
How we measure
Percentage of properties held by value which have been
certified EPC B or better.
Strategic Link
1 2 3 4 5
Strategic Link
1 2 3 4 5
Energy consumed per bed (kWh) 4,538kWh
F
Performance
2022
2019 baseline
4,538
4,900
This is a new key performance indicator reflecting the commitment to our
principal ESG objectives.
Purpose
A Key metric to monitor to progress towards achieving 2,000 kWh per
bed by 2033.
How we measure
Total building energy intensity divided by number of operational beds.
Strategic Link
1 2 3 4 5
Strategic Links
1. Customers
2. Brand
3. People and Operations
4. Buildings
5. Shareholders
Definitions
For definitions see pages
39 and 146.
Tom | Windsor House
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Key Performance Indicators | continued
Financial KPIs
Gross Margin (%) 67.1%
H
Dividend Cover (%) 124%
J
Total Return (%) 10.5%
L
Performance
2022
2021
67.1%
58.8%
Performance
2022
2021
66%
124%
Performance
2022
2021
4.6%
10.5%
Purpose
The gross margin reflects our ability to drive occupancy
and to control our operating costs.
Purpose
Illustrates our ability to pay dividends from recurring,
current year, earnings.
How we measure
Gross profit expressed as a percentage of rental income.
How we measure
EPRA earnings per share expressed as a percentage
of dividends paid and declared in respect to the
financial year.
Purpose
Change reflects the aggregate value created or lost
during the year, through both change in retained capital
value and value returned to shareholders in the form
of dividends.
How we measure
Percentage change in EPRA Net Tangible Assets per share
across the financial year plus dividends paid and declared
during the financial year.
Strategic Link
1 2 3 4 5
Strategic Link
1 2 3 4 5
Strategic Link
1 2 3 4 5
EPRA earnings per share (p) 3.4p
I
EPRA Net tangible Assets per share (p) 115.4p
K
Performance
2022
2021
1.7p
3.4p
Performance
2022
2021
115.4p
104.8p
Previously ‘Adjusted Earnings per share’. Aligning with
industry standards, our measure of recurring earnings is
now EPRA based.
Purpose
A consistent measure of recurring earnings which
provides comparability and a measure upon which
dividend payments are based and assessed.
How we measure
Industry standard earnings metric, calculated in line with
EPRA best practice recommendations.
Previously ‘Net Asset Value per share’. Aligning with industry
standards, our measure of NAV is now EPRA based.
Purpose
Movement in EPRA Net Tangible Assets per share provides a
measure of the Company’s value attributable to each and every share
on issue.
How we measure
Industry standard calculation of net tangible assets as set out in
the EPRA Best Practice Recommendations divided by the diluted
number of shares on issue.
Strategic Link
1 2 3 4 5
2
4
Strategic Link
1 2 3 4 5
Strategic Links
1. Customers
2. Brand
3. People and Operations
4. Buildings
5. Shareholders
Definitions
For definitions see pages
39 and 146.
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Jialin | King’s Stables Road, Edinburgh
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Operating Review
Operating Review
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.
Strategic segmentation
Operational portfolio
Commercial portfolio
Development portfolio
Total
%
Segment A
(£m)
Segment B
(£m)
Segment C
(£m)
Segment D
(£m)
Total market
value (£m)
724.2
122.0
139.8
70.5
1,056.5
7.4
-
731.6
67.8
5.6
-
127.6
11.8
3.7
-
143.5
13.3
2.5
3.2
76.2
7.11
19.2
3.2
1,078.9
100.0
NIY
(%)
5.2
7.8
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
Super prime regional
Prime regional
London
Secondary
Total
Properties
Operational
beds
Market value
(£m)
Market value
(%)
26
48
2
76
10
86
2,590
4,651
151
7,392
1,141
8,533
478.2
512.0
29.0
1,019.2
59.7
1,078.9
44.3
47.5
2.7
94.5
5.5
100.0
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.
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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.
In addition to the above, ongoing capital life cycling works
require around £4.0 million per annum.
Refurbishment
(£m)
44.1
(8.0)
36.1
4.7
6.0
Fire safety
works
(£m)
Green
initiatives
(£m)
37.0
4.0
-
37.0
10.3
14.5
8.0
12.0
0.5
5.0
Five year Plan
(2021 – 2025)
Reallocation
Revised plan
Invested to date
Forecast 2023
investment
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.
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Contents Generation – PageContents Generation – Sub PageContents Generation – Section
Strategy in Action
Strategy in Action
Strengthening
our brand
proposition
The expansion of the portfolio’s
reach and evolution of the
business’s strategy precipitated
a need to re-validate our brand
proposition.
Our brand needed to evolve as part
of our strategic journey of becoming
a high quality, personalised, customer
centric proposition and continue
to be relevant to our customers
and the changing dynamics within
our marketplace.
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We needed to build a brand that stood
out in a largely unbranded sector and
that connected meaningfully with
our target audience; being students
looking for something extra from their
accommodation offer. Importantly, the
brand needed to resonate throughout
a student’s journey and beyond.
We wanted to not only attract customers to our premium
offering but to excel at delivering a great customer
experience and retain our customers throughout their
student life, winning their loyalty and their testimony.
We therefore wanted to understand what our customers
valued about us, what they thought of us and how they
saw us differ to our competitors. Each stage of the brand
evolution needed to be firmly rooted in understanding
students needs and views and validating the proposition
to ensure we got it right for our target audience.
Whilst safety and security remained of prime importance
when selecting an accommodation provider, students also
wanted an experience that could broaden their horizons
and to feel part of a community. They desired a homely
place to live but they also wanted their accommodation
to facilitate meeting new people, socialising, support,
independence and fun. They expressed a genuine interest
in being associated with brands and organisations
who reflect their strong views on the environment,
sustainability and diversity.
This initial discovery phase was distilled down into a
redefined brand strategy: ‘Hello Student is both your
home from home and basecamp for your next adventure’.
The new logo is our unique representation of putting
students at the centre of the experience. The subtle shift
of the letter D in the word student, becomes a person, a
student, at the very heart of our brand.
The end result is a brand that our students really like, and
our site teams love it too. They say they feel proud of the
brand, and to be part of the Hello Student proposition
delivering brilliant living spaces and excellent customer
experience. A great outcome all round.
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Contents Generation – PageContents Generation – Sub PageContents Generation – Section
Principal Risks and Viability
Principal Risks and Viability
The Audit and Risk Committee reviews
the plan bi-annually with the design,
implementation and monitoring being
the responsibility of management on a
day-to-day basis. Risks, both principal and
emerging, are considered in terms of their
impact and likelihood from both a financial
and reputational perspective.
Although not exhaustive, risks facing
the Group are categorised into three
categories being; external risks; internal
risks and emerging risks.
Changes to our risks profile
The nature of the Group’s risks profile
has changed considerably due to the
subsidence of uncertainty related to the
Pandemic and the strong post Pandemic
recovery experienced to date which has
greatly reduced the likelihood of a material
downturn in revenues and consequently
property valuations, but also the risk
of continued distance learning or a
weakened international student market.
Competition risk has subsided as have,
for now, concerns surrounding University
funding and its consequential concerns.
Given the strong post-pandemic demand
experienced and certain international
authorities no longer recognising distance
learning, the risk of on-line learning has
significantly subsided.
The Group seeks to
minimise, control and
monitor the impact of risks
on profitability, reputation
and strategic priorities,
whilst maximising the
opportunities they present
in the context of longer-
term viability.
The Board regularly assesses the risk
appetite of the Group, with the Audit and
Risk Committee formally reviewing the
effectiveness of our risk management
process and internal control systems.
We recognise that a number of risks
are faced which could impact on the
achievement of our strategy. While it is
not possible to identify or anticipate every
risk, we have established a robust risk
management process to identify, manage
and mitigate risk. The Group’s process
for identifying and managing risk is set
by the Board. The Board has delegated
the oversight of risk to the Audit and
Risk Committee.
Risks are identified by applying a dual
approach, ‘bottom up’ at the operational
level having established responsible risk
owners throughout the business and
layered with a ‘top down’ or corporate
overlay as determined by the Board.
Identified risks are assessed by rating each
risk gross and net of mitigating controls.
The Board considers emerging risks and
uncertainties which may prevent the
Group achieving its strategic objectives
and tracks the evolution of existing and
emerging risks throughout the year.
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Adapting risk management in a changing environment
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Low
E4
I4
E1
I2
E3
E2
I3
I1
Medium
Impact
High
External Risks
Internal Risks
E1 Revenue Risk
E2 Property Market Risk
E3 Financing Risk
E4 Inflation Risk
New Risk
Information Technology Risk
I1 Health & Safety Risk
I2
I3 People Risk
I4 Safe and Sustainable
Buildings Risk
Contents Generation – Sub PageContents Generation - Section
External risks
Strategic Links
1. Customers
2. Brand
3. People and Operations
4. Buildings
5. Shareholder Outcomes
Strategic Links
Increasing
No change
Decreasing
Risk and brief description
Potential impact
Mitigation in place
Trend
E1
Revenue Risk
There is a risk that the student
demand for our product will
decrease, e.g. inconsistent brand
proposition.
—
Link to Strategy
3 5
E2
Property Market Risk
Increasing yields across the
property sector impacting
valuations or our non-core asset
disposal programme.
—
Link to Strategy
4 5
E3
Financing Risk
(Previously Funding Risk)
The availability of debt or equity on
acceptable terms.
—
Link to Strategy
1 2 3 4 5
– Loss of revenue
– Erosion of asset values
– Void costs or increasing
level of bad debts
– Potential breach in
bank covenants
– Executive Committee and the Board closely monitor government policy, student
numbers and other micro and macro-economic factors.
– Monitoring restrictions and ensuring marketing is targeted to key international &
domestic markets.
– We ensure our assets are well located, serving established leading universities with
a higher proportion of Post-grad occupiers.
– Standard Operating Procedures and expanded M&E programme.
– Erosion of asset values
– Potential breach in
bank covenants
– Lower Total Return
for shareholders
– Our assets are in prime locations, diversifying risk. CBRE classifies over 90% of the
portfolio as prime or better.
– We maintain prudent levels of gearing, with an LTV limit of 40% and a long-term
target of 35%.
– The higher education sector comprises both domestic and international students,
which helps to underpin the student accommodation market.
– Of the UK property sub-sectors, direct-let PBSA is currently expected to be one of
the most resilient sectors.
– Limiting future
growth potential
– Price-taker in fire
sale scenario
– Average maturity of debt of 4.8 years with £20.0 million undrawn as at 31
December 2022.
– We maintain prudent levels of gearing, with an LTV limit of 40% and a long-term
target of 35%.
– Reduced shareholder
– Strong relationships with key lending institutions.
returns
E4
Inflation Risk
– Reduced profitability and
Inflationary pressure on staffing,
operational costs, utilities and
development/refurbishment costs.
—
dividend capacity
– Inability to deliver
desired return on
investments
– Hedging of utilities costs to September 2024.
– Reassessment of capital expenditure and acquisition plans.
– Resilient revenue stream.
Link to Strategy
1 2 3 4 5
Reducing due
to favourable
supply demand
imbalance in UK
PBSA and record
occupancy level
achieved
Increase due to
outward interest
rate and yield shift
Increased given
increasing
interest rates and
continuing share
price discount to
net asset value
New in 2022
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Principal Risks and Viability | continued
Internal risks
Strategic Links
1. Customers
2. Brand
3. People and Operations
4. Buildings
5. Shareholder Outcomes
Strategic Links
Increasing
No change
Decreasing
Risk and brief description
Potential impact
Mitigation in place
Trend
I1
Health & Safety Risk
I2
The occurrence of a major health
and safety incident including
terrorism, fire or infectious
outbreak.
—
Link to Strategy
1 2 3 4 5
Information Technology
Risk (Previously: Cyber
Security Risk)
The Group suffering from a
cyber security breach, loss or
mismanagement of personal
customer data or wider IT failure.
—
Link to Strategy
1 2 3
I3
People Risk
High turnover in front-line staff and
the knock-on impact on customer
service.
– Injury and impact on
customers, contractors,
staff and visitors
– Health and safety metrics are reported monthly.
– Policies, procedures and training for all staff.
– Ultimate Board responsibility involving regular Board reporting from the Executive
– Compensation costs
with Head of Health and Safety.
incurred
– Reputational impact
– Loss of life in a
worst-case scenario
– Reputational damage
– Deteriorated customer
experience
– Higher costs and
reduced profitability
– Financial impact due
to potential fines under
GDPR legislation
– Live compliance dashboard which is monitored daily.
– Regular review of fire safety regulations to ensure our buildings remain compliant
with standards, going above and beyond requirements.
– Developed a business continuity plan to enable Group operations to continue
in the event of a failure or breach.
– Centralised our IT network across the Group and recruited an in-house IT team.
– Deployed an updated training programme for all staff.
– Implemented a data monitoring system to protect our platforms across the
IT estate.
– Impact on customer
– We are a Living Wage Employer ensuring that we attract and retain
service due to low rates
of retention
– Loss of key business
talent where possible.
– Use of internal communications to increase employee engagement.
– Ongoing training and development programme designed to upskill staff regularly
knowledge
and progress forward with their career within the business.
Inability to retain key employees or
attract specialists.
—
– Inability to complete
refurbishment
programme
Link to Strategy
1 2 3 5
I4
Safe and Sustainable
Buildings Risk
How our buildings will withstand
increased legislation around
fire safety as well as increasing
minimum energy performance
standards.
—
– High compliance costs
– Reputational impact
– Potential challenges
around insuring
our buildings
– Compensation claims
– Decreased liquidity of
our buildings
3
2
Link to Strategy
1 2 3 4 5
– Succession planning and early supply chain engagement.
– Exit interviews are used to identify any areas for improvement within the business.
– Significant capital expenditure plan allocated to ensure our buildings comply with
future fire safety legislation.
– Regular review of fire safety regulations and checks to ensure our buildings, at a
minimum, remain compliant with standards.
– Continuous assessment of our buildings and allocating significant resource on
green initiatives over the next two years.
Stable due to
minimal change
in the health
and safety
environment.
Stable.
No significant
change in risk
profile during
the year
Reduced following
improvement in
retention rates
and development
of key employee
succession plans
Increase due to
greater focus
on fire safety
and potential
upcoming
legislation.
Contents Generation – PageContents Generation – Sub PageContents Generation - Section
Emerging risks
Impact on principal risk probabilities
Mitigating factors
Geopolitical Crisis
A geopolitical dispute between China and
the UK could result in foreign governments
placing embargoes on their students coming
to study in the UK.
– Revenue Risk
– Property Market Risk
– Financing Risk
– Broad marketing campaigns targeted to both the domestic and international
market with a particular focus on underweight international locations.
Climate Change
Climate change has the potential to
impact every business in the world. For our
business, it could impact planning legislation
restricting supply of PBSA, cause flooding
and increase government legislation for
example.
Restriction in international
students
(New in 2022)
Immigration restrictions imposed by the
UK government could substantially reduce
revenue from international students,
currently comprising approximately 50% of
Group revenues.
– Revenue Risk
– Property Market Risk
– Financing Risk
– Health and Safety Risk
– Safe and Sustainable Buildings Risk
– ESG has become a key focus for the Group. Our progress will be monitored by our
ESG Committee; read more on pages 44-67.
– We have announced our commitment to be a net zero business by 2033.
– Revenue Risk
– Substantial domestic demand.
– Marketing focus on expanding domestic reach and diversifying away from reliance
on international markets.
Utility cost inflation
– Cost inflation
– Utilities hedging in place through to September 2024.
– Program of ESG initiatives aimed at a material reduction in consumption.
(New in 2022)
Utility costs have substantially increased
following supply constraints, heightened
considerably by the war in Ukraine restricting
supply and increasing volatility in pricing.
Re-emergence of the Pandemic
New variants and a decrease in vaccine
effectiveness could result in a resurgence
in COVID-19 or similar pandemic related
restrictions.
– Revenue Risk
– Financing Risk
– Health & Safety Risk
– Strong demand and high occupancy level.
– Crisis management training.
– Full remote working capabilities.
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Mitigants
The Directors considered what mitigants to the downside
scenarios were available. These include, but are not
limited to, pausing all uncommitted capital expenditure
and utilising cash generated in a fire sale scenario from
those assets earmarked for disposal.
Conclusion
As a result of the work performed and the mitigants
available, in the unlikely event that the stress tests
performed prove to be insufficient, the Directors are of
the view that the Group’s strategy will provide a sound
platform upon which to continue its business. At 31
December 2022 the group had £75.8 million of cash and
available facility headroom. Post year end, an additional
£20.0 million of facility headroom was secured.
The Directors therefore conclude that there is a
reasonable expectation that the Group can continue
in operation and is capable of meeting its debts and
obligations as they fall due during a period of not less than
three years from the balance sheet date.
Viability
Assessment period
The Directors considered whether to adopt a five or a
three year time horizon in assessing longer term viability.
Notwithstanding that a five year period had been selected
in the prior year, following reassessment, the Directors
concluded a three year viability period to 31 December
2025 was the most appropriate term for the Company
given the following principal reasons:
– the Board reviews budgets and plans that extend to
three years
– the Group’s capital expenditure programme runs
to 2025
The Group’s three year business plan was stress
tested using both specific and cumulative “downside”
assumptions to model a general deterioration in market
conditions and operational performance, including flexing
key base-case assumptions as set out opposite.
In particular, key assumptions underlying the downside
scenario were as follows:
– occupancy reduced to 97 per cent in academic year
23/24, then to 90 per cent for the 2024/25 and 2025/26
academic years;
– revenue growth reduces to as low as 2 per cent in
– the Group’s revenue is annual in nature, with typical
academic year 2025/26;
lease terms of 51 weeks. At any given balance sheet date
there is revenue visibility of approximately 20 months,
with an extension to 36 months not unreasonable given
a number of the Group’s customers choose to stay
during their higher education journey, which is usually
three years
In concluding on the appropriateness of a three
year viability term, the Directors were mindful of any
significant events that may reasonably be expected to
fall immediately after 31 December 2025.
Assumptions
The Group’s three year business plan incorporated the
below key assumptions:
– occupancy remaining stable, given the current
and anticipated strong demand for student
accommodation;
– revenue growth of at least 5 per cent annually;
– utilities costs at hedged rates until September 2024,
with projected market rates thereafter;
– cost inflation falling back to 2 per cent in 2025;
– Valuations remain stable;
– no acquisitions or disposals are completed; and
– credit markets remain open and available to the Group
to allow it to refinance existing debt facilities as they
mature, at forecast swap rates and increased margins.
– utilities costs increase to 1.5 times projected market
rates;
– inflation remains above 8 per cent throughout the
forecast period;
– interest rates rise a further 1.5 per cent on current
forecast rates;
– property valuations suffer a material decline; and
– certain of the Group’s non-committed and non-
regulatory capex programmes are paused during 2024
and early 2025
All base case assumptions were stressed individually
to the point of triggering the first facility interest cover
or loan to value covenant breach, and to the point of
triggering a covenant breach on all facilities.
Two specific scenarios were then tested given current
macroeconomic and geopolitical risks:
– the emergence of a pandemic; and
– an escalation in the Ukrainian conflict, coupled with an a
deterioration in Chinese relations.
Assumptions were flexed to reflect a likely impact on all
key assumptions. These scenarios were also modelled
to the point of the first interest cover or loan to value
covenant breach, and to the point of triggering a
covenant breach on all facilities.
Please see note 28 to the financial statements for further
information on the Group’s covenants.
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Financial Review
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. The business achieved record revenue
occupancy for academic year 2022/23, with 99 per cent now achieved
following January letting activity.
Donald Grant | Chief Financial & Sustainability Officer
Record
revenue
occupancy
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Financial Review | continued
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%, in line with guidance.
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.
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.
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.
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.
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.
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 below. 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.
Core
portfolio
£m
Non-core
(bucket D)
£m
66.3
(20.1)
46.2
70%
6.7
(3.9)
2.8
42%
Income statement
Revenue
Property expenses
Gross profit
Gross margin
Administrative expenses
Operating profit
Revaluation
Gains on disposals
Net finance costs
IFRS Profit
Weighted average ordinary shares (m)
IFRS EPS (pence)
EPRA EPS (pence)
2022
£m
2021
£m
Balance sheet
Property (market value)
Cash on hand
Bank borrowings drawn
Other net liabilities
Net assets
Diluted number of shares
EPRA NTA per share (pence)
Property LTV
EPRA LTV
73.0
(24.0)
49.0
67%
(13.4)
35.6
45.6
1.5
(15.0)
67.7
603.3
11.2
3.4
56.0
(23.1)
32.9
59%
(10.6)
22.3
17.6
1.7
(12.4)
29.2
603.2
4.8
1.6
2022
£m
2021
£m
1,078.9
1,021.3
55.8
37.1
(391.2)
(375.0)
(42.7)
700.8
607.2
115.4
31.1%
32.7%
(35.8)
647.6
606.6
106.7
33.1%
34.3%
Contents Generation – PageContents Generation – Sub PageContents Generation - Section
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
31 December 2021
EPRA earnings
Like-for-like revaluation
Non-like-for-like revaluation
Dividends
Other
31 December 2022
Portfolio valuation
Like-for-like property portfolio
Acquisitions
Disposals
Developments
2022
£m
990.5
25.9
-
62.5
£m
647.6
20.6
22.9
22.7
(15.2)
2.2
700.8
2021
£m
Gain/(loss)1
£m
Change
%
952.8
-
39.8
28.7
22.9
6.4
(2.1)
18.4
45.6
2.4
24.7
(5.3)
29.5
Portfolio valuation
1,078.9
1,021.3
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.
Group’s Net Asset
Value increased
8.2%
in 2022
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Financial Review | continued
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.
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.
All loan covenants were fully compliant during the year.
Cash flow
Operating cash flow
Property acquisitions and capital expenditure
Property disposals
Net cash flows from investing activities
Dividends paid
Net borrowings drawn/(repaid)
Finance costs
Financing cash flows
Net cash flow
2022
£m
43.6
(49.1)
39.7
(9.4)
(16.7)
14.6
(13.4)
(15.5)
18.7
2021
£m
42.4
(16.6)
17.9
1.3
(13.6)
(15.1)
(11.8)
(40.5)
3.2
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 on page 34, 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
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Contents Generation – PageContents Generation – Sub PageContents Generation - Section
EPRA and other alternative
performance measures
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.
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EPRA and other alternative performance measures | continued
EPRA Measure
Earnings (£m)
Definition of measure
Note/ reference
The companies underlying earnings from operational activities
Net tangible assets (NTA)
The underlying value of the company assuming it buys and sells assets
Net disposal value (NDV)
Net reinstatement value (NRV)
Net initial yield
Cost ratio (incl. direct vacancy costs)
Cost ratio (excl. direct vacancy costs)
The value of the company assuming assets are sold, and the liabilities
are settled, not held to maturity.
The value of the assets on a long-term basis, assets and liabilities are
not expected to crystallise under normal circumstances.
Rental income less operating costs divided by the market value of the
property, increased with purchasers costs.
Administrative & operating costs including costs of direct vacancy
divided by gross rental income.
Administrative & operating costs excluding costs of direct vacancy
divided by gross rental income.
8
9
9
9
Opposite
Opposite
Opposite
2022
20.6
115.4
117.9
121.8
5.2%
51%
47%
2021
9.9
106.7
104.4
112.4
5.3%
60%
46%
2.6%
Like-for-like rental income (in respect of
academic year)
Compares the growth in rental income that has been in operation
and not under development, throughout both the current and
comparative year
Financial review
5.2%
Like-for-like capital
Loan to value1
Compares the growth in capital values of the Group’s portfolio which
was controlled by the Group and both balance sheet dates, net of
capital expenditure and excluding development properties
Ratio of net debt, including net payables, to the sum of the net assets,
including net receivables, of the Group, expressed as a percentage
Financial review
2.4%
3.0%
Opposite
32.7%
34.3%
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.
Measure
Total Return
Definition of measure
Note/ reference
Growth in EPRA NTA plus dividends paid as a percentage of opening
EPRA NTA
Net debt (£m)
Borrowings less cash and cash equivalents
Property loan to value
Net debt divided by property market value
Dividend cover
EPRA earnings relative to dividends declared for the year
Dividend pay-out ratio
Dividends declared relative to EPRA earnings
31
31
31
31
31
2022
10.5%
335.4
31.1%
124%
81%
2021
4.6%
337.9
33.1%
64%
156%
Contents Generation – PageContents Generation – Sub PageContents Generation - Section
EPRA Net Initial Yield and topped-up NIY
Investment Property
Less: development
Completed property portfolio
Allowance for purchases cost
Grossed up completed property portfolio valuation
Annualised cash passing rental income
Property outgoings
Annualised net rents
Add: notional rent expiration of rent-free periods or other lease incentives
Topped-up net annualised rent
EPRA NIY
EPRA “topped-up” NIY
EPRA Cost ratios
Operating expense line per IFRS income statement
Administration costs
Ground rent costs
EPRA Costs (including direct vacancy costs)
Direct vacancy costs
EPRA Costs (excluding direct vacancy costs)
Gross Rental Income less ground rents – per IFRS
Less: service fee and service charge costs components of Gross Rental
Gross Rental Income
EPRA Cost Ratio (including direct vacancy costs)
EPRA Cost Ratio (excluding direct vacancy costs)
EPRA Loan to Value (“LTV”)
Bank borrowings drawn
Net payables
Less cash held at the year end
Net borrowings
Investment property at fair value
Property held for sale
Property under development
Property value
EPRA LTV
Group
Year Ended
31 December 2022
£m
Year Ended
31 December 2021
£m
1,078.9
(3.3)
1,075.6
38.5
1,114.1
81.6
(24.0)
57.6
0.1
57.7
5.2%
5.2%
24.0
13.4
-
37.4
(3.2)
34.2
73.0
-
73.0
51%
47%
391.2
17.8
(55.8)
353.2
1,061.9
13.7
3.3
1,078.9
32.7%
1,021.3
(28.7)
992.6
34.2
1,026.8
77.5
(23.1)
54.4
0.2
54.6
5.3%
5.3%
23.1
10.6
-
33.7
(8.1)
25.6
56.0
-
56.0
60%
46%
375.0
12.2
(37.1)
350.1
966.7
25.9
28.7
1,021.3
34.3%
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Contents Generation – PageContents Generation – Sub PageContents Generation – Section
Strategy in Action
Strategy in action
The number of post-graduate
students at UK universities
reached 820,000 in the 2022/23
academic year, the highest annual
increase (+10.4% versus 2021/22)
in the past five years.
Data from UCAS and HESA points to
continued growth in these numbers
over the coming years. Student
accommodation agency StuRents
predicts a shortfall in overall student
accommodation supply of c.450,000
beds by 2025.
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Contents Generation – Sub PageContents Generation - Section
With 40 per cent of our existing
customers currently post-graduates,
our team have real insight into
the shifting priorities of the more
discerning post-graduate customer.
This high percentage shows the
quality and studio makeup of our
existing stock.
We conducted an in depth study with post-graduate
students offering to help us identify evolving priorities
and needs. The study revealed that these customers
felt much more self-assured than when they were
undergraduates and have a greater awareness of who
they are, what they wish to achieve. They are much more
focused on their studies and achieving good grades to
propel them into the workplace. They spend significantly
less time socializing and have largely developed their
social groups. They have an increased workload, less
leisure time and increased pressure to manage their time
and finances. In short, they feel much more independent
and grown up.
They still value the reassurance of a brand, the ability to
make advanced bookings and the certainty of an all-in,
fixed cost rent package, and enjoy living with likeminded
people. However, the difference in stage of life was
profound with a clear preference for living with other
post-graduates in a quieter, more mature environment.
To address these needs, we then considered their top
priorities for accommodation needs. These were:
– proximity to place of study;
– near a supermarket;
– ease of access to city centre;
– a larger room, allowing dual occupancy;
– an ensuite bathroom and in-room laundry facilities;
– a double bed;
– a smaller community of likeminded people;
– space for private entertaining with little desire for large
amenity; but
– with services, amenities (e.g. gym) and support at hand
to make life as worry free as possible
Our proposition was therefore to provide apartments
specifically designed for the needs of post-graduates in a
building exclusively for post-graduates.
First year higher education student enrolments
(by level of study)
(Source: HESA)
600,000
500,000
400,000
300,000
200,000
100,000
)
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40%
of our existing customers
are post-graduates
In November 2022, we launched our first post-graduate
product at Southbridge in Edinburgh. The 59 bed studio
scheme provides accommodation exclusively for post-
graduates primarily based at Edinburgh University,
which is consistently ranked one of the world’s top
50 universities. The property offers rooms which are
typically 20 per cent larger on average than comparable
undergraduate studios in the city, with amenity-lite, high-
quality self-catering facilities for independent living.
This post-graduate proposition leverages well with our
clustering strategy, whereby access to amenity space,
services and support are all available from our under-
graduate sites nearby.
In 2021, following a portfolio segmentation review, 14
properties currently valued at over £140 million were
identified as being of a size and configuration suitable for
conversion to a post-graduate product.
This first pilot property was sold within days of initial
marketing. The property attracted a rental premium
per square foot of approximately 20 per cent, without
the need to build out costly amenity space within the
building. This has significantly reduced the operating
costs and improved the gross margin by almost five per
cent, compared to our under-graduate properties within
the city.
The scheme has achieved an IRR in excess of our 10-12 per
cent target.
Post-graduates currently comprise almost 25 per cent of
all UK university students. The speed of growth and the
depth of this market present a significant opportunity
for the business. Furthermore, it provides an opportunity
to exploit an extension of our relationship with existing
customers, to journey with them for longer.
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Contents Generation – PageContents Generation – Sub PageContents Generation – Section
ESG Report
ESG Report
Sustainability &
social responsibility
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St Mary’s, Bristol
Contents Generation – Sub PageContents Generation - Section
Muxi, 29 | St Mary’s resident
St Mary’s, Bristol
As part of our commitment to retain heritage assets
and repurpose buildings within our portfolio, the
redevelopment of St Mary’s Hospital in Bristol was
completed in August 2022.
The careful restoration of the building that provides
accommodation for 153 students was developed to be
more energy efficient and to motivate a sustainable
mindset. It is part of our wider strategy of converting
existing buildings, with positive impact on the
environment and local community, rather than
building new.
The complex’s £28.5 million development includes a
bookend structure on the southern gable of the former
hospital building, a row of contemporary townhouses
and a pavilion in the former car park. All of which provide
further accommodation.
The scheme has delivered strong environmental
contributions with a BREEAM Excellent rating expected
and an EPC rating of B. The low carbon buildings also
contribute to improvements to air quality and biodiversity
through the delivery of a series of living walls which
have attracted wildlife, forming a green link between the
gardens on Byron Place and the neighbouring Brandon Hill
Nature Park.
national grid. Smart panel heaters with occupancy and
environmental sensors installed allowing control and
understanding of energy consumption per room.
Double-glazing has been installed, low-voltage light
sensors and low water taps to improve energy efficiency
and reduce the wasteful use of water. Recycling facilities
have also been placed in each flat.
The living wall is a patented modular hydroponic system,
launched in 2008 and was chosen for its sustainable
innovation. Good water management is a key driver of the
hydroponic panel design, with the lowest water use of any
known comparable living wall system. The average use is
projected at 1 litre per m2 per day.
Solar panels have been added to all available roof space
- with the exception of the pitched titled roof of the old
hospital. These panels are also linked back to the
St Mary’s welcomed students for the start of the 2022/23
academic year and within four weeks it became one of the
most demanded sites in our portfolio.
Our onsite team have made sure the students have settled
in and continue to monitor their wellbeing, many of
whom are living away from home for the first time. This
includes organising events for the students to help build
meaningful relationships and form a sense of community.
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ESG Report | continued
The Board has allocated significant capital to green
initiatives in 2023 and 2024 which should allow us to
accelerate our net zero programme during the next two
years and deliver tangible benefits to all stakeholders.
ESG Management Framework
O u r People
G W o r king Gro
E S G C ommitte
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E S
The Board
E
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t t e e
G Com m i
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G Workin g G r
Our Peo p l e
p
u
The Board
Has overall responsibility for the Group’s ESG strategy
and its direction.
ESG Committee
Chaired by the Company’s Chairman, the Committee
oversees the creation of the overall ESG strategy for
the Group, ensuring that there is Board level discussion
and input.
ESG Working Group
Chaired by the CFSO, invited members of the senior
leadership team meet monthly and ensures the ESG
strategy is embedded throughout the business.
Our People
The successful delivery of our ESG strategy across the
business, requires the collaboration and support of
all our people.
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Our journey and our commitment to Stakeholders
We are committed to creating and operating a socially
responsible and sustainable business which has a positive
impact for all our stakeholders.
