Empiric Student Property plc Annual Report & Accounts 2023
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Annual Report & Accounts 2023
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 delivering a high-
quality, personalised service to our customers.
We work tirelessly to create a team who are
diverse & inclusive, agile, proactive, thoughtful,
and responsive.
Highlights
During what has been another record year for the Company, we have delivered strong
rental growth and filled our rooms earlier than ever before. Customer satisfaction
improved further and continues to be amongst the highest in the sector with our Hello
Student brand awarded Platinum Operator certification by the industry-recognised
Global Student Living. Combined with ongoing undersupply of high quality, well located
student accommodation in prime cities, this dynamic continues to drive increased
rebookings and greater demand for our rooms. This momentum has continued into the
new sales year, and positions us well for growth.
Financial
1 An alternative performance measure. See page 42 for further details.
Strategic Report
01 Highlights
02 At a Glance
04 Our market
08 Business Model
10 Our Strategy
12 Chairman’s statement
16 Chief Executive Officer’s Review
24 Monitoring our performance (KPIs)
28 Operating Review
32 Principal Risks and Viability
38 Financial Review
42 EPRA and other alternative performance
measures
46 ESG Report
Governance Report
74 Board of Directors
76 Chairman’s Introduction
to Corporate Governance
84 Nomination Committee Report
87 Audit and Risk Committee Report
92 Remuneration Committee Report
110 Directors’ Report
112 Directors’ Responsibilities
Financial Statements
113 Independent Auditor’s Report
120 Consolidated Statement of
Comprehensive Income
121 Consolidated Statement of Financial
Position
122 Company Statement of Financial Position
123 Consolidated Statement of Changes
in Equity
124 Company Statement of Changes in Equity
125 Consolidated Statement of Cash Flows
126 Notes to the Financial Statements
152 Glossary
153 Company Information and
Corporate Advisers
IFRS Earnings
Per Share
(basic)
8.8p
2022 | 11.2p
Change | -21%
Gross Margin
1
69%
2022 | 67%
Change | +2% pts
Dividend per Share
3.5p
2022 | 2.75p
Change | +27%
EPRA Earnings
Per Share
1
4.0p
2022 | 3.4p
Change | +18%
Total Return
1
7.6%
2022 | 10.5%
Change | -2.9% pts
IFRS NAV
£734.2m
2022 | £700.8m
Change | +4.8%
EPRA NTA
Per Share
1
120.7p
2022 | 115.4p
Change | +4.6%
Property Valuation
£1.1bn
2022 | £1.1bn
Change | +3.0% (LfL)
EPRA Loan
to Value
1
30.6%
2022 | 32.7%
Change | -2.1% pts
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 01
At a Glance
Home
from
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Where we operate
North East
152
Scotland
1,165
North West
1,911
West
Midlands
1,206
South East
746
Wales
519
Yorkshire
745
South West
1,464
Beds by region as at 31 December 2023
Scale is representative of beds by region
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
As at 31 December 2023:
Operational Assets
79
31 December 2022 | 85
Cities and Towns
27
31 December 2022 | 28
Beds
7,908
31 December 2022 | 8,533
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 02
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 providing 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 2023 Global Student Living Index, Hello Student
was awarded Platinum Operator Certification, with an NPS score of +30.5, well
exceeding the average for University and Private Halls (+13), and a further improvement
on 2022 when we scored +27. 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.
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 2033 and have allocated significant capital
to invest in decarbonisation initiatives aimed at reducing energy consumption and
managing future EPC risk.
Progressive Culture
Embedded by Core
Values and Purpose
Our culture and values are embedded in our business and in our team.
Financial snapshot
As at 31 December 2023
120.7p
4.0p
7.6%
3.5p
30.6%
£1.1bn
Portfolio valuation
EPRA NTA
1
EPRA EPS
1
Total Return
1
Dividend per share
EPRA LTV
1
£1.1bn
£1.1bn
4.0p
3.4p
7.6%
10.5%
3.5p
2.75p
1 An alternative performance measure.
See page 42 for further details.
2023
2023
2022
2022
2023
2022
2023
2022
2023
2022
120.7p
115.4p
30.6%
32.7%
2023
2022
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 03
Our market
The UK PBSA
sector has
continued to
demonstrate it’s
attractiveness to
global investors
Prime regional PBSA reported
the highest total return of
8.6%
in 2023
“ PBSA continues to outperform
other sectors despite rising
interest rates and high inflation,
with unprecedented rental
growth achieved for 2023/24
and strong prospects for
2024/25 forecasted.”
Will Atkinson | Chief Investment Officer
In 2023, the UK PBSA sector
continued to demonstrate its
attractiveness to investors globally
as an inflation hedge driven by
strong rental growth, fuelled by
an undersupply of high-quality
operational accommodation, long-
term strengthening demand and
historically low levels of new supply.
PBSA continues to outperform other sectors
despite rising interest rates and high inflation, with
unprecedented rental growth achieved for 2023/24 and
strong prospects for 2024/25 forecasted. This rental
growth has held capital values stable with best-in-class
assets in prime locations increasing in value.
The CBRE Purpose-Built Student Accommodation
Index 2023 reports that in the year to September
2023, the index delivered total returns of 7.7 per cent,
outperforming ‘All Commercial Property’ which according
to CBRE’s UK Monthly Index, reported -11 per cent total
returns in the same period
1
.
The PBSA Index reports capital growth of 2.4 per cent in
the year to September 2023, softer than the previous year,
with net income growing by 9.8 per cent. During the same
period, the net initial yield across all assets softened by 35
basis points to 4.9 per cent
1
. Across the quality segments,
Prime Regional assets reported the highest capital value
growth, increasing by 2.8 per cent and the highest total
return at 8.6 per cent. London assets saw the highest
income growth, rising by 16.3 per cent, but this was
offset by softening yields, delivering a 6.8 per cent total
return. The Empiric portfolio is well aligned to the best
performing locations with 93 per cent by value classified
as Prime Regional in the December 2023 portfolio
valuation and 2per cent in London.
Investor demand remains strong for locationally driven
best in class ‘clean and green’ properties with strong
rental growth prospects. However, non-prime assets are
seeing reduced demand from investors unless they offer
value add opportunities that serve growing higher tariff
universities. After a record setting year for transaction
volumes in 2022 that involved large portfolio deals with
£7.1bn of PBSA traded, increased uncertainty, greater
operational scrutiny and ‘higher for longer’ interest rates
stifled transaction volumes in 2023, resulting in £2.8bn of
transactions completing
1
.
04Strategic Report
Empiric Student Property plc | Annual Report & Accounts 2023
Occupational
Demand
The UK Higher Education sector as a whole remains strong
with over 2.2 million full-time students
7
, driven by recent
increases in the proportion of undergraduate applicants
accepted, the compelling international appeal of UK
institutions and the growth of postgraduate study. Strong
demand for university places continues to translate into an
increased requirement for high-quality PBSA bedspaces
at a level that the construction supply is unable to match.
Significant rental pricing increases are expected for the
academic year 2024/25, building on double-digit rental
growth achieved in many locations for the academic
year 2023/24
4
. Emerging data indicates undergraduate
student numbers are reducing to pre-COVID levels, but
this is highly nuanced across the sector with continued
polarization and growth of the higher tariff universities.
The latest UCAS Undergraduate 2023 admission data
reports that a total of 752,025 students applied to UK
higher education institutions in 2023, a slight fall of
1 per cent, with acceptances also falling by 2 per cent,
reaching their lowest level since 2014
3
. Undergraduate
applications from UK domiciled students fell by 2 per
cent, with acceptances falling by 1 per cent to 482,895.
This can be attributed to a second consecutive annual
decrease in the UK 18-year-old entry rate, which fell to
35.6 per cent following a peak of 37.9 per cent in 2021.
However, current levels are still historically very high,
as student participation returns to pre-COVID trends
3
.
Undergraduate applications from EU domiciled students
fell by 4 per cent, with acceptances falling by 7 per cent
to 10,570. Undergraduate applications from non-EU
domiciled students continued sustained growth, rising
by 2 per cent, however, acceptances fell by 2 per cent
3
.
The fall in acceptances can primarily be attributed to a
1per cent decrease in Chinese admissions compared to
the 2022 peak. Despite this decline, China remains the
dominant domicile of international students. In contrast,
Indian applicants have increased by 7 per cent, indicating
a shifting demographic in the international student
make-up
3
.
The flight to quality in the sector is more evident than
ever, with higher tariff institutions experiencing a
year-on-year increase in undergraduate acceptances,
whilst medium and lower tariff institutions have seen
fewer acceptances. Higher tariff acceptances make up
33 per cent of total acceptances compared with 28 per
cent in 2014 and lower tariff institutions make up 34 per
cent in 2023 compared with 41 per cent in 2014
4
. The
total number of undergraduates accepted to UK higher
education institutions has increased from 512,370 in
2014 to 554,470 in 2023.
Aside from undergraduate admissions, the take up of
postgraduate study continues to grow considerably.
A transformation in postgraduate study – aided by
the student loan system, visa changes, a desire for
additional qualifications and universities looking to
generate increased revenue means 538,375 students,
representing over one quarter of students, now study
at this level full-time
7
. The latest dataset from HESA,
for the 2021-22 academic year, reports that full-time
postgraduate student numbers have grown over
54 per cent since the 2017/18 academic year
7
.
2023 Undergraduate UCAS acceptances
Key
UK acceptances Non-EU acceptances EU acceptances
2023
482,895
61,005 10,570
2022
489,360
62,455 11,365
2021
492,005
54,285 15,770
538,000
Postgraduate students, now represent
over one quarter of the total student
population.
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 05
Our market | continued
PBSA
Supply
Investor
Activity
The PBSA sector continues to suffer
from a severe undersupply of high-
quality bedspaces, but this is highly
contrasting across locations. Cushman
and Wakefield reports that 718,805 PBSA
beds were operational for the 2023/24
academic cycle in the UK, with 12,195
new beds delivered for the academic
year. Of the total beds in the market,
41 per cent were direct let and 37 per
cent were university owned. The net
increase in beds compared to 2022/23
was only 8,760, as older university
accommodation and first-generation
privately-owned assets were removed
from operation for refurbishment
4
. This
amount reflects the lowest delivery of
PBSA beds in a decade and highlights
the planning and viability challenges
facing developers, with inflated
construction costs and costly financing
hurdles
4
. Cushman and Wakefield
reports that only 16 markets can now
feasibly sustain the necessary rent levels
to support a viable PBSA development
without further rent increases
4
.
Furthermore, the supply of new PBSA
has been limited by the need for owners
to modernize existing stock and recent
legislative shifts to improve health and
safety standards, including the Building
Safety Act and Fire Safety Act
4
. In the
private rented market, non-institutional
landlords face increased challenges with
strengthening regulations on Houses
in Multiple Occupation (HMO), higher
borrowing costs and reducing political
support. This is expected to reduce
supply and place further upward rental
pressure on PBSA. Research by CBRE
estimates that 400,000 private rented
homes have been sold in recent years,
contributing to a shortage of HMOs
which form a key accommodation option
for students, particularly domestic
domiciled returners
5
. Despite deliveries
remaining at a historic low, a national
development pipeline of 131,211 PBSA
beds remains, 57 per cent of which
(74,000 beds) have planning approval,
with 22,000 beds expected to be
delivered for 2024/25
4
. This potential
supply is not uniformly distributed
across the UK and is often not aligned to
addressing the well published shortfalls.
However, given the unfavourable market
conditions for development, it also
seems unlikely that all of these beds will
materialize in the market.
In 2022, the investment in UK PBSA
achieved a record £7.1bn even with
the wider market investment activity
dampening in the second half of the
year, following the £3.3bn acquisition of
the Student Roost portfolio. Selective
investment activity continued in 2023,
with transaction volumes falling to £2.8bn,
the lowest level since 2018. In 2022, 57,508
beds were transacted regionally and 5,013
beds were transacted in London, but
this fell in 2023 to 19,649 regional beds
and 3,595 London beds
6
. This reduction
reflected other property sectors as
investors reacted to the challenges of
inflation and rising interest rates.
After a slow Q1, Q2 saw an increase in
volume as pricing confidence and debt
availability began to return, with several
portfolios transacting.
In May 2023 DIF Capital Partners
purchased the 4,500 bed, eight asset
Ottoway Portfolio from Arlington Advisors
for £300m and in Q3, Savills IM purchased
a 1,292-bed portfolio from Vita for £295m,
reflecting 5.35 per cent
6
. Later in the
year, Cain and Menora purchased 1,481
beds from Fusion for £350m and Harbert
purchased the regional 1,300 bed ‘Project
Skyfall’ portfolio from Starwood and
Round Hll for £150m. iQ purchased the
458-bed Havannah House in Glasgow for
£60m, reflecting 5.50 per cent and later
in the year two assets from Downing, The
Mont in Edinburgh reflecting 5.50 per cent
and Vega in Vauxhall reflecting 4.75 per
cent. Forward funding deals were struck,
as KKR agreed to forward-fund Watkin
Jones’ 819-bed scheme in Bedminster,
Bristol for £100m and M&G committed
to fund McLaren’s 319-bed scheme in
Nottingham for £52m, reflecting
5.25 per cent
6
.
8,760
2023 increase in PBSA beds,
the lowest delivery of beds
in a decade.
Transaction volumes fell to
£2.8bn
in 2023, the lowest level since 2018,
reflecting the challenges faced by
rising interest rates and inflationary
concerns.
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 06
Dec 21 (%) Mar 22 (%) Jun 22 (%) Sep 22 (%) Dec 22 (%) Mar 23 (%) Jun 23 (%) Sep 23 (%) Dec 23 (%)
Yield
Date
9.00
8.00
7.0 0
6.00
5.00
4.00
3.00
Market Yields –
Best in Class, Direct Let
In 2023, CBRE’s benchmark Direct Let PBSA investment
yields have held stable in both Prime Regional (5.00 per
cent) and Secondary Regional (8.50 per cent) locations,
with Central London softening 50 basis points to 4.25per
cent. Comparatively, Prime Distribution industrial yields
softened 25 basis points to 5.25 per cent and Regional
Cities offices softened 25 basis points to 6.25 per cent in
the same period
2
. Between June 2022 and December 2023,
other sector yields have softened much more significantly
than PBSA. In the period, Central London and Secondary
PBSA yields have softened 75 basis points and 50 basis
points respectively with Regional Cities offices and Prime
Distribution softening 150 basis points and 200 basis
points respectively. All UK property sectors have been
impacted by higher interest rates, which rose from 5.00
per cent in December 2022 to 5.25 per cent in December
2023
8
. Daily SONIA rates also increased from 3.43 per cent
in December 2022 to 5.19 per cent in December 2023
9
.