In August 2022 we published our full Net Zero strategy,
targeting net zero in our operations, developments,
property portfolio and energy consumption by 2033. We set
out seven key performance indicators (KPIs) which will allow
us to track our progress towards this 2033 commitment.
The journey was set out in three clear phases with the first
focussed on engagement and training. We also set out a
wider target of becoming net zero in all emissions, including
scope 3, by 2050 working towards a global decarbonised
economy. We hope to achieve this before 2050, but we
acknowledge the issues with accurate scope 3 emissions
data not being fully available yet.
As in prior years, we have structured our report around
the four commitments outlined below. This allows us to
discuss the progress that has been made against the
targets we set ourselves for 2022 and set out our key
priorities for the year ahead:
1. Become a sustainable business and achieve net zero
2. Excel in the provision of health and safety
3. Enhance mental health & wellbeing
4. Provide opportunities for all
We commit to improving our contribution to the
environment, our social obligations to our employees,
suppliers, customers and the communities in which we
operate. Our activities will be guided by setting ambitious
and challenging goals that will guide the development of
our strategy and operations for the future.
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ESG Report | continued
Become a
sustainable
business and
achieve net zero
We recognise that climate risks are a
threat to future value and will impact
our investment strategy. We have
a responsibility to transition our
properties to net zero. We understand
our stakeholders expect us to provide
sound environmental stewardship of
our business and our properties.
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Progress in 2022
1. Target: Publish Net Zero report on our website
In August 2022 we published our Net Zero report.
This was the culmination of a project launched in 2021
where we worked with our advisers, CBRE, to define
an overarching net zero strategy for the business. This
strategy was designed to help us to define a pathway and
Key Performance Indicators to sit alongside it to provide
a structure for monitoring, accountability and good
governance.
The Boards commitment stems from a recognition that
climate transition presents an opportunity to increase
future value, but inactivity is unquestionably a threat to
value in the medium-to long-term.
We consider our portfolio and strategy to be uniquely
positioned. Our diverse portfolio consists of a number
of properties with a sense of heritage, often carrying a
listed status. Our strategic legacy of repurposing assets
to extend their life rather than completely redeveloping
the site, delivers high quality student accommodation at
a lower environmental impact associated with embodied
carbon, through the reuse of existing buildings. This
therefore aligns well with the net zero agenda.
We have targeted 2033 to allow us to integrate more
stringent decarbonisation activities within our standard
rolling maintenance programmes, which allows us to make
meaningful progress at a pragmatic cost. This timeline
also allows us to deliver net zero alongside improved
quality, whilst continuing to control and manage costs for
our stakeholders.
In order to measure progress, our baseline was set as
2019, being the last ‘normal’ consumption year prior to
the Pandemic. We then developed a decarbonisation
plan which was based on the UK Green Building
Council’s ‘Advancing Net Zero Framework’. Although
we acknowledge that the Science Based Technology
Initiative (STBi) is important in formulating a standardised
approach, we believe we must first complete our detailed
plan and after which we will consider Science Based
Technology accreditation. We then completed an asset
level risk review based on the Carbon Risk in Real Estate
Monitor, using hotels as the most appropriate proxy asset
class. From here we established a governance framework
and our high-level roadmap to net zero.
2. Target: Disclose EPC position and set out steps
to improve
Alongside our interim results in August, we published our
portfolio EPC ratings summarised by rating. In England
and Wales, the government intends to legislate that all
buildings must be rated EPC B or better by 2030. We were
encouraged to report that 36 per cent of the portfolio
was rated as EPC B or better, and this has risen to 40 per
cent at the end of 2022. We know there is more work to be
done in this area.
Managing our future EPC risk is integral to our rolling
refurbishment plan, which has allowed us to set targets
to improve our EPC B or better score to 50 per cent by
2025, 75 per cent by 2028 and we believe we can achieve
100 per cent by 2030, in line with current governmental
targets.
3. Target: Continue roadmap of planned energy
efficiency initiatives
We have made good progress across the year. Although
the energy intensity per bed has increased 8 per cent from
4,172 kwh per bed to 4,538 kwh per bed, this does need to
be considered in the context of the significantly increased
occupancy levels achieved in 2022.
Initiatives progressed during the year included the
following; a solar panel review for 13 sites; where
replacement boilers were required, several gas boilers
were replaced with electric; with our energy consultants,
we created action plans for our least energy efficient
properties; we installed full Atamate energy monitoring
in a newly developed site; we reviewed Building
Management Systems in 45 sites and; in partnership with
Sheffield Council, our three properties in the City are part
of the low carbon district energy which provides central
heating as a biproduct to incineration. During the year
this initiative saved 94 tonnes of carbon compared to an
onsite gas boiler.
A further initiative completed this year was the installation
of Smart Panel Heaters, which is discussed in the case
study opposite.
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Key priorities for 2023
Panel heaters
The focus for 2023 will fall in the
following areas:
– Continue the roll out of smart panel
heaters and use data to support
student engagement
– As part of our refurbishment
programme, deliver two further
carbon neutral properties
– Sub-meter over 1,000 rooms to
provide more data to inform our
education programme and support
energy efficiency behavioural
change.
– Further upgrades to LED lighting and
PIR sensors within the refurbishment
programme
– Improve the score of EPC E rated
properties
– Install greener solutions including
PV and insulation improvements as
part of our capital programme
– Carry out an audit of individual
building energy controls to optimise
energy use
One of the main environmental
impacts of our business comes
from energy use by our student
tenants.
In a number of our properties we run electric panel
heaters that are manually controlled with high
temperature set-points. This has caused the continuous
heating of unoccupied spaces that can lead to inefficient
energy use and increased costs.
In 2018, we signed up to the Student Energy Project,
in coordination with Amber Energy, which encourages
students to reduce energy use. One of the initiatives
focussed on turning down heating and switching off
lights, when not required. A student ambassador was
identified in each building, who was responsible for
educating fellow students.
In 2022, we took this a step further by installing
SmarterDM panel heaters at two buildings at our Victoria
Point, Manchester site. Smart panel heaters have helped
us achieve energy savings of 30 per cent in occupied
areas, resulting in an annual cost saving of around £13,500
and reduced environmental impact, whilst allowing
our students to retain control of their apartments with
minimal disruption.
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ESG Report | continued
Excel in the
provision of
Health and Safety
Having allocated £37 million towards
our programme of fire works, we have
continued to make great progress
throughout 2022 with all properties
now surveyed and 61% of the portfolio
now certified.
3. Target: Continue to progress fire safety initiatives
We have made significant investment in this area during
2022. With the appointment of our Head of Health,
Safety & Fire, we have implemented SafetyNet which has
been designed and built as a bespoke product for our
business, to manage both accident incidents and fire
risk assessments. It will provide an audit trail of action
management and track accountability on a real time
basis. We have secured Hydrock as the Group’s Fire Risk
Assessor and advisor, and the Tyne and Wear fire service
as a primary authority scheme.
Our fire safety management system, incorporating
blueprints and standards, aligns with our health and safety
model and incorporates a fire safety RASCI which has
been developed for our business.
As detailed in the case study opposite, extensive
fire marshal training and fire asset training has been
developed and rolled out across all our sites with a safety
campaign delivered to our on-site teams and
our students.
Progress in 2022
1. Target: Secure an inhouse Health and Safety Expert
to increase resource and knowledge within the
business and facilitate cultural change
During 2022 we secured a Head of Health, Safety & Fire
together with a Security & Business Continuity Manager.
They have bought a wealth of knowledge into the business
and have made a significant contribution to these two
important areas. We launched SafetyNet in late 2022
following an extensive training programme to encourage
our teams to report incidents across out business.
SafetyNet provides for efficient reporting and tracking
of incidents and since its introduction in December we
have seen a substantial increase in Reporting of Injuries,
Diseases and Dangerous Occurrences Regulations
(RIDDORs), with 201 incidents reported across the year,
allowing us to capture information in a more timely
manner which allows the business to identify and respond
appropriately to areas of risk.
We are however pleased to report that there were no
RIDDORs which were reportable to the Health and Safety
Executive during the year.
2. Target: Define and establish key performance
indicators for external reporting
We have established KPIs which are set out on
page 22. These include the number of reportable
incidents, our Colleague engagement score and a metric
which captures student feedback, the Global Student
Living Index’s Net Promoter Score. In addition, Health
& Safety Compliance is an objective linked to certain
variable compensation arrangements via personal
performance objectives.
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Key priorities for 2023
Fire safety campaign
The year ahead will see a focus
on training and testing, with key
deliverables as follows:
– Carry out health & safety inspection
and audit on all our sites as part of
portfolio audit
– Conduct first aid and conflict
management training for all staff
– Begin risk-based site security
assessments
– Crisis management training and
testing for all properties
– Fire marshal training for all staff
– Implement Safe Contractor
accreditation for all suppliers
We carried out a two-week Fire Safety
Campaign across our properties
this year to engage and educate our
employees and students.
Whilst we do all we can to physically reduce the risk of
fire, it is important that we also try to influence student
behaviour by promoting safety messages and guidance.
The first week focussed on fire marshal training which
was provided to every single member of the team in
September. During the second week, each site conducted
a fire alarm evacuation and set up hotspots in reception
areas to drive awareness on how to safely manage the
evacuation of students.
In Liverpool, the local fire authority attended our site to
talk to our team. They also spoke to students about the
risks of fires.
Following the campaign, feedback from the team has
shown how they feel more confident dealing with fire
education and drills.
We are looking into how we measure fire safety incidents
during the next year to see how we can further analyse fire
alarm activations, drills and incidents.
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ESG Report | continued
Enhance mental
health & wellbeing
The mental Health and the wellbeing
of our customers remains a key
priority. Of our customers responding
to this year’s Global Student Living
index survey, 71 per cent said our
accommodation had a positive
impact on their wellbeing, with 73 per
cent responding to say they felt our
accommodation teams cared about
their wellbeing. We are proud to report
that in 2022 we won the award for Best
Student Wellbeing (UK & Ireland).
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Progress in 2022
1. Target: Improve our Best Companies score as well
as our student satisfaction score
Our Best Companies engagement score response in
2022 increased from ‘One To Watch’ status, which was
achieved in 2021, to a one star accreditation, a 13 point
overall increase rate increase for the year. Pleasingly, the
response rate also improved from 64 per cent in 2021 to
72 per cent in 2022. A fantastic achievement.
We are also proud to report that the student satisfaction
benchmark we use within our business, the Global
Student Living Index’s Net Promoter Score (“NPS”), has
improved again in 2022, from +22 to +27. To put this in
context, the latest NPS score for all private halls was +14,
whilst the score for university halls was +9.
Behind the data, the most important factors when
selecting accommodation was proximity to place of
study, feeling safe and secure and the size, condition and
quality of the accommodation. These are all aspects at the
very heart of our brand proposition. Mental Health and the
wellbeing of our customers remains a key priority. Of our
customers responding to the Global Student Living index
survey, 71 per cent said our accommodation had a positive
impact on their wellbeing, with 73 per cent responding
to say they felt our accommodation teams cared about
their wellbeing. This is an extremely encouraging result
following our investment 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.
2. Target: Define and develop approach to the
wellbeing of our stakeholders
In respect to our people, we have established a number of
forums to offer colleagues a variety of ways to share their
views with the executive committee: a formal employee
representative group we call the ‘One Team Collective’
(OTC); an anonymous ‘Talk To Us’ online suggestion box; a
Q&A with the executives who made themselves available
to all employees at three separate venues around the UK
during November; or quarterly internal service surveys or
annual engagement surveys.
The OTC, launched in 2022, is a workforce advisory panel
consisting of 12 employee representatives from across
the Group. Its focus is to support meaningful dialogue
on topics raised by our employees. It met eight times
in 2022 and is supported by Alice Avis, the Company’s
Senior Independent Director who attended one meeting
in person and maintains regular dialogue with the
Collective’s Chair throughout the year.
In respect to our customers, mental health and wellbeing
continues to be an area of significant focus. Almost half
of our students say they struggle with anxiety or stress,
with a third responding to say they experience loneliness.
Students enjoy opportunities for social interaction with
other students. We therefore aim to ensure that our
buildings are configured and our people are trained to
provide the very best support possible.
In response to this we have delivered a three-stage plan
to ensure our residents have access to events, fitness
and the support they need. The first is ensuring our on-
site team are trained on what to look out for and how
to deal with mental health issues and ensure wherever
possible we intervene early as signs appear. Our staff are
therefore MHFA trained and we have welfare visits to sites
scheduled at points in the year when students typically
struggle the most. Secondly, we provide support through
the Health Assured app which is available to all our
students and provides 24/7 access to support, specialists
and where necessary, referrals. We also work hand in hand
with Universities on specific cases to ensure together we
provide the most vulnerable with support at ‘home’ and
within their place of study. Lastly, we aim to support their
wellbeing in the community, with a structured programme
of events designed to allow students to socialise and form
friendships, which is supported by our newly launched
Hello Student app. The app, launched in 2022, provides
our students with the ability to communicate with other
students in their building and with our onsite teams. With
our 7,000 downloads, we have over 75 per cent of our
students actively using this app.
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Key priorities for 2023
Wellbeing
In 2023 we will aim to achieve
the following:
– Strive to improve our Net Promoter
Score further, with a target of +30
(2022: +27)
– Achieve an employee engagement
score of 80 per cent or better
– All employees to have access to
wellbeing support
– Mental Health First Aiders’ in place
at each site
– Provide outstanding customer
service to our students with same
day response to queries raised and
95 per cent of queries to be resolved
within 72 hours
As part of our commitment to
enhancing both the mental and
physical health of our employees,
we have created a separate
wellbeing hub on our benefits
platform, Reward Gateway.
Under the headings of Move, Money, Mind and Munch,
resources are provided around health, personal finance,
mindset and nutrition giving a holistic approach to all
round wellbeing. The redesign of the platform also means
that resources available to employees are utilised in sites
to share with students, further contributing to a positive
customer experience.
Particular attention was paid to the mind element of the
platform that included audio resources aimed at helping
people improve productivity while working and improving
sleep.
The relaunch in April, supported by a detailed
communications plan resulted in a 250 per cent increase
in visits to the site in that month alone. Since April, we
have seen over 1,300 visits to the site from 50 per cent of
all employees.
It has also received positive feedback from employees
across the business with posts on our internal
communications platform, Workplace.
The success of the programme saw us shortlisted in the
top five for best relaunch with recognition given through
the accolade of the rarely given ‘Highly Commended’ by
an independent panel of HR and industry professionals at
the Reward Gateway awards in November 2022.
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ESG Report | continued
Provide
opportunities
for all
We believe in creating a diverse
and gender balanced workforce
which reflects the customers and
communities we serve.
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Progress in 2022
1. Target: Continue to support local communities
In 2022 our teams supported a number of local
community groups. As part of our annual summer
turnaround, it is typical for a number of students to leave
items of furniture in their apartments that they no longer
want. With their consent, numerous items were donated
to the British Heart Foundation nationally, which in total
raised over £28,000 for this worthy cause.
Thank you!
You’ve done something
very special.
Hello Student
You’ve helped to raise:
£28,040
And that money will help turn the British Heart Foundation’s research
into cures and treatments to beat the world’s biggest killers.
Which means that families can spend more time
with the people they love.
British Heart Foundation 2019, a registered charity in
England and Wales (225971) and Scotland (SC039426)
bhf.org.uk
Likewise, in Birmingham, the replacement of hundreds
of duvets resulted in donations to a local dog charity,
providing warmth and comfort to our four-legged friends.
In Aberdeen, our teams helped with collections for
local food banks and at Falmouth, the team completed
a litter collection at a local beach, helping to ensure the
surrounding natural beauty is maintained.
We’ve selected and announced our first corporate charity
partnership with Switch 180. A national youth charity for
children up to young adults of 21 years. Their aim is to help
turn young lives around by delivering services focusing
on physical and mental health support. The charity will
provide numerous opportunities for our people and
students to get involved directly with their time, skills
and expertise, but also help raise money for this great
cause - one that is very much aligned to and supports
our customers.
2. Target: Undertake a review of wider diversity
issues and targets
During the year we considered how as a business we
should respond better to diversity issues both in respect
to our employees and our customers. In respect to our
students, we believe more can be done to ensure our
buildings are fit for purpose for students with disabilities.
We will aim to develop accessible website and
communication provision. We have a number of
international students who enjoying staying with us, but
we would like to do more to understand and adjust our
service to meet the needs of different cultures, be that in
respect to settling in and orientation but also within our
events program which is a great opportunity to celebrate
diversity, for example at Chinese New Year.
We believe in creating a diverse and gender balanced
workforce which reflects the customers and communities
we serve. Although there is always room for improvement,
we do have a reasonably gender and ethnically diverse
workforce. That said, our gender pay gap deteriorated
in 2022 which has been attributed to a decline in female
representation in senior roles. The Company is satisfied
that equivalent roles attract equivalent pay, regardless
of gender, but wish to improve female representation in
senior positions and have therefore made this a target for
2023. In support of this, we have launched a leadership
development programme to support internal promotion
opportunities, see case study opposite where females are
well represented, accounting for 56 per cent of attendees.
Gender pay gap
Mean
Median
Group gender pay gap
Group gender bonus gap
5.6%
25.4%
Proportion of females
receiving a bonus
Proportion of males
receiving a bonus
7.6%
0.8%
63.5%
62.0%
We are committed to providing training and support
that ensures our employees have the tools to succeed
and deliver their best in the workplace. In 2022 we have
delivered over 300 days in training to our employees.
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Key priorities for 2023
Leadership
Our targets during 2023 are as follows:
– Each city to nominate a local cause
to champion
– 50 per cent of non-entry level
positions filled through internal
promotion
– Launch apprenticeship scheme
– Improve diversity within the senior
leadership team
– Improve the accessibility of our
buildings for students with
disabilities where required
As part of our programme to provide
opportunities for all stakeholders, we
have initially focussed on the internal
development of our employees.
We partnered with Impellus and invited 25 of our
employees, who were identified as having high potential
to be future leaders within organisation, to undergo The
Institute of Learning and Management certification.
Those invited completed the six-month Leadership
Skills Development course in December 2022, with each
completing three specialist modules.
During the programme, each participant could choose
two additional modules that included communication
skills, change and innovation, time efficiency, coaching
skills, and managing and appraising performance. The
modules required online learning followed by a written
3,000 word assignment to demonstrate an applied
understanding.
The group were selected following their formal reviews.
The aim was to develop their skills to become more
rounded leaders and help service the business’ future
needs.
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ESG Report | continued
Gender diversity
Gender diversity
Board
2022
2021
Executive Committee
2022
2021
Total employees
2022
2021
Male
Female
4
4
4
4
2
2
2
2
186
155
153
140
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– ensuring systems are in place to encourage the
reporting of concerns and the protection of whistle
blowers in our supply chain.
We continue to believe there is a low risk of slavery and
human trafficking in our colleague base and continue
to review this risk assessment and monitor our activity
as part of our broader approach to ensuring we are a
responsible and sustainable business.
For our full statement please refer to
www.hellostudent.co.uk
Ethical Business
We are committed to carrying out business fairly, honestly
and openly. Our anti-bribery policy mandates a zero-
tolerance approach, of which all our people must read and
confirm their understanding both during their induction
and on an annual basis. We require employees to take
regular compliance training and to certify each year that
they have complied with Company policies.
Our people are important to our business maintaining
the highest standards of honesty, openness and
accountability. Our whistleblowing policy explains how
our people can report a whistleblowing concern and
reassures them that any such disclosure is made in full
confidence. The Board monitors and reviews the policy
on at least an annual basis to ensure it complies with UK
legislation. There were no incidents of whistleblowing
during the year.
Equality, diversity and inclusion
Our employees are committed to promoting an inclusive,
positive and collaborative culture. We treat everyone
equally irrespective of age, gender, sexual orientation,
race, colour, nationality, ethnic origin, religion, religious
or other philosophical belief, disability, gender identity,
marital or civil partner status, or pregnancy or maternity.
Our workforce and customers are from a diverse range of
people so we need to ensure that our workplace remains
inclusive and allows our people and our customers a
place where they can thrive. We are an equal opportunity
employer and will always aim to extend diversity as
vacancies arise.
Modern slavery
Protecting human rights and preventing modern slavery
is important to us. We are fundamentally opposed to
slavery and committed to understanding the risk of it and
ensuring it does not occur anywhere within our business
or supply chain.
Our most significant risk area in relation to slavery and
human trafficking in our supply chain, particularly in
connection with the sourcing by suppliers of construction
material, certain goods and the provision of manual labour
in property development and management services.
While nearly all our direct suppliers are based in the UK,
some of these suppliers’ source certain materials from
around the world.
As part of our broader initiative to identify and
mitigate risk in our supply chain, we have updated our
consideration of factors such as:
– reviewing our current contractors and suppliers,
particularly in relation to supply chain, with a view to
developing preferred supplier list arrangements based
on robust selection;
– centralising more contracts as a core part of our
supplier management strategy;
– strengthening our compliance review processes within
procurement practices;
– developing strong relationships with UK-based
suppliers and contractors that align to our business
code of conduct expectations; and
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Stakeholders
Our stakeholders and how we engage with them
Stakeholder
Why We Engage
How We Engage
Topics
Outcome
Customers
Employees
Communities
Shareholders
The needs of our customers drive our
brand and service offer. They provide
vital feedback on how we can improve
and better fulfil their needs. We have a
responsibility to provide a secure and
homely living environment and to care
for their wellbeing. This is central to the
Board’s strategic decision-making and
any associated operational change.
Our people are vital to the successful
delivery of our business plan. We have a
responsibility to provide our people with
a safe place to work and to care for their
wellbeing to enable them to prosper and
succeed in their professional lives.
The values and culture of our organisation
is embedded within our teams.
The communities in which we operate
help us fulfil our purpose of enhancing the
university experience of our customers.
We aim to understand each unique local
community in which we drive decision
making of how best we can make a
difference.
– On a day-to-day basis within
– Safety in their
– Launched our Hello Student app
our buildings.
homes
(see page 18)
– Through biannual customer surveys.
– Through our social media presence.
– Through building relationships with
universities in the towns and cities
which we operate in.
– Customer service
– Value for money
– Building
– Launched our first Post-grad product
at Southbridge, Edinburgh
(see page 42)
configuration
– Fire safety campaign delivered across
– Wellbeing
all sites (see page 51)
– On a day-to-day basis we use Workplace
as an internal communication tool.
– Quarterly townhalls are held where our
people can raise questions and provide
feedback.
– Through the One Team Collective.
– Safety at work
– Pay and reward
– Fair and equal
treatment
– Business updates
– Through on-site communication with
members of the public and local
communities.
– We have membership with the British
Property Federation where we can
interact with communities and
government on a wider basis.
– Interaction through the property
licensing disclosures we have to
undertake.
– Local job creation
– Provision of
appropriate
housing stock
– Supporting local
charities
– Winner of the 2022 Best Student
Wellbeing award (UK & Ireland)
– One Star accreditation by the Best
Companies survey (see page 52).
– Real Living Wage Employer with a
focus of improving the compensation
arrangements for our lowest paid
employees (see page 86).
– Launch of our internal leadership
development programme
(see page 55).
– Supported the British Heart
Foundation nationally (see page 54).
– Individual sites making positive
contributions to their local
surroundings or assisting local
charities.
– Launched our first corporate charity
partnership with Switch 180
(see page 54).
Our shareholders are key stakeholders
in our business. The Board has a
responsibility and desire to communicate
key matters relating to the Group openly
and honestly to our shareholders.
– Face-to-face meetings with investors
typically following annual and interim
results.
– Financial results
and business
performance
– The publication of our annual report
which presents a comprehensive
update of the Company.
– Dividend payments
– ESG
– Remuneration
The Group also has a wider responsibility
to shareholders to enhance the value
of the business and fulfil its purpose
ethically.
– At our Annual General Meeting.
– When significant change is proposed,
for example, material transactions or
changes to the remuneration structure.
policy
– Numerous meetings with current
and prospective shareholders held
throughout the year.
– Remuneration Committee Chair
consulted with largest Shareholders
on the proposed amendments to the
remuneration policy (see page 87).
– Launched our net zero strategy
(see page 46).
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Stakeholder
Why We Engage
How We Engage
Topics
Outcome
Our environment is fundamental to our
future. We have a duty to operate our
business in an energy efficient way,
giving specific regard to the impact
of our operations on the environment
and utilising methods throughout our
properties that mitigate the risk of
environmental damage.
Biannually we provide a detailed ESG
update within our annual and interim
reports.
– Reduction
greenhouse
emissions
– Becoming a
sustainable
business
– Published our net zero strategy (see
page 46).
– Improving our energy efficiency per
bed (see page 23).
– Managing our EPC risk (see page 23).
– Improving building certification
through developments (see page 45).
Environment
Lenders
Our lending partners are key to our
financing strategy. They support the
delivery of our day-to-day business
plan through the extension of financing
arrangements to facilitate developments,
capital expenditure or acquisitions.
– Open and regular dialogue with
– Development
relationship managers. Proactive
engagement in respect of sale and
acquisition pipelines and early dialogue
on refinancing requirements.
– Ongoing covenant reporting.
financing for St
Mary’s, Bristol
– Refinancing needs
– Following the completion of St Mary’s,
Bristol the development facility has
been converted to an investment
facility.
– Hedging requirement
– Refinancing of First Commercial Bank
facility.
– Discussions advanced regarding 2024
debt maturities
– Quarterly covenant compliance
reporting
– Acquisition of Market Quarter, Bristol.
– Disposal programme raised £53.5
million in 2022.
– Development of St Mary’s, Bristol and
Southbridge, Edinburgh completed
Agents and
Consultants
These stakeholders act on the Company’s
behalf, therefore it is fundamental
that we ensure they understand our
business requirements and meet the high
standards of conduct that we expect of
ourselves.
– Regular meetings and day to day
– Disposals,
communication.
acquisitions and
leasing
– Summer
turnaround
– Internal audit
tender
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Task Force on Climate-related Financial Disclosures (“TCFD”)
We are committed to implementing the recommendations of the Task Force on Climate-related Financial Disclosures.
With the exception of Part A of Metrics and targets and Part (C) of strategy recommendations, we believe this disclosure
addresses all of the recommended disclosures of the TCFD framework.
Area
Governance
(A) Describe the Board’s oversight of climate-related
risks and opportunities.
(B) Describe management’s role in assessing
and managing climate-related risks and
opportunities.
Strategy
(A) Describe the climate-related risks and
opportunities the organisation has identified
over the short, medium, and long term.
Disclosure
(A) The Board is ultimately responsible for risk management including the consideration of climate-related risks, though
this responsibility is delegated to the Audit and Risk Committee. See page 30 for our risk management framework.
Separately, the Board has established an ESG Committee, which meets three times a year and is chaired by the Company’s
Chairman, Mark Pain. This Committee oversees ESG activities on the Boards behalf and provides the Board regular
updates on relevant matters. For more information on governance structure please see page 70. The Board considers ESG
related issues when setting its annual strategy and budget. ESG targets also appear in Executive Directors performance
objectives, which are linked to remuneration. The Boards strategy is distilled into key performance indicators, with
implementation by management monitored by the ESG Committee and reported on to the Board.
(B) As set out on page 46, the Board has ultimate responsibility for the ESG strategy and delegates oversite of this important
area to a formal committee of the Board, the ESG Committee. The ESG Committee considers detailed reports from the
ESG working group and monitors strategic implementation and progress against KPIs. The ESG working group is chaired
by the Chief Financial & Sustainability Officer who is a member of both the ESG Committee and Board. This ensures the
dissemination of strategic priorities to senior management who are responsible for implementing the ESG strategy
within the business. The ESG working group includes senior managers from across the business with representation from
Property investment, Operations, HR, Asset Quality and Sales teams. The group meets monthly and is advised by Maitland
and CBRE and reports to the ESG Committee.
(A) Given the nature of the Group’s business, risks and opportunities are typically considered over the following time horizons:
– Short term; 0-3 years;
– Medium term; 3-10 years;
– Long term: >10 years
Risks are assessed in terms of both financial and reputational impact. Risk managers from within the business are provided
with guidelines to ensure consistency of approach in assessing risks; and at what level of financial impact or reputational
damage a risk maybe considered to be significant versus insignificant.
Risks in the short to medium term surround future EPC requirements for lettable properties implemented via the MEES
regulations and enhancement in GHG emissions reporting. Changing market trends, presents a future risk to the business,
with customers and investors seeking properties with greater sustainability credentials, potentially quicker than we may be
able to provide. In the longer term, climate change concern and more extreme weather conditions presents a significant risk.
An acceleration in our ESG programme may present opportunities to improve returns for stakeholders, through
more energy efficient properties lowering both cost and emissions while attracting and retaining customers through
improved sustainability credentials.
In 2021 we undertook a materiality assessment to identify material topics to aid in the development of our ESG strategy.
In 2022 we published our Net Zero Strategy, which can be found on our website, and sets out a roadmap of how we will
deliver net zero by 2033. It is based on the core assumption that climate risks are sufficient to materially impact the value
of assets and therefore its strategy.
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Area
Strategy
(B) Describe the impact of climate-related risks and
opportunities on the organisation’s businesses,
strategy and financial planning.
(C) Describe the resilience of the organisation’s
strategy, taking into consideration different
climate-related scenarios, including a 2°C or
lower scenario.
Risk management
(A) Describe the organisation’s processes for
identifying and assessing climate-related risks.
Disclosure
(B) Climate related risks may impact planning legislation, cause flooding and damage or increase compliance risk through
the implementation of legislation all of which may materially impact the value of our properties, it’s revenue and costs
and therefore the ability to implement our strategic priorities.
In 2022 we published our Net Zero Strategy, which can be found on our website, and sets out a roadmap of how we will
deliver net zero by 2033.
The Board ensures that climate risks and ESG factors are included as key metrics throughout the business, for example
as we undertake portfolio reviews in determining where we wish to either divest or invest further capital in green energy
efficiency initiatives. We consider climate-related risks and energy efficiency on all acquisitions.
We continue to allocate resources to refurbishment, behavioural change and energy efficiency improvements as part
of our annual budgeting process, with a significant allocation of resources planned for both 2023 and 2024 aimed,
primarily at decarbonisation initiatives. All refurbishment projects now target achieving an enhancement to EPC ratings.
The Group’s procurement strategy provides for environmental and ethical standards to be adhered to within our supply
chain. A number of ESG targets are included within the calculation of variable remuneration.
(C) We cannot yet provide detailed analysis in this area, however we are undertaking a comprehensive assessment and
expect to be able to make appropriate disclosures in next year’s report.
(A) Climate related risks are identified and assessed using the same methodology as all business risks and are captured and
reported as part of the Group’s principal risks. The Group considers both existing and emerging (e.g. MEES legislation)
when assessing climate related risks. These are reviewed by the executives and reported on to the Audit and Risk
Committee on a biannual basis. The Board recognises that climate change is an increasingly important priority and a key
emerging risk.
Risks are assessed in terms of both financial and reputational impact. Risk managers from within the business are
provided with guidelines to ensure consistency of approach in assessing risks; and at what level of financial impact or
reputational damage a risk maybe considered to be significant versus insignificant. Although not exhaustive, risks facing
the Group are then categorised into three categories being; external risks; internal risks and emerging risks.
The process for assessing risk is detailed on page 30.
(B) Describe the organisation’s processes for
(B) Climate related risks are managed by the ESG working group which is chaired by the Chief Financial & Sustainability
managing climate-related risks.
Officer and includes senior representatives from each functional division of the business and is advised by Maitland and
CBRE. This Group is responsible for the identification and management of risk. A risk register is maintained and regularly
updated which sets out discusses the risk and any controls or mitigants either in place or contemplated. Utilising the
work of the ESG working group, climate related risks are then combined with all other risk registers and reported on to
the Boards Audit and Risk Committee bi-annually.
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Energy Usage Data
Task Force on Climate-related Financial Disclosures (“TCFD”) | continued
Area
Disclosure
(C) Describe how processes for identifying,
(C) The Board has overall responsibility for risk management, for determining the Group’s risk appetite and reviewing
assessing, and managing climate-related risks
are integrated into the organisation’s overall risk
management.
Metrics and targets
(A) Disclose the metrics used by the organisation to
assess climate-related risks and opportunities
in line with its strategy and risk management
process.
principal risks and uncertainties regularly, together with the actions taken to mitigate them. Management of climate
related risks is integrated into the business through a programme of staff engagement and training.
(A) We do not yet fully comply with this. As we develop our ESG strategy further, we will publish further metrics in this
area and announce targets for these in next year’s report which will follow a study utilising TCFD’s recommendation
of scenario analysis.
(B) Disclose Scope 1, Scope 2, and, if appropriate,
(B) We disclose Scope 1 and 2 greenhouse gas (“GHG”) emissions on page 64. We have more work to do on our Paris-aligned
Scope 3 greenhouse gas (“GHG”) emissions, and
the related risks.
2050 scope 3 target and we aim to progress this when more data is available to provide an accurate picture.
(C) Describe the targets used by the organisation to
manage climate-related risks and opportunities
and performance against targets.
(C) In our Net Zero Strategy report, which is available on our website and contains our roadmap to 2033, we have set out
wider target of being net zero in all our emissions (adding scope 3) by 2050. We also have two key climate related key
performance indicators within the business which monitor.
a)
our progress towards compliance with future MEES regulation (percentage of the portfolio rated EPC B or better)
where we intend to achieve 50 per cent by 2025, 75 per cent by 2028 and full compliance by 2030; and
b)
energy intensity per bed where we target a reduction to 1,500 kwh per bed by 2040, with an interim target of 2,000
kwh per bed by 2033. Both assessed from our base year of 2019.
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Energy Usage Data
This section contains information on Greenhouse Gas
(GHG) emissions required by the Companies Act 2006
(Strategic Report and Directors’ Report) Regulations 2013
(“the “Regulations”). For the third time, we have chosen to
report this information in line with EPRA (European Public
Real Estate Association) sustainability best practice
methodology which is based on the Global Reporting
Initiative (GRI) Standards.
In the context of significantly increased occupancy in
2022 compared to 2021 (increase of 27 per cent), the key
headlines for the year are as follows:
– 4 per cent increase in like-for-like GHG emissions;
– 10 per cent increase in like-for-like electricity
consumption;
– 2022 operational bed data now inclusive of all sites
under both like-for-like and absolute; and
– The large increase in water consumption is largely
due to catch up readings.
The reporting period is 1 January 2021 to 31 December
2022, comprising the period from the commencement of
operations to the year end. Data for two years is shown to
enable comparison.
Organisational Details
This report has been prepared for Empiric Student
Property Plc (herein referred to as Empiric) with a head
office located at Hop Yard Studios, 1st Floor, 72 Borough
High Street, London, SE1 1XF. The report includes all of the
Empiric portfolio located in the UK.
Organisational Boundary
The operational control approach is used to consolidate
the Company’s organisational boundary. The Company
owns 100 per cent of the property assets it operates
and has therefore reported on that basis. Like-for-like
indicators include all properties which have been in the
portfolio since 1 January 2021, but not those which were
acquired, sold or included in the development pipeline at
any time since that date.
EPRA Sustainability Performance
Measures and GHG emissions
Reporting Period
The EPRA report is required annually and requires data
for two years to enable comparison. The reporting period
for this document is 01 January 2021 to 31 December
2022, comprising the period from the commencement of
operations to the year end.
Methodology
We have used the EPRA Best Practices Recommendations
on Sustainability Reporting (3rd Edition) and GHG
Protocol Standard (revised edition) to prepare this
disclosure. The UK Government Conversion Factors for
Company Reporting have been applied to convert energy
data into greenhouse gas emissions. Whole building
data has been reported and any missing data has been
estimated using either direct comparison, pro rata
calculation or based on an average consumption value
per bed.
In order to express the GHG emissions in relation to
a quantifiable factor associated with the Company’s
activities, the intensity ratio of tCO2e per operating bed
has been chosen, calculated using absolute data.
Exclusions / materiality
Scope 1 fugitive emissions from stationary air
conditioning/refrigeration plant are estimated to account
for less than 5% of the group’s emissions and as such have
been deemed to be immaterial.
Empiric have transitioned to an electric van fleet from Q4
2021. These are charged on Empiric’s estate and as such
the transport consumption from owned fleet is included
in the electricity consumption for the group (scope 2).
Energy Efficiency Actions
In the period covered by the report the Group has:
– Retrofitted networked controlled panel heaters
with occupancy detection across three sites.
– Upgraded/ replaced boiler plant with more efficient
equivalents at 2 sites.
– Commenced Building Management System (BMS)
reviews/ optimisation works across the estate.
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EPRA Sustainability Performance Measures and GHG emissions
Sustainability Performance Measures
(Environment)
Total Portfolio
Impact Area
EPRA Code
Indicator
Boundaries
Units
Absolute Performance
Like-for-Like Performance
Energy
Elec - Abs, Elec - LfL
Electricity
Total landlord obtained energy consumption from electricity (Scope 2)
kWh
18,998,543
20,467,595
17,441,227
19,126,247
10%
2021
2022
2021
2022
% change
Proportion of energy consumption from renewable sources
Proportion of data estimated
Coverage (% by bed)
%
%
%
100%
100%
100%
100%
100%
N/A
DH&C - Abs, DH&C - LfL District heating
and cooling
Total landlord obtained energy consumption from district heating and
cooling (Scope 2)
kWh
649,767
602,384
649,767
602,384
Proportion of energy consumption from renewable sources
Proportion of data estimated
Coverage (% by bed)
Fuels - Abs, Fuels - LfL
Fuels
Total landlord obtained energy consumption from fuels (Scope 1)
Scope 1 transport data
Proportion of energy consumption from renewable sources
Proportion of data estimated (%)
Coverage (% by bed)
%
%
%
kWh
kWh
%
%
%
51%
1%
51%
25%
51%
1%
51%
25%
100%
100%
100%
100%
17,011,313
18,884,069 15,328,277
16,609,127
0
0
0
0
100%
100%
100%
100%
Energy - Int
Energy Intensity Total landlord obtained energy
kWh/bed/year
4,240
4,390
4,172
4,538
8%
No. of applicable
properties
Energy and associated GHG disclosure coverage
–
86
88
82
82
GHG
emissions
GHG - Dir - Abs
Direct
Scope 1 emissions from landlord obtained consumption of fuels
tCO2e
3,116
3,447
2,808
3,032
GHG - Ind - Abs
Location
Scope 2 emissions (location based) from landlord obtained
consumption of electricity
GHG - Int
Fugitive
Emissions
GHG emissions
intensity
GHG emissions intensity from Scope 1 and 2 (location-based)
emissions
Emissions from leaks of GHG, for example from refrigeration
and air-conditioning units (Scope 1)
Water
Water-Abs, Water - LfL Water
Total landlord obtained water from municipal water supplies
Proportion of data estimated
Coverage (% by bed)
Water-Int
Landlord obtained water intensity
Waste
Waste-Abs, Waste - LfL Waste
Total weight of waste to landfill
Waste - Int
Total waste obtained
Total weight of recycling waste
Total weight of waste to energy recovery facility (ERF)
4,075
3,996
3,744
3,737
0.83
0.82
0.82
0.84
N/A
N/A
N/A
N/A
227,032
343,415
216,209
340,908
1,256
742
240
0.24
930
533
240
0.21
tCO2e/bed/
year
tCO2e
m3
%
%
m3/bed/year
Tonnes
Tonnes
Tonnes
Tonnes/bed/
year
7%
0%
3%
Contents Generation – PageContents Generation – Sub PageContents Generation - Section
Section 172(1) Statement
Impact Area
Head office
Student Accommodation
Performance based on Asset Type
2021 (Abs)
2022 (Abs)
2021 (LfL)
2022 (LfL)
% change
2021 (Abs)
2022 (Abs)
2021 (LfL)
2022 (LfL)
% change
Energy
99,825
99,825
99,825
99,825
0% 18,898,718
20,367,770
17,341,402
19,026,422
100%
100%
100%
100%
N/A
N/A
N/A
N/A
100%
100%
0%
N/A
2.04%
0.10%
100%
100%
100%
2.17%
100%
100%
100%
0.09%
-96%
649,767
602,384
649,767
602,384
51%
1%
51%
25%
51%
1%
51%
25%
100%
100%
100%
100%
17,011,313
18,884,069 15,328,277
16,609,127
0
0%
0
0%
0
0%
0
0%
0.00%
0.24%
0.00%
0.28%
100%
100%
100%
100%
4,240
4,390
4,172
4,538
85
87
81
81
N/A
0%
0%
3,116
3,447
2,808
3,032
N/A
N/A
N/A
N/A
1
0
1
0
1
0
1
0
21.196
19.304
21.196
19.304
-10%
4,054
3,977
3,723
3,717
N/A
N/A
N/A
N/A
N/A
0.83
0.82
0.82
0.84
10%
0%
0%
-7%
0%
3685%
0%
8%
0%
0%
0%
9%
0%
8%
<1%
3%
N/A
N/A
N/A
N/A
N/A
227,032
343,415
216,209
340,908
12%
14%
12%
12%
100%
100%
100%
100%
26
38
1,256
742
240
0.24
27
43
930
533
240
0.21
58%
2%
0%
58%
GHG
emissions
Water
Waste
Footnotes/Assumptions
1.
The proportion of the district heating
energy that comes from renewable
(biogenic) sources was 50.97% in
2021. The figures for 2022 will not
be available until March 2022 so, the
same fuel mix is assumed for 2022
also.
Gas supplied to Empiric’s estate is
exclusively derived from fossil fuels.
100% of the water withdrawn is
assumed to be from municipal water
supplies.
Head office energy consumption
is estimated based on the EPC and
assumed to be similar for both
reporting years.
Waste data was only available for
Buccleuch Street and King's Stables
Road sites. This data has been
extrapolated and supplemented
with waste collection data from local
councils that Empiric’s portfolio is
located in.
Council waste collection data was
only available for 2020/21 at the time
of compiling the report. As such, it has
been assumed the data is also valid for
2022.
It is assumed that bins do not reach
capacity before collection. Based on
the information from Buccleuch Street
and King's Stables Road sites and
average waste level is assumed.
Owned fleet consumption data from
2021 was not available at the time of
compiling the report.
2.
3.
4.
5.
6.
7.
8.
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Contents Generation – Sub PageContents Generation – Section
Principal decisions
Section 172(1) Statement
The Board openly accepts its obligation to operate as a good corporate citizen and recognises that broader stakeholder recognition is integral to the long-term success of the
Company. For the year under review, the Board has had due regard for the following:
Section 172 requirements
Disclosures
The likely consequences
of any decision in the
long term
The Board provides oversight over the Company’s performance and gives guidance as to the long-term strategy of the Company. The day-to-day
management and decision-making is delegated by the Board to the Executive Committee which provides regular updates to the Board. This allows the
Board to monitor the performance of the Company and ensure that the Company is progressing in line with the long-term strategy. The KPIs reported
on page 22 are the key metrics which the Board reviews, which are supplemented by further detailed reporting.
Also see details surrounding stakeholder engagement on page 58 and Board activities and principal decisions taken as set out on page 67.
The interests of the
Company’s employees
Our people are crucial to the Company’s success; they provide our customers with exceptional service to ensure they feel at home. The Board recognises how
vital our people are and as such all decisions taken by the Board consider the interests of the Company’s employees.
The Board has designated Alice Avis (Senior Independent Non-Executive Director) to liaise with the One Team Collective. This allows a direct conduit between
the Board and our people. This gives the Board insight into the views and concerns of our people and allows them to ensure their decisions are aligned with the
interests of the Company’s employees.
The need to foster the
Company’s business
relationships with
suppliers, customers
and others
Also see Providing opportunities for all on page 54 and the company’s activities surrounding enhancement of mental health & well-being on page 52.
The Company has a few key suppliers and the Board is involved in reviewing and approving any key contracts which the Company enters into. As such the
Board provides oversight and challenge to key suppliers. Day-to-day relationships with Company suppliers are delegated to the Senior Leadership Team
to ensure a close relationship is fostered.
Without customers the Company could not exist, and as such the Board takes great interest in fostering relationships with these customers. The Board
reviews the results of the biannual customer survey, as well as receiving and reviewing other ad hoc reports on our customers’ preferences and wishes.
As part of the CEO’s Board reporting, our customers sit as a standing agenda item. The Board believes that fostering a close relationship and a deep
understanding of our customers is key to the Company’s success.
The impact of the
Company’s operations on
the community and the
environment
The desirability of the
Company maintaining
a reputation for high
standards of business
conduct
The need to act fairly
between members of the
Company
Also see details surrounding stakeholder engagement on page 58.
The community and environment in which the Company operates in is a key priority for the Board. The Board takes the impact of the Group’s operations
on the community and environment into account in each decision. The decisions which the Board take can have widespread ramifications. Reviewing this
impact is not a perfunctory exercise but one which the Board believes is a key responsibility, which includes robust challenge of all decisions.
The Board recognises the importance of maintaining a reputation for high standards of business conduct. The Board always seeks to make the best
decision for the Company which while taking into account the needs of all of our stakeholders also reflects morally on our obligations as a Company.
The Board encourages this principle throughout the business and directs the Company’s ethos through the Company purpose and values.
The Board also encourages the Company to go above and beyond in certain areas and one particular example is mental health welfare, where the Board
pushed for greater support for both our people and our customers.
The Board believes transparency and accountability of the business is paramount to encourage shareholder confidence. The Board listens to and reviews
the views across our shareholder base.
The need to act fairly between all of our shareholders underpins the Board’s decisions’ and the Board receives regular feedback from shareholders after
our annual and interim results release. The Board also receives feedback from research analysts throughout the year. This helps to identify key shareholder
trends which the Board takes note of. The capital structure of the Company as a REIT, limiting individual shareholdings to a maximum of 10% of issued
share capital, helps to ensure there are no dominant shareholders and that all shareholders are treated equally.
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Contents Generation – Sub PageContents Generation - Section
The Strategic Report was approved by the Board
on 16 March 2023 and is signed on its behalf by:
Donald Grant | Director
Principal decisions
February 2022: Acquisition of Market Quarter, Bristol
Decision taken
An opportunity arose to acquire a 92 bed freehold
purpose built property in a prime location in Bristol.
The Company held two existing operational assets in
the city and was in the process of developing a third.
Bristol is a city with strong student demographics and an
undersupply of student accommodation.
Long-term success considerations
A key pillar of the Company’s strategy is to grow
successful clusters of properties in close proximity to the
best universities, usually members of the Russell Group.
The acquisition of Market Quarter presented the perfect
opportunity to cluster the property with existing sites to
leverage operational efficiencies and improve the gross
trading margin in the city, whilst enhancing the amenity
offer for all the Company’s Bristol based students.
Stakeholder impact considerations
Customers: The provision of quality student
accommodation in an undersupplied location was
considered, whilst improving the overall service offer
available to existing students through greater scale;
Shareholders: Strategic alignment and enhancement of
shareholder return was considered; and
Employees: The ability of our existing teams to provide
the service level expected across an increasing number
of rooms and properties and what appropriate support
could be made available to them.
Outcome
Bristol is currently the Company’s top performing city,
both in terms of value creation in 2022, but also from a
staff engagement perspective. Excellent feedback has
been received from stakeholders that have visited the
property. The Company’s gross margin was improved by
seven percentage points across the city in 2022.
October 2022: Closure of Brunswick house
Decision taken
Following a detailed analysis of the fire safety programme
and refurbishment requirements for the Group’s property
at Brunswick House in Southampton,
the decision was taken to close the property for the
entirety of academic year 2023/24 and not offer the
property for sale at the forthcoming sales launch for
academic year 2023/24.
Long-term success considerations
In arriving at their decision, the Board considered the
impact on stakeholders of a more staggered works
programme extending over multiple years. It was
concluded that the strategy could be balanced in such a
way as to accelerate the programme and run the fire safety
works concurrently with the refurbishment programme,
ultimately delivering the properties potential considerably
earlier and improve longer term customer satisfaction.
Stakeholder impact considerations
Customers: The Board considered the communication
plan and the provision of accommodation at other sites in
the city as well as the longer term impact on customers of
a more staggered programme of works;
Lenders: The impact on covenants and income security
offered to lenders was considered and early engagement
was discussed;
Shareholders: Alignment with corporate strategy was
considered together with return hurdles that could be
expected from an accelerated programme; and
Employees: Redeployment of our people to ensure they
could be retained during the period of closure.
Outcome
The decision was well communicated with minimal
impact on students and employees whilst providing a
more manageable project for our development team.
Overall, the decision was well handled and received by all
stakeholders.
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Contents Generation – PageContents Generation – Sub PageContents Generation – Section
Governance Report
Board of Directors
Board of Directors
Committees
N Nomination
A Audit and Risk
R Remuneration
E ESG
Chair
Mark Pain
Duncan Garrood
Donald Grant
Alice Avis MBE
Martin Ratchford
Clair Preston-Beer
Non-Executive Chairman
Chief Executive Officer
Chief Financial and Sustainability Officer
Senior Independent Non‑Executive Director
Non-Executive Director
Non‑Executive Director
Appointed
1 September 2018
28 September 2020
12 September 2022
Independent
Yes
N
E R
Committee
Memberships
Relevant Skills
and Experience
No
E
No
E
– Chartered accountant
– Strong financial, customer and shareholder focus
– Extensive experience of executive and non-executive
– Strong operational, sales and marketing skills
– Extensive experience of executive roles in the
consumer/leisure sectors
roles in the real estate, financial services and
consumer/leisure sectors
– Significant expertise in the consumer/leisure sectors
– Chartered accountant
– Over 20 years’ experience in the listed real estate
and financial services sectors, covering finance,
tax, regulatory compliance, HR, IT and
company secretarial
– Extensive experience in marketing, e-commerce,
– Chartered accountant
– Significant expertise in large hospitality/
strategy and operations in the consumer
– Over 20 years’ experience in executive and leadership
retail businesses
goods/retail sectors
roles in the UK/international listed real estate, funds
– Extensive experience in international franchising/
– Executive and non-executive expertise in FTSE 100/
and student accommodation sectors
business transformation
UK and international entrepreneurial organisations
– Expertise in structured real estate debt and equity
financing and systems and control environments
Principal External
Appointments
– Chairman – AXA UK
– Chairman – London Square
– Senior Independent Director
– Close Brothers Group plc
– None
– None
– Non-executive Director
– BGF (the Business Growth Fund)
– Non-executive Director
– The Edrington Group Limited
– Non-executive Director – iPulse Limited
– Chief Finance Officer at Frasers Property UK Limited, a
– Managing Director – Local Pubs – Greene King
Frasers Property group company
Significant
Previous External
Experience
– Group Finance Director – Abbey National PLC
– Group Finance Director – Barratt Developments PLC
– Non-executive Directorships – Ladbroke Coral Group
PLC, Aviva Insurance Limited, Spirit Pub Group PLC,
Johnston Press PLC, Northern Rock, LSL Property
Services and Punch Taverns PLC
– Vice Chairman and Senior Independent Director
– Yorkshire Building Society
– CEO – Ten Entertainment Group Plc
– CEO – Bills Restaurants
– CEO – Punch Taverns plc
– President – M.H. Alshaya
– Commercial Director – BAA plc
– Chief Financial Officer – RDI REIT P.L.C
– Group Financial Controller
– Capital & Counties Properties PLC
– Head of Finance – Liberty International PLC
– Head of Financial & Regulatory Control (EMEA)
– BCG Partners / Cantor Fitzgerald
– Executive chairman – Lumene Oy
– CEO – Sanctuary Spa Group
– Marketing and E-Commerce Director
– Marks and Spencer PLC
– Global brand Director, Johnnie Walker – Diageo PLC
– Finance director, Real Estate and Funds
– Managing Director – Costa Coffee, Middle East & Asia
– Thomas Cook plc
– Head of Europe, Finance – British Land PLC
– Finance Director – The Unite Group PLC
– Chief Operating Officer – Costa Coffee, UK
– Franchise Director – Costa Coffee, UK
1 March 2019
Yes
1 October 2021
Yes
1 July 2022
Yes
R N
E A
A R N
E
A R N
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Contents Generation – Sub Page
Appointed
1 September 2018
28 September 2020
12 September 2022
No
E
No
E
Independent
Yes
N
E R
Committee
Memberships
Relevant Skills
and Experience
Mark Pain
Duncan Garrood
Donald Grant
Alice Avis MBE
Martin Ratchford
Clair Preston-Beer
Non-Executive Chairman
Chief Executive Officer
Chief Financial and Sustainability Officer
Senior Independent Non‑Executive Director
Non-Executive Director
Non‑Executive Director
1 March 2019
Yes
1 October 2021
Yes
1 July 2022
Yes
R N
E A
A R N
E
A R N
E
– Chartered accountant
– Strong operational, sales and marketing skills
– Chartered accountant
– Strong financial, customer and shareholder focus
– Extensive experience of executive roles in the
– Over 20 years’ experience in the listed real estate
– Extensive experience of executive and non-executive
consumer/leisure sectors
and financial services sectors, covering finance,
roles in the real estate, financial services and
– Significant expertise in the consumer/leisure sectors
tax, regulatory compliance, HR, IT and
consumer/leisure sectors
company secretarial
– Extensive experience in marketing, e-commerce,
strategy and operations in the consumer
goods/retail sectors
– Executive and non-executive expertise in FTSE 100/
UK and international entrepreneurial organisations
– Chartered accountant
– Over 20 years’ experience in executive and leadership
roles in the UK/international listed real estate, funds
and student accommodation sectors
– Expertise in structured real estate debt and equity
financing and systems and control environments
– Significant expertise in large hospitality/
retail businesses
– Extensive experience in international franchising/
business transformation
Principal External
– Chairman – AXA UK
– None
– None
Appointments
– Chairman – London Square
– Senior Independent Director
– Close Brothers Group plc
– Non-executive Director
– BGF (the Business Growth Fund)
– Non-executive Director
– The Edrington Group Limited
– Non-executive Director – iPulse Limited
– Chief Finance Officer at Frasers Property UK Limited, a
– Managing Director – Local Pubs – Greene King
Frasers Property group company
Significant
Previous External
Experience
– Group Finance Director – Abbey National PLC
– CEO – Ten Entertainment Group Plc
– Group Finance Director – Barratt Developments PLC
– CEO – Bills Restaurants
– Non-executive Directorships – Ladbroke Coral Group
– CEO – Punch Taverns plc
PLC, Aviva Insurance Limited, Spirit Pub Group PLC,
– President – M.H. Alshaya
Johnston Press PLC, Northern Rock, LSL Property
– Commercial Director – BAA plc
Services and Punch Taverns PLC
– Vice Chairman and Senior Independent Director
– Yorkshire Building Society
– Chief Financial Officer – RDI REIT P.L.C
– Group Financial Controller
– Capital & Counties Properties PLC
– Head of Finance – Liberty International PLC
– Head of Financial & Regulatory Control (EMEA)
– BCG Partners / Cantor Fitzgerald
– Executive chairman – Lumene Oy
– CEO – Sanctuary Spa Group
– Marketing and E-Commerce Director
– Marks and Spencer PLC
– Global brand Director, Johnnie Walker – Diageo PLC
– Finance director, Real Estate and Funds
– Thomas Cook plc
– Head of Europe, Finance – British Land PLC
– Finance Director – The Unite Group PLC
– Managing Director – Costa Coffee, Middle East & Asia
– Chief Operating Officer – Costa Coffee, UK
– Franchise Director – Costa Coffee, UK
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Contents Generation – PageContents Generation – Sub PageContents Generation – Section
Chairman’s Introduction
to Corporate Governance
Chairman’s Introduction to Corporate Governance
Mark Pain | Non-Executive Chairman
Our Approach to Corporate Governance
As Chairman I am responsible for leading the Board
and ensuring that it maintains the highest standards
of corporate governance whilst promoting long-term
sustainable success. We have a clear framework in place
for the way in which the Board operates to ensure we are
working for the benefit of all our stakeholders, in a legal,
ethical and transparent manner.
Purpose and culture
The Board believes that having a clear purpose which
is underpinned by its values-based culture is the key
to creating a business with strong governance. The
Company’s purpose as set out on the inside front cover
and is aligned with the Company’s strategic objectives
(as set out on page 10) and the interests of the Company’s
key stakeholder groups.
The Board regularly assesses how well its purpose and
values have been embedded in the Company’s culture.
Regular enquiry and feedback is received from members
of the senior leadership team, the Chair of the One Team
Collective, review of business performance and ad-hoc
engagement with our people.
The boardroom culture is good natured and constructive.
The Chairman and the CEO set a tone of openness
and thoroughness, which is upheld by the Board with
Directors holding themselves to high standards of
integrity. The Board is agile, which enables opportunities
to be addressed at short notice.
Our approach to corporate governance is based upon
the principles and provisions of the UK Corporate
Governance Code (the “Code”) published by the Financial
Reporting Council (“FRC”). The following Corporate
Governance Report sets out how the Company has
applied and complied with the Code during the 2022
financial year.
We are committed to ensuring we adhere to the highest
standards of corporate governance. We continue
to monitor developments to allow us to respond
appropriately where required.
The Board
The Board’s role is to promote the long-term success
of the Company, generating value for shareholders and
contributing to its key wider stakeholder groups. The
Board leads and provides direction for the executive
Directors, by setting our Company strategy and objectives
and overseeing the implementation of key operational
policies throughout the business. The executive Directors
are responsible for managing our daily business activities
and operations.
The Board delegates appropriate matters to its
Committees and reviews their terms of reference at least
every other year. The last review of the terms of reference
took place in December 2022. Copies of these are
available from the Company Secretary or the Company’s
website www.empiric.co.uk
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Governance Structure
The Board
To assist in the effectiveness of the Board, it delegates certain matters to formal Board Committees to review and make recommendations
back to the Board. All Committees must operate within their terms of reference which are set by the Board. Day-to-day operations are carried
out by the executive Directors, who must adhere to policies and authorities set by the Board.
Nomination
Committee
Considers the composition,
skills and succession planning
of the Board.
Audit and Risk
Committee
Ensures the Group’s
financial reporting and risk
management is properly
monitored, controlled
and reported.
Remuneration
Committee
Reviews remuneration
of executives and senior
leadership team in accordance
with shareholder approved
policy.
ESG
Committee
Safeguards the interest, and
monitors engagement with,
stakeholders to ensure the
Company demonstrates sound
social and environmental risk
management.
Read more on | page 79
Read more on | page 81
Read more on | page 84
Read more on | page 44
Senior Leadership Team
Working with the executive Directors, the senior leadership team ensure Company policies are embedded
in the business and its operations and that strategic decisions are executed appropriately.
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Chairman’s Introduction to Corporate Governance | continued
Board composition
The Board consists of two executive Directors and four non-executive Directors,
including the Chairman.
Changes in Board membership during the year are discussed in the Nominations
Committee report on page 79.
Biographical information of each Directors is set out on page 68.
Board position
Primary Responsibilities
Senior independent
non-executive
Director
The Directors bring a wealth of property, operational, financial, governance and
marketing knowledge and skills to our business. Together with a depth of experience,
the Directors scrutinise the businesses strategy and performance.
Non-executive
Directors
• Acting as a sounding board for the Chairman and
intermediary for other Directors when required;
• Leading the evaluation of the Chairman on behalf of the
other Directors; and
• Being available to shareholders to raise their concerns if
they cannot be resolved through other channels.
• Providing constructive challenge;
• Overseeing the Senior Leadership Team’s progress on
implementing strategy and meeting objectives; and
• Monitoring the reporting of performance.
Each Board member’s length of service is reviewed annually in line with the Code.
The tenure of each Director is set out in the table on page 80.
There is a clear division of responsibilities between the Chairman and
Chief Executive Officer. Their roles are clearly set out and agreed by the Board.
The primary responsibilities of the Directors are as follows:
Board position
Primary Responsibilities
Chairman
• Leading the Board and ensuring its effectiveness;
• Reviewing the Company’s general progress and long-
term development; and
• Ensuring the Company is meeting its responsibilities to
all stakeholders.
Chief executive
officer
• Leading and developing the Company’s profitable
operation and development;
Board meetings
The Board holds regular formal, scheduled meetings with additional meetings scheduled
as business needs require. The agenda for each meeting is typically set by the Chairman,
with assistance from the executive Directors. The agenda, along with the Board papers,
are sent in advance allowing sufficient time for the Directors to digest and consider,
thereby enabling effective decision making within meetings. Any decisions and actions
arising from the meetings are implemented by the executive Directors and monitored by
the Company Secretary.
During the year, there were six Board meetings held. The table below shows the Directors’
attendance at Board meetings in 2022. The figures in brackets show the number of
meetings each Director was eligible to attend.
• Overseeing all activities of the business and leading the
sales, marketing and operations functions;
• Ensuring the objectives are in line with operational
activities; and
Mark Pain
Duncan Garrood
Chief financial
and sustainability
officer
• Creating shareholder value over the long term.
• Overseeing sustainability across the business;
• Leading the finance and IT functions;
• Producing timely and accurate financial information and
analysis;
• Raising and managing debt;
• Ensuring tax and regulatory compliance; and
• Maintaining financial control.
Donald Grant (appointed 12 September 2022)
Alice Avis
Martin Ratchford
Clair Preston-Beer (appointed 1 July 2022)
Lynne Fennah (retired 31 October 2022)
Stuart Beevor (retired 23 May 2022)
Meetings
6 (6)
6 (6)
2 (2)
6 (6)
6 (6)
3 (3)
5 (5)
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Director independence
The Board reviews the independence of the Chairman and
non-executive Directors on an annual basis. For the financial
year ending 31 December 2022, all of the non-executive
Directors, including the Chairman, are considered to be
independent for the purposes of the Code.
Advice for Directors
The Directors have access to independent advice at
the Company’s expense, if they judge it necessary to
discharge their responsibilities. All Directors have access
to the advice and services of Apex Secretaries LLP, who
act as Company Secretary.
Appointment of Directors
The executive Directors have contracts with the Company
which include a six-month notice period and include
restrictive covenants. The non-executive Directors
have letters of appointment, which can be terminated
in accordance with the Articles of Association and do
not specify a notice period. The terms and conditions of
appointment for the non-executive Directors are available
for inspection at our registered office and at each Annual
General Meeting.
Directors who are appointed to the Board are required
to be elected by shareholders at the next Annual General
Meeting. Donald Grant and Clair Preston-Beer will be
proposed for election to the Board for the first time at
the Annual General Meeting on 24 May 2023. All other
Directors are subject to annual re-election at each Annual
General Meeting.
All appointments to the Board are subject to a formal,
rigorous and transparent process. Further details on
the two appointments during 2022 can be found in the
Nominations Committee report on page 79.
Board induction and training
Donald Grant and Clair Preston-Beer received a thorough
formal induction upon appointment. This included
meeting members of the Board and Senior Leadership
Team, and meetings with key advisers.
The Chairman reviews and discusses each Director’s
individual training and development needs. The Board as
a whole also receives briefings and training on relevant
topics. The Company benefits from the non-executive
Directors’ membership of other boards. This provides
experience that can be applied to our business. In addition,
the Board receives regular publications on key topics from
our advisers and other professional services firms.
Time commitment of non-executive Directors and
external appointments
Non-executive Directors are required to devote sufficient
time to fulfil their responsibilities to the Group, to prepare
for meetings, and to regularly refresh and update their
skills and knowledge. Each Director’s other significant
commitments are disclosed to the Board at the time
of their appointment and they are required to notify
the Board of any subsequent changes. Each Director is
also required to seek permission from the Chairman of
the Board prior to accepting any other directorships of
publicly quoted companies.
The Chairman has reviewed the availability of the non-
executive Directors and is satisfied that each Director
is able to, and in practice does, devote the necessary
amount of time to the Group’s business.
The Senior Independent Director has reviewed the
availability of the Chairman and considers that he is able
to, and in practice does, devote the necessary amount of
time to the Group’s business.
Board succession
Board succession is considered by the Nominations
Committee. See page 79 for further detail.
Board operations
The Board meets a minimum of once per quarter, normally
aligned to the Company’s financial calendar. These
meetings operate under a formal quarterly schedule
of matters reserved for the Board to ensure that the
Company’s strategy, objectives, risks, operations, controls
and policies are all addressed or reviewed throughout the
year. The matters reserved schedule specifies that Board
decision making must give due regard for all stakeholders.
To ensure conflicts are avoided, Directors are asked to
disclose their interests before each meeting,
Board and Committee papers are ordinarily provided
by management seven days in advance of meetings to
allow Directors sufficient time to prepare and request
additional information, if required. Management and
advisers may be invited to attend meetings to provide
further information or guidance on specific matters.
Meetings are minuted, with discussion and challenge
recorded to demonstrate due consideration has been
given by the Board of each matter discussed.
Update calls are often scheduled between Board
meetings to keep Directors abreast of operational
matters to prevent Directors becoming overloaded with
information. Additional Board meetings may be called on
short notice, as business needs require.
Quarterly Board agenda items
The formal agenda for regular Board meetings includes,
amongst other matters:
– health and safety update;
– CEO report;
– a review of the performance of the property portfolio;
– an assessment of our progress with new investment
opportunities (the detailed proposals are prepared by
the executive Directors and reviewed and approved by
the Board, as appropriate);
– consideration of strategy;
– review of financial performance, forecasts and debt;
– an update on the student accommodation sector;
– sales and marketing activities;
– an update on investor relations and shareholder
analysis;
– a report on shareholder feedback;
– reports of the Committees;
– updates on regulatory, compliance or governance
matters advised by the Company Secretary or other
advisers; and
– a report on public relations and press commentary.