Gilt levels fell slightly after peaking during the year, with
five-year gilts falling from 3.66 per cent in December 2022
to 3.46 per cent in December 2023
10
.
The decline in PBSA investment volumes reflects the
wider macroeconomic trends of 2023 which contrast
with the robust occupational student market, where
demand for student accommodation remains strong,
occupancy rates are high, and many markets are affected
by lagging development pipelines. The average rental
growth for direct let beds in the UK is poised to set
another impressive year, having reached 10 per cent for
the academic year 2023/24. It is these factors that support
PBSA’s status as a top-performing UK real estate sector,
attract new investor capital and underpin investors’ long-
term confidence in the sector
4
.
5.0%
Prime regional investment yield,
stable during 2023.
CBRE Benchmark Investment Yields
Student – Central London
Direct let
Student – Prime Regional
Direct let
Student – Secondary Regional
Direct let
Industrial – Prime Distribution
Offices – Regional Cities
Key
Sources:
1 UK Purpose-Built Student Accommodation Index
2023 | CBRE UK
2 CBRE Investment Yield Sheet Dec 2023.
3 UCAS Undergraduate end of cycle data resources
2023 | Undergraduate | UCAS
4 UK Student Accommodation Report |
United Kingdom | Cushman & Wakefield
(cushmanwakefield.com)
5 UK Real Estate Market Outlook 2024 | CBRE UK– CBRE
Insight Tool.
6 Knight Frank Transaction Schedule November 2023.
7 Who's studying in HE? | HESA
8 Bank Rate history and data | Bank of England Database
9 SONIA interest rate benchmark | Bank of England
10 UK5Y-GB: 3.714% +0.017 (0.00%) (cnbc.com)
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 07
R
e
c
y
c
l
e
O
p
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r
a
t
e
Creating
homely, modern,
vibrant
communities
for discerning
customers
L
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a
t
i
o
n
s
/
s
p
e
c
i
fi
c
a
t
i
o
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s
A
c
q
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e
/
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p
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.
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 customers’
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 acquire,
develop and operate high-quality,
sustainable student accommodation.
Brand
Hello Student® is a leading, Platinum
certified, 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 customers and our people are our key focus. We aim
to deliver stand-out customer service, which in turn drives
occupancy and financial returns through working together.
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 08
Outcome
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.
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
Wellbeing Manager and welfare programme in place
to ensure that we provide the 24/7 support that our
customers can expect when they stay with us.
Acquire/develop
We acquire standing assets when an opportunity arises
which complements our portfolio and core strategy.
We consider developing assets when we can 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.
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.
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
+30.5
Higher than PBSA private hall average +13
Shareholders
Shareholders benefit from Total Returns which
are underpinned by income and continued
rental growth.
Total accounting return
7.6%
Our people
Our people have the opportunity to develop their
careers in an exciting and growing sector.
Colleague Engagement Score
85%
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.
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 09
Our strategy
Delivering
against our
strategic
objectives
1. Customers 2. Brand
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.
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 be known as a
responsible provider.
Progress in the year
î 12 further sites fully re-branded.
î Embedded brand experience proposition
to align customer experience across all
sites.
î Further improved NPS scores.
î Implemented customer happiness index.
Progress in the year
î Our net promoter score was +30.5,
compared to PBSA private hall average +13.
î 60% of customer queries now resolved
within 72 hours.
î Continued the roll out of our Post Grad
exclusive product with the opening of a
second scheme in Nottingham.
î Awarded Platinum Operator Certification
from GSLI.
Associated KPIs
A B C
D
G H
Associated KPIs
A B C
D
F
Key aims for 2024
î New website to enhance digital brand
experience.
Key aims for 2024
î Continue to improve our NPS score.
î Improve customer safety satisfaction
scores as measured by Global Student
Living Index.
î Mental Health First Aiders in place at
all our sites.
Associated risksAssociated risks
E1 E3
I1 I2 I3 I4
E1 E4E3
I3 I4
KPI Links
A. Rebooker Rate
B. Net Promoter Score
C. Revenue Occupancy
D. Safety – Number
of Accidents
E. Colleague
Engagement
F. 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. Climate Change Risk
E4. Financing Risk
E5. Inflation Risk
Internal Risks
I1. Health and Safety Risk
I2. Information
technology Risk
I3. People Risk
I4. Safe and Sustainable
Buildings Risk
10Strategic Report
Empiric Student Property plc | Annual Report & Accounts 2023
3. Our People and Operations 4. Building 5. Shareholders
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 themprovide the best and
most efficient customer service experience.
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.
Strategic objective
We want to provide our shareholders
with attractive sustainable returns. This is
achieved through improving the profitability,
performance and scale ofour portfolio.
Progress in the year
î Employee turnover reduced to <15%.
î 51% of eligible vacancies filled by
internal promotions.
î Health and safety compliance 95%.
î 21% of responding employees identify as
being from an ethnic minority.
Progress in the year
î Core disposal programme materially
completed with over £43m generated from
sales in 2023.
î Completed the refurbishment
of 254 rooms.
î Completed the roll-out of our second
post-grad site in Nottingham.
Progress in the year
î Fully covered dividend of 3.5p, +27%
on 2022.
î Delivered total accounting return
of 7.6% for the year.
î Expanded investor relations programme.
Associated KPIs
A B C
D E
Associated KPIs
A B C
D F G I K
H J L
Associated KPIs
A B C
D F G
H
Key aims for 2024
î Achieve health & safety compliance
score above 95%.
î Launch apprenticeship scheme.
î Provide training and accreditation to
maintenance operatives to enable them to
become certified for electrical repairs.
î Set company diversity target.
Key aims for 2024
î Refurbish a further 250+ rooms for launch
of new academic year.
î Exceed EPC B or better target covering
more than 55% of the portfolio.
î Target 75% EWS 1 compliance.
î Detailed planning consent for an additional
250+ rooms at Victoria Point, Manchester.
Key aims for 2024
î Leverage operational platform for growth
in beds under management.
î Shareholder advisory vote on two year
ESG plan.
î Remove short-term refinancing risk.
Associated risks Associated risks Associated risks
E1 I1E3 E4 I2 I3 I4
E1 E2 E3 E5 I1 I2 I4
E1 E2 E3 E4 E5
I1 I2 I3 I4
KPI Links
A. Rebooker Rate
B. Net Promoter Score
C. Revenue Occupancy
D. Safety – Number
of Accidents
E. Colleague
Engagement
F. 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. Climate Change Risk
E4. Financing Risk
E5. Inflation Risk
Internal Risks
I1. Health and Safety Risk
I2. Information
technology Risk
I3. People Risk
I4. Safe and Sustainable
Buildings Risk
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 11
Chairman’s statement
We remain
encouraged
by the outlook
for our business
and the wider
sector
“ 2024 marks ten years since the Company’s IPO
and I’m pleased to say that the business hasn’t
been in better shape. The transformation of
operational capabilities is complete and
delivering for all stakeholders. We remain
encouraged by the outlook for the sector and
the opportunities for the business and its future.”
Mark Pain | Non-Executive Chairman
The macro-economic climate remained
challenging throughout 2023 with high
inflation and interest rates, governmental
policy changes, and ongoing geo–political
uncertainty. Despite these headwinds we
remain encouraged by the outlook for our
business and the wider sector.
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 12
Continued undersupply of high quality student
accommodation, particularly in key Russell Group
aligned university towns and cities has helped drive
occupancy. We achieved 99 per cent occupancy for the
second academic year in a row. Our premium quality
accommodation and customer service proposition
continues to appeal to both the international and
domestic student market, with further improvement in our
Net Promoter Score and attainment of GSLI’s prestigious
platinum operator certification.
Income growth underpins valuation performance
Our direct-let model coupled with dynamic pricing
capabilities has delivered rental growth for the academic
year 2023/24 of 10.5 per cent like for like. Strong rental
performance has entirely offset a 30 basis point yield
softening across our property portfolio in 2023, delivering
portfolio valuation growth of three per cent like for like.
We are encouraged by the resilience of the purpose-built
student accommodation sector when viewed in contrast
to other real estate investment sectors.
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 the Board, its operations
and the reports from its various Committees can be found
on pages 79 to 109.
Building a sustainable business
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 and established our target to achieve net zero
as a business by 2033. We have created interim targets
for the forthcoming two year period to 2026. This plan
will be subject to an advisory shareholder vote at the
forthcoming Annual General Meeting. It is our intention
to bring future plans and associated targets back to
shareholders every two years.
The Board has significantly accelerated investment in
green initiatives, having allocated up to £12.0 million
towards making our buildings more energy efficient, less
carbon emitting and to further manage future EPC risk
across the portfolio. As part of this initiative, we are on
track to advance decarbonisation at 16 sites during 2024,
with four newly decarbonised properties scheduled to be
completed in early 2024. We are proud to have achieved
our 2025 EPC target over a year early with 51 per cent of
the portfolio now rated EPC B or better.
The Group continues to champion wellbeing initiatives
for our customers and employees. Hello Student hosts a
calendar of social events throughout the year. Students
have 24/7 access to our welfare programme and during
the year the Company appointed a full time Welfare
Manager, further demonstrating our commitment to this
important and greatly valued aspect of our business. Our
workforce is stable and engaged, with improved levels of
retention and employee engagement.
Students have access
to our welfare programme
24/7
99%
occupancy level for the second
academic year in a row
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 13
Chairman’s statement | continued
Health and Safety
Health and Safety is a critical area of attention for the
Board. We continue to enhance our monitoring and
investment in prevention and mitigation to ensure all our
buildings are as safe and secure as possible. Key priorities
in 2023 included greater focus on external audit, training
and contractor management.
Board appointments and succession
The Board has benefited from an experienced and stable
leadership team during 2023, with both Donald Grant
and Clair Preston-Beer having joined the Board in 2022.
Both have settled in well bringing a wealth of experience
that has been complementary to Board dynamic and
strategicoutlook.
Lisa Hibberd joined in February 2024 and will replace
Apex Secretaries LLP as Company Secretary to the Board
from 31 March 2024. Lisa has over 15 years’ experience as
Company Secretary in the listed real estate sector.
The Board evaluation concluded that the Board and
its Committees have continued to operate effectively
throughout the year. Please see page 82 for further details.
Dividends
Alongside our 2022 full year results announced in March
2023, the Company set a dividend target for the financial
year of 3.25 pence per share. With stronger than expected
growth in like for like rents achieved and occupancy
having exceeded target, sufficient confidence existed
to increase the full year target to 3.5 pence per share. In
November 2023, the Board confirmed this target and
today’s announcement of the final payment in respect
of the 2023 financial year marks the achievement of this
target. The full year payment represents a 27 per cent
increase in dividends paid, year on year.
The Board intends to continue to make quarterly
payments to shareholders throughout 2024. 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
achieved for the 2023/24 academic year, and ongoing
expectations in respect of the forthcoming academic
year, tempered by inflationary pressures, particularly in
respect to energy costs, the Board will target a minimum
dividend of 3.5 pence per share for the financial year to 31
December 2024.
Annual General Meeting
The Annual General Meeting held on 24 May 2023 was
well attended by shareholders and we were pleased to
announce that all resolutions were passed.
The Company’s 2024 Annual General Meeting will be held
on 22 May 2024. We will host a physical meeting which
provides 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.
Looking ahead
The attractiveness of the UK’s top quality universities
continues to appeal both internationally and domestically,
with demand and supply imbalance expected to continue
for the foreseeable future.
We’ve experienced an encouraging start to the sales
launch of academic year 2024/25 and are optimistic of
achieving occupancy rates above 97 per cent again, our
measure of effectively full.
The Board will target a minimum
dividend payment of 3.5 pence
per share
3.5p
“ Health and Safety is a critical
area of attention for the Board.
We continue to enhance our
monitoring and investment in
prevention and mitigation to
ensure all our buildings are as
safe and secure as possible.”
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 14
With the repositioning of the portfolio now materially
complete, the Board’s attention will continue to focus
on routes to growth. The success of the Group’s Post
Grad pilots, in Edinburgh and now also in Nottingham,
continues to demonstrate the potential of this market.
Since year end, we have been pleased to complete on the
acquisition of a former office block, excellently located
near an existing operational site in Bristol, a city that has
performed extremely well in recent years. Four further
opportunities remain under offer in Top Tier university
cities, which are complementary to our core strategy,
offer long term earnings accretion and are in locations
where we have an existing operational presence.
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 2024 with continued optimism.
Mark Pain | Non-Executive Chairman
13 March 2024
“ The attractiveness of the UK’s
top quality universities continues
to appeal both internationally
and domestically, with demand
and supply imbalance expected
to continue for the foreseeable
future.”
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 15
Chief Executive Officer’s Review
Well
poised for
growth
Fuelled by the acute undersupply of well located,
high quality student accommodation in key
university towns and cities across the UK, we
successfully filled our rooms quickly and through
our dynamic pricing capability we achieved
upper quartile rental growth performance.
“ Building on 2022, the business has again
delivered a year of record achievements,
culminating in a very strong financial and
operational performance.”
Duncan Garrood | Chief Executive Officer
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 16
2023 saw our best ever rebooker campaign, with 22 per
cent of rooms sold to students who were already staying
with us; a tangible validation of customer satisfaction
and the value inherent in our service proposition. Overall,
we achieved occupancy above 99 per cent for academic
year 2023/24 and this momentum has continued into
the start of the sales programme for the forthcoming
academic year.
Outstanding like for like rental growth of 10.5 per cent was
secured, surpassing expectations multiple times during
the sales cycle. This is testament to our strategy of selling
rooms on a direct-let basis and our now well embedded
dynamic pricing system. Underpinned by strong rental
growth, our portfolio valuation grew a further three per
cent like for like. The balance sheet is in good shape with a
prudent level of gearing, comfortably in line with our long-
term target, and refinancing risk has been well managed.
We’ve been pleased to grow our shareholder distributions
by 27 per cent year on year, and deliver a total accounting
return of 7.6 per cent.
Strong market fundamentals continue
Demand and supply imbalance continues unabated.