These agenda items are also included within a
comprehensive set of Board papers ahead of each Board
meeting.
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Chairman’s Introduction to Corporate Governance | continued
Board activities, keys decisions and stakeholder impact
Strategic topic
Customer
Area of focus
Principal decisions taken and key stakeholders impact
Ensure the continued safety and
satisfaction of our customers;
2022 Global Student Living
results
Decision taken
Closure of Brunswick House, Southampton for academic year 2023/24 to facilitate timely EWS works.
Stakeholder impact considerations
Customers: Communication plan and provision of accommodation in other sites in the city;
Lenders: The impact on covenants and income security offered;
Shareholders: The speed of implementation and potential impact on revenues and distributions;
Employees: Redeployment of our people to ensure they are retained during the period of closure.
People
Achieving One Star accreditation
in Best Companies Survey
Decisions taken
2023 compensation review;
2022 engagement survey
Inflation and cost of living
pressures
Approved operational strategy.
Stakeholder impact considerations
Employees: Cost of living pressures; mental health & wellbeing support; appropriate training provision;
Shareholders: Impact on returns generated.
Strategy
Non-core disposal program,
including consideration of
offers received
Acquisitions and developments
Options for growth
Decisions taken
Continued disposal of non-core assets;
Development of post-graduate product;
Acquisition of Market Quarter, Bristol.
Stakeholder impact considerations
Customers: communication and continuity of service provision;
Community: developmental impacts; engagement with local residents;
Shareholders: strategy alignment and enhancement of returns;
Employees: TUPE transfer considerations, communication and engagement.
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Strategic topic
Area of focus
Principal decisions taken and key stakeholders impact
Capital allocation
Refinancing and capital
allocation to ensure liquidity
and covenant headroom
Decisions taken
Refinancing debt;
Investor engagement
Interest rate and energy hedging;
Dividend payments and guidance;
Appointment of corporate broker.
Stakeholder impact considerations
Lenders: maintaining prudent covenant compliance;
Marketing and sales
Review of pricing approach for
launch of academic year 2023/24
Decision taken
Pricing strategy approved with the aim of achieving balance between inflationary pressure and affordability
Shareholders: Appropriate risk and gearing; open communication and expectation management;
Agents/consultants: long term liquidity planning providing for prompt and fair payment terms.
Hello Student re-branding
Stakeholder impact considerations
Customers: affordability; cost of living pressures; engagement;
Shareholders: impact on returns and distribution guidance.
ESG
Development of net zero
strategy
Capital allocation to green
initiatives
Decision taken
Publication of the Group’s net zero strategy
Commitment to enhance capital allocation to green initiatives
Stakeholder impact considerations
Environment: becoming a sustainable business and contributing the communities in which we operate;
Shareholders: Impact on returns and delivery against commitments made;
Customers: Delivery against expectations.
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Chairman’s Introduction to Corporate Governance | continued
The results of the evaluation were reviewed by the Chairman and reported to the Board
at its December 2022 meeting. Concerns raised were discussed and appropriate actions
agreed.
The Board effectiveness review concluded that the Board and Committees continued to
operate effectively throughout 2022. Nevertheless, several suggested enhancements are
proposed for 2023, which are set out in the table below.
Key findings
2023 action plan
Linking the strategy and plan with more
explicit milestones and KPIs that can be
tracked more frequently.
Strategic KPIs set and agreed for 2023
which will be reported on and monitored
by the Board throughout the year.
Establishing clear measurable ESG plans
and milestones.
Further enhancing external reporting and
investor relations.
Net Zero strategy to be decoupled to
establish measurable annual targets for
the pathway to net zero in 2033.
Sharper focus on the quality of
information, including stakeholder
engagement to consider feedback on
areas of improvement. A revitalised
investor relations programme to be
established and reported on regularly
to the Board.
Strategy
In May, the Board held its annual strategy day. The day was structured to provide the
executive Directors and the non-executive Directors in particular, with an opportunity
to focus on the development and execution of, and provide challenge to, the Company’s
corporate strategy.
The executive Directors, members of the senior leadership team and other external
specialists delivered a number of presentations, providing in-depth analysis on a
number of areas. The meetings were carefully structured to achieve a balance between
presentation, debate and discussion.
Engagement with stakeholders
The Board understands the views of the Company’s key stakeholders and takes account
of their interests in discussions and in its decision-making.
The Board’s approach to corporate governance is also determined by, and takes account
of, the interests of various other stakeholders, not least of all our customers, our people
and the communities in which we operate.
Further details of stakeholder engagement can be found on page 58.
Board evaluation and performance
The annual Board evaluation provides an opportunity to consider ways of identifying
efficiencies, strengths and areas of further development to enable the Board to
continuously improve its own performance and the performance of the Group.
In 2022 the Board evaluation was facilitated by Gould Consulting, an independent
external service provider with no connection to the Group or any of its Director’s.
The Chairman of the Board, with the support of the Nomination and Governance
Committees, led the Board in considering and responding to the annual review of the
Board’s effectiveness, which included a review of its Committees.
The key topics covered in the evaluation included:
– Strategy and culture;
– Stakeholder engagement;
– Chairing of the Board;
– Board dynamics and the functioning of the Board;
– Quality of debate and Challenge;
– Board Support and Board and Committee interactions; and
– ESG
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Update on actions arising from the 2021 Board evaluation
In November 2021, the Chairman conducted an internal evaluation of the effectiveness of
the Board and its Committees. The table below outlines the improvement areas identified
in this evaluation, and the progress made on these during 2022.
Key findings
Actions taken
Ensuring that the organisation’s vision,
values and culture are embedded in all
levels of the organisation.
Much clearer articulation of vision, values
and culture completed at annual strategy
away day.
Increased visibility of Executive leadership
team.
Targeting increased engagement scores
and reduced voluntary turnover.
Developing the strategic plan further to
optimise shareholder returns.
Re visited strategic plan at annual strategy
away day.
Ensuring that the optimisation of the Hello
Student operating platform is driving
improvements in digital customer service.
Continued focus on delivering the ESG
Strategy with further development of
ESG KPIs to enable the Board to assess
progress.
Clear articulation of shareholder
requirements.
Focused plan to transform property
portfolio and increase presence in post-
graduate market.
Customer service App delivered.
Service standards clearly articulated and
managed through the line.
Targeted continually improving NPS
scores.
Clear commitment to ESG plan.
Net Zero plan published.
Clarification and commitment to
measuring and monitoring long term
targets, with annual targets established
within personal performance objectives.
The performance of the individual Directors was reviewed by the Chairman, whilst the
Chairman’s performance was appraised by the Senior Independent Director during
a series of informal meetings held with Board members. The meetings considered
the Chairman’s clarity of communication, leadership, relationship with the executive
Directors and his ability to devote sufficient time and commitment to the Company. The
Board believe the Chairman commits sufficient time to the role and that his leadership
style and tone promotes effective decision making and constructive debate within the
Board. Good progress was noted to have been made against all the areas of opportunity
for improvement identified in the prior year. The review concluded that the Board is
highly supportive of the Chairman and believe he is performing the role effectively.
Compliance Statements
The Directors confirm that to the best of our knowledge:
– The Group is well placed to manage its financing and other business risks. The Board
is therefore of the opinion that it is appropriate to adopt the going concern basis
of accounting in preparing the Annual Report and Accounts (see page 121 for more
information);
– The Strategic Report, which the Board has approved, includes a review of the
performance of the Group together with a description of the principal risks and the
uncertainties it faces;
– Taking into account the Group’s current position and the impact of the principal risks
documented in the Strategic Report, the Directors have a reasonable expectation that
the Company will remain viable and continue to operate and meet its liabilities as they
fall due, over the period to 31 December 2025. Further details are set out in the Viability
Statement on page 34, and in the Principal Risks and Uncertainties section on page 30;
– The Directors have carried out a robust assessment of the principal risks facing the
Company, including those that would threaten its business model, future performance,
solvency or liquidity. The principal risks, and the procedures for managing or mitigating
them, are set out on pages 30 to 33; and
– The Annual Report and Accounts, taken as a whole, is fair, balanced and understandable
and provides the information necessary for shareholders to assess the Group’s position
and performance, business model and strategy.
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Chairman’s Introduction to Corporate Governance | continued
Going concern
The financial position of the Company and Group, its
cash flows, liquidity position and borrowing facilities
are described in the Financial review on pages 35 to 38.
Detailed forecasts have been prepared and the Directors
have considered the future cash requirements of the
Group and concluded that they have sufficient capacity
to meet all commitments as they fall due.
As such, the Directors believe that the Company and
Group are well placed to manage their financing and other
business risks. The Board is, therefore, of the opinion
that the going concern basis of accounting adopted
in the preparation of the annual report and accounts is
appropriate for the period to 31 December 2024.
Mark Pain | Non-Executive Chairman
16 March 2023
Audit, risk and internal control
The Board is responsible for maintaining the Company’s
systems of internal controls and risk management,
in order to safeguard the Company’s assets. These
processes are designed to identify, manage and mitigate
both the key principal risks and emerging risks inherent
to the business. The system is also designed to manage,
rather than eliminate, the risk of failure to achieve
business objectives and can only provide reasonable, but
not absolute, assurance against material misstatement or
loss. Please refer to pages 30 to 33 for more information
on our principal risks and uncertainties.
The Board regularly monitors the Company’s risk
management and internal control systems which have
been in place for the year under review and up to the date
of approval of the annual report and accounts, including
receiving reports from the external auditor. The Board also
conducts a formal risk assessment (for both principal and
emerging risks) on a bi-annual basis.
During the year, the Board appointed Grant Thornton as
its Internal Auditor. Internal controls include the systems
of operational and compliance controls maintained
by our finance team. Regular reports are provided by
management and reviewed by the Boards Audit and Risk
Committee and reported on to the Board. Further details
can be found in their report on pages 81 to 83.
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Nomination Committee Report
Nomination Committee Report
Committee composition and operations
Led by the Chairman, the Board is collectively responsible
for the long term success of the Company. It is therefore
appropriate that the Nominations Committee, which is
responsible for the composition of the Board, to be led
by the Company’s Chairman, Mark Pain. He is assisted by
three independent Directors, all of whom have significant
experience as directors of listed companies.
The Committee met five times during the year and were
attended by all relevant Committee members and the
Company Secretary. The Committee’s primary objective is
to lead the process for appointments and ensure plans are
in place for the orderly succession of both the Board and
the Group’s Senior Leadership Team.
The main topics discussed during the year were the
retirement of both the Chief Financial and Sustainability
Officer and Non-Executive Chair of the Remuneration
Committee, and the appointment of their respective
successors. Succession planning for the Executive and
Senior Leadership Team remained high of the Committees
agenda alongside the size, structure and composition of
the Company’s Board.
Appointment and induction of the Chief Financial and
Sustainability Officer
The Committee oversaw the departure of Lynne Fennah,
the Company’s Chief Financial and Sustainability Officer
of five years, who tendered her resignation in May 2022 to
pursue other interests.
A detailed role specification was prepared and reviewed
by members of the Committee. Odgers Berndtson, a
leading external search firm, were appointed to lead the
search process. Odgers Berndtson has no connection
with the Group, other than providing this type of service.
Having conducted a market-wide search across a number
of related industry sectors, long lists were generated,
and reviewed by the Chief Executive Officer, the People
& Performance Director and the Chairman. A short list of
candidates was then taken through for formal assessment
which included interviews with a number of Board
members. Selected candidates were then taken through
for psychometric testing and independent referencing.
On 4 August 2022, the Board announced the unanimously
agreed appointment of Donald Grant as Chief Financial and
Sustainability Officer, replacing Lynne Fennah.
Upon appointment Donald was given induction sessions
by the Chief Executive Officer, the Sales and Marketing
Director and the Property Director. These sessions
covered background information of the Group, including
its evolution, key risks, funding structure, strategy, culture
and share register composition. The Company Secretary
provided a schedule of matters reserved for the Board and
the Company’s Corporate Calendar. Donald has met with
most of the Company’s key advisers and toured a number
of properties.
Succession planning
The Committee is responsible for reviewing the
succession plans for the Board. The succession plans
for the Executive Directors are prepared on both a short
and long-term basis, whilst the Non-Executive Directors’
succession planning mirrors the breadth of skills and
experience the current Board holds.
During the year, Stuart Beevor informed the Board of his
intention to stand down as a Non-Executive Director and
Chair of the Remuneration Committee. Redgrave Partners
were appointed to lead the search process in finding his
replacement. Having conducted a market-wide search
across a range of industry sectors, and candidates from
diverse backgrounds, a long list was generated, and
reviewed by the Board. A short list of candidates were
then taken through a formal assessment process which
included interviews with Board members. On 1 July 2022,
Clair Preston-Beer was appointed as a Non-Executive
Director of the Company, bringing a wealth of operational
skills and experience to the Board
As a result of Stuart’s departure, on 1 April 2022, Alice
Avis took the Chair of the Remuneration Committee. Alice
meets the Code Requirements for such a position having
served on the Group’s Remuneration Committee since her
appointment in 2019.
Mark Pain | Nomination Committee Chairman
Committee membership and meetings
Mark Pain (Chair)
Stuart Beevor (retired 23 May 2022)
Alice Avis
Martin Ratchford
Clair Preston-Beer (appointed 1 July 2022)
Meetings
5 (5)
1 (1)
5 (5)
5 (5)
3 (3)
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Nomination Committee Report | continued
With a strong, gender diverse, Senior Leadership Team
currently in place there is pool of internal candidates
who could, in time, present succession opportunities for
both Executive Directors. Therefore as vacancies arise
consideration will be given to both external and internal
candidates. The Committee will continue to review the
Boards succession plan throughout 2023.
Diversity
Whilst much of the focus of analysis and guidance in
relation to diversity and ethnicity is centred on companies
which sit within the FTSE 350, of which the Company
is not a part, the Committee recognises the benefits of
diversity in its broadest sense, including gender, ethnicity,
age and educational and professional background.
Tenure
Tenure
To step down by
Independent Non-Executive Directors
Mark Pain
Alice Avis
Martin Ratchford
4 years
3 years
1 year
Clair Preston-Beer
< 1 year
Executive Directors
Duncan Garrood
Donald Grant
2 years
< 1 year
September 2028
March 2029
October 2031
July 2032
n/a
n/a
Independence and re-election
Donald Grant, the Chief Financial and Sustainability
Officer, and Clair Preston-Beer, who were both appointed
by the Board during the year, will be subject to election by
shareholders for the first time at the AGM on 24 May 2023.
All Directors are subject to annual re-election at the AGM,
and the Board will recommend reappointment as part of
the AGM notice.
Prior to recommending the reappointment of any Director
to the Board, the Committee assesses their continued
independence, the time commitment required, any
overboarding concerns and whether their reappointment
would be in the best interests of the Group. The Board is
satisfied that each of the four Non-Executive Directors
remain independent in both character and judgement and
that they comply with the independence criteria of the
Code.
Biographies for each Director can be found on pages 68
to 69.
In respect of gender diversity, 33 per cent of the Board
are female, in line with the voluntary target set by the
Hampton-Alexander Review, with one of the senior
Board positions, the Senior Independent Director, held
by a female. Below the Board, 33 per cent of the senior
leadership team are female, with females representing 45
per cent of all employees. More information about gender
diversity in the Group as a whole can be found on page 56.
In terms of ethnic diversity, the Company is diverse
with 32 per cent of the Group’s responding employees
identifying as being from an ethnic minority. The
Company has invested in additional support and career
pathways to increase diversity in the workforce. During
the process to replace Stuart Beevor as a Non-Executive
Director, the Board considered a long list of candidates
which were appropriately gender and ethnicity balanced.
We will continue to target diversity throughout the
Company and will comply with all emerging best practice
in this area. We value the benefits of diversity and intend
to maintain an appropriately diverse Board and Senior
Leadership Team and we will continue to actively seek
diversity amongst candidates where vacancies arise.
Diversity is, and will remain, core to our decision making
whilst seeking to appoint the very best candidate for each
role.
Mark Pain | Nomination Committee Chairman
16 March 2023
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Audit and Risk Committee Report
Audit and Risk Committee Report
Committee composition and operations
The Committee comprises three independent Non-
Executive Directors. The Board is satisfied that Martin
Ratchford has recent and relevant financial experience to
chair the Committee.
The Committee met three times during the year in
February, August and December. Meetings were
attended by all relevant members and were aligned to
the Company’s financial reporting and risk management
cycles. All meetings were attended by the Company’s
Chairman, the CEO, the CFSO, the Financial Controller
and the Company Secretary. In February and August the
external auditor and valuer are invited to attend to present
their respective reports and valuations to the Committee.
In December, the Committee also met the prospective
Internal Audit firm as part of the tender process and the
external auditor who presented their audit plan for the
forthcoming year end.
The Committee operates within the terms of reference
approved by the Board annually. These can be found on
the Company’s website www.empiric.co.uk. and set
out the role of the Committee in accordance with the
Corporate Governance Code. The Company’s policy
for the provision of non-audit services aligns with the
Financial Reporting Council’s Revised Ethical Standard’s
published in December 2019.
Responsibilities of the Committee
The Committee has delegated responsibility from the
board and is primarily responsible for discharging
governance responsibilities in respect of audit, risk and
internal control environment and to report to the Board as
appropriate. Specifically the Committee:
– reviews the work of the external auditor and valuers
and the significant financial judgements made by
management;
– monitors the integrity of the Company’s annual
and interim financial statements and any formal
announcements or correspondence in respect of the
Company’s financial information;
– considers significant financial reporting issues,
judgements and estimates exercised in the preparation
of financial information;
– advises the Board on various statements made in the
Annual Report, including those on viability, going
concern, risk and controls and whether, when read
as a whole, the Annual Report can be considered
fair, balanced and understandable and provides the
information necessary for shareholders to assess
the Company’s performance, its business model and
strategy;
– considers and approves the remuneration of the
external auditor, assessing effectiveness and making
recommendations to the Board on the appointment of,
and the policy for non-audit services provided by, the
external auditor;
– considers the ongoing need for an internal audit
function, oversees tenders and confirms appointment
and annual internal audit plans;
– reviews the risk management framework and ensures
that risks are carefully identified and assessed, and that
systems of risk management and internal control are in
place and effective; and
– reviews whistleblowing arrangements and any matters
arising.
The Board delegates these duties to the Committee so
they can receive suitably focussed attention, however
the Committee acts on behalf of the full Board, and the
matters reviewed and managed by the committee remain
the responsibility of the directors as a whole.
Activities and matters discussed
During the year the following matters were considered
and discussed:
– Reports from the Company’s valuer, CBRE;
– Reports from the Company’s external auditor, BDO LLP,
regarding the 2021 full year results, the 2022 interim
results and the 2022 audit plan;
– Reports from the Financial Controller
– Risk management process and related disclosures;
– Financial stress testing and covenant compliance
– Viability and going concerns assessment and related
disclosures
– 2021 report and accounts
– 2022 interim statements
– Effectiveness of internal controls
– Independence and effectiveness of the external auditor
– Significant areas of estimation and judgement
Martin Ratchford | Audit and Risk
Committee Chairman
Committee membership and meetings
Martin Ratchford
Stuart Beevor (retired 23 May 2022)
Alice Avis
Clair Preston-Beer (appointed 1 July 2022)
Meetings
3 (3)
1 (1)
3 (3)
2 (2)
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Audit and Risk Committee Report | continued
– Accounting for the cost of cladding remediation and
fire safety
– REIT compliance
– Review of business continuity and crisis management
plans
– Review of whistleblowing, cyber security and anti-
bribery policies and procedures
– Review of Company’s policy is respect of non-audit fees
– Tender and appointment of the internal auditor
– Guidance from and correspondence with the Financial
Reporting Council
External Auditor and non-audit services
BDO LLP has been the Company’s auditor since 2014
following an audit tender in 2013. During the year we
reviewed BDO’s appointment as the Group’s external
auditor. Following this review, the Committee decided to
retain BDO and have therefore recommended a resolution
for BDO’s reappointment to be proposed to shareholders
at the AGM. As 2023 will be the tenth year BDO LLP would
have been in post, the external audit contract will be
placed out to tender during 2023 in respect of the 2024
audit.
The Committee considered BDO’s compensation,
performance independence and effectiveness during the
year. The Committee met with key members of the audit
team, including the lead audit engagement partner. BDO
LLP has formally confirmed its independence, as part of
the annual reporting process. The Committee regularly
liaises with the lead audit partner to discuss any issues
arising from the audit, as well as cost-effectiveness.
We subject the Group’s policy in regard to non-audit
services to an annual review. During the year, BDO LLP
did not provide any non-audit services other than those
activities required for regulatory reasons, being the review
of the Company’s Interim Report.
The following fees were paid to the external auditor during
the year and are included within administrative expenses
in the Group’s Statement of Comprehensive Income.
£m
Audit and related fees
Non-audit fees
Total
Year ended
31 December
2022
Year ended
31 December
2021
0.5
–
0.5
0.4
–
0.4
KPMG LLP continues to support the Group with the
provision of tax compliance and advisory services.
Independence and effectiveness of the external Auditor
The Committee has reviewed the independence and
effectiveness of the external auditor. In doing so,
consideration was given to the following:
– assurances from BDO LLP as to the quality of the audit
and the ongoing independence of the auditor, which
were in line with the Financial Reporting Council’s
ethical standards;
– publications provided to management throughout
the year on emerging issues and financial reporting
updates;
– quality of written reports submitted to the Committee
which were clear and concise with presentations at
meetings being considered as balanced, clear and
understandable;
– safeguards that limit the amount of non-audit services
provided by BDO LLP aimed at protecting their
independence;
– consultation with management that demonstrated
the auditors competency and experience necessary to
perform effectively in their role; and
– audit queries were raised and dealt with in a proactive
and timely manner and there was sufficient challenge
with regard to areas of judgment, estimate, internal
controls and areas of heightened risk.
After due consideration the Committee concluded
that the external auditor had maintained independence
and remained effective. The Committee therefore
recommended BDO LLP’s reappointment to the Board.
Appointment of internal Auditor and internal controls
The Committee had concluded in 2021 that the Group
would develop an internal audit function. It was
considered that an outsourced internal auditor would
provide the most cost effective approach due to the
range of specialist skills likely to be required across a
multi-faceted operational business. A tender process
was conducted with a shortlist of appropriate firms. Each
firm submitted a comprehensive proposal in line with a
predetermined brief, which was reviewed and discussed
with the Committee. After due consideration, and with the
committee having met the key people, Grant Thornton LLP
was appointed as the Group’s internal Auditor.
The Committee has continued to review the effectiveness
of the internal control environment throughout the year.
Reports prepared by the Financial Controller and CFSO
on internal controls were reviewed and challenged. The
Committee was satisfied that no significant weaknesses
were identified and concluded that the control
environment was effective and robust for a Company of
our size and complexity. Following the appointment of the
internal Auditor, an internal plan is to be devised which
will provide external assurance on internal controls going
forward. The plan will address key risk areas, including the
verification of critical mitigating controls.
External Valuers and valuation of investment property
The valuation of investment property remains one of
the most significant judgments in the Group’s financial
statements. The valuations are scrutinised by both
the Committee and the external Auditor. The external
Auditors’ specialist valuation adviser considers the
appropriateness of the procedures undertaken and
whether the valuations can be considered to fall within an
acceptable range. In each case, no issues were raised.
The Committee monitored the objectivity and
independence of CBRE during the year. The valuers have
confirmed that they are appropriately qualified to carry
out the valuations and that fees received are not a material
part of their overall fee income. The Committee remains
satisfied that the valuers are objective and independent.
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Going concern and viability
The appropriateness of preparing the Group’s financial
statements on a going concern basis remains a significant
area of judgement. The Committee reviews and considers
whether managements assessment of the Group’s long-
term viability appropriately reflects the prospects of the
Group and covers an appropriate period of time.
Specifically, the Committee considered whether the
assessment reflected the Group’s low risk appetite,
its principal risks, strategy and the current operating
environment. The Committee then reviewed the
assumptions and sensitivities applied in stress testing the
Company’s base case plan and whether these represented
severe but plausible downside scenarios.
In conclusion, the Committee concurred with
management’s assessment and recommended the
adoption of the going concern basis of preparation
and the viability statement to the Board. The viability
statement, together with details on the assessment
undertaken and stress tests applied, are set out on
page 34.
Changes in accounting policies and standards
The Committee is responsible for reviewing any proposed
changes in accounting policies and the implementation of
new accounting standards.
After due consideration, no changes were proposed
to the Group’s accounting policies which have been
consistently applied throughout the year to 31 December
2022. Following discussions with management and the
external auditor, no new accounting standards or annual
updates were expected to have a material impact on the
consolidated financial statements for the year ended 31
December 2022.
Risk management
A process for identifying and recording risks has been
established and is embedding within the business, A
Group risk register is compiled from the reports of the
various divisions and corporate functions. Prior to its
submission to the Committee, review meetings are held
with departmental heads, and the identified risks and
associated ratings are challenged where appropriate.
Guidelines ensure a commonality of approach with
thresholds set from both a financial and reputational
perspective. Risks were assessed based on a ‘gross’ and
‘net’ exposure basis, with ‘net’ exposure arrived at after
considering the impact of mitigating actions or controls
which are currently in place.
Results are analysed to identify the Group’s principal
risks which are then compared to the previous review and
proposed disclosures to highlight any significant changes
or emerging risks. The most notable changes this year
were:
– the impact of rising and volatile interest rates;
– significant inflationary pressures on operational,
administrative and development/refurbishment costs;
– risks to valuations from rising yields;
– geopolitical factors which may impact the number of
international students; and
– re-emergence of COVID-19 or similar pandemic.
Full disclosure of the Group’s principal risks are set out
on pages 30 to 33.
Whistleblowing
The Committee is responsible for reviewing the
arrangements by which staff can raise concerns, in
confidence, about any possible improprieties relating to
financial reporting or other matters. During the year we
have reviewed the Whistleblowing Policy and ensured it
has been widely published throughout the Group. The
policy encourages disclosure to an executive Director
of the Company, but where that is not considered
appropriate, to the Company’s Chairman or external
auditor.
The Committee has concluded that the Group has suitable
arrangements for proportionately and independently
investigating such matters and for appropriate follow-up
action.
Conclusions in Respect of the Company’s Annual
Report
The production and audit of the Annual Report is a
comprehensive process, requiring input from several
different contributors and with a high level of input
from the Chief Executive Officer and Chief Finance &
Sustainability Officer. There are early opportunities for the
board to review and comment on the annual report. To
reach a conclusion on whether the Annual Report taken as
a whole is fair, balanced and understandable, as required
by the Code, the Board has requested that the Committee
advises on whether it considers that the Annual Report
fulfils these requirements.
In outlining our advice, we considered information
presented to the Committee throughout the year,
together with the following:
– the controls in place for the production of the Annual
Report, including the verification processes to confirm
its factual content; and
– the detailed reviews undertaken at various stages of
the production process by the Executive Directors,
Company Secretary, legal adviser, brokers, auditor
and the Committee, which are intended to ensure
consistency and overall balance.
– A cross check between Board Minutes and the Annual
Report is undertaken to ensure that reporting is
balanced
– Whether information is presented in a clear and concise
manner to facilitate users access to relevant information
As a result of this work, the Committee has concluded
and reported to the Board that the Annual Report for
the year ended 31 December 2022, taken as a whole,
is fair, balanced and understandable and provides the
information necessary for shareholders to assess the
Group’s position, performance, business model, strategy
and principal risks. The Board’s conclusions in this respect
are set out in the Directors’ Responsibilities Statement on
page 107.
Should any stakeholders wish to contact me, I can be
reached via the ‘Contact’ link on the Company’s website.
I also expect to be attending the forthcoming Annual
General Meeting in May 2023 and would be happy to
address any questions shareholders may have in respect
to the Committee’s activities.
Martin Ratchford | Audit and Risk Committee Chairman
16 March 2023
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Remuneration Committee Report
Statement from the Chairman of the
Remuneration Committee
Committee composition and operations
In anticipation of Stuart Beevor’s retirement in May 2022,
Alice Avis was appointed as Committee Chair on 1 April
2022. We thank Stuart for his effective chairing of the
Committee over the past six years and for his insights and
valued contributions.
The Committee is comprised of three non-executive
Directors and the Company’s non-executive Chairman.
The three non-executive Directors are also members
of the Audit and Risk and ESG Committees, which
ensures they have a wide appreciation of the work,
achievements or improvements required of the executive
Directors, which aids in establishing their objectives
and determining their performance in line with the
Remuneration Policy.
The Committee is responsible for reviewing and
making recommendations to the Board regarding the
Remuneration Policy and for reviewing compliance with
Policy. The Committee met five times during the year, with
meetings attended by all relevant members, including
the Company Secretary. Deloitte provide advice to the
Committee, where required.
Key activities during 2022
– Alignment of the Company’s strategy and
shareholders’ interests
– CFSO succession
– New Remuneration Policy
– Employee engagement
– Remuneration and benefits of wider workforce,
including consideration of impact of cost-of-living
crisis
– Gender pay report
– CEO pay ratio and internal proportionality
Remuneration Committee Report
Alice Avis | Remuneration Committee Chairman
Committee membership and meetings
Stuart Beevor (retired 23 May 2022)
Alice Avis (appointed Chair 1 April 2022)
Mark Pain
Martin Ratchford
Clair Preston-Beer (appointed 1 July 2022)
Meetings
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Dear Shareholder,
On behalf of the Board, I am pleased to present the
Directors’ Remuneration Report for the year ended
31 December 2022.
The report is divided into three parts:
– The Annual Statement which summarises the
remuneration outcomes in 2022, the key decisions
taken and how the Remuneration Policy (‘Policy’)
will be applied in the current financial year;
– The New Remuneration Policy which is submitted
for approval by shareholders at the Annual General
Meeting on 24 May 2023; and
– The Annual Report on Remuneration which sets out
full details of remuneration paid in 2022 and our
intended implementation of our new Policy in 2023.
We greatly value engagement with our shareholders
and look forward to your continued support at the
forthcoming Annual General Meeting.
Alice Avis MBE | Remuneration Committee
Chairman
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Annual Statement
2022 performance and reward
As you have read in the statements from the Chairman
and CEO, the Company has delivered strong financial
and operational results, with revenue occupancy of 99
per cent achieved and like for like rental growth of 5.2 per
cent for academic year 2022/23, driven by the success of
our dynamic pricing capability and the continued strong
demand underpin. Despite challenging market conditions,
the operational improvements made alongside continued
optimisation of the portfolio’s quality has delivered a total
accounting return of 10.5 per cent.
Continued good progress has been made on our non-
core disposal programme with £57.8 million generated
from the disposal of seven properties during 2022.
Recent investment market turbulence has delayed the
disposal programme’s initial aspirations and it now looks
increasingly likely we will continue to hold a number of
non-core assets beyond the original 18 month timeline
set out in 2021. Nevertheless, we expect the programme
to be materially complete by the end of 2023. Despite
market disruption, the Group successfully disposed of
two properties above book value in the final quarter of
2022, while a further £50 million remains under offer or in
an advanced stage of negotiation.
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.
Hello Student aims to provide students with a ‘Home
from Home’. Our customer first philosophy, coupled
with a boutique, personalised experience in a safe and
welcoming environment enables them to make the most
of their time at university.
Our people are central to this. It is through their hard work
& commitment that the Company has been able to deliver
great service and high levels of customer satisfaction.
This is reflected in the results from the latest annual GLSI
survey which shows our NPS has improved again from
+22 to +27. I would like to thank all our people for their
continuing efforts which are very much appreciated by
the Board.
Achieving record revenue occupancy for academic
year 2022/23 together with significant progress
against personal strategic objectives, namely, the
successful implementation of the Company’s strategy,
the improvement in culture and engagement and the
development of a customer service focus, has resulted
in a formulaic outcome for Duncan Garrood’s annual
bonus of 61.6 per cent of the 2022 annual maximum. The
Committee considered whether the level of bonus pay out
was appropriate, reflected performance and was aligned
to shareholder interests. The Committee concluded that
the formulaic outcome was justified and represented a fair
recognition of performance.
The vesting of the LTIP awards granted to Lynne Fennah
on 8 April 2020 were subject to a single performance
condition of Total Return (being growth in NAV per
share plus dividends paid) assessed over the three year
performance period ending 31 December 2022. 25% of
the award would vest for meeting a threshold Total Return
target of 8 per cent per annum increasing to 100 per cent
vesting for meeting a maximum target of 12 per cent per
annum. Actual performance was below the threshold level
for the award so no LTIP shares vested.