Participation rates in the UK’s higher education sector
remains historically high with over 2.2 million full-time
students. China remains the dominant domicile of
international students, but shifting demographic trends
demonstrate the attractiveness of a relatively affordable
UK higher education to a growing number of students
from other international markets, particularly India. The
UK remains a very attractive high quality, and affordable
higher education destination of choice.
A clear flight to quality is continuing, with higher tariff,
typically Russell Group, universities experiencing year on
year growth in acceptances to the detriment of medium
and lower tariff universities. This validates our strategy
of focusing our portfolio on these cities, which deliver
growth and encourage investment.
The take up of post-graduate studies has grown
considerably, aided by the student loan system, visa
changes and the desire for further qualifications,
while meeting the need of UK universities to generate
additional revenue. One quarter of all students now study
at post-graduate level full time.
The year saw a net increase in Purpose Built Student
Accommodation (“PBSA”) beds of only 8,760, the
lowest in a decade. This highlights the challenges faced,
including planning, construction costs and increased
interest rates. Legislative changes have driven more
than 400,000 private rental properties from the market,
contributing to a decline in HMOs, our main competitive
market. This has driven more students, particularly
domestic students, towards PBSA operators like
ourselves.
Driving occupancy and rental growth
The investment in our operational capabilities, completed
over the past couple of years, continues to deliver results.
Internalising our capabilities has allowed us to put our
customers first and deliver a high quality experience,
which has been paramount in the development of our
strategic priorities and improved rent performance.
Our key performance indicator in this regard is the
Global Student Living Index’s Net Promoter Score. This
year our operating brand, Hello Student, successfully
achieved a further improvement to +30.5 (2022: +27),
significantly outperforming the benchmark All Private
Halls score which scored +13. In addition, Global Student
Living awarded Hello Student the accolade of platinum
operator, only awarded to a very small number of PBSA
operators, a certification standard we are extremely proud
to have achieved and a reflection of our commitment to
a personal, high quality, customer service proposition.
We strive to help our customers make the most of their
university experience by making their lives as simple and
fulfilling as possible.
Outstanding like for like rental
growth of
10.5%
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 17
Chief Executive Officer’s Review | continued
Great customer service drives demand for our rooms.
22 per cent of our rooms for academic year 2023/24
were sold to students who were already staying with us,
helping create a sense of community and allowing us to
eliminate costs associated with customer acquisition and
associated costs of turnaround for a quarter of our rooms.
This is a great achievement considering at least a third
of students complete their higher education journey
each year.
The strategic shift in the portfolio away from secondary
locations in favour of clustering premium quality
properties in prime, undersupplied cities within close
proximity to top-tier universities, positioned the portfolio
well to capitalise on our dynamic pricing capability,
maximising revenue relative to underlying demand.
As academic year 2023/24 began, we had sold over 99 per
cent of our rooms achieving like for like rental growth of
10.5 per cent, materially ahead of our base pricing uplift
of seven per cent.
We continue to attract a greater proportion of UK
students than in pre-Covid years. For academic year
2023/24, UK students represent 49 per cent of all
bookings, the balance comprising 32 per cent Chinese
and 19 per cent other international. Notwithstanding the
UK governments rhetoric in respect to restricting visa
applications for international students, and in particular
their dependants, this demographic has changed little
over the past three years underlining our focus on
top-tier universities and the studio-led nature of our
accommodation.
We will continue to target those international markets
where we are underweight relative to the opportunity
available.
Active property management
In early 2021 we set out a plan to dispose of a modest
portfolio of non-core assets. At the time those assets
identified for disposal represented approximately 10 per
cent of the portfolio, a little over £100.0 million by value.
In addition, 16 per cent of the portfolio was earmarked
for extensive refurbishment to bring the standard of
accommodation in line with what is considered to offer an
on-brand customer experience.
By the end of 2023, we had disposed of properties valued
at £101.2 million, of which six properties valued at £43.4
million were sold during 2023, with over £30.0 million
remaining under offer. In aggregate, disposals completed
to date were achieved at a four per cent premium to
their respective book value at the point of sale. With this
programme now materially concluded, we expect to see a
more normalised churn in the portfolio going forward.
Proceeds from the disposal programme have largely
been deployed into our core portfolio, either to fund
the refurbishment programme, acquisitions, our
ongoing programme of fire safety works or toward debt
prepayment pending substitution.
In 2021 we outlined a five year refurbishment plan with an
estimated cost of £36.0 million. At 31 December 2023,
those properties earmarked for extensive refurbishment
had reduced to eight per cent of the portfolio by value, with
£21.4 million invested to date. The annual refurbishment
programme is ongoing, targeting the delivery of between
250 and 350 beds annually. The refurbishment cycle
for 2023 was completed to plan, delivering 254 fully
refurbished beds and associated amenity areas across
six core locations in advance of the new academic year,
with a further 220 rooms receiving a light refurbishment.
In addition, our second Post Grad exclusive site at Talbot
Studios in Nottingham was completed and welcomed
students from September 2023.
One of our larger properties, Brunswick Apartments,
Southampton has been closed for the duration of the
2023/24 academic year for refurbishment. This 173
bed property will reopen to students from September
2024 following a full room and amenity refurbishment,
alongside fire safety, energy efficiency and Net Zero
related works.
A variety of acquisition opportunities were at various
stages of negotiation, including under offer at 31
December 2023. These acquisitions are complementary
to our core strategy, in locations where we have an
existing operational presence and will be accretive to
earnings. In February 2024 we were pleased to complete
on the acquisition of a former office building in Bristol,
which is located firmly in the centre of our existing cluster
within the city. This building will be reconfigured to
provide high quality student accommodation which we
expect to deliver for academic year 2025/26.
Acquisition properties valued at over £20.0 million remain
under offer in Top Tier university cities.
Having spent considerable time in 2023 performing
due diligence on the post-graduate market across our
key cities and identifying an appropriately aligned seed
portfolio, conversations with a small selected number of
interested parties commenced in late 2023. The objective
of these conversations was to establish the depth of
appetite to form a joint venture as a means to accelerate
the roll out of this product and in turn grow our business.
These conversations continue, including visits to sites
and management meetings, as we now progress toward
identifying the party with whom we may enter a period of
exclusive negotiation and due diligence. We will continue
to keep investors informed of progress.
Supporting our customers and delivering
consistent service
Every area of our business is encouraged, and motivated,
to provide a customer first philosophy. We remain acutely
aware that with rising rents our customers expect an
increasingly high quality experience and value.
Our Student app has continued to provide a platform
for greater and more timely customer engagement
and a means to improve our service offer. We are able
to respond to customer service requests in a more
timely and structured manner. Students have the ability
to monitor our progress toward resolution of issues
raised, receive site related information, be notified when
parcels are available for collection, when social events
are arranged or to facilitate networking. In addition, this
year during the annual turnaround of customers, the app
was key to facilitating the check in process, removing
considerable administrative time and improving overall
customer experience. Pleasingly, we have been nominated
for the award of Best Check-in Experience in 2024.
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 18
The most substantive evidence of customer service
and the benchmark we use within our business is the
Global Student Living Index’s Net Promoter Score. We
are proud to report that our NPS score has improved
again this year, from +27 to +30.5. To put this in context,
the latest NPS score for all private purpose built student
accommodation was +13, whilst the score for university
halls was +8. Of our customers, 85 per cent rate us good
or very good, which benchmarks very well against some of
the highest performing UK service providers.
The wellbeing of our customers is of paramount
importance to us. Hosting young adults during what
for most is a highly challenging time of their life, is a
responsibility we have to both customers and their
parents alike. To further support our service provision
in this important area, we have appointed a Wellbeing
Manager who brings expertise as an accredited Mental
Health First Aid Instructor and Sexual Violence Liaison
Officer and will be pivotal to embedding mental health
first aid training across all our sites. We take the welfare of
our team and customers extremely seriously.
We were proud to see our efforts in this area
acknowledged when we were certified as a Platinum
Operator by Global Student Living in June 2023.
“ The most substantive evidence
of customer service and the
benchmark we use within our
business is the Global Student
Living Index’s Net Promoter Score.
We are proud to report that our
NPS score has improved again
this year, from +27 to +30.5.”
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 19
Developing our people
At the heart of our business are the people that design,
support and deliver great customer experience and
buildings. By rewarding, training and developing our
people we ensure our brand remains at the leading edge
of customer service and experience.
There is good rationale for focussing on employee
development, retention and engagement. During the
year we increased our retention rate to 85 per cent, which
is extremely high in the service industry, whilst internal
promotions accounted for over 50 per cent of all non-
entry level vacancies.
We are proud members of the Real Living Wage
Foundation, meaning our lowest paid employees are paid
above the minimum wage and received salary increases
mitigating inflation. During a time of increased pressures
on cost-of-living we were pleased to be in a position
to support our employees, with average compensation
increases of 4.4 per cent in 2024.
Having invested in our people, their wellbeing and various
engagement initiatives, we are pleased to report that
our colleague engagement score was 85 per cent, which
continues to compare favourably to the national average.
Safety
We are responsible for ensuring that everyone who is
living, working in or visiting our buildings is kept safe. We
ensure that our buildings comply with not only all relevant
regulations but also with best practice within the industry.
There has been considerable focus on fire safety again
this year. Having allocated £46.0 million toward a five year
programme of fire safety initiatives, we have continued to
progress works on a risk based basis. In 2023 we invested
a further £6.9 million towards attainment of the latest
EWS1 certification standard, bringing total investment to
date in this area to £24.5 million, an investment which is
fully reflected within property valuations. By 31December
2023, 69 per cent of the portfolio had achieved EWS1
certification and we remain on track to meet the
objectives outlined in the five year plan.
Our buildings continue to be inspected on a regular basis
to ensure that we identify and eliminate hazards. To assess
the buildings, we have engaged with specialist consultants
to undertake thorough assessments of general safety,
hazards, prevention of fire risks and water systems.
In response to concerns surrounding the use of
Reinforced Autoclaved Aerated Concrete (“RAAC”),
we commissioned external surveyors and structural
engineers to assist with a portfolio wide review based on
construction type and building age. Onsite inspections
did not identify this material at any of our medium or high
risk properties.
Becoming a sustainable business
Following the 2022 publication of our full Net Zero
strategy, the year has seen a number of building blocks
put in place to facilitate the implementation of this plan.
The Board agreed an initial capital allocation of £12.0
million towards green initiatives, focused primarily on
decarbonisation, EPC risk management and driving
behavioural change. The Company tendered and
appointed energy advisers during 2023 as well as
appointing an energy Project Manager, who brings
extensive prior experience implementing decarbonisation
initiatives at operational sites. In early 2024, four further
decarbonised sites were delivered with a further four
in progress. Good progress has been made in the
management of EPC risk, with 51 per cent of our sites
now rated EPC B or better, a target achieved over a year
earlier than was envisaged in our Net Zero strategic plan,
showing our focus on delivery.
The business remains committed to achieving Net Zero
by 2033. As part of this journey, our plan, including
interim targets for the next two years, will be subject to
an advisory shareholder vote at the forthcoming Annual
General Meeting.
Further details are set out in the ESG report on page 46.
Strategy and outlook
As we move forward into 2024, the outlook for our
business and the wider sector looks very strong. Having
already secured over 60 per cent revenue occupancy for
the 2024/25 academic year, we are confident of achieving
another successful year from an occupancy perspective.
As inflation tempers, so would we expect rental growth,
however we believe like for like rental growth in excess of
six per cent can be achieved this year.
Our strategic focus now shifts to driving operational
efficiencies through growth. Acquiring or developing
new sites in top-tier cities that are close to well-located
existing sites will enable us to exploit our clustering
strategy and realise further the benefits of scale. In
addition, we continue to explore opportunities to
accelerate the roll out of our post-graduate product.
In line with the continuous focus on improving customer
experience, we expect to invest in a new end to end ERP
system and associated customer facing website upgrade
in 2024. This will improve the booking experience further
and make it easier for customers to secure a room with us.
Further, we’ll continue to invest in our people to ensure
stability and engagement is retained and more time will
be spent on talent mapping to underpin our future.
Finally, we will continue the roll out of our brand across key
locations, which helps drive down the cost of customer
acquisition and improved operational margins.
Having increased the dividend target in the final quarter
of 2023 to 3.5 pence per share, and today declaring
a dividend in line with that plan, the Board remains
confident in targeting a minimum dividend of 3.5 pence
per share for the 2024 financial year.
Duncan Garrood | Chief Executive Officer
13 March 2024
Chief Executive Officer’s Review | continued
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 20
“ Our strategic focus
now shifts to driving
operational efficiencies
through growth.”
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 21
Strategy in Action
Customer
wellbeing
Survey data from Global Student Living
informed us that there remained areas we
could continue to improve upon.
As a result, a programme of work was built
to address the feedback received and
once implemented it delivered significant
improvements in our customer survey scores,
culminating in our Hello Student brand being
awarded Platinum Operator certification.
Customer experience, mental
health and wellbeing are of the
utmost importance to us as a
business both commercially and
as a duty of care for the continued
safety of our customers.
Strategic Report
Empiric Student Property plc | Annual Report & Accounts 2023
22
socialising or study in a communal environment. Finally, to
reinforce our commitment to wellbeing, we appointed a
dedicated Wellbeing Manager who has been tasked with
‘training in’ mental health first-aiders at all our sites.
Following the roll out of these initiatives, in 2023 we
saw a marked improvement in scores received with 74
per cent saying that their accommodation team care
about their wellbeing and 76 per cent now saying their
accommodation has a positive impact on their wellbeing,
comfortably above the industry benchmark for All Private
Halls of 63 per cent.
The feeling of a sense of community has seen an
incredible improvement from 37 per cent to 63 per cent.
The number of residents who have struggled with stress
or anxiety has reduced from 46 per cent to 40 per cent
and loneliness from 26 per cent to 22 per cent. There
is still more work to be done here, but this was a very
pleasing improvement, and clear validation that our
efforts are delivering results.
The Platinum Operator certification from Global Student
Living is the highest status achievable, for which we are
all very proud. We received a Net Promotor Score (NPS)
of +32 in early 2023 and +30.5 in the late 2023 survey,
surpassing our target of +30 for the year.