Full details of the 2022 reward outcomes are set out on
pages 96 to 100.
CFSO Succession
As announced on 23 May 2022, Lynne Fennah, our former
Chief Financial and Sustainability Officer, decided to step
down from her role to pursue other interests. Following
a thorough recruitment process, Donald Grant was
appointed as an executive Director on 12 September 2022
and after an orderly transition, succeeded Lynne on her
departure.
Lynne Fennah’s service contract provided for a 12 month
notice period. As part of the orderly transition, notice
commenced on 1 June 2022 and Lynne remained on
the Board as a Director of the company until 31 October
2022. Details of her termination payments are outlined
on page 100. Under the Annual Bonus Plan rules, Lynne
is not entitled to an annual bonus for the year ending 31
December 2022. The Committee exercised its discretion,
in accordance with the Plan rules and the remuneration
policy, to allow Lynne to receive her deferred annual bonus
shares due to vest on 24 March 2025 in addition to those
which are due to vest on 8 April 2023 to which she remains
entitled, given the vesting date is within her notice period.
All unvested LTIP awards will lapse.
The 2022 salary for the new CFSO, Donald Grant, was
10.5 per cent lower than Lynne’s whilst the Annual Bonus
and LTIP opportunity remain the same. His pension
contribution, being 7.5 per cent of salary, is in line with
the wider workforce. Given the timing of his appointment,
Donald did not participate in either the Annual Bonus or
LTIP in 2022.
Gender Pay
The Group believes in creating a diverse and gender
balanced workforce which reflects the customers and
communities we serve. We provide training and support
that ensures our employees have the tools to succeed
and deliver their best in the workplace. We are required
to report upon the gender pay gap within our subsidiary,
Hello Student Management Limited. Analysis based on
data to 5 April 2022 demonstrates that the mean gender
pay gap is 7.2 per cent (with males paid more than
females) and the mean gender bonus gap is 10.5 per cent
(males paid higher bonuses than females). This represents
a deterioration on the prior year which is attributable
to the decline in female representation in senior roles
since the prior year, with female representation at 48 per
cent, down from 57 per cent in the prior year. Primarily,
the deterioration follows the resignation of our female
Operations Director. The Committee is satisfied that
equivalent roles attract equivalent pay, regardless
of gender.
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Remuneration Committee Report | continued
We are committed to providing fair and competitive
pay and benefits as well as continuously improving
the experience of all employees in respect of equality,
diversity and inclusion. In 2022, as part of our plans to
address the gap, we launched a leadership development
programme to support internal promotion opportunities.
Females were well represented, accounting for 56 per
cent of attendees.
The One Team Collective (formerly the Colleague Forum)
is a workforce advisory panel consisting of 12 employee
representatives from across the Group. Its focus is to
support meaningful dialogue on topics raised by our
employees. It met eight times in 2022 and is supported
by myself, the Company’s Senior Independent Director.
I attended one meeting in person and maintain regular
dialogue with the Collective’s Chair throughout the year.
Full details with a supporting narrative are published on
our Hello Student® website, www hellostudent.co.uk, and
is prepared in line with the UK Equality Act 2010 (Gender
Pay Gap Information) Regulations Act 2017.
Workplace Engagement and Remuneration
Our employees are central to delivering the great service
experience which is central to our brand proposition.
To ensure that we continue to attract and retain talent,
the Company strives to reward its employees with
a compensation package that ensures we remain
competitive. We remain proud members of the Living
Wage Foundation.
During 2022, the Committee reviewed pay and benefits
across the wider workforce, with particular consideration
given to the impact of the cost- of- living crisis. The
annual pay review, effective 1 January 2023, resulted in an
average salary increase of 8.3 per cent, with our lowest
paid employees receiving increases in line with inflation.
In addition, we have increased pension contributions for
all eligible employees to 7.5 per cent, offered an enhanced
benefits and recognition platform and given all employees
a £250 bonus in November to provide some assistance
with inflationary pressures around the festive period. Our
Sharesave scheme was launched in July 2021 to allow our
employees the opportunity to buy into the success of
the Company, with 28 per cent of those eligible having
participated. Having reviewed employee compensation
arrangements, the Committee is satisfied that employee
pay and conditions remain fair and proportionate.
Our colleague engagement survey was undertaken in
June 2022 via Best Companies with the engagement
index score increasing from ‘One to Watch’ to a ‘One
Star’ Accreditation. The most recent engagement survey,
conducted via Reward Gateway, demonstrated that 84 per
cent of those responding would recommend the Group as
a place to work or its properties as a place to stay.
The amendments made to employee pay, benefits and
engagement have greatly helped improve our employee
retention rate, which rose by 14 per cent to over 78 per
cent in the year to 31 December 2022.
CEO Pay Ratio and Internal Proportionality
Under the requirements introduced by The Companies
(Miscellaneous Reporting) Regulations 2018 we have
calculated the CEO to employee pay ratio for the Group.
Using the methodology, the CEO pay ratio when
compared against the median employee is 30:1 with
full details set out on page 102. The Remuneration
Committee believes in reward packages that are externally
competitive and internally proportionate, meaning the
CEO is the employee with the highest proportion of
variable pay as he has the highest level of responsibility.
We are pleased to report that as the pay ratio normalises
post-Pandemic, the median, 25th and 75th percentiles
are all lower than their 2019 equivalent, demonstrating
our continued investment in pay and reward for our
workforce.
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2023 Reward Decisions
The Committee conducted a thorough review of the
CEO and CFSO’s base salary. As part of this review, the
Committee, taking advice from Deloitte, our independent
Remuneration Consultant, considered the company’s
performance, the average annual salary increase for
employees (8.3 per cent), the executive’s current pay
relative to a group of relevant external companies as
well as shareholder expectations. As a result, both were
awarded a salary increase of four per cent with effect from
1 January 2023.
Donald Grant joined the Company and the Board in
September 2022 as CFSO. Upon appointment his
salary was 10.5 per cent lower than the outgoing CFSO,
Lynne Fennah, and remains 6.9 per cent lower following
adjustment on 1 January 2023. He has received no 2022
bonus award and his salary increase remains sufficiently
below the employee average and in line with his service
agreement, which provided for review on 1 January 2023.
The executive bonus plan arrangements for 2023 will
follow the same structure as in 2022, with a maximum
annual opportunity set at 110 per cent of salary. There
are three equally weighted financial measures, which
when combined account for two thirds of the maximum
opportunity. These financial measures are based on
revenue, EBITDA & dividend. One third of the maximum
opportunity is linked to specific individual objectives
based on strategic key performance indicators and
include ESG related objectives.
Both executive Directors will receive LTIP awards in 2023,
as was the case in 2022, over shares worth 150 per cent
of salary. The vesting of the LTIP award is subject to two
performance measures each representing 50 per cent of
the award for the performance period 1 January 2023 to 31
December 2025. Firstly, Total Accounting Return (“TAR”)
relative to threshold and maximum targets, with TAR
being the growth in net asset value plus dividends paid.
25 per cent of the award will vest for meeting a threshold
TAR target of 6 per cent per annum increasing to 100 per
cent vesting for meeting a maximum target of 10 per cent
per annum. Secondly, Total Shareholder Return (“TSR”)
relative to the FTSE All Share Real Estate Companies
peer group, with 25 per cent of the award vesting for
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median performance and 100 per cent for 75th percentile
performance (with straight line vesting between threshold
and maximum performance on both measures).
New Remuneration Policy
At the 2023 Annual General Meeting, there will be a
binding shareholder vote on our new Remuneration Policy
which is required under the standard three-year approval
cycle. No substantial changes are included in the new
Policy which is set out on pages 87 to 92.
Strategic and Shareholder Alignment
In setting executive remuneration in 2023, the Committee
has continued to seek alignment with the Company’s
strategic priorities and shareholder interests. In particular:
– Annual bonus performance measures continue to
be focused on objectives critical to delivering the
improvement in corporate performance, optimising
revenue, EBITDA and dividends, together with individual
specific strategic objectives;
– Executives are aligned with the principle of shareholder
value creation through participation in the long-
term incentive plan that rewards growth in NAV plus
dividends and relative shareholder returns;
– The executive Directors are required to build up and
retain significant holdings in the Company’s shares
equivalent to 200 per cent of salary which directly align
them with other shareholders; and
2.
– The Remuneration Committee is acutely aware of the
need to align executive remuneration, and that of the
rest of the workforce, with shareholder returns while
fully recognising that remuneration should motivate
and reward continued performance, hard work and
commitment.
Full details of how the Remuneration Policy will be applied
during 2023, as well as how Directors were paid in 2022,
are set out on pages 95 to 99. There will be an advisory
shareholder vote on this section of the Remuneration
Report at our 2023 Annual General Meeting.
Alice Avis MBE | Remuneration Committee Chairman
16 March 2023
New Remuneration Policy
The current Directors’ Remuneration Policy was approved
by shareholders in 2020 and expires at the 2023 Annual
General Meeting.
During 2022, the Remuneration Committee undertook a
thorough review of the Policy to ensure that it continued
to support delivery of the business strategy and remained
complaint with all key remuneration requirements of the
UK Corporate Governance Code and emerging practice.
The Committee considered input from management,
while ensuring that conflicts of interest were suitably
mitigated, and our independent advisors.
Following that review, the Committee concluded that no
substantial changes were required to the Policy at this
time although certain minor amendments were proposed,
primarily in order to provide greater clarity in specific
areas, as set out below.
1.
Pension provision - The new Policy will clarify that
the level of pension provision for all executive
Directors is capped in line with the prevailing
pension contribution applicable to the majority of
the workforce (currently 7.5 per cent of salary).
Annual bonus and LTIP structure – In line with
Investment Association guidance and standard
market practice, the new Policy will contain scope
for the Committee to amend the calculation of
performance targets for events not foreseen at the
time original targets were set (for example following
material acquisitions, disposals or investments) to
ensure they remain a fair reflection of performance.
It will also contain flexibility for the Committee to
use its discretion to amend the formulaic outturn,
upwards or downwards, if it does not consider
that the formulaic outcome is a fair and accurate
reflection of performance or that the award was
achieved within an acceptable risk profile. It will also
be made more explicit in the new Policy that ESG
related performance measures are able to be used
within the annual bonus.
3.
4.
Shareholding guidelines - Consistent with market
practice, the Committee’s scope to exempt shares,
acquired by an executive Director in a personal
capacity, from the post-employment guidelines is
clarified.
Recruitment policy – Consistent with market
practice, the new Policy will contain flexibility for the
reimbursement of specific costs which are approved
by the Committee and incurred by an individual in
relation to their appointment (for example legal
costs).
The Committee consulted with the company’s top
20 shareholders on these proposed changes during
November 2022 and received broad support for the new
Policy. I would like to thank all those who took the time to
provide valued comments on these proposals.
The proposed New Directors’ Remuneration Policy for
the period 2023-2026 is set out on pages 87 to 92.
The Committee recommends it to shareholders for
approval at the Annual General Meeting on 24 May 2023.
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Remuneration Committee Report | continued
Remuneration Policy Report for executive Directors
Fixed pay
Component
Purpose and link to strategy
Operation
Maximum
Performance framework
Base salary
Core element of remuneration set at
a level to attract and retain Executive
Directors of the required calibre to
deliver the Company’s investment
objectives successfully.
None.
Fixed cash paid monthly generally
reviewed annually. The review takes
into consideration a number of
factors, including but not limited to:
• the individual Director’s role,
experience and performance;
• business performance;
• relevant data on remuneration levels
paid for comparable roles; and
To avoid setting the expectations
of Executive Directors and other
employees, there is no overall
maximum salary for Executive
Directors under the Remuneration
Policy. Any increase in salaries will
be determined by the Remuneration
Committee, taking into account the
factors stated in this table and the
following principles:
• pay and conditions elsewhere in the
• Salary increases for Executive
Company.
Benefits
To provide market-competitive
benefits.
Benefits are role specific and take into
account local market practice.
Benefits currently include (but are
not limited to) reimbursed travel
expenses, medical insurance, disability
and life insurance and a car allowance.
Directors will typically not exceed
the average salary increase (in
percentage of salary terms) for other
permanent employees;
• Increases may be made above this in
certain circumstances, such as:
• progression within the role;
• increase in scope and responsibility
of the role;
• increase in experience where an
individual has been recruited on a
lower salary initially; and
• increase in size and complexity of
the Company.
There is no overall maximum level,
but benefits are set at an appropriate
level for the specific nature of the
role and depend on the annual cost of
providing individual benefits.
None.
Pension
To provide market-competitive
retirement benefits.
The Company either contributes
to the Directors’ personal pension
arrangements or direct to their
pension plans.
All Director’s pension provision
capped in line with provision available
to the majority of the workforce,
currently 7.5% of salary.
None.
Alternatively, Directors may receive a
cash allowance in lieu of pension.
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Component
Purpose and link to strategy
Operation
Maximum
Performance framework
Variable Remuneration
Annual and
deferred
annual bonus
To link reward to the achievement of
key business objectives for the year.
To provide additional alignment with
shareholders’ interests through the
operation of bonus deferral.
The Executive Directors are participants
in the annual bonus plan which is
reviewed annually to ensure bonus
opportunity, performance measures and
targets and objectives are appropriate
and support the business strategy.
The Committee will determine the level
of bonus to be awarded, taking into
account the extent to which the targets
have been met and overall business and
personal performance.
Up to 60% of an Executive Director’s
annual bonus will usually be paid in cash
following the release of the audited
results of the business.
At least 40% of any bonus is usually
deferred into an award over Company
shares issued as a nil-cost option
pursuant to the terms of the LTIP, which
will usually be deferred for three years.
Dividend equivalents will be paid usually
in additional shares when the deferred
shares are released.
Awards under the LTIP will usually
be made in the form of a contingent
award of shares or grant of nil-cost
options or nominal value options.
Vesting of the award is dependent
on the achievement of performance
targets, typically measured over a
three-year period.
Vested awards will be subject to an
additional two-year holding period.
Dividend equivalents will be paid
usually in additional shares when the
LTIP awards are released.
LTIP
To link reward for the Executive
Directors to the achievement of
long-term performance objectives
of the Company which are aligned
to the strategic goals and to retain
executives.
The maximum annual bonus
opportunity is 150% of base salary per
annum.
Each year the Remuneration
Committee will determine the
maximum annual bonus opportunity
for each individual Executive Director
within this limit.
The bonus is based on performance
assessed over one year using
appropriate financial, strategic, ESG
and personal performance measures.
The selected measures for the next
financial year will be set out in the
Remuneration section of the Annual
Report for that year.
The maximum LTIP award that may be
made is up to 150% of base salary per
annum as provided for in plan rules,
but for the avoidance of doubt this
excludes any nil -cost options issued
pursuant to an award under the annual
bonus scheme.
Vesting of LTIP awards is dependent
on the achievement of performance
measures determined by the
Committee ahead of each award. These
details will be disclosed in the Annual
Report on Remuneration section of the
Remuneration Report.
Performance will usually be measured
over a three-year performance period.
For achieving a “threshold” level of
performance against a performance
measure, no more than 25% of the
award will vest.
Vesting then increases on a sliding
scale to 100% for achieving a stretching
maximum performance target.
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Remuneration Committee Report | continued
Component
Purpose and link to strategy
Operation
Maximum
Performance framework
Employee
Share Option
Plan – Executive
Directors will
only be granted
share options
under the ESOP
in exceptional
circumstances.
To reward employees for the delivery
of long-term shareholder value.
The ESOP permits the grant of share
options with an exercise price of not
less than the market value of a share
(as determined by the Committee) at
the time of grant. Options will usually
be exercisable between three and ten
years following the grant.
Share options may be granted under
an HMRC approved Company Share
Option Plan to the extent possible.
If ESOP awards were, in exceptional
circumstances, granted to an
Executive Director, they would
be subject to an appropriate
performance condition as determined
by the Committee.
All-employee
share plans
To reward employees for the delivery
of long-term shareholder value.
Executive Directors may participate
on the same basis as other employees
Participants may contribute up to the
relevant limits set out in the plan
Remuneration Policy Report for the Chairman and non-executive Directors
Purpose and link to strategy
Operation
To attract and retain
non-executive
Directors of the
required calibre by
offering market‑
competitive fees.
The Chairman of the Board receives an all-inclusive fee. Non-executive Directors receive a basic Board fee.
Additional fees may be payable for additional Board responsibilities such as acting as the Senior Independent
Director, chairmanship or membership of a Board Committee.
The Committee reviews the fees paid to the Chairman and the Board reviews the fees paid to the Non-executive
Directors periodically.
Additional fees may be paid to non-executive Directors on a per diem basis to reflect increased time commitment in
certain limited circumstances.
Expenses incurred in the performance of non-executive duties for the Company may be reimbursed or paid directly
by the Company, as appropriate, including any tax and social security contributions due on the expenses.
Non-executive Directors may be provided with benefits to enable them to undertake their duties.
Opportunity
Fees are set at an appropriate level
that is market competitive and
reflective of the responsibilities and
time commitment associated with
specific roles.
The total aggregate fees payable to
the Chairman and non-executive
Directors will not exceed the
£400,000 limit stated in the
Company’s Articles of Association.
Notes to the Directors’ Remuneration Policy Table
1. Malus and clawback
Malus and clawback may be applied by the Committee to any variable remuneration
awarded to an executive Director under this Remuneration Policy. Potential
circumstances in which the Committee could choose to apply malus and clawback
are following a restatement of results, censure by a regulatory authority, any other
circumstances where the Board considers that the reputation of the Company has been
materially damaged or any other reason (including poor performance or misconduct
on the part of the participant) that the Board considers appropriate. Clawback may be
applied to a cash bonus up to three years from the determination of the bonus. Malus and
clawback may be applied to a deferred annual bonus up to three years from the date of
their award and to an LTIP award up to five years from the date of their award.
2. Shareholding guidelines
To align executive Directors interests with those of the Company’s Shareholders,
executive Directors are required to build a shareholding of twice their annual salary
and hold this position for a further two years post-employment (unless the Committee
considers a lower limit to be appropriate in a particular participant’s circumstances). At
its discretion, the Committee may exempt shares acquired in an executive Director’s
personal capacity from the post-employment guideline.
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3. Legacy awards
The Committee reserves the right to make any remuneration payments and/or payments
for loss of office (including exercising any discretions available to it in connection with
such payments) notwithstanding that they are not in line with the Policy set out above
where the terms of the payment were agreed: (i) before the Policy report set out on pages
88 to 90 came into effect, provided that the terms of the payment were consistent with
the shareholder-approved Directors’ Remuneration Policy in force at the time they were
agreed; or (ii) at a time when the relevant individual was not a Director of the Company
and, in the opinion of the Committee, the payment was not in consideration for the
individual becoming a Director of the Company. For these purposes “payments” includes
the Committee satisfying awards of variable remuneration and, in relation to an award
over shares, the terms of the payment are agreed between participants at the time the
award is granted. The Committee will operate the annual bonus and LTIP in accordance
with the relevant plan rules.
4. Discretion
The Committee retains overriding discretion as to the operation and administration of
these plans as follows:
Annual bonus: The Committee may settle an award in shares and may amend the
performance targets applying to an award in exceptional circumstances if the new
performance targets are considered fair and reasonable and are neither materially more
nor materially less challenging than the original performance targets. The Committee
may also amend the calculation of performance targets for events not foreseen at the
time targets are set to ensure they remain a fair reflection of performance. Likewise, they
may amend the formulaic outturn upwards or downwards if it does not consider that the
formulaic outcome is a fair and accurate reflection of performance or that the award was
not achieved within an acceptable risk profile.
Deferred annual bonus/LTIP: The Committee may amend the performance conditions
applying to an award in exceptional circumstances if the new performance conditions
are considered fair and reasonable and are neither materially more nor materially less
challenging than the original performance conditions. The Committee may also amend
the calculation of performance targets for events not foreseen at the time targets are
set to ensure they remain a fair reflection of performance. Likewise, they may amend
the formulaic outturn upwards or downwards if it does not consider that the formulaic
outcome is a fair and accurate reflection of performance or that the award was not
achieved within an acceptable risk profile. Specific examples include a variation of share
capital, demerger, special dividend, distribution or any other corporate event which may
affect the current or future value of an award, in which case the Committee may adjust
the number of shares or the option price. Any use of the above discretions would, where
relevant, be explained in the Annual Report on Remuneration and may, as appropriate, be
the subject of consultation with the Company’s major shareholders.
5. Takeover or other corporate event
Incentive awards will generally vest early on a takeover, merger or other corporate event
to the extent that any performance condition is then satisfied. When an LTIP award vests
in these circumstances, the number of shares in respect of which it vests will, unless
the Committee decides otherwise, be reduced to reflect the fact that it is vesting early.
Alternatively, participants may be allowed or required to exchange their awards over
shares in the acquiring company. The Committee has the discretion to take other action
as appropriate if other events occur which may have an effect on awards. In the event that
all-employee plans are operated, they would be expected to vest on a takeover or other
corporate event and those which have to meet requirements to utilise tax benefits would
vest in accordance with those requirements.
6. Minor changes
The Remuneration Committee may make minor amendments to the Directors’
Remuneration Policy set out on pages 88 to 90 (for regulatory, exchange control, tax or
administrative purposes or to take account of a change in legislation) without obtaining
shareholder approval for such amendment.
7. Performance measures and target setting
The annual bonus is based on operating, financial, ESG and personal performance
measures which are aligned with the Company’s annual strategic plan. The LTIP awards
are based on measures chosen to motivate and reward Directors for the successful
achievement of long-term sustainable performance and to ensure maximum alignment
with shareholders. Targets for all incentive plans are set by the Committee and take into
account a number of reference points.
8. Remuneration arrangements throughout the Company
There are differences in the components of total remuneration packages for the
executive Directors and other employees generally. This reflects differences in market
practice taking into account roles and seniority. The remuneration policies for executive
Directors and other senior executives are generally consistent in terms of structure and
the approach to rewarding performance. In particular, we place significant emphasis
throughout the business on performance based rewards.
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Remuneration Committee Report | continued
Directors’ remuneration policy implementation illustration
The charts below are presented to illustrate the application of the Directors’
Remuneration Policy set out in the policy report for the executive Directors for 2023,
illustrating the split between the different elements of remuneration under three
different performance scenarios, being “Minimum”, “On-target” and “Maximum”.
CEO
Minimum
On-target
Maximum
Maximum with
50% share
price growth
27%
23%
44%
21%
37%
31%
100%
£0.5m
35%
£1.1m
36%
£1.8m
46%
£2.1m
Fixed elements
Annual variable elements
Long-term variable elements
CSFO
Minimum
On-target
Maximum
Maximum with
50% share
price growth
27%
23%
44%
21%
37%
31%
100%
£0.3m
35%
£0.8m
36%
£1.2m
46%
£1.5m
Fixed elements
Annual variable elements
Long-term variable elements
For illustrative purposes, the on-target and maximum for the annual variable elements are assumed to be
55 per cent and 150 per cent of salary, respectively. Although the policy maximum is 150 per cent, in 2023 the
Committee has set the maximum annual variable at 110 per cent of salary.
In respect of the long-term variable elements, on-target and maximum are assumed to be 90 per cent and
150 per cent of salary respectively. For illustrative purposes above, no share price growth, dividend accruals or
discount rate assumptions have been applied.
Fixed elements include annual salary effective 1 January 2023, pension contributions of 7.5 per cent of salary and
annualised taxable benefits effective from 1 January 2023, which include private medical insurance and
car allowances.
Recruitment and new appointments
In determining remuneration arrangements for new appointments to the Board
(including internal promotions), the Committee considers all relevant factors, including
the calibre and experience of the individual, the market from which they are recruited and
existing arrangements for other executive Directors, with a view that any arrangements
are in the best interests of the Company and our shareholders. Typically, new
appointments will have (or be transitioned onto) the compensation structure currently in
place for other executive Directors and in line with the Policy report presented on pages
88 to 90. The maximum variable pay opportunity in respect of recruitment (excluding
buy-outs) comprises a maximum annual bonus of 150 per cent of annual salary and a
maximum LTIP award of 150 per cent of annual salary as stated in the Policy report on
pages 88 to 90. The Committee retains the flexibility to determine that for the first year
after appointment any annual incentive award within this maximum will be subject to
such terms as it may determine. Where an executive Director is appointed from internal
promotion, the normal policy of the Company is that any legacy arrangements would be
honoured in line with the original terms and conditions. Similarly, if an executive Director
is appointed following the Company’s acquisition of, or merger with, another company
or business, legacy terms and conditions would be honoured. Upon appointment, the
Committee may consider it appropriate to offer additional remuneration arrangements
in order to secure the appointment. In particular, the Committee may consider it
appropriate to “buy out” terms or remuneration arrangements forfeited on leaving a
previous employer. The overriding principle would be that the value of any buy-out
awards should be no more than the commercial value of awards which would have been
forfeited. The form of any award would be determined at the time and the Committee
may make buy-out awards under LR 9.4.2 of the Listing Rules. The Committee may
provide costs and support if the recruitment requires relocation of the individual.
Likewise, the Committee may approve the reimbursement of specific costs incurred by
an individual in relation to their appointment.
Recruitment of Chairman and non-executive Directors
On the appointment of a new Chairman or non-executive Director, fees paid will normally
be consistent with the Policy report set out on pages 88 to 90. Where specific cash
or share arrangements are delivered to the Chairman or non-executives, these will
not include share options or any other performance related elements. However, if the
Chairman or a non-executive Director takes on an executive function on a short-term
basis, they would be eligible to receive any of the standard elements of an executive
Directors compensation structure.
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Service contracts
Key terms of the current executive Directors’ service agreements and non-executive
Directors’ letters of appointment are summarised in the table below. It is envisaged
that any future appointments would have equivalent contractual arrangements unless
otherwise stated in this Policy report.
Provision
Policy
Notice period
Executive Directors must give or be given a notice period of six
months. In respect of non-executive Directors, no notice period is
required by either the individual or the Company.
Termination pay
No termination pay provisions exist for either executive or non-
executive Directors.
Expiry date
Executive Director contracts have no expiry date, while non-
executive Directors are ordinarily required to step down from the
Board within ten years of their appointment.
Each Director will retire and put themselves forward for re-election at the first Annual
General Meeting of the Company following their appointment, and thereafter in line with
the Articles and the UK Corporate Governance Code.
Payment for loss of office
Where an executive Director leaves employment, the Committee’s approach to
determining any payment for loss of office will normally be based on the overarching
objective of arriving at an outcome which is in the best interests of the Company and
its shareholders, while taking into account the specific circumstances of cessation of
employment. While the Committee must ensure all contractual obligations are satisfied,
termination payment would not be expected in normal circumstances to exceed
salary, pension and benefits in relation to the individual’s outstanding notice period.
The Committee reserves the right to make any other payments in connection with a
Director’s cessation of office or employment where the payments are made in good faith
in discharge of an existing legal obligation (or by way of damages for breach of such an
obligation) or by way of a compromise or settlement of any claim arising in connection
with the cessation of a Director’s office or employment. Any such payments may include
but are not limited to paying any fees for outplacement assistance and/or the Director’s
legal and/or professional fees in connection with cessation of office or employment.
The treatment of outstanding incentive awards will be governed by the relevant plan rules
as set out in the table overleaf.
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Remuneration Committee Report | continued
Plan
Good leaver categories
Treatment for good leavers
Treatment for all other reasons
Annual
bonus
Death, ill-health, injury or disability, redundancy,
transfer of employing company or business to which
an individual’s employment relates out of the Group,
transfer of undertaking, any other reason, except
summary dismissal, as the Remuneration Committee
determines.
The participant will normally retain their entitlement to
the bonus to the extent that the performance targets
have been met. Bonuses will normally be subject to
time prorating to reflect the period in employment,
although the Committee has the discretion to vary this
and/or pay the bonus entirely in cash. The Committee
may determine that the bonus payment is calculated
and made, at their discretion, at cessation instead of at
the end of the performance period.
All other leavers will forfeit their entitlement to an
annual bonus payment.
Deferred
annual
bonus
LTIP
Death, ill-health, injury or disability, redundancy,
transfer of employing company or business to which
an individual’s employment relates out of the Group,
transfer of undertaking, any other reason, except
summary dismissal, as the Committee determines.
The participant will normally retain their entitlement
to receive their deferred annual bonus, which will vest
on the normal vesting date. In the event of death or
special circumstances, at the Committee’s discretion,
awards may vest early either in part or in full.
All other leavers will forfeit their entitlement to
receive any further vesting of deferred annual bonus
awards.
Cessation during the performance period due to
death, ill-health, injury or disability, redundancy,
transfer of employing company or business to which
an individual’s employment relates out of the Group,
transfer of undertaking, any other reason, except
summary dismissal, as the Committee determines.
Cessation during the holding period for all reasons
except summary dismissal.
Cessation during the vesting period
Awards lapse.
In the event of death, or special circumstances at the
Committee’s discretion, awards may be released upon
cessation based on the Committee’s determination
of the extent to which any relevant performance
conditions are satisfied at that date. Otherwise, a
Good Leaver’s awards will be released at the end of
the holding period (unless the Committee exercises
its discretion to release the award at the end of the
performance period) subject to satisfaction of any
relevant performance conditions measured over the
full performance period. A Good Leaver’s awards will
normally vest on a time-apportioned basis although
the Committee has the discretion, acting fairly and
reasonably, to disapply time apportionment.
Cessation during the holding period
Outstanding awards will be released at the end of the
holding period or upon cessation at the Remuneration
Committee’s discretion.
Consideration of employment conditions elsewhere in the Group
The Committee reviews general levels of employee pay and related issues and is conscious of the importance of ensuring that its pay decisions for executive Directors are regarded as
fair and proportionate within the business. As outlined in the Policy report, pay and conditions in the Company are two of the considerations taken into account when the Committee
is determining salary levels for the executive Directors. The Committee does not formally consult with employees as part of its process when determining executive Director pay.
Consideration of Shareholders’ views
The Remuneration Committee actively consults with major shareholders and takes into account views expressed when shaping the structure of the Directors’ remuneration
arrangements.
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Annual Report on Remuneration
The Annual Report on Remuneration will be subject to an advisory shareholder vote at the
2023 Annual General Meeting.
Committee confirming that, in its assessment, the financial outturns which determined
the bonus were achieved within an acceptable risk profile. Clawback may be applied to a
cash or deferred bonus up to three years from the date of determination of the award.
Implementation of the Remuneration Policy in 2023
This section provides an overview of how the Committee is proposing to implement the
Remuneration Policy during 2023.
Base salary
As discussed in the Remuneration Committee Chairman’s statement, the executives’
salaries have increased by 4 per cent with effect from 1 January 2023. This was arrived at
following advice from Deloitte, our Remuneration Consultants and a comprehensive review
with consideration given to the Company’s performance and the average annual salary
increase awarded to the workforce (8.3 per cent). The prior and current salaries are set out
below. For information, the CEO received an annual salary increase of 2.5 per cent in 2022.
Executive Director
Prior salary
Current salary
Duncan Garrood £410,000 fixed 1 January 2022
£426,400 with effect from
1 January 2023
Donald Grant
£290,000 fixed 12 September
2022
£301,600 with effect from
1 January 2023
Pension and benefits
Executive Directors will be provided with a standard benefits package including pension
provision of 7.5 per cent of salary, medical insurance, life insurance, and car allowance of
£15,000 for the CEO and £9,662 for the CFSO.
Annual and deferred annual bonus
The maximum pay out under the annual bonus scheme is unchanged at 110 per cent of
salary, with at least 40 per cent of any bonus satisfied by the issue of nil-cost options,
which will be deferred for three years.
The annual bonus will be determined by three equally weighted financial performance
measures, accounting for two thirds of the bonus opportunity. In 2023 these have been
linked to revenue, EBITDA and dividend payment. The balance, being one third of the
bonus opportunity, is linked to the achievement of specific individual objectives derived
from strategic key performance indicators, including ESG related objectives. Following
due consideration, the Committee considers these objectives are appropriate in 2023
as the Company continues to capitalise on the post pandemic recovery whilst managing
its controllable cost base as tightly as possible, therefore driving improving shareholder
returns. Notwithstanding the formulaic outcome against these measures, the Committee
will continue to consider carefully overall business performance at the year-end and
determine whether the exercise of discretion is warranted.
The targets and outturn against these measures will be disclosed in the Remuneration
Report for the year ending 31 December 2023. Any bonus pay out will be subject to the
LTIP
Duncan Garrood and Donald Grant will receive LTIP awards for 2023 equivalent to 150 per
cent of salary, with the number of shares determined by the average share price in the 12
months preceding the date of grant, or in exceptional circumstances such other share
price deemed appropriate by the Committee. The vesting of the LTIP award is subject to
two performance measures each representing 50 per cent of the award.
Firstly, Total Accounting Return (“TAR”) relative to threshold and maximum targets for
the period 1 January 2023 to 31 December 2025, with TAR being the combined growth in
net asset value and dividends paid during the period. 25 per cent of the award will vest
for meeting a threshold TAR target of 6 per cent per annum, increasing to 100 per cent
vesting for meeting a maximum target of 10 per cent per annum, with straight line vesting
between threshold and maximum performance.
Secondly, Total Shareholder Return (“TSR”) relative to the FTSE All Share Real Estate
Companies peer group, with 25 per cent of the award for median performance and 100 per
cent for achieving performance within the 75th percentile, with straight line vesting between
threshold and maximum performance, for the period 1 January 2023 to 31 December 2025.
Any LTIP vesting will again be subject to the Committee confirming that, in its
assessment, the vesting out turn was achieved within an acceptable risk profile. The
Committee will continue to have discretion to override formulaic outcomes.
Malus and clawback will also be applied to LTIP awards up to five years from the date of
grant, which is in line with the UK Corporate Governance Code. Vested awards will be
subject to an additional two-year holding period.
Non-executive Director remuneration
The fee structure for the remuneration of non-executive Directors from 1 January 2023 is
outlined in the table below. This fee structure has remained unchanged since 1 July 2016.
Non-executive Director fees are determined by the Board, except for the fee for the
Chairman of the Board, which is determined by the Remuneration Committee.
Base fee
Annual fees (£)
£40,000
Audit & Risk Committee Chairman
£48,000
Remuneration Committee Chairman
£48,000
Senior Independent Director
£49,000 (£52,500 if role is held by an individual
who is also a Committee Chairman)
Chairman of the Board
£115,000
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Remuneration Committee Report | continued
Remuneration outcome in 2022
Single total figure of remuneration (audited)
The following table sets out the total remuneration for executive Directors and non-executive Directors for the year ended 31 December 2022 alongside the equivalent data for the
previous year.
Executive Directors
Duncan Garrood
Donald Grant1
Lynne Fennah2
Non-Executive Directors
Mark Pain
Stuart Beevor3
Alice Avis4
Martin Ratchford
Clair Preston-Beer5
Executive Directors
Duncan Garrood
Lynne Fennah2
Non-Executive Directors
Mark Pain
Jim Prower6
Stuart Beevor
Alice Avis7
Martin Ratchford8
Salary
and fees
(£)
410,000
88,859
270,088
115,000
20,000
51,136
48,000
20,000
Salary
and fees
(£)
Year ended 31 December 2022
Benefits
(£)
Pension
(£)
Total Fixed
(£)
Annual
bonus (£)
Long-term
incentives
(£)
Total
Variable
(£)
17,887
3,874
11,751
30,750
6,692
40,513
458,637
99,425
322,352
—
—
—
—
—
—
—
—
—
—
115,000
20,000
51,136
48,000
20,000
277,816
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
277,816
—
—
—
—
—
—
—
Total
(£)
736,453
99,425
322,352
115,000
20,000
51,136
48,000
20,000
Year ended 31 December 2021
Benefits
(£)
Pension
(£)
Total Fixed
(£)
Annual bonus
(£)
Long-term
incentives
(£)
Total
Variable (£)
Total
(£)
400,000
316,200
17,829
14,073
30,000
47,430
447,829
377,703
44,000
34,782
115,000
39,375
48,000
42,250
12,000
—
—
—
—
—
—
—
—
—
—
115,000
39,375
48,000
42,250
12,000
—
—
—
—
—
—
—
—
—
—
—
—
44,000
34,782
491,829
412,485
—
—
—
—
—
115,000
39,375
48,000
42,250
12,000
1 Donald Grant joined the Company and the Board on 12 September 2022 as CFSO designate, in anticipation of Lynne Fennah’s retirement.
2 Lynne Fennah retired from the Board on 31 October 2022. Her remuneration is reported in the above table to the date she ceased to be a Director of the Company. Details in relation to her termination payments are on page 100.
During the year, Lynne received 92,018 deferred shares at a value of £89,902. These relate to vested awards made pursuant to the deferred shares element of the Company’s annual bonus award for the years ending 31 December 2017
and 31 December 2018.
3 Stuart Beevor retired from the Board on 23 May 2022 and his fees were paid until 31 May 2022.
4 Alice Avis, the Company’s Senior Independent Director, was appointed Chair of the Remuneration Committee on 1 April 2022, with her fee adjusted to reflect the increased responsibility upon Stuart Beevor’s retirement on 23 May 2022.
5 Clair Preston-Beer joined the Board as non-executive Director on 1 July 2022
6 Jim Prower retired from the Board on 30 September 2021
7 Following Jim Prower’s retirement, Alice Avis was appointed Senior Independent Director on 1 October 2021 and her fee was adjusted to reflect the increased responsibility
8 Martin Ratchford joined the Board on 1 October 2021 as Audit & Risk Committee Chair
Contents Generation – PageContents Generation – Sub PageContents Generation - Section
Notes to the single figure table
Salary and fees: This represents the cash paid or receivable in respect of the relevant financial year.
Benefits: This represents the taxable value of all benefits paid or receivable in respect of the relevant financial year. Executive Directors receive a standard benefits package including
medical insurance, life insurance and car allowance.
Annual bonus: Total bonus payable for the relevant financial year, whether payable in cash or as a deferred share award.
Long-term incentives: This relates to the value of long-term awards where the applicable three year performance period ends in the year under review. The Committee determined
that the performance condition for the awards granted in April 2019 and April 2020 had not been met and accordingly neither year’s awards vested.
Pension: Duncan Garrood and Donald Grant received a Company contribution worth 7.5 per cent of base salary: Lynne Fennah received a contribution of 15 per cent of base salary
during the year, reducing to 7.5 per cent from 1 January 2023. All executive Directors elected to receive a cash allowance in lieu of pension.
Additional disclosures in respect of the single figure table (audited)
2022 annual bonus
Duncan Garrood and Lynne Fennah participated in the 2022 annual bonus scheme with a maximum annual bonus opportunity of 110 per cent of salary based on the performance
targets set out below.
The maximum potential annual bonus that could be paid to the executive Directors in respect of the year ended 31 December 2022 was determined by a combination of three
performance measures, each equally weighted and based on the level of revenue occupancy achieved, dividends paid to shareholders and performance against specific individual
objectives.
In line with Policy, Lynne Fennah forfeited her right to an annual bonus upon resignation in May 2022.
Performance targets and their outcome for Duncan Garrood are set out below:
Performance measure
Revenue occupancy
Dividends paid (and fully covered}
Individual specific objectives 1
Duncan Garrood
Total before application of Committee discretion
Total after application of Committee discretion
Proportion of bonus
determined by
measure
Threshold
Performance
0% payable
Maximum
performance
100% payable
Actual
performance
% of maximum
bonus payable
33.33%
33.33%
<85%
>90%
90.5%
2.5 pence
5.0 pence
2.75 pence
33.34%
See page 98
75%
33.3%
3.3%
25.0%
61.6%
61.6%
1
Individual objectives were subject to a dividend related unlock. Subject to actual performance against individual objectives, this element of the annual bonus would not unlock unless a minimum 2.5 pence per share fully covered
dividend had been paid or declared to be paid to shareholders in respect to the financial year. This unlock was achieved.
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Remuneration Committee Report | continued
Achievement against individual objectives:
Duncan Garrood
Objective
Outturn
The appropriate implementation of the corporate strategy, including:
a) Like-for-like rental growth above budget;
b) Asset Disposals of greater than £30 million;
c) Implement new Hello Student proposition and identity.
Develop workplace engagement and culture, improve retention & internal talent
development and health & safety compliance, including:
a) Best Companies index score improvement, increase 5 points;
b) Health & safety compliance at or above 95 per cent;
c) Reduction in management voluntary turnover from 36 per cent to 30 per cent;
d) Colleague engagement above 82 per cent.
Develop and start delivering a strong customer service focus which will
differentiate Hello Student’s proposition, including:
a) An increase in Net Promoter Score to 23 or more on GLSI survey;
b) Deliver a customer service app for all sites by the third quarter;
c) Develop a service and training programme with implementation starting by
year end.
Key:
Some progress
Good progress
Excellent progress
Successfully progressed implementation of corporate strategy
with like for like rental growth above budget, achieving 2.7 per
cent for the 2022 financial year and 5.2 per cent for the academic
year 2022/23. Asset disposals of non-core properties of £53.5m
and the implementation of a strong Hello Student brand identity,
the development of a new sub-brand, Postgrad by Hello Student
and the evolution of the ESP brand identity.
Good progress has been made on strengthening workplace
engagement and culture, as evidenced by achieving One
Star accreditation in the Best Companies Index, and through
increasing colleague engagement to 84 per cent in the annual
survey.
In addition good progress was also made on reducing
management voluntary turnover to below 30 per cent and on
strengthening our health & safety culture with Health & Safety
compliance rising to 95 per cent.
Good progress made on improving the customer service focus
with Net Promoter Score rising to 27 and achieving the best
score amongst PBSA providers. Developed and implemented a
customer service app across all sites for the start of academic
year 2022/23 with over 6,500 customers registered and active
users.
The service and training programme was developed but was not
implemented by year end due to strategy reprioritisation agreed
by the Board.
Outcome
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The table below sets out the annual bonus award made in respect of the 2022 financial year. Although Policy maximum is set at 150 per cent, the Committee had committed to an
annual maximum in respect of 2022 of 110 per cent.
Duncan Garrood
61.6%
£166,690
£111,126
1 To be settled in shares following a three year vesting period from date of grant.
Bonus award
percentage of 2022 maximum
Bonus paid in cash
Bonus awarded in deferred shares1
Total bonus
£277,816
LTIP vesting
The vesting of the LTIP award granted to Lynne Fennah on 8 April 2020 was subject to a single performance condition of Total Return (being net asset value growth and dividends
paid) relative to threshold and maximum targets for the performance period 1 January 2020 to 31 December 2022. 25 per cent of the award would vest for meeting a threshold Total
Return target of 8 per cent per annum, increasing to 100 per cent vesting for meeting a maximum target of 12 per cent per annum. Actual performance for the performance period was
below the threshold level for the award, so no LTIP shares shall vest.
All subsequent LTIP awards granted to Lynne Fennah were subject to performance periods which extend beyond her notice period and have therefore lapsed.
Scheme interests awarded during the financial period (audited)
Long-term incentive plan awards
Long-term incentive plan awards are granted over the Company’s shares with the number of shares under award determined by reference to a percentage of base salary. Vesting of
the awards is conditional upon satisfaction of performance conditions and is usually also conditional upon continued employment until the awards vest on the third anniversary of
grant. Vesting is subject to an additional two-year holding period.
The following table provides details of the LTIP award granted to Duncan Garrood on 24 March 2022
Duncan Garrood
LTIP
701,814
Type of award
Maximum number of shares
Face value
£
615,000
Threshold vesting
End of performance period
25%
31 December 2024
Duncan Garrood was entitled to an LTIP award over shares worth 150 per cent of his annual salary at the start of the year. The number of shares in the award (and the face value in the
above table) was calculated using a Company share price of 87.6 pence, representing the average of the daily closing prices of the Company’s ordinary Shares on the London Stock
Exchange for the 12-month period ended 28 February 2022.
Vesting of these awards is subject to two performance measures each being 50 per cent of the award. Firstly, Total Accounting Return (“TAR”) relative to threshold and maximum
targets for the periods 1 January 2022 to 31 December 2024, with TAR being the combined net asset value growth and dividends paid. 25 per cent of the award will vest for meeting
a threshold TAR target of 6 per cent per annum, increasing to 100 per cent vesting for meeting a maximum target of 10 per cent per annum. Secondly, Total Shareholder Return
(TSR) relative to the FTSE All Share Real Estate Companies peer group, with 25 per cent of the award for median performance and 100 per cent for 75th percentile performance (with
straight line vesting between) for the period 1 January 2022 to 31 December 2024.
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Remuneration Committee Report | continued
Payments to past directors (audited)
There were no payments to past Directors during 2022, other than those pursuant to the deferred shares element of the annual bonus awards made to Timothy Attlee, the Company’s
former CEO. Details of which were previously outlined in the 2020 Remuneration Report.
Payments for loss of office (audited)
Lynne Fennah retired from the Board on 31 October 2022 following her resignation which was effective 1 June 2022. Remuneration payments have been determined by the Committee
taking into account contractual entitlements, the rules of the Company’s incentive plans and provisions of the Policy.
In accordance with her service contract, which provided for a 12 month notice period, Lynne has, and will continued to, receive her salary, benefits and pension payments until the
end of her notice period on 31 May 2023. As previously agreed, her pension contribution was reduced from 15 per cent to 7.5 per cent in line with the majority of the workforce, from 1
January 2023.
Under the Annual Bonus Plan rules, Lynne is not entitled to an annual bonus for the year ending December 2022.
The Committee exercised its discretion, in accordance with the Plan rules and the remuneration policy, to allow Lynne to receive her 15,877 deferred annual bonus shares due to vest
on 24 March 2025 in addition to the 72,396 deferred shares which are due to vest on 8 April 2023 to which she remains entitled, given the vesting date is within her notice period.
All unvested LTIP awards have lapsed.
Statement of Directors’ shareholdings and share interests (audited)
The table below shows the Directors’ share ownership as at 31 December 2022.
The standard shareholding guideline is that executive Directors are expected to build up and retain a shareholding worth at least 200 per cent of salary. Subject to the incentive
plans delivering at least an on target level of award, the guideline is expected to be satisfied within a five-year period of their appointment to the Board. To date these shareholding
requirements have not been met as both executive Directors have less than five years’ service on the Board and are therefore currently in the build-up phase against this guideline.
Executive Directors are required to maintain their shareholding in accordance with this guideline for two years post-employment (unless the Committee considers a lower limit to be
appropriate in a particular participant’s circumstances).
Mark Pain
Duncan Garrood
Donald Grant
Alice Avis
Martin Ratchford
Clair Preston-Beer
Lynne Fennah (former Director)
Stuart Beevor (former Director)
Dividends received
during the year ended 31
December 2022
Beneficially owned
shares at 31 December 2022
(number of shares)
£2,500
£2,328
—
—
—
—
£2,535
£500
100,000
93,122
—
—
—
—
147,418
20,000
Outstanding LTIP awards subject
to performance and employment
conditions at 31 December 20222
(number of shares)
Outstanding annual bonus awards
subject to employment conditions
at 31 December 20223 (number of
shares)
—
1,901,814
—
—
—
—
—
—
—
20,084
—
—
—
—
88,273
—
% of salary1
n/a
19.1%
0%
n/a
n/a
n/a
n/a
n/a
1 Value-based on salary effective from 1 January 2022 and the closing share price on 30 December 2022 of 84.2 pence.
2 These are outstanding LTIP awards subject to the performance conditions disclosed in this or previous Remuneration Reports.
3 These are outstanding deferred awards granted pursuant to the annual bonus plan.
Between 31 December 2022 and the date of this Report, there were no changes in the shareholdings outlined in the above table.
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Performance graph and CEO remuneration table
The chart below compares the TSR performance of the Company during the period since IPO to the FTSE All- Share Index and the FTSE All-Share REIT Index. These indices
have been chosen because they are recognised equity market indices of which the Company is a member. The base point in the chart for the Company equates to the IPO price
of 100 pence.
Company Total Shareholder Return performance relative to FTSE All-Share and FTSE All-Share REIT indices
£140
£120
£100
£80
£60
£40
Jun-14
Dec-14
Jun-15
Dec-15
Jun-16
Dec-16
Jun-17
Dec-17
Jun-18
Dec-18
Jun-19
Dec-19
Jun-20
Dec-20
Jun-21
Dec-21
Jun-22
Dec-22
Empiric Student Property
FTSE All Share Index
FTSE REIT Index
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Remuneration Committee Report | continued
Chief Executive Officer remuneration outcomes
The table below shows the total remuneration payable to the CEO for the financial periods since IPO, and variable pay outturns as a percentage of the maximum opportunity.
12 months
ended
30 June 2015
12 months
ended
30 June 2016
6 months
ended
31 December
2016
12 months
ended
31 December
2017
12 months
ended
31 December
20181
12 months
ended
31 December
2019
12 months
ended
31 December
20202
12 months
ended
31 December
2021
12 months
ended
31 December
2022
CEO single figure of remuneration
£576,263
£748,160
£314,455
£731,442
£539,500
£670,557
£361,041
£491,829
£736,453
Annual bonus pay out (% of
maximum)
100%
100%
50%
0%
25.1%
LTIP vesting
n/a
n/a
n/a
63.7%
0%
1 Includes Acting CEO for period 1 January 2018 to 31 October 2018.
2 Combination of Tim Attlee as CEO from 1 January 2020 to 30 June 2020 and Duncan Garrood as CEO from 28 September 2020 to 31 December 2020.
42%
0%
0%
0%
10%
61.6%
0%
0%
CEO Pay Ratio
The UK Companies (Miscellaneous Reporting) Regulations 2018 introduces a requirement for certain UK listed companies to publish the ratio of CEO pay it its UK employees.
The regulation uses the full year total pay and benefits for all employees and therefore the same methodology that is used to calculate the CEO’s single figure of remuneration
on page 96. The Committee assesses whether the year on year movement in the ratio is consistent with the Company’s performance and employee reward decisions.
Year
2022
20211
20201
2019
Method
Option A
Option A
Option A
Option A
32:1
25:1
14:1
33:1
30:1
22:1
17:1
31:1
25th percentile pay
Median pay
75th percentile pay
1 CEO pay ratio has been updated for 2021 and 2020 to be consistent with the calculation methodology applied in 2022
Year
2022
Method
Lower quartile
Salary
Median quartile
Salary
Upper quartile
Option A
Total pay and benefits
£21,971
Total pay and benefits
£24,375
Total pay and benefits
£22,798
£24,375
£31,670
We have used Option A as we assess it to be the statistically preferred method for calculating the pay ratio.
Figures are calculated based on a reference date of 31 December 2022 (339 employees at this date).
Remuneration for non-executive Directors has not been included in the calculations.
The conversion for part-time colleagues to FTE equivalent uses a standard working week of 37.5 hours and 52 weeks a year.
The summary above illustrates that as the pay ratio normalises post-Pandemic, the median, 25th and 75th percentiles are all lower that their 2019 equivalent, demonstrating our
continued investment in the pay and reward for our workforce.
The Group adopts a reward framework which is based on a consistent framework which applies to all our employees. Remuneration should remain competitive compared to
comparative roles and always equal to or more than the Living Wage. Our employees are paid using the same principles as the pay for our executive Directors. The median ratio
is consistent with the Group’s wider policies on pay, reward and progression policies.
23:1
17:1
18:1
25:1
Salary
£27,500
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Percentage change in remuneration of the Directors
The table below shows the change in the various elements of Director remuneration relative to the change in average employee remuneration between 2021 and 2022 (plus between
2020 and 2021 as set out in last year’s Remuneration Report). The table is presented for those Directors who held Board positions in both 2022 and 2021, therefore Clair Preston-Beer
and Donald Grant do not appear as both joined the Board during the year.
Percentages disclosed below are calculated to show the change in the figures within the table entitled Single total figure of remuneration (audited), appearing on page 96.
Year to
31 December 2022
Base salary / fee
Benefits
Annual bonus
Mark Pain
change
+0%
+0%
+0%
Alice Avis
Change 1
+21.0%
+0%
+0%
Martin Ratchford
change
Duncan Garrood
change
Lynne Fennah
change 2
+0%
+0%
+0%
+2.5%
+0.3%
+531%
-14.6%
-15.0%
-100%
Stuart Beevor
change 2
-58.3%
+0%
+0%
Average employee
change
+6.9%
+18.2%
+111.4%
1 Alice Avis assumed the Chair of the Remuneration Committee following Stuart Beevor’s retirement and her fee was adjusted accordingly
2 Lynne Fennah and Stuart Beevor retired from the Board during 2022
Year to
31 December 2021
Base salary
Benefits
Annual bonus
Mark Pain
change
+0%
+0%
+0%
Alice Avis
Change 3
+5.6%
+0%
+0%
Martin Ratchford
Change 4
Duncan Garrood
Change 5
Lynne Fennah
Change 6
Stuart Beevor
change
Average employee
change
+0%
+0%
+0%
+0%
+0%
+100%
+0%
+0%
+100%
+0%
+0%
+0%
+4.0%
+0%
-100%
3 Change in base salary has been restated.
4 Martin Ratchford joined the Board on 1 October 2021
5 Base salary change from the prior year is calculated with reference to an annualised prior year base salary as Duncan Garrood joined the Board part way through the prior year.
6 Figures presented for base salary disregard the impact of Lynne Fennah’s ‘acting-up’ allowance in granted in 2020 of £20,000 as this was time limited and not representative of her on-going base salary.
Year to
31 December 2020
Base salary
Benefits
Annual bonus
Mark Pain
change
+0%
+0%
+0%
Alice Avis
Change 7
Martin Ratchford
Change
Duncan Garrood
Change
Lynne Fennah
Change 8
Stuart Beevor
change
Average employee
change
+0%
+0%
+0%
+0%
+0%
+0%
+0%
+0%
+0%
+2.0%
+2.2%
-100%
+0%
+0%
+0%
+10.0%
+0%
+100%
7 Base salary change from the prior year is calculated with reference to an annualised prior year base salary as Alice Avis joined the Board part was through the prior year.
8 Figures presented for base salary disregard the impact of Lynne Fennah’s ‘acting-up’ allowance of £20,000 granted in the year as this was time limited and not representative of her on-going base salary. Change in benefits has been
restated.
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Remuneration Committee Report | continued
Relative importance of spend on pay
The table below sets out the total expenditure on pay for all of the Company’s employees,
compared to distributions to shareholders by way of dividend.
Total staff costs (note 6 to the financial
statements)
Year ended
31 December 2022
Year ended
31 December 2021
£13.9m
£10.4m
Total dividends
£15.2m
£15.1m
Internal Advice
No individual was present when their own remuneration was being discussed. The
Company Secretary acted as secretary to the Committee. The executives and the People
& Performance Director joined certain meetings to discuss relevant matters, as required.
External Advice
Deloitte LLP was appointed by the Company in 2015 to provide advice on executive
remuneration matters. Although there is no requirement for mandatory rotation of
remuneration advisers, the current engagement partner has been in post since 2019.
During the year, the Committee received independent and objective advice from
Deloitte, principally on the drafting of the Remuneration Report, the New Remuneration
Policy, incentive design and market practice. Deloitte was paid £25,060 in fees during the
year ended 31 December 2022 for these services (charged on a time plus expense basis).
Deloitte is a founding member of the Remuneration Consultants Group and, as such,
voluntarily operates under the Code of Conduct in relation to executive remuneration
consulting in the UK. Deloitte provided no other services to the Company during this
period.
– Proportionality: Our variable remuneration arrangements are designed to provide a
fair and proportionate link between Group performance and reward. The Committee
has overriding discretion that allows it to adjust formulaic annual bonus or LTIP
outcomes so as to prevent disproportionate results. Additionally, we ensure there is
a clear link between executive remuneration and the longer-term performance of the
Group through a combination of bonus deferral into shares, five-year release periods
for LTIP awards and stretching shareholding requirements that apply during and post
employment.
– Risk: Before approving any bonus or LTIP pay out, the Committee confirms that they
were achieved within an acceptable risk profile. Malus and clawback provisions also
apply to both the annual bonus and LTIP awards.
Shareholder Voting
Shareholder support was received for our resolutions on remuneration as summarised
below:
Approval of the Directors’
Remuneration Report (May 2022
Annual General Meeting)
Approval of the Remuneration
Policy (May 2020 Annual General
Meeting)
Votes for
Votes against
Votes withheld
367,664,246
(98.1%)
7,293,186
(1.9%)
28,379,559
349,871,083
(97.7%)
8,367,331
(2.3%)
134,527
External Board Appointments
Executive directors are only entitled to accept appointments outside the Company with
the consent of the Board. Any fees received may be retained by the Director.
Compliance with the UK Corporate Governance Code
The Committee is mindful of the UK Corporate Governance Code and considers that it
has appropriately addressed the principles of Provision 40 in the Code:
This report was approved by the Board on 16 March 2023.
On behalf of the Board
– Clarity: This Remuneration Report provides a straightforward and transparent
disclosure of our executive remuneration arrangements.
Alice Avis MBE | Remuneration Committee Chairman
16 March 2023
– Simplicity and alignment to culture: Our variable remuneration arrangements are
straightforward with individuals eligible for an annual bonus and, at more senior levels,
LTIP awards. Performance measures used in these plans are aligned with key strategic
objectives and their performance indicators and long-term sustainable value creation.
– Predictability: The Policy report on pages 87 to 90 contains maximum opportunity
levels for executive Directors’ bonus and LTIP awards and pension provision. The charts
on page 92 provide an illustration of the potential total reward opportunity for the
executive Directors.
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Directors’ Report
Directors’ Report
Directors’ Report
Introduction
The Directors are pleased to present their Annual Report, including the Group and
Company’s audited financial statements, for the year ended 31 December 2022. The
Strategic Report on pages 1 to 67 comprise the Management Report, for the purposes
of Disclosure Guidance and Transparency Rule 4.1.5R.
Political donations
The Company made no political donations and incurred no political expenditure during
the year.
Share capital
At 31 December 2022, the total number of ordinary shares in issue was 603,351,880.
Restrictions on transfer of securities in the Company
There are no restrictions on the transfer of securities in the Company, except pursuant to:
– the Listing Rules of the Financial Conduct Authority (the “Listing Rules”), whereby
certain individuals require approval to deal in the Company’s shares; and
– the Company’s Articles of Association, whereby the Board may decline to register a
transfer of shares or otherwise impose a restriction on shares, to prevent the Company
breaching any law or regulation.
The Company is not aware of any agreements between holders of securities that may
result in restrictions on the transfer of securities in the Company.
Securities carrying special rights
No person holds securities in the Company carrying special rights with regard to control
of the Company.
Going concern
The Directors believe that the Company is well placed to manage its financing and
other business risks. More detail on the basis of this conclusion is provided on page
121. The Board is, therefore, of the opinion that the going concern basis adopted in the
preparation of the Annual Report and Accounts for the year ended 31 December 2022 is
appropriate.
Statutory information incorporated by reference
Information required to be part of this Directors’ Report can be found elsewhere in the
Annual Report and is incorporated into this report by reference, as indicated below:
– Description of the business model can be found on page 8
– Future developments and outlook are contained within the CEO report on page 16
– Important events which have taken place since the end of the financial year are set out
on page 137
– Details of financial instruments and financial risk management objectives and policies
are detailed on page 138
– Principal and emerging risks and uncertainties pertaining to the Group and the way in
which it manages and controls these risks are outlined on page 30
– The Group’s viability statement is set out on page 34
– Disclosures regarding the employment of disabled people, human rights, social
matters and employee engagement are contained within the ESG report on page 44
– How the Board fosters business relationships with customers and suppliers is set out
on page 58
– Principal decisions taken during the year are set out on page 67
– The diversity policy of the Group and related targets are set out on page 56
– Details regarding the Group’s anti-bribery policy can be found on page 56
– Environmental and greenhouse gas reporting can be found on page 64
Financial results and dividends
The financial results for the year can be found in the Group Statement of Comprehensive
Income on page 115.
Details of dividends paid and declared for the year are set out on page 130.
Directors
The names of the Directors of the Company who served during the year are set out
on page 96. The biographical details of the current Board are on page 68.
Directors’ and Officers’ liability insurance
The Company maintains Directors’ and officers’ liability insurance, at its expense,
on behalf of the Directors.
Directors’ interests in shares and dividends
The Directors’ interests in ordinary shares and dividends are disclosed in the
Annual Report on Remuneration on page 100.
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Directors’ Report | continued
Substantial shareholdings
As at 31 December 2022, the Company had been notified under the Disclosure Guidance
and Transparency Rules (“DTR 5”) of the following substantial holders who were directly
or indirectly interested in three per cent or more of the issued share capital of the
Company:
Shareholder
Investec Wealth & Investment
CCLA Investment Management
Premier Miton Investors
BlackRock
East Riding of Yorkshire
Janus Henderson Investors
as at 31 December 2022
Number of
ordinary
shares
Percentage of
ordinary
shares
54,061,805
41,743,362
31,310,045
29,938,757
28,293,515
22,148,940
8.96%
6.92%
5.19%
4.96%
4.69%
3.67%
Amendment of articles
The Articles may be amended by a special resolution of the Company’s shareholders.
Powers of the Directors
Subject to the Articles, the Companies Act 2006 and any directions given to the
Company by special resolution, the business of the Company will be managed by the
Board, which may exercise all the powers of the Company.
Powers in relation to the Company issuing or purchasing its shares
At the Company’s Annual General Meeting held on 23 May 2022, the Directors were
granted general authority to allot shares in the Company in accordance with section
551 of the Companies Act 2006 up to an aggregate nominal amount of £2,010,676. Of
these ordinary shares, the Directors were granted authority to issue up to an aggregate
nominal amount of £301,601 of equity securities non-pre-emptively and wholly for
cash. In addition, the Directors were granted a further authority to issue up to an
aggregate nominal amount of £301,601 of equity securities non-pre-emptively where
such allotment or sale is used only for the purposes of financing (or refinancing, if the
authority is to be used within six months after the original transaction) a transaction
which the Board determines to be an acquisition or other capital investment of a kind
contemplated by the Statement of Principles on Disapplying Pre-Emption Rights. These
authorities expire at the conclusion of the Company’s 2023 Annual General Meeting.
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At the 23 May 2022 Annual General Meeting, the Directors were granted authority to
make one or more market purchases of ordinary shares in the Company, in accordance
with sections 693 and 701 of the Companies Act 2006, up to an aggregate number of
60,320,307 ordinary shares, within certain price parameters. No ordinary shares have
been purchased by the Company under this authority, which will expire at the conclusion
of the Company’s 2023 Annual General Meeting.
Appointment and replacement of Directors
Details of the process by which Directors can be appointed or replaced are included in
the Corporate Governance Statement on page 70.
Independent Auditor
BDO LLP has expressed its willingness to continue as auditor for the financial year ending
31 December 2023 and a resolution relating to its reappointment will be tabled at the
Annual General Meeting on 24 May 2023.
Disclosure of information to Auditor
The Directors who were members of the Board at the time of approving the Directors’
Report have confirmed that:
– so far as each Director is aware, there is no relevant audit information of which the
Company’s auditor is not aware; and
– each Director has taken all the steps that they ought to have taken as a Director in
order to make themselves aware of any relevant audit information and to establish that
the Company’s auditor is aware of that information.
Annual General Meeting
The 2023 Annual General Meeting will be held at 11:00 a.m. on 24 May 2023. The notice of
meeting will be sent to shareholders in April 2023.
This report was approved by the Board on 16 March 2023.
Donald Grant | Director
16 March 2023
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Directors’ Responsibilities
Directors’ responsibilities pursuant to DTR4
The Directors confirm that to the best of their knowledge:
– the Group financial statements have been prepared in accordance with UK
international accounting standards in conformity with the requirements of the
Companies Act 2006 and give a true and fair view of the assets, liabilities, financial
position and profit and loss of the Group and the undertakings included in the
consolidation as a whole;
– the Annual Report includes a fair review of the development and performance of the
business and the financial position of the Group and the Parent Company, together
with a description of the principal risks and uncertainties that they face; and
– the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable
and provides the information necessary for shareholders to assess the Group’s
position, performance, business model, strategy and principal risks.
Signed on behalf of the Board by
Donald Grant | Director
16 March 2023
Directors’ Responsibilities
The Directors are responsible for preparing the Annual Report and the Group and
Company financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare the Group and Company financial
statements for each financial year. Under that law the Directors are required to prepare
the Group financial statements and have elected to prepare the Company financial
statements in conformity with the requirements of the Companies Act 2006. Under
company law the Directors must not approve the financial statements unless they
are satisfied that they give a true and fair view of the state of affairs of the Group and
Company and of the profit or loss for the Group for that year.
In preparing these financial statements, the Directors are required to:
– select suitable accounting policies and then apply them consistently;
– make judgements and accounting estimates that are reasonable and prudent;
– state whether they have been prepared in accordance with UK international accounting
standards in conformity with the requirements of the Companies Act 2006, subject to
any material departures disclosed and explained in the Group and Company financial
statements;
– prepare the Group and Company financial statements on the going concern basis
unless it is inappropriate to presume that the Group and the Company will continue in
business; and
– prepare a Directors’ Report, a Strategic Report and Directors’ Remuneration Report
which comply with the requirements of the Companies Act 2006.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group and the Company’s transactions and disclose
with reasonable accuracy at any time the financial position of the Group and the
Company and enable them to ensure that the financial statements comply with the
Companies Act 2006. The Directors are also responsible for safeguarding the assets of
the Group and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
Website publication
The Directors are responsible for ensuring the Annual Report and the financial
statements are made available on a website. Financial statements are published
on the Company’s website in accordance with legislation in the UK governing the
preparation and dissemination of financial statements, which may vary from legislation
in other jurisdictions. The maintenance and integrity of the Company’s website is the
responsibility of the Directors. The Directors’ responsibility also extends to the ongoing
integrity of the financial statements contained therein.