We recognise from regular third-party customer surveys
that a student’s accommodation, both in terms of the
quality and design of the building as well as the service
they experience can have a marked impact on mental
health and wellbeing. In survey data collected in 2022,
68 per cent of our respondents said they felt that their
accommodation team cared about their wellbeing, with
64 per cent saying that the accommodation as a whole
had a positive effect on their wellbeing. Interestingly,
only 37 per cent said that there was a strong sense of
community inherent within their accommodation, with
46per cent saying they struggled with stress and anxiety,
26 per cent with loneliness.
As a result, in 2023, we designed a programme of
events for students to engage in, aimed at bringing
students together more often and building that sense
of community. This started with asking current students
if they’d be prepared to help us welcome new students
on check-in day in the Summer. For most new students,
this can be a daunting experience and the friendly face
of a like-minded individual prepared to ‘show them the
ropes’, helped ease the transition into their new home.
All customers, new and current, both fed back that it
was a rewarding and fun experience. We also began
a programme to improve further our amenity space,
with the provision of more flexible space to facilitate
“ The property is really safe, very
clean and the staff are so lovely
and helpful. The regular events
mean you get to meet a lot of
new people.”
Supriya | St Andrews
“ The feeling of a sense of
community has seen an
incredible improvement from
37 per cent to 63 per cent.”
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 23
Our strategy
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.
Non-Financial KPIs
Performance Performance
Performance Performance
22% 99%
+30.5 1
22%
19%
99%
99%
+30.5
+27
1
0
2023
2022
AY 2023/24
AY 2022/23
2023
2022
2023
2022
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
The rebooker rate demonstrates our ability to retain
occupancy and is a key driver of our revenue demonstrating
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.
Purpose
Allow us to benchmark against our peers.
How we measure
Calculated by the Global Student Living Index from
responses received from students staying with us and
submitting answers to a standardized questionnaire.
Purpose
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.
Associated KPIs Associated KPIs
Associated KPIs Associated KPIs
1 2 3
4 5
1 2 3
4 5
1 2 3
4 5
1 2 3
4 5
A. Rebooker Rate (%) C. Revenue Occupancy (%)
B. Net Promoter Score D. Safety – Number of Accidents
24Strategic Report
Empiric Student Property plc | Annual Report & Accounts 2023
Performance Performance
Performance
85% 51%
4,481kWh
85%
84%
51%
40%
4,481kWh
4.538kWh
2023
2022
2023
2022
2023
2022
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 standardised questionnaire
sent to all employees.
Purpose
A key metric to allow us to monitor progress towards improving
average EPC ratings and delivery of this aspect of our net zero
strategy.
How we measure
Percentage of properties by value which have been certified
EPC B or better.
Purpose
A key metric to monitor the progress towards achieving
2,000 kWh per bed by 2033.
How we measure
Total building energy intensity divided by the number of
operational beds on a like for like basis
Associated KPIs Associated KPIs
Associated KPIs
1 2 3
4 5
3 5
2 3
E. Colleague Engagement (%) G. EPC risk mitigation (EPC B or better) (%)
F. Energy consumed per bed (kWh)
Strategic Links
1. Customers
2. Brand
3. People and Operations
4. Buildings
5. Shareholders
Definitions
For definitions see page 152.
“ My accommodation is
very clean, the location is
great for town and class.
The staff are so friendly,
helpful and welcoming
with amazing events
thoughout the year which
are well thought out.”
Emma | St. Andrews
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 25
Our strategy | continued
“ Living with Hello Student
is easy, taking all the
normal worries out of
renting. High speed
Internet, wonderful staff
on hand if any problems.
It couldn't be a better
place to focus on your
studies and develop.”
Alfie | Falmouth
Financial KPIs
Purpose
The gross margin reflects our ability to drive occupancy and to
control our operating costs.
How we measure
Gross profit expressed as a percentage of rental income.
Purpose
Illustrates our ability to pay dividends from recurring, current year,
earnings.
How we measure
EPRA earnings per share expressed as a percentage
of dividends paid and declared in respect to the
financial year.
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.
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.
Associated KPIs Associated KPIs
Associated KPIsAssociated KPIs
2 3 5
5
1 2 3
4 5
5
2023
2022
2023
2022
2023
2022
2023
2022
68.7%
67.1%
114%
124%
120.7p
115.4p
4.0p
3.4p
68.7%
114%
120.7p4.0p
Performance Performance
PerformancePerformance
H. Gross Margin (%) J. Dividend Cover (%)
K. EPRA NTA per share (p)I. EPRA earnings per share (p)
26Strategic Report
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Links
1. Customers
2. Brand
3. People and Operations
4. Buildings
5. Shareholders
Definitions
For definitions see pages
42 and 152.
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.
Associated KPIs
5
2023
2022
7.6%
10.5%
7.6%
Performance
L. Total Return (%)
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 27
Operating Review
Overview
Current market conditions are the strongest we’ve
experienced in recent years. New supply of high quality,
well located accommodation, particularly in prime
cities, is limited and has been unable to keep pace with
increased student participation. Demand has been
exacerbated recently by the decline in HMO provision,
which when coupled with the ongoing pressure on the
cost of living, makes our all-inclusive fixed price model
increasingly attractive.
The lettings cycle for academic year 2023/24 tracked
eight to ten weeks ahead of prior year during the first
half of 2023, with our rooms filling quicker than we’ve
ever experienced. Unprecedented demand, coupled
with our direct-let model, enabled us to capture rental
growth inflation during the entire letting period. Like for
like growth of 10.5 per cent was achieved, surpassing
expectations on multiple occasions during the sales cycle.
A strong rebooker programme contributed significantly
to the speed at which we filled our rooms and provided
the platform to benefit from dynamic pricing. At the start
of the year we targeted 20 per cent for academic year
2023/24. In total, 22 per cent of our rooms were sold to
students already living with us, with some of our strongest
locations achieving rates in excess of 30 per cent.
Portfolio overview
A summary of the Group’s portfolio is set out below,
segmented in line with our valuer’s view of quality. Almost
95 per cent of the portfolio is now aligned to Prime or
Super Prime locations.
Since 31 December 2022, the portfolio has grown in
value by three per cent, like for like. This is as a result of
the continued income growth achieved for the 2023/24
academic year, offset by a weakening of yields, primarily
in secondary locations and an increased cost of fire
safety works. Overall, the portfolio’s net initial yield has
increased by 30 basis points to 5.5 per cent. This yield
movement reflects reduced investment market activity,
which is mainly due to an increased cost of capital,
together with the valuer taking a more cautious approach
to future income growth until it is sufficiently secured.
With a reversionary yield of 5.7 per cent, confidence exists
that as the letting cycle advances for the new 2024/25
academic year, this risk premium should be removed.
Reflected within the like for like growth of three per cent, is
a £9.0 million adjustment made during the first half of the
financial year to reflect the increased cost of fire safety works.
This followed an extensive tendering exercise for our larger
properties where works are required to be carried out on their
external wall systems (“EWS”). The increase was primarily due
to high demand for specialist contractors, the rising cost of
scaffolding and revisions required following further intrusive
investigations. In arriving at the portfolio’s market value,
the valuer has applied a pound for pound deduction for the
forecasted cost of these works. Like many other real estate
investors, we have started compensation claims against
a number of lead contractors. Given the conversion and
refurbishment nature of a large number of our properties, the
likelihood of success is more uncertain and no deduction has
been assumed against the costs of remediation.
A portfolio segmentation review was carried out in early
2021 with each property assigned a strategic segment
reflecting the Group’s investment style, as follows:
Segment A: Properties that are appropriately configured
and on-brand and aligned to top-tier universities.
Segment B: Properties that fundamentally meet our key
criteria but require extensive refurbishment to become
on-brand. If extensive refurbishment is not expected to
deliver our IRR return hurdle of 9-11 per cent, then the
property is earmarked for sale.
Segment C: Well-located properties clustered around a
Segment A property which are configured in a manner
that lend themselves better to a conversion to our new
brand Post Grad by Hello Student, this is typically based
on room mix, size and amenity.
Valuers quality segmentation
Properties
Operational
beds
Market value
£m
Market value
%
Super prime regional 25 2,473 500.5 45.6
Prime regional 45 4,331 520.5 47.4
London 1 79 19.7 1.8
71 6,883 1,040.7 94.8
Secondary 9 1,025 57.2 5.2
Total 80 7,908 1,097.9 100.0
Strategic segmentation
Segment A
£m
Segment B
£m
Segment C
£m
Segment D
£m
Total
market value
£m
NIY
%
Operational portfolio 794.2 84.7 154.3 45.9 1,079.1 5.5
Commercial portfolio 9.7 1.4 1.4 3.3 15.8 7.7
Development portfolio - - - 3.0 3.0
Total 803.9 86.1 155.7 52.2 1,097.9
31 December 2023 (%) 73.2 7.8 14.2 4.8 100.0
31 December 2022 (%) 67.8 11.8 13.3 7.1 100.0
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 28
Segment D: These properties are typically not of a size
or configuration that lend themselves to become a core
Segment A or Segment C scheme, are typically located in
a single asset city whereby the benefits of clustering can
not easily be realised and/or are not aligned to a top-tier
university. These are therefore considered non-core, and
earmarked for disposal.
We have seen activity in the investment market return
following a period of disruption in the final quarter of
2022, allowing us to progress our non-core disposal
programme at pace, particularly in the first half of the year.
We successfully concluded the disposal of six properties
during the year, generating £43.4 million, with pricing
marginally above their respective book values, in
aggregate. The sales cumulatively represent 620
operational beds and have reduced by one the cities in
which the Company has an operational presence.
At 31 December 2023, further properties valued at over
£30.0 million remain under offer, which once complete
will conclude the non-core sales programme which began
in March 2021 and has generated gross proceeds of £101.2
million to date.
As we recycle capital from secondary locations or cities
where we do not have sufficient scale, we aim to drive
operational performance and improved returns through
clustering. Progress made over the last 12 months has
enabled us to improve our Gross Margin a further two
percentage points this year from 67 per cent in the year to
31 December 2022 to 69 per cent.
Refurbishment and development
Our annual refurbishment programme continues to target
the delivery of between 250 and 350 beds annually, with
the investment into the refurbished rooms typically
delivering IRRs of between 9-11 per cent.
This year’s annual cycle delivered 231 fully refurbished
rooms and associated amenity areas across four core
locations ready for the start of the 2023/24 academic year
in September, with a further 325 rooms receiving a light
refurbishment. Ongoing rolling refurbishments continued
into the fourth quarter of 2023 at our sites in Leeds,
Cardiff and Birmingham.
In September 2023, we delivered our second post-graduate
exclusive site at Talbot Studios in Nottingham. This follows
the success of our pilot scheme which opened in Edinburgh
in November 2022.
As previously announced, we took the decision to close
one of our larger properties, Brunswick Apartments,
Southampton for the duration of the 2023/24 academic
year. Works began in September 2023 on this 173 bed
property, which will reopen to students from September
2024 following a full room refurbishment and the addition
of a new amenity provision, alongside fire safety, energy
efficiency and Net Zero works. The property is selling
well for academic year 2024/25 with aggregate pricing
currently ahead of expectations.
Capital expenditure programme
Progress against our five year programme of
refurbishment, fire safety works and green initiatives is
set out below. The revised plan reflects the increased
cost of EWS works as announced in the first half of 2023.
In respect to our programme of fire safety works, all
properties have been surveyed and 69 per cent of the
portfolio has been certified.
Refurbishment
£m
Fire safety
works
£m
Green
initiatives
£m
Five year plan
(2021 – 2025)
36.1 37.0 12.0
Revision to cost
forecast for EWS
works
– 9.0 –
Revised plan 36.1 46.0 12.0
Invested to date 21.4 24.5 1.7
Forecast 2024
investment
13.5 14.2 6.0
In addition to the above, ongoing capital life cycling works
continue to require around £4.0 million per annum.
Commercial portfolio
We have continued to actively manage the 35-unit
commercial estate that generally sits below our
operational portfolio, with a number of value-creating
projects completed. Notable deals include finalising an
agreement for lease with an Asian supermarket operator
on a ten year term in Bristol. This deal will also facilitate
the development of new gym amenity space to the rear
of the unit. A five year lease renewal was secured with a
national bakery chain in Liverpool, at passing rent.
Several asset management initiatives are planned for 2024
to drive value and enhance the student offering onsite. In
late 2023 a 12-month lease renewal in Bristol was agreed
to ensure an existing tenant could continue trading before
taking occupation of a neighbouring commercial space
within the estate. Upon achieving vacant possession
of this larger unit, we have terms agreed with a Korean
restaurant to take a 15-year lease which will facilitate the
addition of a new student reception and study zone.
We will continue to seek to regear all qualifying leases
where the tenant covenant is strong, namely with our
national convenience store tenants.
Acquisitions and developments
A number of attractive acquisition opportunities remain
under offer at 31 December 2023 in top tier university
cities which are complementary to our core strategy and
will be accretive to earnings.
Subsequent to the year end, we were pleased to complete
on one of these opportunities, a former office block in
Bristol. The extremely well located property sits firmly
in the centre of our existing cluster within the city. This
building will be reconfigured to provide over 50 high
quality new PBSA beds which we expect to deliver for
academic year 2025/26.
With the non-core disposal programme now materially
completed, we expect to see further selective growth
through acquisitions during the first half of 2024.
In early 2024 we plan to submit a planning application
in respect to our Victoria Point, Manchester site. The
city continues to suffer an acute under supply of PBSA
beds and has consistently performed well for us from
an occupancy and rental growth perspective. The
masterplan, if approved, provides for a full refurbishment
of the existing asset together with an over 200 bed
extension.
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 29
Strategy in Action
Investing
in our
people
Having internalised all
operations during the past
three years and as a service
business, we strive to
develop and retain talent
as a means of delivering
great customer service.
As a business employing 348
people, we have many highly
talented individuals working
for us that we aim to identify,
train and reward.
Employee
engagement
85%
Eligible roles filled by
internal candidates
51%
Employee retention
85%
Strategic Report
Empiric Student Property plc | Annual Report & Accounts 2023
30
We created a preferred skills matrix for MOs. This matrix
detailed the role profile for future recruitment, whilst
providing a benchmark to assess the skills of our current
MOs and identify areas for development.
To date, ten MOs have attended a formal ‘Electrical
Fundamentals’ course at the Company’s expense. This
has enabled them to carry out basic electrical works, safe
isolations, re-energising circuits and equipment, fault
finding and equipment replacement. A further group of
MOs have expressed a desire to complete the course,
which is planned in early 2024.
We have also identified MOs who are happy to teach
others, for example in carpentry. We have therefore
matched MOs with others who have the skills desired, so
that they can become more proficient, learn a new skill
or just pick up a few more ‘tips of the trade’. A forum has
been established whereby MOs can ask questions, seek
help or share ideas and knowledge.
We are proud of our employee engagement score and
employee retention rate. Initiatives such as this help
foster mutual reward.
We employ Maintenance Operatives (“MOs”) at our Hello
Student sites. These individuals are on hand to resolve
routine issues arising from time to time in student rooms
or around the wider property amenity. Across the MO
team within our business, there is a wide variety of skills,
competency and knowledge.
Numerous tasks continue to be undertaken by third party
contractors when a repair is outside the remit of the MOs
knowledge, training or skill set, yet we realise that there
is a desire and genuine enthusiasm amongst many MOs
to enhance their knowledge to be able to do more or do
it better. This is very much in the Company’s interest too,
insofar as a more highly trained MO would likely increase
the likelihood of same day repair and reduce the cost of
reactive third party repairs.
An investment in developing our people and enhancing
the MOs knowledge was therefore perfectly aligned to our
strategy of providing great customer service.
“ Investing in the development of
our people and enhancing their
knowledge is perfectly aligned
to our strategy of providing great
customer service.”
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 31
E3
Low Medium High
High Medium Low
Impact
Probability
I2
E1
E5
I4
I1
I3
E4
E2
Principal Risks and Viability
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
RiskCommittee.
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.
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 across a
property cycle 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.
The Audit and Risk Committee considers
emerging risks. These are new or
unforeseen risks, of which the Committee
is aware, however their potential impact
is not fully known. The Committee reviews
these biannually alongside the principal
risks and uncertainties. The Audit and Risk
Committee has detailed below the risks it
believes are emerging and the potential
impact it may have on our principal risks:
Changes to our risks profile
The Group's risk profile has remained
relatively stable during the year.
Continued rental growth, coupled with
strong occupancy continues to reduce
the likelihood of a material downturn in
revenues and consequently, property
valuations.
Far reaching climate change concerns
have precipitated the upgrade of this
emerging risk, to a principal risk concern.
Adapting risk management in a changing environment
External Risks
E1 Revenue Risk
E2 Property Market Risk
E3 Climate Change Risk
E4 Financing Risk
E5 Inflation Risk
New Risk
Internal Risks
I1 Health & Safety Risk
I2 Information Technology Risk
I3 People Risk
I4 Safe and Sustainable
Buildings Risk
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 32
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
E1
Revenue Risk
Owner: Chief Customer Officer
There is a risk that the student
demand for our product will
decrease, e.g. inconsistent brand
proposition, governmental
intervention or affordability
concerns.
—
Link to Strategy
3 5
î Loss of revenue
î Erosion of asset values
î Void costs or increasing
level of bad debts
î Potential breach of bank
covenants
î Executive Committee and the Board closely monitor government policy, student
numbers and other micro and macro-economic factors.
î Monitoring restrictions and ensuring marketing is targeted to key international
& domestic markets.
î We ensure our assets are well located serving established leading universities
with a higher proportion of Post Grad occupiers.
î Standard Operating Procedures and expanded M&E programme.
î Substantial domestic student demand and management of demographics.
Stable overall
due to favourable
supply demand
imbalance in
UK PBSA and
continued record
occupancy levels
achieved, however
concerns in
respect to change
in government
policy have
heightened.
E2
E2
Property Market Risk
Owner: Chief Investment Officer
Increasing yields across the
property sector impacting
valuations.
—
Link to Strategy
4 5
î Erosion of asset values
î Potential breach in bank
covenants
î Lower Total Return for
shareholders
î Our assets are in prime locations, diversifying risk. CBRE classifies over 90% of
the portfolio as prime or better.
î We maintain prudent levels of gearing, with an LTV limit of 40% and a long-term
target of 35%.
î The higher education sector comprises both domestic and international students,
which helps to underpin the student accommodation market.
î Of the UK property sub-sectors, direct-let PBSA is currently expected to be one
of the most resilient sectors.
Stable due to
expectation that
interest rates have
peaked.
E3
E3
Climate Change Risk
Owner: Chief Financial
& Sustainability Officer
Climate change has the potential
to impact every business in the
world. For our business, it could
impact planning legislation
restricting supply of PBSA, create
physical risks such as flooding and
increase government legislation and
regulation, for example.
—
Link to Strategy
1 2 3 4 5
î Financial and reputational
risk associated with
inappropriate action
î Cost of transition
î Net zero commitment and plans established.
î Behavioural training to be carried out with tenants during 2024.
î Specialist advisers appointed internally and externally to ensure plans are
implemented in line with Net Zero pathway.
Risk moved from
emerging to
principal risk.
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 33
External risks | continued
Internal risks
Risk and brief description Potential impact Mitigation in place Trend
Ex
E4
Financing Risk
Owner: Chief Financial
& Sustainability Officer
The availability of debt or equity on
acceptable terms.
—
Link to Strategy
1 2 3 4 5
î Limiting future growth
potential
î Price-taker in fire sale
scenario
î Reduced shareholder
returns
î Refinancing terms have been credit approved and concluded in early 2024
providing interest rate security.
î Average maturity of debt of 3.9 years with £82.5 million in cash and undrawn
committed facilities as at 31 December 2023.
î We maintain prudent levels of gearing, with an LTV limit of 40% and a long-term
target of 35%.
î Strong relationships with key lending institutions.
Reduced following
removal of near-
term risk.
Ex
E5
Inflation Risk
Owner: Chief Financial &
Sustainability Officer
Inflationary pressure on staffing,
operational costs, utilities and
development/refurbishment costs.
—
Link to Strategy
1 2 3 4 5
î Reduced profitability and
dividend capacity
î Inability to deliver
desired return on
investments
î Utility costs hedged to September 2024 with selected hedging secured
beyond 2025.
î Reassessment of capital expenditure and acquisition plans.
î Resilient revenue stream.
î Albeit slowly, inflation is beginning to ease.
Stable.
Inflationary
pressures have
eased.
Risk and brief description Potential impact Mitigation in place Trend
Ex
I1
Health & Safety Risk
Owner: Chief Executive Officer
The occurrence of a major health
and safety incident including
terrorism, fire or infectious
outbreak.
—
Link to Strategy
1 2 3 4 5
î Injury and impact on
customers, contractors,
staff and visitors
î Compensation costs
incurred
î Reputational impact
î Loss of life in a worst-
case scenario
î Health and safety metrics are reported to executive committee monthly.
î Policies, procedures and training for all staff.
î Ultimate Board responsibility involving regular Board reporting from the Executive
with Head of Health and Safety.
î Live compliance dashboard which is monitored daily.
î Regular review of fire safety regulations to ensure our buildings remain compliant
with standards, going above and beyond requirements.
Stable due to
minimal change
in the health
and safety
environment.
Principal Risks and Viability | continued
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 34
Internal risks | continued
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
I2
I2
Information Technology
Risk
Owner: Chief Financial &
Sustainability Officer
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
î Reputational damage
î Deteriorated customer
experience
î Higher costs and reduced
profitability
î Financial impact due to
potentially significant
fines under GDPR
legislation
î A business continuity plan is in place to enable Group operations to continue in
the event of a failure or breach.
î The IT network is centralised across the Group with an in-house IT team.
î Security training programme for all staff.
î Data monitoring system to protect our platforms across the IT estate and strong
Data Protection Office in place.
î Regular penetration testing.
Stable. No
significant change
in risk profile
during the year.
I3
I3
People Risk
Owner: Chief Operating Officer
Loss of front-line staff and the
knock-on impact on customer
service.
Inability to retain key employees or
attract specialists.
—
Link to Strategy
1 2 3 5
î Impact on customer
service due to low rates
of retention
î Loss of key business
knowledge
î Inability to complete
refurbishment
programme
î We are a Real Living Wage Employer ensuring that we attract and retain talent
where possible.
î Employee engagement at 85%.
î Ongoing training and development programme designed to upskill staff regularly
and progress forward with their career within the business.
î Succession planning and early supply chain engagement.
î Exit interviews are used to identify any areas for improvement within the business.
Reduced following
improvement in
retention rates
and development
of key employee
succession plans.
I4
Safe and Sustainable
Buildings Risk
Owner: Chief Executive Officer
How our buildings will withstand
increased legislation around fire
safety as well as increasing minimum
energy performance standards.
—
Link to Strategy
1 2 3 4 5
î High compliance costs
î Reputational impact
î Potential challenges
around insuring our
buildings
î Compensation claims
î Decreased liquidity of
our buildings
î Significant capital expenditure plan allocated to ensure our buildings comply
with future fire safety legislation.
î Regular review of fire safety regulations and checks to ensure our buildings,
at a minimum, remain compliant with standards.
î Continuous assessment of our buildings and allocating significant resource
on to future green initiatives.
Stable. A greater
focus on fire safety
and potential
upcoming
legislation
remains high.
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 35
Principal Risks and Viability | continued
Emerging risks
Emerging risk
Impact on principal risk
probabilities Mitigating factors
Geopolitical Crisis
A geopolitical dispute between China, or
any other sovereign state who generates a
significant amount of student revenue, and
the UK could result in foreign governments
placing embargoes on their students
coming to study in the UK.
î Revenue Risk
î Property Market Risk
î Financing Risk
î Broad marketing campaigns targeted to both the domestic and international market with
a particular focus on underweight international locations.
Restrictions in international
students
Immigration restrictions imposed by the
UK Government could substantially reduce
revenue from international students.
î Revenue Risk î Substantial domestic demand.
î Marketing focus on expanding domestic reach and diversifying away from reliance on
international markets.
Re-emergence of a Pandemic
New variants and a decrease in vaccine
effectiveness could result in a resurgence
in COVID-19 or similar pandemic related
restrictions.
î Revenue Risk
î Financing Risk
î Health & Safety Risk
î Strong demand and high occupancy.
î Crisis management training.
î Full remote working capabilities.
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 36
Viability
Assessment period
The Directors have considered a three year time horizon
in assessing longer term viability. A three year period to
31 December 2026 has been selected for the following
principal reasons:
î the Board reviews budgets and plans that extend to
three years; and
î the Group’s revenue is annual in nature, with typical
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 2026.
At 31 December 2023 the Group had four debt facilities
totaling £103.1 million falling due during the viability
period. Of this amount, £57.7 million, representing
three separate facilities, were due to expire in 2024
with £45.4 million due to mature in November 2025. On
7March 2024, the Group signed a new seven year facility
agreement (the “New Facility”) and drew an initial £44.4
million. The proceeds from this initial utilisation together
with a cash payment of £13.7 million refinanced all 2024
expiries. The New Facility makes provision for a non-
binding commitment to draw down a further £80.5 million
which is expected to occur in May 2024, the proceeds
from which will refinance the November 2025 maturity.
In the highly unlikely event the Group is unable to draw
the New Facility’s non-binding commitment, alternative
refinancing arrangements will be made to address the
November 2025 expiry closer to the time. The New Facility
will be fully hedged, mitigating exposure to interest rate
volatility. Once concluded, there will be no further debt
maturities until April 2028.
Assumptions
The Group’s three year business plan incorporated the
below key assumptions:
î occupancy remaining stable, given the current strong
demand for student accommodation;
î revenue growth of at least four per cent annually;
î utilities costs at fully hedged rates until September
2024, with projected market rates applied to residual
exposure thereafter;
î average cost inflation at 2.8 per cent throughout the
forecast period;
î valuations remain stable;
î no acquisitions or disposals are completed;
î the likelihood of the New Facility concluding as planned,
refinancing all expiring debt facilities during the period;
and
î a £20.0 million facility expiring in February 2026 will be
refinanced at equivalent terms.
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 above.
In particular, key assumptions underlying the downside
scenario were as follows:
î Occupancy falls in academic year 2024/25 to 95 per
cent, then to 90 per cent for the 2025/26 and 2026/27
academic years
î Revenue growth reduced to as low as two per cent in
academic year 2026/27
î Exposure to utilities cost volatility increased to 1.5 times
projected market rates
î Inflation increased to five per cent, significantly above
the Bank of England target rate of two per cent;
î Floating interest rates rise a further one per cent in early
2024, prior to refinancing transactions concluding
î Property valuations suffer shock decline of ten per cent
î Certain of the Group’s non-committed and non-
regulatory capex programs are curtailed or paused
during the forecast period
î Credit markets preclude the refinancing of a
£20.0 million facility expiring in February 2026;
î Temporary suspension of dividends.
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.
Please see Note 28 to the financial statements for further
information on the Group’s covenants.
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.
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.
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 37
Financial Review
2023 was a
strong year
for the Group
across key
financial
metrics.
“ The operational business and its key
metrics continue to be in great shape
and have translated into a strong set
of results, exceeding expectations.”
Donald Grant | Chief Financial & Sustainability Officer
7.6%
Total accounting return
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 38
Financial review
2023 was a strong year for the Group across key financial
metrics. Revenue surpassed £80.0 million, supported in
part by a 10.5 per cent like for like rent increase for the
2023/24 academic year, with the estate effectively full
for the second academic year running. Gross margin
increased to 69 per cent and administrative costs
have been held within guidance levels at £14.0 million,
continuing to improve as a proportion of revenue.
The balance sheet is in sound shape with EPRA LTV falling
to 30.6 per cent and refinancing risk managed through
to 2028.
Dividends paid and declared during the year, coupled with
a growth in EPRA Net Tangible Asset value of 5.3 pence
per share, delivered a total accounting return of
7.6 percent.
Revenues increased by £7.5 million or 10.3 per cent.
Combined occupancy for 2023 was 99 per cent and the
year benefited from blended like for like rental growth of
7.0 per cent. Disposal of non-core assets reduced revenue
by £2.2 million.
Sound progress was made toward achieving a gross
margin of 70 per cent, with a two percentage point
improvement in gross margin to 69 per cent. Non-core
assets did continue to adversely impact gross margin
during the year, but as demonstrated above, excluding
these assets, a 70 per cent gross margin was achieved.
Although cost inflation pressure has continued, utility
costs remained fixed throughout 2023, mitigating
volatility on a key operational cost line. Utility costs
remain fully fixed until September 2024, following which
we currently have price certainty across 50 per cent of
assumed consumption from October 2024 until March
2026, a level we will seek to extend and increase as
opportunities arise.