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Independent auditor’s report to the members of Empiric Student Property plc
OPINION ON THE FINANCIAL STATEMENTS
In our opinion:
–
the financial statements give a true and fair view of the state of the Group’s and of
the Parent Company’s affairs as at 31 December 2022 and of the Group’s profit for
the year then ended;
the Group financial statements have been properly prepared in accordance with
UK adopted international accounting standards;
the Parent Company financial statements have been properly prepared in
accordance with United Kingdom Generally Accepted Accounting Practice; and
the financial statements have been prepared in accordance with the requirements
of the Companies Act 2006.
–
–
–
We have audited the financial statements of Empiric Student Property plc (the ‘Parent
Company’) and its subsidiaries (the ‘Group’) for the year ended 31 December 2022 which
comprise the Group Statement of Comprehensive Income, the Group Statement of
Financial Position, the Company Statement of Financial Position, the Group Statement
of Changes in Equity, the Company Statement of Changes in Equity, the Group
Statement of Cash Flows and notes to the financial statements, including a summary
of significant accounting policies. The financial reporting framework that has been
applied in the preparation of the Group financial statements is applicable law and UK
adopted international accounting standards. The financial reporting framework that
has been applied in the preparation of the Parent Company financial statements is
applicable law and United Kingdom Accounting Standards, including Financial Reporting
Standard 101 Reduced Disclosure Framework (United Kingdom Generally Accepted
Accounting Practice).
BASIS FOR OPINION
as applied to listed public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. The non-audit services
prohibited by that standard were not provided to the Group or the Parent Company.
CONCLUSIONS RELATING TO GOING CONCERN
In auditing the financial statements, we have concluded that the Directors’ use of the
going concern basis of accounting in the preparation of the financial statements is
appropriate. We considered the ability of the Group and the Parent Company to continue
as a going concern to be a key audit matter based on our assessment of the significance
of the risk and the effect on our audit strategy. Our evaluation of the Directors’
assessment of the Group and the Parent Company’s ability to continue to adopt the
going concern basis of accounting and our response to the key audit matter is set out in
the key audit matters section of our report.
Based on the work we have performed, we have not identified any material uncertainties
relating to events or conditions that, individually or collectively, may cast significant
doubt on the Group and the Parent Company’s ability to continue as a going concern
for a period of at least twelve months from when the financial statements are authorised
for issue.
In relation to the Parent Company’s reporting on how it has applied the UK Corporate
Governance Code, we have nothing material to add or draw attention to in relation to the
Directors’ statement in the financial statements about whether the Directors considered
it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going
concern are described in the relevant sections of this report.
We conducted our audit in accordance with International Standards on Auditing (UK)
(ISAs (UK)) and applicable law. Our responsibilities under those standards are further
described in the Auditor’s responsibilities for the audit of the financial statements
section of our report. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion. Our audit opinion is consistent with
the additional report to the Audit and Risk Committee.
Overview
Coverage
Independence
Following the recommendation of the Audit and Risk Committee, we were appointed
by the Board of Directors on 4 August 2015 to audit the financial statements for the year
ending 30 June 2015 and subsequent financial periods. The period of total uninterrupted
engagement including retenders and reappointments is nine years, covering the years
ending 30 June 2015 to 31 December 2022. We remain independent of the Group and
the Parent Company in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the FRC’s Ethical Standard
Key audit matters
100% (2021: 100%) of Group profit before tax
100% (2021: 100%) of Group revenue
100% (2021: 100%) of Group total assets
Valuation of investment property
(excluding properties under
development)
Going concern
2022
2021
Yes
Yes
Yes
Yes
Materiality
Group financial statements as a whole
£11,500,000 (2021: £10,700,000) based on 1% (2021: 1%)
of Group total assets
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AN OVERVIEW OF THE SCOPE OF OUR AUDIT
Our Group audit was scoped by obtaining an understanding of the Group and its
environment, including the Group’s system of internal control, and assessing the
risks of material misstatement in the financial statements. We also addressed the
risk of management override of internal controls, including assessing whether there
was evidence of bias by the Directors that may have represented a risk of material
misstatement.
The Group operates solely in the United Kingdom and through one segment, the
investment property portfolio. None of the individual subsidiaries were considered to be
significant components and as such the audit approach included undertaking audit work
on the key risks of material misstatement identified for the Group across the segment.
The Group audit team performed all the work necessary to issue the Group and Parent
Company audit opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial statements of the current period and include
the most significant assessed risks of material misstatement (whether or not due to
fraud) that we identified, including those which had the greatest effect on: the overall
audit strategy, the allocation of resources in the audit, and directing the efforts of the
engagement team. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
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Independent auditor’s report to the members of Empiric Student Property plc | continued
Key audit matter
Valuation of investment
Property (excluding
properties under
development)
Refer to Note 1.5 (Accounting
Policies) and Note 11
(Investment Property).
The valuation of investment property requires
significant judgement and estimates by the Directors
and the independent valuer (“the Valuer”) and was
therefore considered a significant risk due to the
subjective nature of certain assumptions inherent in
each valuation.
Any input inaccuracies or unreasonable bases used in
the valuation judgements (such as capitalisation yields,
future lease income, and future capital expenditure)
could result in a material misstatement of the
financial statements.
There is also a risk that the Directors may influence
the significant judgements and estimates in respect
of property valuations in order to achieve property
valuation and other performance targets to meet
market expectations.
For these reasons we considered the valuation of
investment property to be a key audit matter.
How the scope of our audit addressed the key audit matter
We met with the Group’s external valuer, who valued all the Group’s investment properties
to understand the assumptions and methodologies used in valuing these properties, the
market evidence supporting the valuation assumptions and the valuation movements in
the year.
We assessed the competency, independence, and objectivity of the external valuer, which
included making enquiries regarding interests and relationships that may have created a
threat to the valuer’s objectivity.
We used our knowledge and experience, including the assistance of our internal RICS
qualified valuers, to evaluate and challenge the valuation assumptions, methodologies
and the inputs used. This included establishing our own range of expectations for the
valuation of investment property based on externally available metrics and wider economic
and commercial factors. We assessed the valuation for each of the investment properties
against our own expectation and challenged the external valuer in respect of those
properties where the valuations fell outside of our range of expectation through discussion
and inspection of corroborating information to determine the appropriate valuation.
We checked the data provided to the valuer by the Group was consistent with the data we
had audited. This data included inputs such as rent for the current academic year (which
we have agreed on a sample basis to executed lease agreements as part of our audit work),
number of beds per property, projected capital expenditures and refurbishments, and fire
safety works.
We reviewed the Directors assessment of the future capital expenditure including fire
safety works. We corroborated a sample of costs to supporting documentation such
as subcontractor agreements and price quotes. We also obtained a copy of the report
detailing the expected works that management commissioned from an external expert.
We assessed the competency, independence, and objectivity of the external expert, which
included making enquiries regarding interests and relationships that may have created a
threat to the expert’s objectivity.
Key observations:
Based on the procedures we performed, we considered the assumptions and
methodologies used to value the Group’s investment portfolio to be appropriate.
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Key audit matter
Going Concern
Refer to Note 1.4
(Accounting Policies)
We considered the ability of the Group and the
Parent Company to continue as a going concern to
be a key audit matter based on our assessment of the
significance of the risk and the effect on our audit
strategy specifically because of the risks set out below.
There is a risk that any potential breaches in future
covenant compliance may result in the bank loans being
called due.
Additionally, the Group has a number of facilities that
fall due for repayment in the period to 31 December
2024 as disclosed in note 1.4. There is a risk that bank
loans due for repayment in the going concern period
may not be able to be repaid or refinanced.
How the scope of our audit addressed the key audit matter
We assessed the appropriateness of the going concern period being to 31 December 2024
in light of the nature of operations being linked to the academic year cycle and future
loan maturities.
We assessed the appropriateness of the Group’s cash flow forecasts in the context of the
Group’s 31 December 2022 financial position and the expected student occupancies and
compared the Directors’ downside sensitivities against results achieved in the current and
previous years along with letting levels obtained for the next student year.
We evaluated the key assumptions in these forecasts and considered whether these appear
reasonable, for example by comparing rental revenue to expected student occupancy,
comparing the projected SONIA interest rates to forward curves, agreeing the utility cost
hedge to the signed contract, and the ability to pause future capital expenditure if required.
We also compared the overhead to previous years and considered the nature of spend and
challenged the Directors as to what they considered discretionary.
We obtained covenant calculations and forecast calculations to test for any potential future
covenant breaches. We also considered the covenant compliance headroom for sensitivity
to both future changes in property valuations and the Group’s future financial performance.
Where facilities were refinanced post year end, we obtained supporting documentation in
the form of a facility agreement to verify this. For the remaining facilities we considered the
ability of the Group to refinance these with their recent track record of refinancing loans
and availability of finance in the marketplace.
We reviewed the disclosures relating to the going concern basis of preparation and
considered whether these were consistent with the Directors’ going concern assessment.
Key observations:
These are set out in the conclusions related to going concern section of our audit report.
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Independent auditor’s report to the members of Empiric Student Property plc | continued
OUR APPLICATION OF MATERIALITY
We apply the concept of materiality both in planning and performing our audit, and in
evaluating the effect of misstatements. We consider materiality to be the magnitude by
which misstatements, including omissions, could influence the economic decisions of
reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements
exceed materiality, we use a lower materiality level, performance materiality, to determine
the extent of testing needed. Importantly, misstatements below these levels will not
necessarily be evaluated as immaterial as we also take account of the nature of identified
misstatements, and the particular circumstances of their occurrence, when evaluating
their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial
statements as a whole and performance materiality as follows:
Group financial statements
Parent company financial statements
2022
£m
2021
£m
2022
£m
2021
£m
Materiality
£11,500,000
£10,700,000
£10,350,000
£9,630,000
1% of Group total assets.
90% of Group materiality.
Capped at 90% of Group
materiality given the assessment
of aggregation risk.
We determined that Group
total assets would be the most
appropriate basis for determining
overall materiality as we consider
this to be one of the principal
considerations for users of the
financial statements in assessing
the financial performance of
the Group.
Specific materiality
We also determined that for other classes of transactions and account balances not
related to investment properties, a misstatement of less than materiality for the financial
statements as a whole, specific materiality, could influence the economic decisions of
users. As a result, we determined materiality for these items based on 5% of European
Public Real Estate Association (“EPRA”) earnings being £1,030,000 (2021: 5% of three-
year average EPRA earnings being £810,000). This materiality is applied to test those
items which do or may impact the measurement EPRA earnings. Disclosure matters and
the cash flow statement are subject to Group financial statement materiality. We further
applied a performance materiality level of 75% (2021: 75%) of specific materiality to
ensure that the risk of errors exceeding specific materiality was appropriately mitigated.
Reporting threshold
We agreed with the Audit and Risk Committee that we would report to them all
individual audit differences in excess of £230,000 (2021: £214,000) and for amounts
impacting EPRA earnings in excess of £52,000 (2021: £48,000). We also agreed to
report differences below these thresholds that, in our view, warranted reporting on
qualitative grounds.
OTHER INFORMATION
The directors are responsible for the other information. The other information
comprises the information included in the annual report and accounts other than the
financial statements and our auditor’s report thereon. Our opinion on the financial
statements does not cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of assurance conclusion
thereon. Our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements
or our knowledge obtained in the course of the audit, or otherwise appears to be
materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact.
£8,625,000
£8,025,000
£7,760,000
£7,220,000
We have nothing to report in this regard.
75% of materiality - in determining performance materiality we have
considered the following factors:
• Our risk assessment, including our assessment of the Group’s overall
control environment; and
• Our past experience of the audit and the level of corrected
and uncorrected misstatements identified in prior periods and
Management’s willingness to investigate and correct these.
CORPORATE GOVERNANCE STATEMENT
The Listing Rules require us to review the Directors’ statement in relation to going
concern, longer-term viability and that part of the Corporate Governance Statement
relating to the parent company’s compliance with the provisions of the UK Corporate
Governance Code specified for our review.
Basis for
determining
materiality
Rationale
for the
benchmark
applied
Performance
materiality
Basis for
determining
performance
materiality
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Based on the work undertaken as part of our audit, we have concluded that each of the
following elements of the Corporate Governance Statement is materially consistent with
the financial statements or our knowledge obtained during the audit.
Going concern and
longer-term viability
• The Directors’ statement with regards to the
appropriateness of adopting the going concern basis of
accounting and any material uncertainties identified set
out on page 105; and
• The Directors’ explanation as to their assessment of the
Group’s prospects, the period this assessment covers and
why the period is appropriate set out on page 34.
Other Code provisions
• Directors’ statement on fair, balanced and understandable
set out on page 107;
• Board’s confirmation that it has carried out a robust
assessment of the emerging and principal risks set out on
page 30;
• The section of the annual report that describes the review
of effectiveness of risk management and internal control
systems set out on page 78; and
• The section describing the work of the Audit and Risk
committee set out on page 81.
OTHER COMPANIES ACT 2006 REPORTING
Based on the responsibilities described below and our work performed during the course
of the audit, we are required by the Companies Act 2006 and ISAs (UK) to report on
certain opinions and matters as described below.
Strategic report and
Directors’ report
In our opinion, based on the work undertaken in the course
of the audit:
• the information given in the Strategic report and the
Directors’ report for the financial year for which the
financial statements are prepared is consistent with the
financial statements; and
• the Strategic report and the Directors’ report have
been prepared in accordance with applicable legal
requirements.
In the light of the knowledge and understanding of
the Group and Parent Company and its environment
obtained in the course of the audit, we have not identified
material misstatements in the strategic report or the
Directors’ report.
Directors’ remuneration In our opinion, the part of the Directors’ remuneration report
to be audited has been properly prepared in accordance with
the Companies Act 2006.
Matters on which we are
required to report by
exception
We have nothing to report in respect of the following matters
in relation to which the Companies Act 2006 requires us to
report to you if, in our opinion:
• adequate accounting records have not been kept by the
Parent Company, or returns adequate for our audit have
not been received from branches not visited by us; or
• the Parent Company financial statements and the part of
the Directors’ remuneration report to be audited are not in
agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by
law are not made; or
• we have not received all the information and explanations
we require for our audit.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the Directors’ responsibilities statement, the Directors are
responsible for the preparation of the financial statements and for being satisfied that
they give a true and fair view, and for such internal control as the Directors determine is
necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the
Group’s and the Parent Company’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the going concern basis
of accounting unless the Directors either intend to liquidate the Group or the Parent
Company or to cease operations, or have no realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE
FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken
on the basis of these financial statements.
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Independent auditor’s report to the members of Empiric Student Property plc | continued
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations.
We design procedures in line with our responsibilities, outlined above, to detect material
misstatements in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud is detailed below:
We obtained an understanding of the legal and regulatory framework applicable to the
Group and the industry in which it operates. We considered the significant laws and
regulations to be the applicable accounting framework, Companies Act 2006, the UK
Listing Rules and the REIT tax regime requirements.
We also assessed the susceptibility of the Group’s financial statements to material
misstatement, including how fraud might occur by considering the key risks impacting
the financial statements. We identified specific fraud risks with respect to the valuation
of investment property, which has been included as a key audit matter and our audit
response is set out in that section of our audit report. We also identified specific fraud
risks with respect to revenue recognition (student rental income) and management
override of controls.
Our procedures in response to the above included:
– Agreement of the financial statement disclosures to underlying supporting
documentation to assess compliance with those laws and regulations having an impact
on the financial statements;
– Review of minutes of board and committee meetings throughout the period and
enquiries of management and the Audit and Risk Committee as to their identification
of any non-compliance with laws or regulations, or any actual or potential claims
or fraud;
– Obtaining an understanding of the control environment in monitoring compliance
with laws and regulations and performing our own checks of compliance with relevant
requirements, including the Companies Act 2006, the UK Listing Rules and the REIT tax
regime requirements;
– We addressed the risk of revenue recognition for student rental income through
setting expectations of revenue to be recognised for a sample of lease agreements,
compared it to the actual amounts recognised and investigated variances. We also
performed a reconciliation of total revenue for student rental income to underlying
cash receipts; and
– We addressed the risk of management override of controls by testing a sample of
journals processed during the year to supporting documentation and evaluating
whether there was evidence of bias that represented a risk of material misstatement
due to fraud.
We communicated relevant identified laws and regulations and potential fraud risks to
all engagement team members and remained alert to any indications of fraud or non-
compliance with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material misstatement in the
financial statements, recognising that the risk of not detecting a material misstatement
due to fraud is higher than the risk of not detecting one resulting from error, as fraud
may involve deliberate concealment by, for example, forgery, misrepresentations or
through collusion. There are inherent limitations in the audit procedures performed and
the further removed non-compliance with laws and regulations is from the events and
transactions reflected in the financial statements, the less likely we are to become aware
of it.
A further description of our responsibilities is available on the Financial Reporting
Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor’s report.
USE OF OUR REPORT
This report is made solely to the Parent Company’s members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the Parent Company’s members those matters
we are required to state to them in an auditor’s report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume responsibility to anyone
other than the Parent Company and the Parent Company’s members as a body, for our
audit work, for this report, or for the opinions we have formed.
THOMAS EDWARD GOODWORTH (SENIOR STATUTORY AUDITOR)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
16 March 2023
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
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Financial Statements
Group Statement
of Comprehensive Income
Group Statement of Comprehensive Income
Continuing operations
Revenue
Property expenses
Gross profit
Administrative expenses
Change in fair value of investment property
Operating profit
Finance cost
Net gain on disposal of investment property
Profit/(loss) before income tax
Corporation tax
Profit for the year and total comprehensive income
Earnings per share expressed in pence per share
Basic
Diluted
Year ended
31 December
2022
£ m
Year ended
31 December
2021
£ m
Note
2
3
4
11
5
7
8
73.0
(24.0)
49.0
(13.4)
45.6
81.2
(15.0)
1.5
67.7
–
67.7
11.2
11.1
56.0
(23.1)
32.9
(10.6)
17.6
39.9
(12.4)
1.7
29.2
–
29.2
4.8
4.8
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Group Statement of Financial Position
Group Statement of Financial Position
Equity
Called up share capital
Share premium
Capital reduction reserve
Retained earnings
Total equity
Total equity and liabilities
Net Asset Value per share basic (pence)
Net Asset Value per share diluted (pence)
EPRA NTA per share (pence)
At
31 December
2022
£ m
At
31 December
2021
£ m
6.0
0.3
444.7
249.8
700.8
6.0
0.3
459.9
181.4
647.6
1,146.5
1,069.4
116.1
115.4
115.4
107.4
106.7
106.7
Note
19
20
21
9
9
9
These financial statements were approved by the Board of Directors on 16 March 2023
and signed on its behalf by:
DONALD GRANT
Director
ASSETS
Non-current assets
Investment property – Operational Assets
Investment property – Development Assets
Property, plant and equipment
Intangible assets
Right of use asset
Total non-current assets
Current assets
Trade and other receivables
Assets classified as held for sale
Cash and cash equivalents
Total current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Borrowings
Lease liability
Deferred income
Total current liabilities
Non-current liabilities
Borrowings
Lease liability
Total non-current liabilities
Total liabilities
Total net assets
At
31 December
2022
£ m
At
31 December
2021
£ m
Note
11
11
13
12
14
15
16
17
18
17
18
1,062.4
3.3
1.1
1.9
1.3
967.2
28.7
0.4
1.3
1.0
1,070.0
998.6
7.0
13.7
55.8
76.5
7.8
25.9
37.1
70.8
1,146.5
1,069.4
24.8
–
0.1
33.1
58.0
386.5
1.2
387.7
445.7
700.8
20.0
44.7
0.1
29.9
94.7
326.2
0.9
327.1
421.8
647.6
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Contents Generation – PageContents Generation – Sub PageContents Generation - Section
Company Statement of Financial Position
Company Statement of Financial Position
At
31 December
2022
At
31 December
2021
Note
£ m
£ m
ASSETS
Fixed assets
Investments in subsidiaries
Property, plant and equipment
Intangible assets
Right of use asset
Total fixed assets
Current assets
Amounts due from Group undertakings
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
CREDITORS
Current creditors
Amounts due to Group undertakings
Trade and other payables
Lease Liability
Total non-current creditors
Non-current creditors
Borrowings
Lease liability
Total non-current creditors
Total creditors
Total net assets
30
13
12
14
14
16
17
17
18
At
31 December
2022
At
31 December
2021
Note
£ m
£ m
19
20
21
6.0
0.3
444.7
88.7
539.7
6.0
0.3
459.9
42.1
508.3
Capital and reserves
Called up share capital
222.6
187.6
Share premium
1.0
1.9
1.3
0.3
1.3
1.0
Capital reduction reserve
Retained earnings
Total capital and reserves
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
226.8
190.2
400.5
369.0
0.3
4.3
405.1
631.9
87.8
3.1
0.1
91.0
–
1.2
1.2
92.2
0.3
2.0
371.3
561.5
27.2
5.1
0.1
32.4
19.9
0.9
20.8
53.2
539.7
508.3
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Contents Generation – PageContents Generation – Sub PageContents Generation – Section
Group Statement of Changes in Equity
Group Statement of Changes in Equity
Year ended 31 December 2022
Balance at 1 January 2022
Profit for the year
Total comprehensive income for the year
Share-based payments
Dividends
Amounts recognised directly in equity
Called up
Share
share capital
premium
£ m
6.0
–
–
–
–
–
£ m
0.3
–
–
–
–
–
Capital
reduction
reserve
£ m
459.9
–
–
–
(15.2)
(15.2)
Retained
earnings
£ m
181.4
67.7
67.7
0.7
–
0.7
Total
equity
£ m
647.6
67.7
67.7
0.7
(15.2)
(14.5)
Balance at 31 December 2022
6.0
0.3
444.7
249.8
700.8
Balance at 1 January 2021
Profit for the year
Total comprehensive income for the year
Share-based payments
Dividends
Amounts recognised directly in equity
6.0
0.3
475.0
–
–
–
–
–
–
–
–
–
–
–
–
–
(15.1)
(15.1)
152.0
29.2
29.2
0.2
–
0.2
633.3
29.2
29.2
0.2
(15.1)
(14.9)
Balance at 31 December 2021
6.0
0.3
459.9
181.4
647.6
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Contents Generation – PageContents Generation – Sub PageContents Generation - Section
Company Statement of Changes in Equity
Company Statement of Changes in Equity
Year ended 31 December 2022
Balance at 1 January 2022
Profit for the year
Total comprehensive income for the year
Share-based payments
Dividends
Amounts recognised directly in equity
Called up
Share
reduction
Capital
share capital
premium
£ m
6.0
–
–
–
–
–
£ m
0.3
–
–
–
–
–
reserve
£ m
459.9
–
–
–
(15.2)
(15.2)
Retained
earnings
£ m
42.1
45.9
45.9
0.7
–
0.7
Total
equity
£ m
508.3
45.9
45.9
0.7
(15.2)
(14.5)
Balance at 31 December 2022
6.0
0.3
444.7
88.7
539.7
Balance at 1 January 2021
Loss for the year
Total comprehensive income for the year
Share-based payments
Dividends
Amounts recognised directly in equity
6.0
0.3
475.0
–
–
–
–
–
–
–
–
–
–
–
–
–
(15.1)
(15.1)
50.6
(8.7)
(8.7)
0.2
–
0.2
531.9
(8.7)
(8.7)
0.2
(15.1)
(14.9)
Balance at 31 December 2021
6.0
0.3
459.9
42.1
508.3
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Contents Generation – PageContents Generation – Sub PageContents Generation – Section
Group Statement of Cash Flows
Cash flows from operating activities
Profit before income tax
Share-based payments expense
Depreciation and amortisation
Finance costs
Gain on disposal of investment property
Change in fair value of investment property
Decrease in trade and other receivables
Increase in trade and other payables
Increase in deferred rental income
Net cash flows generated from operations
Cash flows from investing activities
Purchases of tangible fixed assets
Purchases of intangible assets
Purchase and development of investment property
Proceeds on disposal of asset held for sale, net of selling costs
Proceeds on disposal of investment property, net of selling costs
Net cash flows from investing activities
Cash flows from financing activities
Dividends paid
Bank borrowings drawn
Bank borrowings repaid
Loan arrangement fee paid
Lease liability paid
Finance cost
Net cash flows from financing activities
Increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
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Group Statement of Cash Flows
Year ended
Year ended
31 December
31 December
2022
£ m
67.7
0.7
0.6
15.0
(1.5)
(45.6)
36.9
0.2
3.3
3.2
6.7
43.6
(1.0)
(0.9)
(47.2)
26.7
13.0
(9.4)
(16.7)
36.2
(20.0)
(1.6)
(0.1)
(13.3)
2021
£ m
29.2
0.2
0.5
12.4
(1.7)
(17.6)
23.0
6.7
3.5
9.2
19.4
42.4
(0.4)
(0.5)
(15.7)
–
17.9
1.3
(13.6)
–
(15.0)
(0.1)
–
(11.8)
(15.5)
(40.5)
18.7
37.1
55.8
3.2
33.9
37.1
Contents Generation – PageContents Generation – Sub PageContents Generation - Section
Notes to the Financial Statements
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.
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 Group’s covenants are currently
compliant and we envisage compliance to continue to be achieved in a reasonably
severe downside scenario. The Group’s portfolio could currently withstand a 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.
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Contents Generation – PageContents Generation – Sub PageContents Generation – Section
Notes to the Financial Statements | continued
1. ACCOUNTING POLICIES continued
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 as set out on pages 30 to 33 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:
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(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.
Contents Generation – PageContents Generation – Sub PageContents Generation - Section
1. ACCOUNTING POLICIES continued
1.5 Significant Accounting Estimates and Judgements continued
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)
(b)
(c)
the contractual arrangement with the other vote holders of the investee;
rights arising from other contractual arrangements; and
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.
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Contents Generation – PageContents Generation – Sub PageContents Generation – Section
Notes to the Financial Statements | continued
1. ACCOUNTING POLICIES continued
Other Financial Liabilities
Other financial liabilities include the following items:
–
Bank borrowings are initially recognised at fair value net of any transaction costs
directly attributable to the issue of the instrument. Such interest-bearing liabilities
are subsequently measured at amortised cost using the effective interest rate
method, which ensures that any interest expense over the period to repayment is at
a constant rate on the balance of the liability carried in the Consolidated Statement
of Financial Position. For the purposes of each financial liability, interest expense
includes initial transaction costs and any premium payable on redemption, as well
as any interest or coupon payable while the liability is outstanding.
Trade payables and other short-term monetary liabilities, which are initially
recognised at fair value and subsequently carried at amortised cost using the
effective interest method.
–
Intangible Assets
Intangible assets are initially recognised at cost and then subsequently carried at cost
less accumulated amortisation and impairment losses.
Amortisation has been charged to the Consolidated Statement of Comprehensive
Income on a straight-line basis over ten years.
Investment Property
Investment property comprises property that is held to generate rental income or for
capital appreciation. This includes property under development rather than for sale in the
ordinary course of business.
Investment property is measured initially at cost including transaction costs and is
included in the financial statements on unconditional exchange. Transaction costs
include transfer taxes, professional fees and initial leasing commissions to bring the
property to the condition necessary for it to be capable of operating.
Once purchased, investment property is stated at fair value. Gains or losses arising from
changes in 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.
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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:
–
–
15% per annum; and
straight-line basis over three years.
Fixtures and fittings:
Computer equipment:
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.
Contents Generation – PageContents Generation – Sub PageContents Generation - Section
1. ACCOUNTING POLICIES continued
1.5 Significant Accounting Estimates and Judgements continued
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
Student rental income
Student rental refunds*
Commercial rental income
Other income
Total revenue
Group
Year ended
31 December
2022
£’m
Year ended
31 December
2021
£’m
71.4
–
1.6
–
73.0
56.0
(1.8)
1.5
0.3
56.0
* These were Covid-19 related concessions in the prior year. No such concessions were offered in 2022.
3. PROPERTY EXPENSES
Direct site costs (income generating properties)
Technology services
Site office and utilities
Cleaning and service contracts
Repairs and maintenance
Total property expenses
Group
Year ended
31 December
2022
£’m
Year ended
31 December
2021
£’m
5.7
0.6
12.2
3.3
2.2
24.0
7.0
0.7
10.4
3.0
2.0
23.1
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Contents Generation – PageContents Generation – Sub PageContents Generation – Section
Notes to the Financial Statements | continued
4. ADMINISTRATIVE EXPENSES
6. EMPLOYEES AND DIRECTORS
Salaries and Directors’ remuneration
Legal and professional fees
Other administrative costs
Depreciation and amortisation
IT expenses
Auditor’s fees
Fees payable for the audit of the Group’s annual accounts
Fees payable for the review of the Group’s interim accounts
Fees payable for the audit of the Group’s subsidiaries
Total auditor’s fees
Abortive acquisition costs
Group
Year ended
31 December
2022
£’m
Year ended
31 December
2021
£’m
7.4
2.3
1.6
0.6
0.8
12.7
0.4
–
0.1
0.5
0.2
5.3
2.3
1.5
0.5
0.5
10.1
0.3
–
0.1
0.4
0.1
Total administrative expenses
13.4
10.6
5. NET FINANCE COST
Wages and salaries
Pension costs
Cash bonus
Share-based payments
National insurance
Less: Hello Student® employee costs
included within property expenses
Amounts included in administrative
expenses
The average monthly number of
employees:
Management – Company
Administration – Company
Operations – Hello Student
Management Limited
Company
Group
Year ended
31 December
2022
£’m
Year ended
31 December
2021
£’m
Year ended
31 December
2022
£’m
Year ended
31 December
2021
£’m
4.4
0.2
0.5
0.7
0.6
6.4
–
3.5
0.1
–
0.2
0.5
4.3
10.7
0.5
0.9
0.7
1.1
13.9
8.8
0.4
0.1
0.2
0.9
10.4
–
(6.5)
(5.1)
6.4
4.3
7.4
5.3
8
52
–
60
8
49
–
57
8
52
280
340
8
49
238
295
Finance costs
Interest expense on bank borrowings
Amortisation of loan transaction costs
Net finance cost
Group
Year ended
31 December
2022
£’m
Year ended
31 December
2021
£’m
14.0
1.0
15.0
11.6
0.8
12.4
Directors’ remuneration
Salaries and fees
Pension costs
Cash bonus
Share-based payments
Group
Year ended
31 December
2022
£’m
Year ended
31 December
2021
£’m
1.1
0.1
0.3
0.6
2.1
1.0
0.1
0.1
0.2
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.
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Contents Generation – PageContents Generation – Sub PageContents Generation - Section
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.
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
Group
Year ended
31 December
2022
£’m
Year ended
31 December
2021
£’m
–
–
–
–
–
–
–
–
–
–
Profit for the year
67.7
29.2
Profit before tax multiplied by the rate of corporation tax in the
UK of 19% (2021: 19%)
Exempt property rental profits in the year
Exempt property revaluations in the year
Effects of:
Non-allowable expenses
Capital allowances
Gain on disposal not taxable
Unutilised current year tax losses
Total current income tax charge in the income statement
12.9
(6.4)
(8.7)
0.2
–
–
2.0
–
5.5
(4.1)
(3.3)
0.1
(1.1)
0.3
2.6
–
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 £1.5 million (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.
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Contents Generation – PageContents Generation – Sub PageContents Generation – Section
Year to 31 December 2021
Earnings per IFRS statement of
comprehensive income
Adjustments to remove:
Gain/loss on disposal of investment
property
Changes in fair value of investment
properties (Note 11)
Calculation
of basic EPS
£ m
Calculation
of diluted
EPS
£ m
Calculation
of EPRA
basic EPS
£ m
Calculation
of EPRA
diluted EPS
£ m
29.2
29.2
29.2
29.2
–
–
–
–
(1.7)
(1.7)
(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
Notes to the Financial Statements | continued
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
of basic EPS
£ m
Calculation
of diluted
EPS
£ m
Calculation
of EPRA
basic EPS
£ m
Calculation
of EPRA
diluted EPS
£ m
Year to 31 December 2022
Earnings per IFRS statement of
comprehensive income
Adjustments to remove:
Changes in fair value of investment
properties (Note 11)
Gain on disposal of investment property
67.7
67.7
67.7
67.7
–
–
–
–
(45.6)
(45.6)
(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
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Contents Generation – PageContents Generation – Sub PageContents Generation - Section
Year ended 31 December 2021
Net assets per Statement of Financial
Position
Adjustments
Fair value of fixed rate debt
Purchaser’s costs1
Net assets used in per share
calculation
Number of shares in issue
NAV
EPRA NAV measures
IFRS
£ m
EPRA
NTA
£ m
EPRA
NRV
£ m
EPRA
NDV
£ m
647.6
647.6
647.6
647.6
–
–
–
–
–
34.2
(14.3)
–
647.6
647.6
681.8
633.3
Issued share capital (m)
603.2
603.2
603.2
603.2
Issued share capital plus employee
options (m)
Net Asset Value per share
Basic Net Asset Value per share
(pence)
Diluted Net Asset Value per share
(pence)
606.6
606.6
606.6
606.6
107.4
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.