Administrative expenses increased by £0.6 million
or 4.5per cent, broadly in line with CPI for the year,
comfortably covered by strong rental growth.
Finance costs increased as anticipated, with floating rates
closing the year some 170 basis points higher than at
31December 2022. Of the Group’s drawn debt, 12 per cent
remains exposed to interest rate volatility.
Rental growth underpinned a portfolio valuation uplift of
£30.1 million, a significant contributor to the IFRS profit
for the year of £53.4 million.
Income statement
Core
portfolio
£m
Non-core
(bucket D)
£m
2023
£m
2022
£m
Revenue 74.7 5.8 80.5 73.0
Property expenses (22.1) (3.1) (25.2) (24.0)
Gross profit 52.6 2.7 55.3 49.0
Gross margin 70% 47% 69% 67%
Administrative expenses (14.0) (13.4)
Operating profit 41.3 35.6
Revaluation 30.1 45.6
(Losses)/gains on disposals (0.6) 1.5
Derivative mark to market loss (0.2) –
Net finance costs (17.2) (15.0)
IFRS Profit 53.4 67.7
EBITDA 42.1 36.3
Weighted average ordinary shares
(m) 603.4 603.3
IFRS EPS (pence) 8.8 11.2
EPRA EPS (pence) 4.0 3.4
Balance sheet
2023
£m
2022
£m
Property (market value) 1,097.9 1,078.9
Bank borrowings drawn (360.3) (391.2)
Cash on hand 40.5 55.8
Net debt (319.8) (335.4)
Other net liabilities (43.9) (42.7)
Net assets 734.2 700.8
Diluted number of shares 608.0 607.2
EPRA NTA per share (pence) 120.7 115.4
Property LTV 29.1% 31.1%
EPRA LTV 30.6% 32.7%
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 39
Strong rental growth underpinned a £30.1 million portfolio revaluation gain for the
year. This was attributed to strong rental growth in key Russell Group aligned university
cities, most notably Manchester, York, Newcastle, Bristol and Edinburgh, all of which
experienced at or near double digit valuation growth. Net asset value increased by
5.3 pence per share or 4.6 per cent, primarily due to the valuation movement, with the
residual attributed to earnings, net of dividends paid.
Evolution of net asset value £m
31 December 2022 700.8
EPRA earnings 24.1
Like for like revaluation 30.8
Dividends paid (20.7)
Other (0.8)
31 December 2023 734.2
Portfolio valuation
2023
£m
2022
£m
Gain
1
£m
Change
%
Like for like property portfolio 1,097.9 1,035.3 30.6 3.0
Disposals – 43.6 (0.5)
Portfolio valuation 1,097.9 1,078.9 30.1
1 Net of capital expenditure and headlease amortisation
On a like for like basis, excluding disposals and capital expenditure, the portfolio
increased in value by £30.6 million. The net initial yield moved outward from 5.2 per
cent to 5.5 per cent with the valuer applying a more prudent approach in 2023 and not
applying core yields to future income until it is sufficiently secured. The reversionary yield
has moved out to 5.7 per cent, demonstrating the valuation growth potential inherent in
the portfolio. Notwithstanding this, the outward yield shift was offset by the significant
rental growth achieved.
In the 2024 Spring budget, the UK Government announced the abolition of Multiple
Dwellings Relief (“MDR”) by repealing Schedule 6B of the Finance Act 2023. The removal
of MDR will increase purchaser cost assumptions applied to valuations of the Group’s
English property portfolio. Full purchaser cost assumptions are already in place in respect
of a number of the Group’s property valuations and this change does not currently apply
to Scottish or Welsh properties. On the assumption that in time it will, the estimated
impact of this change is a £35 million reduction in the portfolio’s aggregate valuation as
at 31 December 2023.
The disposal programme was materially completed during the year. In total, £43.4 million
was generated from assets disposed of during 2023. After disposal costs, a net loss on
disposals of £0.6 million was realised.
Capital expenditure during the year amounted to £32.5 million, primarily related to
refurbishment works and the ongoing programme to enhance fire safety.
Debt
Drawn borrowings decreased by £30.9 million during the year, primarily following the
application of disposal proceeds, pending substitution. At the balance sheet date the
weighted average cost of debt was 4.3 per cent and the weighted term to maturity was
3.9 years.
The first of a two tranche £124.9 million refinancing completed post year end. This first
tranche refinanced all near term, primarily floating rate debt maturities. The second
tranche is anticipated to complete in the second quarter of 2024 extending the 2025
expiry to 2031. Once completed, the Group will be 100 per cent protected against
interest rate volatility, with an anticipated weighted cost of debt of 4.6 per cent and a
weighted term to maturity of 5.7 years. Refinancing risk will then be mitigated until 2028.
Property loan to value was 29.1 per cent, down from 31.1 per cent at the prior year end,
reflecting the valuation performance and the application of surplus cash in prepayment
of flexible debt facilities. EPRA LTV, which includes net payables, also decreased two per
cent to 30.7 per cent and will be the Group’s primary LTV measure going forward.
Net debt to EBITDA was 7.6, down from 9.2 at 31 December 2022, with cash and available
committed facilities of £82.5 million.
All loan covenants were fully compliant during the year.
Cashflow
2023
£m
2022
£m
Operating cash flow 43.7 43.6
Capital expenditure (34.0) (49.1)
Property disposals 42.6 39.7
Finance income 0.2 –
Net cash flows from investing activities 8.8 (9.4)
Dividends paid (20.2) (16.7)
Net borrowings (repaid)/drawn (31.0) 14.6
Finance costs (16.6) (13.4)
Financing cash flows (67.8) (15.5)
Net cash flow (15.3) 18.7
The disposal programme of non-core assets continued into 2023, generating proceeds
net of disposal costs of £42.6 million. These were largely reinvested into the core-
portfolio refurbishment and fire safety programme, with the balance applied toward
prepayment of flexible debt facilities.
Financial Review | continued
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 40
Cash paid toward funding dividend payments excludes £0.5 million of withholding tax
which was paid to HM Revenue & Customs in January 2024.
Cash outflows related to the settlement of finance costs have increased in line with
interest rates applicable to the Group’s residual floating rate debt facilities.
Going concern
The Board places particular focus on the appropriateness of adopting the going concern
assumption when preparing the Group’s consolidated financial statements.
In light of the Group’s liquidity position, its modest level of gearing and capital
commitments of £1.7 million, the Directors have concluded that, in reasonably possible
adverse scenarios, there remains adequate resources and mitigants available to
continue to operate until at least 31 December 2025, being a period of not less than 12
months from the date of approval of these financial statements. The Directors therefore
concluded that it remains appropriate to adopt the going concern basis of preparation
when compiling the Annual Report and Accounts for the year ended 31 December 2023.
Attention is drawn to Note 1.4 to the financial statements and to the Company’s
statement in respect to viability for further details surrounding the conclusion reached.
Dividends
A final interim dividend of 0.9375 pence per share has been declared for the final quarter
of 2023, bringing total dividends paid and payable in respect of 2023 to 3.5 pence. This
represents an 87.5 per cent pay-out on EPRA EPS. The dividend will be paid as a Property
Income Distribution on 19 April 2024 to shareholders on the register at 5 April 2024.
Donald Grant | Chief Financial & Sustainability Officer
13 March 2024
3.5p
Total dividends paid and
payable in respect of 2023
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 41
EPRA and other alternative performance measures
Our performance in line with industry standard measures
EPRA disclosures
The following is a summary of the EPRA performance measures included in the Group’s results. As defined by the EPRA Best Practice Recommendations, these are a set of standard
disclosures for the property industry designed to drive consistency in reporting.
EPRA measure Definition of measure
Note/
reference 2023 2022
Earnings (£m) The companies underlying earnings from operational activities 8 24.1 20.6
Net tangible assets (NTA) (£m) The underlying value of the company assuming it buys and sells assets 9 120.7 115.4
Net disposal value (NDV) (£m) The value of the company assuming assets are sold, and the liabilities are settled, not held to maturity 9 122.5 117.9
Net reinstatement value (NRV)
(£m)
The value of the assets on a long-term basis, assets and liabilities are not expected to crystallise under
normal circumstances
9 126.8 121.8
Net initial yield Rental income less operating costs divided by the market value of the property, increased with
purchasers costs
Below 5.0% 5.2%
Cost ratio (incl. direct
vacancy costs)
Administrative & operating costs including costs of direct vacancy divided by gross rental income. Below 49% 51%
Cost ratio (excl. direct
vacancy costs)
Administrative & operating costs excluding costs of direct vacancy divided by gross rental income Below 48% 47%
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
10.5% 5.2%
Like for like capital 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
Financial
review
3.0% 2.4%
Loan to value Ratio of net debt, including net payables, to the sum of the net assets, including net receivables, of the
Group, expressed as a percentage
Below 30.6% 32.7%
Vacancy rate Estimated Market Rental Value (ERV) of vacant space divided by ERV of the whole portfolio Below 0.8% 3.1%
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 42
Other alternative performance measures
An alternative performance measure (“APM”) is a financial measure of historical or future financial performance, financial position or cash flows of an entity which is not a financial
measure defined or specified in International Financial Reporting Standards (“IFRS”).
APM’s are presented to provide useful information to readers and have been, or are still, consistent with industry standards. The table below sets out the additional non-EPRA derived
APM’s included within the Annual Report and Accounts.
Measure Definition of measure
Note/
reference 2023 2022
Total return Growth in EPRA NTA plus dividends paid as a percentage of opening EPRA NTA 31 7.6% 10.5%
Net debt (£m) Borrowings less cash and cash equivalents 31 319.8 335.4
Property loan to value Net debt divided by property market value 31 29.1% 31.1%
Dividend cover EPRA earnings relative to dividends declared for the year 31 114% 124%
Dividend pay-out ratio Dividends declared relative to EPRA earnings 31 88% 81%
Group
EPRA Net Initial Yield (“NIY”) and topped-up NIY
Year ended
31 December 2023
£m
Year ended
31 December 2022
£m
Investment property 1,097.9 1,078.9
Less: development property (3.0) (3.3)
Completed property portfolio 1,094.9 1,075.6
Allowance for purchases cost 37.1 38.5
Grossed up completed property portfolio valuation 1,132.0 1,114.1
Annualised cash passing rental income 81.7 81.6
Property outgoings (25.2) (24.0)
Annualised net rents 56.5 57.6
Add: notional rent expiration of rent-free periods or other lease incentives 0.1 0.1
Topped-up net annualised rent 56.6 57.7
EPRA NIY 5.0% 5.2%
EPRA topped-up NIY 5.0% 5.2%
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 43
Group
EPRA cost ratios
Year ended
31 December 2023
£m
Year ended
31 December 2022
£m
Operating expense line per IFRS income statement 25.2 24.0
Administration costs 14.0 13.4
Ground rent costs - -
EPRA costs (including direct vacancy costs) 39.2 37.4
Direct vacancy costs (0.4) (3.2)
EPRA costs (excluding direct vacancy costs) 38.8 34.2
Gross rental income less ground rents – per IFRS 80.5 73.0
Less: service fee and service charge costs components of gross rental - -
Gross rental income 80.5 73.0
EPRA cost ratio (including direct vacancy costs) 49% 51%
EPRA cost ratio (excluding direct vacancy costs) 48% 47%
EPRA loan to value (“LTV”)
Bank borrowings drawn 360.3 391.2
Net payables 16.8 17.8
Less cash held at the year end (40.5) (55.8)
Net borrowings 336.6 353.2
Investment property at fair value 1,072.5 1,061.9
Property held for sale 22.4 13.7
Property under development 3.0 3.3
Intangible assets 3.1 1.9
Property value 1,101.0 1,080.8
EPRA LTV 30.6% 32.7%
EPRA and other alternative performance measures | continued
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 44
Group
EPRA capital expenditure analysis
Year ended
31 December 2023
£m
Year ended
31 December 2022
£m
Acquisitions - 19.3
Development 0.3 -
Investment properties
Incremental lettable space - 15.2
No incremental lettable space 32.2 15.2
Total capex 32.5 49.7
Conversion from accrual to cash basis (0.1) (2.5)
Total capex on cash basis 32.4 47.2
EPRA vacancy rate
Estimated rental value of vacant space 0.7 2.6
Estimated rental value of whole portfolio 86.2 83.6
EPRA vacancy rate (%) 0.8% 3.1%
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 45
We are committed to creating and
operating a socially responsible and
sustainable business which is fit for
the future and has a positive impact
for all our stakeholders.
Our
commitment
to Stakeholders
We believe that to achieve
this commitment, ESG must
be fully embedded within all
our activities.
ESG Report
46Strategic Report
Empiric Student Property plc | Annual Report & Accounts 2023
“ Hello Student properties are the
best. They are affordable, well
located and have friendly staff
who look out for me.”
Leen | Aberdeen
Materiality
Working with third-party ESG Consultants, we have
collated all our ESG data from around our business.
Subsequently, we completed a materiality assessment
matrix, to determine the topics that were material to
the business and to our stakeholders. This materiality
assessment is outlined within our standalone 2023
ESG Report.
This assessment highlighted that ‘Health and Safety’,
‘Mental Health and Wellbeing’, ‘Energy Management’
and ‘Product Design and Lifecycle Management’ were
amongst the most material topics for our business.
As we operate within the Real Estate Industry, we utilised
the Sustainability Accounting Standards Board (SASB)
framework and guidance in relation to materiality. The
SASB helps companies identify, measure, and manage
the sustainability related risks and opportunities that
most directly affect cash flows, access to finance
and cost of capital. Providing this comparable and
standardised framework also allows information to be
clearly communicated to our stakeholders, in particular
our investors. This framework highlighted that ‘Energy
Efficiency and Consumption’ and ‘Sustainable Properties’
were the key areas of importance for our business.
As we develop and enhance our ESG reporting annually,
we will take guidance and direction from the International
Sustainability Standards Board’s (ISSB) financial
materiality guidance to meet our investor audience.
ESG management Framework
We have developed a robust, transparent management
framework which is outlined below.
In 2022 we published our Net Zero Strategy, which
outlines our target of net zero for scopes 1 and 2 by 2033
and for scope 3 by 2050.
Our activities will be guided by setting ambitious and
challenging goals aligned to our strategy and operations
for the future. The publication of an annual ESG Report
reflects our commitment to ESG, setting and reviewing
our annual progress and longer-term targets.
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.
Our People
The successful delivery of our ESG strategy across the
business, requires the collaboration and support of
all our people.
ESG Working Group
Chaired by the CFSO, invited members of the senior
leadership team meet monthly and ensure the ESG
strategy is embedded throughout the business.
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Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 47
Key 2023 highlights
Governance
î A crisis management course was undertaken focusing
on senior operational employees and the Executive
Committee.
Environmental
î Further upgrades to LED lighting and PIR sensors within
the refurbishment programme occurred in this financial
year. For example, all external lighting at Foss Studios
and the York sites has been upgraded to LED. Also, in
room and communal surveys were completed across 14
additional buildings in 2023.
î Over 225 smart panel heaters were installed and were
operational in 2023.
î Building Management Systems (BMS) audits completed
across the portfolio, to assess the energy consumption
for each building.
î EPC B or better target of 50 per cent achieved over a
year earlier than originally planned.
Social
î All team members had access to a range of physical,
mental and financial wellbeing support, via our
Employee Assistance Programme. Employees have
access to our wellbeing hub on the Reward Gateway.
î In 2023, 51 per cent of eligible roles were filled through
internal progression.
î After completing our year-end colleague engagement
questionnaire for 2023, an engagement score of 85 per
cent was achieved.
Please see page 71 for future targets and commitments.
Energy Efficiency
and Consumption
We are resolute in our desire to
decarbonise our operations. We aim
to be Net Zero across operations,
developments, property portfolio, and
energy consumption by 2033 (Scopes
1 and 2). A more extensive objective is
set to attain net-zero emissions across
all scopes, including Scope 3, by 2050
or earlier. To meet this target, we have
devised several initiatives. For example,
to continue to source 100 per cent of
our electricity from renewable sources.
We aim to have over 55 per cent of the
portfolio awarded an EPC rating of B or
better by the end of 2024. This will be
achieved by improvements to assets
to align with improved EPC scores as
required during upgrades
and refurbishments.
This will also be reinforced through the
assessment of EPC ratings on all new
acquisitions and developments. Also,
we aim to validate our net-zero target
with the Science Based Targets initiative
(SBTi) within the next two years.
We have allocated internal resources
through a Net-Zero strategy and
engagement program, to meet these
targets. Further information can be found
in our standalone 2023 ESG Report.
ESG Report | continued
48Strategic Report
Empiric Student Property plc | Annual Report & Accounts 2023
2023
2022
2023
2022
Gender diversity
4
4
2
3
4
2
Board
Executive Committee
2023
2022
186
147
14153
Total employees
201
Key
Male
Female
2
2
Sustainable
Properties
Diversity
We completed a comprehensive
review and remedial work on solar PV
(photovoltaic) systems at thirteen
buildings in 2023, ensuring they operate
at optimal capacity. Plans include
implementing centralised real-time
monitoring for solar PV systems at all
thirteen sites alongside assessing the
feasibility of installing them at additional
buildings. This will be completed in
2024 as part of the metering and BMS
improvement works.
To improve heating efficiency, EcoSync
'smart' Radiator Valve Actuators (TRVs)
have been installed at our St Mary’s, Bristol
site in 2023, resulting in a significant
29.1 per cent reduction in energy use at
the site. The system collects data every
five minutes, allowing for continuous
improvement. Surveys and cost estimates
have been conducted for an additional
eight sites and will be completed in Q1
2024. Efforts to optimise boiler operation
and reduce energy costs have been
completed at six sites during 2023, via the
Sabien M2G Boiler optimisation controls,
which uses intelligent software and
hardware to improve a boiler’s efficiency
by reducing energy wastage. In 2024,
additional sites will be incorporated and
targets will be set.
In 2023, waste management practices
focused on recycling, with initiatives
like recycling of mattresses. Water
stewardship efforts involved implementing
low-usage water taps and setting specific
targets for each site. Transportation is
environmentally conscious, with a fleet of
electric vans across eight city locations.
Biodiversity initiatives included creating
meadows, installing beehives, and
incorporating green roofs at various
sites. The living green walls at St Mary's
contributes to our environmental impact,
and bird and bat boxes support local
wildlife. In 2024, we aim to continue
our focus on preserving green spaces
and actively improving environmental
practices where appropriate.
The Board believes that being inclusive
improves opportunities for our students,
employees and people living in the
communities. This creates long-term
value to our business and society. The
Board and all Committees consider
diversity for every appointment. The
female representation of the Board
during 2023 was 33 per cent, with
females representing two out of six
Board members. As diversity remains an
important topic for our business, and
within the Real Estate sector, the Board
annually reviews diversity across the
entire workforce, at senior management
and Board level.
Our employees are committed to
promoting an inclusive, positive and
collaborative culture with zero tolerance
applied to any form of discrimination, as
defined in the Equality Act 2010.
Our workforce and customers are
diverse so we need to ensure that our
workplace remains inclusive so our
people and our customers can thrive.
We are an equal opportunity employer
and will always aim to extend diversity as
vacancies arise.
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 49
Employee Engagement
Our regular cadence of communications includes 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 regularly;
quarterly internal service surveys and annual engagement
surveys. These collectively provide opportunities to
frequently share information and views with the
Executive Committee.
Investing in future talent
In 2022, we launched a leadership development
programme to support internal promotion opportunities.
In 2024, we aim to develop this further and complete a
bespoke leadership development programme for future
leaders within the business.
We have a Reward Policy across the business to ensure
we are paying and rewarding all team members in a fair
and transparent way based on a clearly communicated
rationale. We review pay for all team members on an
annual basis effective 1 January. The purpose of this policy
is to set a fair and equal approach across the business.
“ Employee engagement is a
catalyst for the business’s
success. Our two-way
communication keeps employees
informed, invested and engaged.
It is important we understand
our employees’ concerns and our
bi-annual employee engagement
questionnaire allows us to keep
our finger on the pulse, identify
trends and take action if needed.”
Group People Partner
Our
people
Our people are vital to the successful delivery of our
business plan. Their attitude, talent and commitment,
creates a culture that supports creativity and
integrity. 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 total number of employees at the end of 2023
was approximately 348, corresponding to 269
full time employees and 79 part time employees;
five people were hired on a third-party contract
throughout the year.
Depending on the role, we provide part time and
temporary working opportunities where possible.
Employee Turnover and new hires
We aim to ensure our employees are proud and
happy to work with us. The average percentage of
voluntary employee turnover across the Group in
2023 was fifteen per cent in 2023 from 21 per cent in
2022.
Permanent new hires in 2023.
Age 2023 2022
Under 30 43 38
Between 30-50 42 53
Over 50 17 15
Total 102 106
ESG Report | continued
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 50
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 is within 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.
Most of 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:
î 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;
î centralising more contracts as a core part of our
supplier management strategy;
î strengthening our compliance review processes within
procurement practices;
î developing strong relationships with UK-based
suppliers and contractors that align to our business
code of conduct expectations; and
î 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. We regularly
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
Diversity, Equality and Inclusion Policy
We are fully committed to creating a working environment
that makes people proud, engaged and values the
contribution of all team members. Therefore, we have
developed our Diversity, Equality and Inclusion Policy.
All team members are required to confirm acceptance
and understanding as a mandatory element of their
introduction. We aim to give all team members access
to training and development opportunities to support
their understanding of the importance of this policy. The
People Team are responsible for managing this policy.
Ethical Business
We are committed to carrying out business fairly, honestly
and openly. Our anti-bribery policy mandates a zero-
tolerance approach. 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 financial year.
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 51
Stakeholder Why We Engage How We Engage Topics Outcome
Customers
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.
î On a day-to-day basis within our
buildings.
î Through biannual customer surveys.
î Through our social media presence.
î Through building relationships with
universities in the towns and cities
which we operate in.
î Safety in their homes
î Customer service
î Value for money
î Building configuration
î Wellbeing
î Developed our Hello Student app to
facilitate the check-in process
î Global Student Living awarded our
operational brand, Hello Student,
Platinum Operator certification and our
site at Bath Street, Glasgow Best Learning
Environment for 2023.
Employees
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.
î On a day-to-day basis we use Workplace
as an internal communication tool.
î Quarterly townhalls are held where our
people can raise questions and provide
feedback.
î Through the One Team Collective
î Safety at work
î Pay and reward
î Fair and equal
treatment
î Business updates
î Real Living Wage Employer with a
focus of improving the compensation
arrangements for our lowest paid
employees.
î Improved employee retention rate to 85
per cent.
Communities
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.
î Through on-site communication
with members of the public and local
communities.
î We have membership with the British
Property Federation where we can
interact with communities and
government on a wider basis.
î Interaction through the property
licensing disclosures we have to
undertake.
î Local job creation
î Provision of
appropriate housing
stock
î Supporting local
charities
î Supported Switch 180 and the British
Heart Foundation nationally.
î Programme of charitable and community
work across all sites.
Our stakeholders and how we engage with them
ESG Report | continued
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 52
Stakeholder Why We Engage How We Engage Topics Outcome
Shareholders
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.
The Group also has a wider
responsibility to shareholders to
enhance the value of the business and
fulfil its purpose ethically.
î Face-to-face meetings with investors
typically following annual and interim
results.
î The publication of our annual report
which presents a comprehensive
update of the Company.
î At our Annual General Meeting.
î When significant change is proposed,
for example, material transactions or
changes to the remuneration structure.
î Financial results and
business performance
î Dividend payments
î ESG
î Remuneration policy
î Numerous meetings with current and
prospective shareholders held throughout
the year.
î Property tours conducted in Bristol,
Edinburgh and Liverpool.
î Attendance at industry conferences.
î Consultation on Post-Graduate growth
strategy.
î Introduced shareholder vote on future ESG
strategy.
Environment
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.
î Biannually we provide a detailed
ESG update within our annual and
interim reports.
î Reduction in
greenhouse gas
emissions
î Becoming a
sustainable business
î Published stand-alone ESG report.
î Improving our energy efficiency per bed
with a 1.3 per cent reduction despite
higher occupancy.
î Managing EPC risk with over 50 per cent of
the portfolio now EPC B or better.
î New energy hedging contract signed
with electricity sourced 100 per cent from
renewable sources.
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.
î Open and regular dialogue with
relationship managers. Proactive
engagement in respect of sale and
acquisition pipelines and early dialogue
on refinancing requirements.
î Ongoing covenant reporting
î Refinancing and
hedging needs
î Update on asset
management
initiatives and related
impact.
î Prudent management of maturing debt
with refinancing of 2024 and 2025 expiries
in hand.
î Quarterly covenant compliance reporting
and regular engagement throughout the
year.
î Site visits.
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.
î Regular meetings and day to day
communication.
î Disposals, acquisitions
and leasing
î Summer turnaround
î External audit tender
î Review of ERP
provision and
appointment
î Disposal programme continued with six
properties disposed during 2023
î Annual refurbishment activity.
î Reappointment of BDO LLP as external
auditor to the Group.
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 53
Health
and Safety
The Board defines our Health and Safety Policy, which
outlines the organisational structures responsible for
its implementation. Our Head of Health, Safety and Fire
and our Security and Business Continuity Manager take
responsibility for the Health and Safety Management
Systems within the company.
Our Safety Blueprint provides an overview of the
strategic elements of health and safety and how we
strive to create a positive and proactive approach
to the management of this important area. We are
committed to conducting all our activities in a safe
and secure manner, which is underpinned by our
health and safety management standards and our
commitment to learn and continually improve. The
Safety Blueprint details the governance structure we
have to drive accountability, how we communicate
with our teams and encourage them to be proactive in
the management of health and safety risks. The Board
is responsible for reviewing the Health and Safety
Blueprint and the annual Health and Safety Plan for
all areas of the business. They ensure that the Health
and Safety Management System is proportionate,
implemented and reviewed annually. They receive a
monthly board report to help monitor the company’s
safety performance.
We promote a culture of continuous improvement,
to prevent any major incidents. Our aim is to have
zero significant accidents. A robust reporting system
ensures that all accidents and near misses are captured,
monitored and appropriately reported.
Safety and professionalism are of utmost importance
across all our sites. We extend this commitment to our
onsite subcontractors, mandating their participation
in the evaluation process for SafeContractor
accreditation. This ensures they meet essential criteria
and adhere to industry-specific regulations, to ensure a
secure and dependable partnership.
The implementation of SafetyNet, a custom low-code
incident reporting system, revolutionised our approach
to health and safety. Launched in late 2022, SafetyNet
includes functionalities like Fire Risk Assessment,
Audits, Compliance Checklists, Dashboards, and
Contractor Management. Phase 2, incorporating the
Fire Risk Assessments and Compliance checklists, was
completed in January 2023. Safe practices are of the
utmost importance across all our sites.
Since its launch, SafetyNet has significantly increased
reported incidents, leading to thorough investigations
and risk reduction measures. The transition to digital
compliances streamlined checklist completion,
facilitating timely reporting and enhanced compliance
monitoring. The reported incidents cover Security,
Wellbeing, and Fire, providing a comprehensive view
of overall risk. Plans for "SafetyNet 2.0" are underway
to further improve user experience and reporting in
early 2024. A training program accompanying the
launch resulted in a substantial increase in reported
near misses, facilitated by the streamlined reporting
process. Work is currently underway to precisely
distinguish between near misses and incidents within
the system, and the corresponding figures will be
disclosed in 2024.This aligns with the Health and Safety
Bird’s Triangle theory, emphasising the importance
of proactive safety measures in averting potential
accidents. This helped to inform strategic decisions, to
mitigate risks and enhance overall safety.
The wellbeing and mental health of our customers
and employees is a top priority for the Board. We are
continuously reviewing and improving processes across
the company to look after our employees and improve
colleagues’ wellbeing. The addition of a Wellbeing
Manager to the team in 2023 represents a pivotal step
forward in bolstering our commitment to employee
well-being. This newly appointed role is specifically
designed to contribute towards a positive and supportive
work environment, ensuring the holistic well-being of
the workforce. The Wellbeing Manager will play a crucial
role in implementing and enhancing programmes that
promote physical, mental, and emotional health among
employees. This demonstrates our commitment to
creating a workplace that prioritises the overall wellbeing
of our team members.
Employee Wellbeing
In respect to our people, we have established several
forums, to offer colleagues a variety of ways to share their
views with the executive committee. For example, a formal
employee representative group (One Team Collective’
(OTC)); an anonymous ‘Talk To Us’ online suggestion
box; and internal service surveys or annual engagement
surveys. We conducted two surveys in 2023 (Q1 and Q4).