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.
Year ended 31 December 2022
Net assets per Statement
of Financial Position
Adjustments
Fair value of fixed rate debt
Purchaser’s costs1
Net assets used in per share
calculation
Number of shares in issue
NAV
EPRA NAV measures
IFRS
£ m
EPRA
NTA
£ m
EPRA
NRV
£ m
EPRA
NDV
£ m
700.8
700.8
700.8
700.8
–
–
–
–
–
38.5
15.3
–
700.8
700.8
739.3
716.1
Issued share capital (m)
603.4
603.4
603.4
603.4
Issued share capital plus employee
options (m)
Net Asset Value per share
Basic Net Asset Value per share
(pence)
Diluted Net Asset Value per share
(pence)
607.2
607.2
607.2
607.2
116.1
115.4
115.4
121.8
117.9
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Contents Generation – PageContents Generation – Sub PageContents Generation – Section
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Notes to the Financial Statements | continued
10. DIVIDENDS PAID
Interim dividend of 2.50 pence per ordinary share in respect of
the quarter ended 30 September 2021
Interim dividend of 0.625 pence per ordinary share in respect
of the quarter ended 31 December 2021
Interim dividend of 0.625 pence per ordinary share in respect
of the quarter ended 31 March 2022
Interim dividend of 0.625 pence per ordinary share in respect
of the quarter ended 30 June 2022
Interim dividend of 0.625 pence per ordinary share in respect
of the quarter ended 30 September 2022
Group and Company
Year ended
31 December
2022
£ m
Year ended
31 December
2021
£ m
–
3.8
3.8
3.8
3.8
15.2
15.1
–
–
–
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
Group
Year ended 31 December 2022
Investment
properties
freehold
£ m
Investment
properties
long leasehold
£ m
Total
operational
assets
£ m
Properties
under
development
£ m
Total
investment
property
£ m
As at 1 January 2022
835.5
131.7
967.2
Capital expenditure
Property acquisitions
Reclassification
Transfer of completed
developments
Sale of investment
property
Transfer to held for sale
asset
Change in fair value
during the year
12.9
19.3
(8.6)
52.9
(11.8)
(13.7)
2.3
–
8.6
–
–
–
15.2
19.3
–
28.7
15.2
–
–
52.9
(52.9)
(11.8)
(13.7)
–
–
995.9
30.4
19.3
–
–
(11.8)
(13.7)
As at 31 December 2022
920.4
142.0
1,062.4
3.3
1,065.7
33.9
(0.6)
33.3
12.3
45.6
Year ended 31 December 2021
As at 1 January 2021
Capital expenditure
Sale of investment
property
Transfer to held for sale
asset
Change in fair value
during the year
Group
Total
operational
assets
£ m
Properties
under
development
£ m
Investment
properties
freehold
£ m
849.2
6.2
(16.3)
(25.9)
Investment
properties
long
leasehold
£ m
132.1
1.8
–
–
981.3
8.0
(16.3)
(25.9)
Total
investment
property
£ m
1,005.1
15.4
(16.3)
(25.9)
17.6
995.9
23.8
7.4
–
–
(2.5)
28.7
As at 31 December 2021
835.5
131.7
967.2
22.3
(2.2)
20.1
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.
Contents Generation – PageContents Generation – Sub PageContents Generation - Section
11. INVESTMENT PROPERTY continued
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.
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:
Value per independent valuation report
1,078.9
1,021.3
Group
As at
31 December
2022
£ m
As at
31 December
2021
£ m
“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.
Add: Head lease
Deduct: Assets held for sale
0.5
0.5
(13.7)
(25.9)
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:
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:
Date of valuation 31 December 2022
Assets measured at fair value:
Student properties
Commercial properties
As at 31 December 2022
Date of valuation 31 December 2021
Assets measured at fair value:
Student properties
Commercial properties
As at 31 December 2021
Total
£ m
1,046.5
19.2
1,065.7
Total
£ m
976.9
19.0
995.9
Quoted
prices
inputs
markets
(Level 1)
£ m
–
–
–
Significant
observable
inputs
(Level 2)
£ m
Significant
unobservable
inputs
(Level 3)
£ m
–
–
–
1,046.5
19.2
1,065.7
Quoted prices
in active
markets
(Level 1)
£ m
Significant
observable
inputs
(Level 2)
£ m
Significant
unobservable
inputs
(Level 3)
£ m
–
–
–
(f)
–
–
–
976.9
19.0
995.9
(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.
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.
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Notes to the Financial Statements | continued
11. INVESTMENT PROPERTY continued
15% increase
in cost of EWS
works
£ m
-3% change
in rental
income
£ m
+3% change
in rental
income
£ m
-0.25%
change
in yield
£ m
+0.25%
change
in yield
£ m
(3.4)
(43.3)
45.6
54.3
(47.2)
15% increase
in cost of EWS
Works
£m
-3% change
in rental
income
£ m
+3% change
in rental
income
£ m
-0.25%
change
in yield
£ m
+0.25%
change
in yield
£ m
As at 31 December 2022
(Decrease)/
increase in the
fair value of
the investment
properties
As at 31 December 2021
(Decrease)/
increase in the
fair value of
the investment
properties
Group
Company
Hello
Student®
website
development
£ m
NAVision
development
£ m
NAVision
development
£ m
Total
£ m
Total
£ m
0.9
–
0.9
0.8
0.1
0.9
1.6
0.6
2.2
0.7
0.2
0.9
2.5
0.6
3.1
1.5
0.3
1.8
1.6
0.6
2.2
0.7
0.2
0.9
1.6
0.6
2.2
0.7
0.2
0.9
Year ended 31 December 2021
Costs
As at 1 January 2021
Additions
As at 31 December 2021
Amortisation
As at 1 January 2021
Charge for the year
As at 31 December 2021
Net book value
(2.4)
(41.5)
40.7
48.5
(44.9)
As at 31 December 2021
–
1.3
1.3
1.3
1.3
(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
Hello
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website
development
£’m
NAVision
development
£’m
Total
£’m
NAVision
development
£’m
0.9
–
0.9
0.9
–
0.9
2.2
0.8
3.0
0.9
0.2
1.1
3.1
0.8
3.9
1.8
0.2
2.0
2.2
0.8
3.0
0.9
0.2
1.1
Total
£’m
2.2
0.8
3.0
0.9
0.2
1.1
Year ended 31 December 2022
Costs
As at 1 January 2022
Additions
As at 31 December 2022
Amortisation
As at 1 January 2022
Charge for the year
As at 31 December 2022
Net book value
As at 31 December 2022
–
1.9
1.9
1.9
1.9
13. PROPERTY, PLANT AND EQUIPMENT
Group
Company
Fixtures
and
fittings
£’m
Computer
equipment
£’m
0.9
0.8
1.7
0.6
0.2
0.8
0.4
0.2
0.6
0.3
0.1
0.4
Fixtures
and
fittings
£’m
Computer
equipment
£’m
0.9
0.8
1.7
0.6
0.2
0.8
0.2
0.1
0.3
0.2
–
0.2
Total
£’m
1.3
1.0
2.3
0.9
0.3
1.2
Total
£’m
1.1
0.9
2.0
0.8
0.2
1.0
Year ended 31 December 2022
Costs
As at 1 January 2022
Additions
As at 31 December 2022
Depreciation
As at 1 January 2022
Charge for the year
As at 31 December 2022
Net book value
As at 31 December 2022
0.9
0.2
1.1
0.9
0.1
1.0
Contents Generation – PageContents Generation – Sub PageContents Generation - Section
13. PROPERTY, PLANT AND EQUIPMENT continued
Movements on the Group provision for impairment of trade receivables were as follows:
Group
Company
Fixtures
and
fittings
£’m
Computer
equipment
£’m
0.5
0.4
0.9
0.5
0.1
0.6
0.3
0.1
0.4
0.2
0.1
0.3
Fixtures
and
fittings
£’m
Computer
equipment
£’m
0.5
0.4
0.9
0.5
0.1
0.6
0.2
–
0.2
0.2
–
0.2
Total
£’m
0.8
0.5
1.3
0.7
0.2
0.9
Total
£’m
0.7
0.4
1.1
0.7
0.1
0.8
Year ended 31 December 2021
Costs
As at 1 January 2021
Additions
As at 31 December 2021
Depreciation
As at 1 January 2021
Charge for the year
As at 31 December 2021
Net book value
As at 31 December 2021
0.3
0.1
0.4
0.3
–
0.3
14. TRADE AND OTHER RECEIVABLES
Trade receivables
Other receivables
Prepayments
VAT recoverable
Amounts due from Group
undertakings
Group
Company
31 December
2022
£ m
31 December
2021
£ m
31 December
2022
£ m
31 December
2021
£ m
1.4
2.2
3.2
0.2
7.0
–
7.0
2.5
1.8
2.9
0.6
7.8
–
7.8
–
0.1
0.1
0.1
0.3
–
0.1
0.2
–
0.3
400.5
400.8
369.0
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.
At 1 January
Increase in provision for receivables impairment
At 31 December
Group
31 December
2022
£ m
31 December
2021
£ m
(1.5)
(0.4)
(1.9)
(1.4)
(0.1)
(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.
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Notes to the Financial Statements | continued
16. CASH AND CASH EQUIVALENTS
18. BANK BORROWINGS
Group
Company
31 December
2022
£ m
31 December
2021
£ m
31 December
2022
£ m
31 December
2021
£ m
Cash and cash equivalents
55.8
37.1
4.3
2.0
17. TRADE AND OTHER PAYABLES
Trade payables
Other payables
Accruals
Amounts owed to Group
undertakings
Group
Company
31 December
2022
£ m
31 December
2021
£ m
31 December
2022
£ m
31 December
2021
£ m
1.9
5.4
17.5
5.1
2.1
12.8
24.8
20.0
–
–
24.8
20.0
0.6
0.3
2.2
3.1
87.8
90.9
3.3
0.2
1.6
5.1
27.2
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.
A summary of the drawn and undrawn bank borrowings in the year is shown below:
Group
Bank
borrowings
drawn
31 December
2022
£ m
Bank
borrowings
undrawn
31 December
2022
£ m
Total
31 December
2022
£ m
Bank
borrowings
drawn
31 December
2021
£ m
Bank
borrowings
undrawn
31 December
2021
£ m
Total
31 December
2021
£ m
At 1 January
375.0
67.5
442.5
390.0
52.5
442.5
36.2
(36.2)
–
–
–
Bank borrowings
drawn in the year
Bank borrowings
repaid or cancelled
during the year
(20.0)
(11.3)
(31.3)
(15.0)
At 31 December
391.2
20.0
411.2
375.0
–
–
442.5
15.0
67.5
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.
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18. BANK BORROWINGS continued
Maturity of Bank Borrowings
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
2022
£ m
31 December
2021
£ m
Repayable in less than one year
Repayable between one and two years
Repayable between two and five years
330.0
390.0
Repayable in over five years
Bank borrowings
Group
31 December
2022
£ m
31 December
2021
£ m
–
64.0
70.0
257.2
391.2
45.0
20.0
52.8
257.2
375.0
Non-current
Balance brought forward
Total bank borrowings in the year
Bank borrowings becoming non-current in the year
Less: Bank borrowings becoming current in the year
Less: Bank borrowings repaid during the year
Bank borrowings drawn: due in more than one year
Less: Unamortised costs
36.2
45.0
–
(20.0)
391.2
(4.7)
–
–
(45.0)
(15.0)
330.0
(3.8)
Bank borrowings due in more than one year
386.5
326.2
Current
Balance brought forward
Total bank borrowings in the year
Less: Bank borrowings becoming non-current in the year
Bank borrowings becoming current in the year
Bank borrowings drawn: due in less than one year
Less: Unamortised costs
Bank borrowings due in less than one year
Group
31 December
2022
£ m
31 December
2021
£ m
45.0
–
(45.0)
–
–
–
–
–
–
–
45.0
45.0
(0.3)
44.7
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.
Carrying value of fixed rate borrowings
Fair value adjustment
Fair value of fixed rate borrowings
Group
31 December
2022
£ m
31 December
2021
£ m
277.2
(15.3)
261.9
277.2
14.3
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.
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Notes to the Financial Statements | continued
19. SHARE CAPITAL
22. LEASING AGREEMENTS
Group and Company
Group and Company
31 December
2022
Number
31 December
2022
£ m
31 December
2021
Number
31 December
2021
£ m
Balance brought forward
603,203,052
6.0 603,160,940
Share options exercised
(including dividend
equivalence)
148,828
–
42,112
Balance carried forward
603,351,880
6.0 603,203,052
6.0
–
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:
Balance brought forward
Balance carried forward
21. CAPITAL REDUCTION RESERVE
Balance brought forward
Less interim dividends declared and paid per Note 10
Balance carried forward
Group and Company
31 December
2022
£ m
31 December
2021
£ m
0.3
0.3
0.3
0.3
Group and Company
31 December
2022
£ m
31 December
2021
£ m
459.9
(15.2)
475.0
(15.1)
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.
Future total minimum lease receivables under non-cancellable operating leases on
investment properties are as follows:
Less than one year
Between one and two years
Between two and three years
Between three and four years
Between four and five years
More than five years
Total
Group
31 December
2022
£ m
31 December
2021
£ m
56.2
42.9
1.5
1.4
1.3
1.1
6.0
67.5
1.4
1.4
1.3
1.3
7.8
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.
Contents Generation – PageContents Generation – Sub PageContents Generation - Section
25. RELATED PARTY DISCLOSURES continued
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 in 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
Granted during the
period
Vested and
exercised during
the period
Lapsed during the
period
Outstanding
number carried
forward
3,446,320 2,314,539 1,250,045 1,051,708
1,477,817 3,913,420
2,430,279 1,725,577 1,064,494
604,134
439,022
207,198
(127,492)
(35,779)
(1,992,233)
(558,017)
–
–
(129,253)
(139,325)
(691,237)
(276,544)
(725,806) (1,951,564)
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.
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Notes to the Financial Statements | continued
27. SHARE-BASED PAYMENTS continued
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:
Risk Management
The Company and Group is exposed to market risk (including interest rate risk), credit
risk and liquidity risk.
Deferred
bonus shares
LTIPs (market
based
conditions)
LTIPs (Total
Return
conditions)
SAYE Award
(a)
(b)
(c)
(d)
(e)
(f)
Share price at grant date of
Exercise price of
Vesting period
Expected volatility of
Expected dividend yield of
Risk-free rate of
£0.88
£nil
3 years
N/A
N/A
N/A
£0.88
£nil
3 years
30.0%
3.5%
1.4%
£0.88
£nil
3 years
N/A
2.8%
1.4%
£0.85
£0.75
3 years
28.5%
4.4%
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
2022
£ m
31 December
2021
£ m
Bank borrowings and leasehold liability at start of the year
372.0
385.3
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.
Cash flows from financing activities
Bank borrowings drawn
Bank borrowings repaid
Lease liability paid
Loan arrangement fees paid
Non-cash movements
Amortisation of loan arrangement fees
Recognition of lease liabilities
36.2
(20.0)
(0.2)
(1.6)
1.0
0.4
–
(15.0)
–
(0.2)
0.8
1.1
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.
Bank borrowings and leasehold liability at end of the year
387.8
372.0
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28. FINANCIAL RISK MANAGEMENT continued
(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.
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:
Credit ratings (Moody’s)
AIB Group
Canada Life
Mass Mutual
Scottish Widows
Lloyds Bank Plc
Natwest
Long-term
Outlook
A3
Aa3
A2
A2
A1
A3
Stable
Stable
Stable
Stable
Stable
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.
At 31 December 2022
Bank borrowings and interest
Trade and other payables
At 31 December 2021
Bank borrowings and interest
Trade and other payables
At 31 December 2022
Bank borrowings and interest
Trade and other payables
Group
On
demand
£ m
Less
than 3
months
£ m
3 to 12
months
£ m
1 to 5
years
£ m
> 5 years
£ m
Total
£ m
–
–
–
3.9
24.8
11.7
178.3
266.4 460.3
–
–
–
24.8
28.7
11.7
178.3
266.4
485.1
Group
On
demand
£ m
Less
than 3
months
£ m
3 to 12
months
£ m
1 to 5
years
£ m
> 5 years
£ m
Total
£ m
–
–
–
3.2
54.4
194.2
189.1
440.9
20.0
–
–
–
20.0
23.2
54.4
194.2
189.1
460.9
Company
On
demand
£ m
Less
than 3
months
£ m
3 to 12
months
£ m
1 to 5
years
£ m
> 5 years
£ m
Total
£ m
–
–
–
–
3.1
3.1
–
–
–
–
–
–
–
–
–
–
3.1
3.1
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Notes to the Financial Statements | continued
28. FINANCIAL RISK MANAGEMENT continued
Company
Status
Ownership
Principal activity
At 31 December 2021
Bank borrowings and interest
Trade and other payables
Company
On
demand
£ m
Less
than 3
months
£ m
3 to 12
months
£ m
–
–
–
0.1
5.0
5.1
0.4
–
0.4
1 to 5
years
£ m
20.1
–
20.1
–
–
–
20.6
5.0
25.6
Brunswick Contracting Limited
Empiric (Alwyn Court) Limited
> 5 years
£ m
Total
£ m
Empiric (Baptists Chapel) Limited
Empiric (Bath Canalside) Limited
Active
Active
Active
Active
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Property Contracting
Property Investment
Property Investment
Property Investment
Property Investment
Property Investment
Property Investment
Property Investment
Property Investment
Property Investment
Property Leasing
Empiric (Bath James House) Limited
Active
Empiric (Bath JSW) Limited
Active
Empiric (Bath Oolite Road) Limited
Active
Empiric (Bath Piccadilly Place) Limited
Active
Empiric (Birmingham Emporium) Limited Active
Empiric (Birmingham) Limited
Empiric (Bristol St Mary’s) Leasing
Limited
Active
Active
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.
Empiric (Bristol) Leasing Limited
Dormant
100%
Property Leasing
Empiric (Bristol St Mary’s) Limited
Active
100%
Property Investment
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
2022
£’m
31 December
2021
£’m
Empiric (Bristol) Limited
Active
Empiric (Buccleuch Street) Limited
Active
Empiric (Canterbury Franciscans)
Limited
Active
100%
100%
100%
Property Investment
Property Investment
Property Investment
Empiric (Canterbury Pavilion Court)
Limited
Empiric (Cardiff Wndsr House) Leasing
Limited
Active
100%
Property Investment
Dormant
100%
Property Leasing
As at 1 January
Additions in the year
Disposals
Balance at 31 December
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.
1
4
0
187.6
41.4
(6.4)
–
–
222.6
187.6
Empiric (Cardiff Wndsr House) Limited Active
187.6
Empiric (Centro Court) Limited
Active
Empiric (Claremont Newcastle) Limited Active
Empiric (College Green) Limited
Empiric (Developments) Limited
Active
Active
Empiric (Durham St Margarets) Limited Active
Empiric (Edge Apartments) Limited
Active
100%
100%
100%
100%
100%
100%
100%
Property Investment
Property Investment
Property Investment
Property Investment
Development
Management
Property Investment
Property Investment
Contents Generation – PageContents Generation – Sub PageContents Generation - Section
30. INVESTMENTS IN SUBSIDIARIES continued
Company
Status
Ownership
Principal activity
Empiric (Edinburgh KSR) Leasing Limited Active
Empiric (Edinburgh KSR) Limited
Empiric (Edinburgh South Bridge)
Limited
Active
Active
100%
100%
100%
Property Leasing
Property Investment
Property Investment
Empiric (Exeter Bishop Blackall School)
Limited
Empiric (Exeter Bonhay Road) Leasing
Limited
Active
100%
Property Investment
Dormant
100%
Property Leasing
Empiric (Exeter Bonhay Road) Limited
Active
100%
Property Investment
Empiric (Exeter City Service) Limited
Dormant
100%
Property Investment
Company
Status
Ownership
Principal activity
Empiric (Huddersfield Oldgate House)
Leasing Limited
Empiric (Huddersfield Oldgate House)
Limited
Empiric (Huddersfield Snow Island)
Leasing Limited
Empiric (Lancaster Penny Street 1)
Limited
Empiric (Lancaster Penny Street 2)
Limited
Empiric (Lancaster Penny Street 3)
Limited
Dormant
100%
Property Leasing
Active
100%
Property Investment
Active
100%
Property Leasing
Active
100%
Property Investment
Active
100%
Property Investment
Active
100%
Property Investment
Property Investment
Empiric (Leeds Algernon) Limited
Active
100%
Property Investment
Property Investment
Empiric (Leeds Mary Morris) Limited
Dormant
100%
Property Investment
Property Investment
Empiric (Leeds Pennine House) Limited Active
Property Investment
Empiric (Leeds St Marks) Limited
Empiric (Leicester 134 New Walk)
Limited
Empiric (Leicester 136-138 New Walk)
Limited
Empiric (Leicester 140-142 New Walk)
Limited
Active
Active
100%
100%
100%
Property Investment
Property Investment
Property Investment
Active
100%
Property Investment
Active
100%
Property Investment
Dormant
100%
Property Leasing
Empiric (Leicester 160 Upper New Walk)
Limited
Active
100%
Property Investment
Empiric (Exeter DCL) Limited
Empiric (Exeter Isca Lofts) Limited
Empiric (Exeter LL) Limited
Empiric (Falmouth Maritime Studios)
Limited
Empiric (Falmouth Ocean Bowl) Leasing
Limited
Active
Active
Active
Active
100%
100%
100%
100%
Active
100%
Property Leasing
Empiric (Falmouth Ocean Bowl) Limited Active
Empiric (Glasgow Ballet School) Limited Active
Empiric (Glasgow Bath St) Limited
Active
100%
100%
100%
Property Investment
Property Investment
Property Investment
Empiric (Glasgow George Square)
Leasing Limited
Empiric (Glasgow George Square)
Limited
Empiric (Glasgow George St) Leasing
Limited
Dormant
100%
Property Investment
Active
100%
Property Leasing
Empiric (Glasgow George St) Limited
Active
Empiric (Glasgow) Leasing Limited
Active
Empiric (Glasgow) Limited
Empiric (Hatfield CP) Limited
Active
Active
100%
100%
100%
100%
Property Investment
Property Leasing
Property Investment
Property Investment
Empiric (Leicester Bede Park) Limited
Active
Empiric (Leicester De Montfort Square)
Limited
Active
100%
100%
Property Investment
Property Investment
Empiric (Leicester Hosiery Factory)
Limited
Empiric (Leicester Peacock Lane)
Limited
Active
100%
Property Investment
Active
100%
Property Investment
Empiric (Leicester Shoe & Boot Factory)
Limited
Active
100%
Property Investment
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Notes to the Financial Statements | continued
30. INVESTMENTS IN SUBSIDIARIES continued
Company
Status
Ownership
Principal activity
Empiric (Leicester West Walk) Limited
Dormant
100%
Property Investment
Empiric (Liverpool Art School/Maple
House) Limited
Empiric (Liverpool Chatham Lodge)
Limited
Active
100%
Property Investment
Active
100%
Property Investment
Empiric (Liverpool Grove Street) Limited Active
Empiric (Liverpool Hahnemann Building)
Limited
Active
100%
100%
Property Investment
Property Investment
Empiric (Liverpool Octagon/Hayward)
Limited
Active
100%
Property Investment
Empiric (London Camberwell) Limited
Active
Empiric (London Francis Gardner)
Limited
Active
Empiric (London Road) Limited
Active
Empiric (Manchester Ladybarn) Limited Active
Empiric (Manchester Victoria Point)
Limited
Active
Empiric (Newcastle Metrovick) Limited Active
Empiric (Northgate House) Limited
Active
Empiric (Nottingham 95 Talbot) Limited Active
100%
100%
100%
100%
100%
100%
100%
100%
Empiric (Nottingham Frontage) Limited Active
Empiric (Oxford Stonemason) Limited
Active
Empiric (Picturehouse Apartments)
Limited
Active
Empiric (Portobello House) Limited
Active
Empiric (Portsmouth Elm Grove Library)
Limited
Active
100%
100%
100%
100%
100%
Empiric (Nottingham Frontage) Leasing
Limited
Dormant
100%
Property Leasing
Company
Status
Ownership
Principal activity
Empiric (Portsmouth Europa House)
Limited
Empiric (Portsmouth Kingsway House)
Limited
Active
100%
Property Investment
Active
100%
Property Investment
Empiric (Portsmouth Registry) Limited
Active
Empiric (Provincial House) Leasing
Limited
Active
Empiric (Provincial House) Limited
Active
Empiric (Reading Saxon Court) Leasing
Limited
Active
Empiric (Reading Saxon Court) Limited Active
Property Investment
Empiric (Snow Island) Limited
Property Investment
Empiric (Southampton Emily Davies)
Limited
Active
Active
Property Investment
Empiric (Southampton) Leasing Limited Active
Property Investment
Empiric (Southampton) Limited
Active
Active
Empiric (St Andrews Ayton House)
Leasing Limited
Empiric (St Andrews Ayton House)
Limited
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Property Investment
Property Leasing
Property Investment
Property Leasing
Property Investment
Property Investment
Property Investment
Property Leasing
Property Investment
Property Leasing
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
Empiric (Summit House) Limited
Empiric (Talbot Studios) Limited
Active
Active
Active
Active
100%
100%
100%
100%
100%
Property Investment
Property Investment
Property Investment
Property Investment
Property Investment
Property Investment
Empiric (Trippet Lane) Limited
Property Investment
Empiric (Twickenham Grosvenor Hall)
Limited
Property Investment
Property Investment
Property Investment
Property Investment
Property Investment
Property Investment
Property Investment
Empiric (Portsmouth Europa House)
Leasing Limited
Active
100%
Property Leasing
Empiric (York Foss Studios 1) Limited
Active
100%
Property Investment
Contents Generation – PageContents Generation – Sub PageContents Generation - Section
30. INVESTMENTS IN SUBSIDIARIES continued
31. ALTERNATIVE PERFORMANCE MEASURES
Company
Status
Ownership
Principal activity
The below sets out our alternative performance measures.
Empiric (York Lawrence Street) Limited Active
Empiric (York Percy’s Lane) Limited
Active
Empiric Acquisitions Limited
Active
100%
100%
100%
Property Investment
Property Investment
Immediate Holding
Company
Empiric Investment Holdings (Two)
Limited
Empiric Investment Holdings (Three)
Limited
Empiric Investment Holdings (Four)
Limited
Empiric Investment Holdings (Five)
Limited
Empiric Investment Holdings (Six)
Limited
Empiric Investment Holdings (Seven)
Limited
Active
100%
Holding Company
Active
100%
Holding Company
Active
100%
Holding Company
Active
100%
Holding Company
Active
100%
Holding Company
Active
100%
Holding Company
Empiric Investments (One) Limited
Dormant
100%
Empiric Investments (Two) Limited
Active
100%
Empiric Investments (Three) Limited
Active
100%
Empiric Investments (Four) Limited
Active
100%
Empiric Investments (Five) Limited
Active
100%
Empiric Investments (Six) Limited
Active
100%
Empiric Investments (Seven) Limited
Active
100%
Hello Student® Management Limited
Active
100%
Immediate Holding
Company
Immediate Holding
Company
Immediate Holding
Company
Immediate Holding
Company
Immediate Holding
Company
Immediate Holding
Company
Immediate Holding
Company
Property
Management
Gross margin – Gross profit expressed as a percentage of rental income. A business KPI
to monitor how efficiently we are running our buildings.
Gross Margin
Revenue
Property Expenses
Gross profit
Group
31 December
2022
£ m
31 December
2021
£ m
73.0
(24.0)
49.0
56.0
(23.1)
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.
Total Return
EPRA NTA per share at start of year
EPRA NTA per share at end of year
NTA growth per share in period
Dividend per share
Dividends plus growth in NTA
Group
31 December
20221
£ m
31 December
2021
£ m
106.7
115.4
8.7
2.5
11.2
105.0
107.4
2.4
2.5
4.9
Total return calculated as Dividends plus EPRA NTA Growth in
year per share/ NTA at start of year
10.5%
4.6%
1
EPRA NTA per share calculated on a fully dilutive basis, in line with EPRA guidance.
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Contents Generation – PageContents Generation – Sub PageContents Generation – Section
Notes to the Financial Statements | continued
31. ALTERNATIVE PERFORMANCE MEASURES continued
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.
Property Loan to value (“LTV”)
Bank borrowings drawn
Less cash held at the year end
Net borrowings
Property valuation
Group
31 December
2022
£ m
31 December
2021
£ m
391.2
(55.8)
375.0
(37.1)
335.4
337.9
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).
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Five Year Historical Record
Five Year Historical Record
Revenue
Direct costs
Gross profit
Gross margin
Administrative expenses
Operating profit
Property revaluation
Finance costs
Gain or loss on disposals
Net profit
EPRA EPS (pence)
Portfolio valuation
Borrowings
Other net assets/liabilities
Net assets
EPRA NTA
EPRA NTA per share
31 December
2022
£ m
31 December
2021
£ m
31 December
2020
£ m
31 December
2019
£ m
31 December
2018
£ m
73.0
(24.0)
49.0
56.0
(23.1)
32.9
59.4
(22.7)
36.7
70.9
(23.4)
47.5
64.2
(24.5)
39.7
67.1%
58.8%
61.8%
67.0%
61.8%
(13.4)
(10.6)
35.6
45.6
22.3
17.6
(15.0)
(12.4)
1.5
67.7
3.41
1.7
29.2
1.65
(9.8)
26.9
(37.6)
(13.3)
–
(24.0)
(9.2)
38.3
29.2
(12.7)
–
54.8
(9.1)
30.6
22.4
(12.7)
–
40.3
2.26
4.22
2.97
1,065.7
995.9
1,005.1
1,029.1
971.0
(386.5)
(371.0)
(385.3)
(349.8)
(324.3)
21.6
700.8
700.8
115.4
22.7
647.6
647.6
106.8
13.5
633.3
633.3
104.6
(14.5)
664.8
(6.8)
639.9
664.8
110.0
639.9
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%
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Contents Generation – PageContents Generation – Sub PageContents Generation – Section
Glossary
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.
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.
Company – Empiric Student Property plc.
Dividend Cover – EPRA earnings divided by dividends declared for the year.
Post-Grad – Post-graduate students who have successfully completed an undergraduate
course and are undertaking further studies at a more advanced level.
Dividend pay-out ratio – Dividends declared relative to EPRA earnings.
RCF – Revolving credit facility.
EPRA – European Public Real Estate Association.
REIT – Real estate investment trust.
EPRA basic EPS – EPRA Earnings divided by the weighted average number of ordinary
shares outstanding during the period (refer to Note 8).
Revenue Occupancy – Calculated as the percentage of our Gross Annualised Revenue we
have achieved for an academic year.
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.
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.
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.
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.
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.
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Contents Generation – PageContents Generation – Sub PageContents Generation - Section
Company Information
and Corporate Advisers
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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Contents Generation – PageContents Generation – Sub PageContents Generation – Section
Notes
Printed by a carbon balanced, FSC®-recognised printer, certified to
ISO 14001 environmental management system using 100% renewable
energy. This product has been made of material from well-managed,
FSC®-certified forests and other controlled sources. Both paper and
production are measured and carbon balanced, based on a third party,
audited, calculation.
100% of the inks used are HP Indigo ElectroInk which complies with
RoHS legislation and meets the chemical requirements of the Nordic
Ecolabel (Nordic Swan) for printing companies, 95% of press chemicals
are recycled for further use and, on average 99% of any waste associated
with this production will be recycled and the remaining 1% used to
generate energy.
The printer contributes to the World Land Trust’s ‘Conservation Coast’
project in Guatemala. This scheme supports many landowners and local
communities to register and obtain their own land and thereby protect
thousands of acres of threatened coastal forest. The local organisation
FUNDAECO works with over 3000 families to help transform local
livelihoods through job creation and ecotourism.
Empiric Student Property plc
1st Floor Hop Yard Studios
72 Borough High Street
London
SE1 1XF
T +44 (020 8078 8791
E info@empiric.co.uk
More information on
www.empiric.co.uk