In 2022, we completed a series of roadshows with the
Executive Team who made themselves available to all
employees at three separate venues around the UK.
Whilst this did not occur in 2023, we intend to relaunch
this every other year, and the next roadshow is planned
for 2024.
Mental Health
and Wellbeing
ESG Report | continued
54Strategic Report
Empiric Student Property plc | Annual Report & Accounts 2023
The One Team Collective (OTC), now in its second year
of running, is a workforce advisory panel consisting of
11 employee representatives from across the Group. Its
focus is to support meaningful dialogue on topics raised
by our employees. The OTC met eight times in 2023
and is supported by Alice Avis, the Company’s Senior
Independent Director who attended three meetings and
maintains regular dialogue with the Collective’s Chair
throughout the year.
Wellbeing Standard
Currently we have a ‘Wellbeing Standard’, which works
to monitor and assess hazards and risks that could
impact the wellbeing of team members. We will work
to identify all workplace stressors and conduct risk
assessments, to eliminate or control the risks from stress.
The risk assessment will include the six key management
standards; demands, controls, support, relationships,
role, and change. The risk assessment process will include
consultation with the One Team Collective on issues
relating to the prevention of work-related stress. Access
is then provided to confidential counselling for team
members affected by stress, caused either by work or
external factors. Managers and supervisors are provided
with training in good management practices and given
access to resources, to help implement the company’s
agreed stress management strategy.
Customer’s Wellbeing
Customer experience, mental health and wellbeing are of
utmost importance to us as a business, both commercially
and as a duty of care for the continued safety of our
customers. External data completed by students via the
Global Student Living Index and general feedback via the
site teams helped us to identify areas for improvement.
A programme of work was built and implemented, based
on the above sources and resulted in improvements in our
customer survey scores. This led to a Platinum Operator
certification in 2023 from the Global Student Living Index.
We understood from regular third-party customer surveys
that a student’s accommodation, in terms of the quality,
design of the building and the service they experience
can have a marked impact on their mental health and
wellbeing. In 2022, 68 per cent of respondents stated that
they felt that their accommodation team cared about their
wellbeing and 64 per cent said that the accommodation
had a positive effect on their wellbeing.
In 2023, in response to the customer feedback, we
have designed a programme of events for students to
help foster a sense of community. This involved current
students welcoming new students on check in day. During
refurbishments, we have improved amenity space to
better provision space for residents to be able to socialise
or study in a more communal environment. This has been
delivered at our Pennine House and St Marks Court, Leeds
sites in 2023, and is planned for Brunswick, Southampton
and Victoria Point, Manchester in 2024.
Following the roll out of these initiatives, in 2023 we
have seen an increase to 74 per cent of respondents
stating that their accommodation team care about
their wellbeing and 76 per cent believe that their
accommodation has a positive impact on their wellbeing.
The Global Student Living Index states that the industry
benchmark for wellbeing in Private Halls is 63 per cent.
The score for a sense of community has seen an incredible
improvement from 37 per cent to 63 per cent over the
last year.
Whilst the number of residents who have struggled with
stress or anxiety has reduced from 46 per cent to 40
per cent; and loneliness from 26 per cent to 22 per cent
there is still work to be done to reduce this further. These
results, contributed to our Platinum Operator certification
from Global Student Living, which is the highest
certification status that can be achieved.
We recognise that further work can be done to improve
the customer experience we offer and the impact on
our resident’s health and wellbeing. The recruitment of a
Wellbeing Manager and the training of Mental Health First
Aiders at all our sites is expected to improve and reinforce
further our commitment to student wellbeing.
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 55
The table below sets out the progress made in 2023 against the targets set at the
start of the year.
Key Performance Indicator Progress
Improve EPC ratings. Interim targets
were linked to EPC B or better: 50%
by 2025, 75% by 2028, 100% by 2030
KPI progress:
î Percentage of properties with B or better
EPC ratings increased to 51% (2022:
40%), a target achieved a year earlier than
envisaged in our Net Zero Strategy.
Energy consumed per bed (kWh) A key metric to monitor the progress towards
achieving 2,000 kWh per bed by 2033.
Despite higher occupancy in financial year
2023 (99%) compared to financial year 2022
(90%), energy consumption per bed fell by
1.3% to 4,481 kWh.
Executive Statement
We have set an ambitious absolute net-
zero target for scopes 1 and 2 of no later
than 2033 and have allocated significant
capital to invest in decarbonisation
initiatives to reduce energy consumption
and manage future EPC risk. EPC
ratings are crucial, ensuring regulatory
compliance, environmental responsibility
and associated cost savings. High
ratings enhance marketability, attract
eco-conscious stakeholders, and may
qualify businesses for incentives, grants,
and tax benefits.
Our Sustainability Journey
We acknowledge that climate risks
threaten future value and will influence our
investment strategy. It is our responsibility
to transition our properties to achieve
absolute net-zero. We are guided by the
standard definition of absolute net-zero
targets as emission reductions of at least
90 per cent across all scopes before
2050 and only a very small number of
residual emissions (up to ten per cent) can
be neutralised with carbon offsets. We
recognise that our stakeholders expect
us to demonstrate sound environmental
stewardship in our business operations
and our properties.
As a socially and environmentally
responsible company, we have established
an ambitious net-zero target, aiming
to achieve this for scopes 1 and 2 no
later than 2033. We've outlined key
performance indicators to monitor our
progress toward fulfilling
this commitment.
To expedite our efforts, we have increased
our investment in green initiatives,
dedicating up to £12 million to advance
our environmental pathway for the period
from 2023 to 2025. The goal is to enhance
the energy efficiency of our buildings,
reduce carbon emissions, and proactively
address potential future EPC risks across
our portfolio. We outline 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 yet being
fully available.
Task Force on Climate-related Financial
Disclosures (“TCFD”)
ESG Report | continued
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 56
Annual Target Progress
Continue the rollout of smart
panel heaters
Target progress:
î Over 225 units installed in 2023.
î Over 175 panels as part of the Brunswick, Southampton refurbishment which is
underway and set to open for the start of academic year 2024/25.
î EcoSink (Intelligent valve for wet radiator): pilot successful at St Marks.
Two further fossil fuel free
properties
1
Target partly achieved. Works in place with full delivery of four sites in early 2024:
î Brunswick, Southampton set to be net-zero for the start of the 2024/25
academic year.
Sub-metering over 1,000
rooms to provide more data for
Education Programme
Target subject to further technical solutions research in 2024:
î Several options will be reviewed. For example, the Atamate solution (a system
to reduce energy and optimise building performance) that is installed at South
Bridge, Edinburgh, along with Hark and Florawise, which both offer different
options.
î Sub-metering will be considered alongside EcoSink and Smart Panel rollout.
Further upgrades to LED Lighting
and PIR Sensors within the
refurbishment programme
Target on track:
î Successful LED upgrades in Victoria Point and Foss Studios sites.
î Energy surveys completed across 14 buildings; upgrades will take place
in 2024.
Greener Solutions Installation Partial attainment:
î Full decarbonisation surveys have been undertaken on 12 sites during 2023.
These will form the main capex programme for 2024. Air source heat pump
(ASHP) and PV installations are planned for installation at 16 sites in 2024.
Audit Building Energy Controls
to optimise their energy use
Target achieved:
î Successful Building Management System (BMS) audits across the portfolio.
î CBRE completed building-by-building review showing the existing status
and consumption that will allow a range of interventions (ASHP, PVs etc) to be
modelled before 2033.
î A review in early 2024 will confirm that the optimal efficiency targets are
being achieved.
1 The removal of gas in favour of 100% renewable electric, installing solar and air source heat pumps.
About the TCFD
The Group supports the Taskforce on Climate-related
Financial Disclosures (TCFD) and believes it provides
a strong foundation to develop our climate strategy.
We understand that climate change presents potential
risks to the property portfolio, business continuity and
capital expenditure. There is a need for comparability
in reporting across sectors, as businesses collectively
tackle climate change. In 2023, we have continued to
follow the recommendations of the TCFD framework,
assessing and improving our understanding of the how
climate-related risks and opportunities impact our
business. Additionally, we are pleased to publish our
first standalone TCFD report, available on our website.
Complying with the TCFD
LR 9.8.6R requires mandated companies to include a
Task Force on Climate-related Financial Disclosures
(TCFD) statement in their annual report. As a company
on the premium listing segment of the Official
List of the Financial Conduct Authority (FCA), we
have complied with the requirements of LR 9.8.6R
by including climate-related financial disclosures
consistent with the TCFD recommendations
and recommended disclosures (11 of the 11
recommendations).
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 57
ESG Report | continued
Governance
Overview
The Group is committed to good governance and
management of climate-related risks and opportunities
in a responsible and transparent manner. We believe that
we need the collaboration of all our people to successfully
deliver on our ESG strategy. The ESG strategy is aligned
with our overall business strategy and reinforced by the
company’s Board of Directors and management team. The
Group has a well-developed ESG Management Framework
(see page 47) that has embedded the management of
climate change issues within our business.
Board-level Oversight
As set out on page 47, the Board has responsibility for the
oversight of climate-related risks and opportunities. The
Board monitors and oversees progress against climate-
related goals and targets, through delegation to the
ESG committee. All Board members are members of the
ESG committee, which met three times during the year
(March, August and December). The Board considers
climate change when reviewing business strategy and
when setting annual budgets. The remuneration policy
was updated in 2023, creating a clear linkage to ESG
performance indicators. All objectives remain subject to
the discretion of the Remuneration Committee.
The Chief Financial and Sustainability Officer conducts
day-to-day responsibilities of climate-related projects
and ensures that climate-related risks and opportunities
are identified, and the potential impacts are accurately
and formally reported to the ESG Committee and
theBoard.
To support the Board in fulfilling their duties, in August
2023 our ESG advisers, Inspired PLC, facilitated a
workshop, covering climate change, net zero and climate-
scenario analysis. All Board members were in attendance.
The Group conducted climate-scenario modelling, to
assess risks and opportunities related to climate change,
which were then consolidated into a climate-risk register.
In the December 2023 ESG committee meeting, the
register underwent review. Subsequently, the Board
approved the inclusion of significant climate-related risks
into the Group’s comprehensive risk register. Climate-
related investment thresholds, linked to investment
decision making, will be considered further in the next
reporting cycle.
Management-level Oversight
The Board ensures the dissemination of strategic
priorities to senior management who are responsible
for implementing the ESG strategy, inclusive of climate-
related matters within the business. The Board entrusts
the ESG Committee and in respect of risk management,
the Audit and Risk Committee, with overseeing the
ESG strategy and monitoring progress toward goals
and targets related to climate issues. Both committees
report directly to the Board. The ESG Committee reviews
climate change as a standing agenda item in its meetings
and incorporates the climate change lens into reviewing
business strategy. The ESG Committee considers reports
from the ESG working group.
All ESG Committee meetings in 2023 were attended
by external consultants from Inspired PLC, to provide
additional support in assessing and addressing climate-
related issues. Consultants regularly provided updates
to the Board on the progress of climate modelling and its
results once the process was completed.
We recognise that climate change is a complex issue
and acknowledge our responsibility to minimise our
impact on the planet. In 2022, we identified climate
change as an emerging risk, however following further
discussions in ESG Committee meetings, its status
was updated to a principal risk in 2023.
We have conducted a climate scenario analysis, to
gain meaningful insight into climate-related risks and
opportunities to our business over the short, medium
and long-term.
We utilised the TCFD framework to develop our
understanding and management of climate-related
risks and opportunities relevant to our business,
incorporating these into the strategic and financial
planning process for the business.
Climate Scenario Analysis
Climate scenario analysis uses possible global
warming pathways, to visualise potential future
scenarios. This allows a better understanding of the
potential risks and opportunities that can impact our
operations directly or indirectly. For example, through
new legislation, changing market conditions, or acute
weather events like storms and wildfires.
Strategy
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 58
Our future vulnerability to the impact of climate change
was assessed and scored, according to the likelihood of
the event and potential damage to the business. This is
our second year producing a TCFD report and first year of
climate-scenario modelling, so no comparisons have yet
been made to the previous period. This will be conducted
in our 2024 disclosure. The impact of each scenario on the
entity’s business model and strategy and the resilience
of our business model and strategy will be considered
in greater depth in 2024, as we further develop our
understanding of climate-related financial risks and
opportunities.
The scenarios were built using established international
frameworks, including The International Energy Agency’s
World Energy Models (WEM), the Shared Socioeconomic
Pathways (SSPs): Climate Natural Catastrophe Damage
Model, CORDEX regional climate forecasts, and Integrated
Assessment Models (IAM). The Group has considered the
climate-related impacts under three scenarios:
î Proactive Scenario (Below 2°C by 2100).
î Reactive Scenario (2-3°C by 2100).
î Inactive Scenario (Above 3°C by 2100).
We have used three-time horizons to provide analysis
with a suitable level of granularity and coverage. Looking
beyond the usual business timelines, to include a long-
term view up to and beyond 2052, providing insight into
emerging future risks. The following list outlines the time
horizons used to identify when a risk or opportunity could
have the most significant impact on the business. These
timeframes were chosen to align with the UK’s target to be
Net-Zero by 2050.
Short (2023-2027): greatest changes would be in the
proactive scenario over this period.
Medium (2028-2037): physical impacts would
start to be experienced and in the proactive/active
scenarios, when policies will tighten.
Long (2038-2052): greatest physical impacts would
be experienced in this period in the inactive scenario.
Our Climate-related Risks
The Group has assessed the impact of climate-related
risks as required by the TCFD framework. We identified
fourteen risks and three opportunities that may have a
potential impact on the business, based on 27 locations
at the highest revenue site per city in 2023. The risks
identified to be material are shown on page 63.
The climate-related risks associated with the climate
scenario analysis were reviewed by the ESG Committee
and presented to the Board of Directors for the final sign-
off in December 2023.
Our longer-term timeline extends up to seven years and
aligns closely with the short-term (0 to 5 years) climate
modelling timeline. Currently, only those risks that are
deemed material in the short term will be transferred to
the Group’s risk register. Climate-related risks assessed
as significant in the medium and long term will be
subject to annual monitoring but are not currently
integrated into the Group’s risk register. During 2024, we
plan to expand the analysis to all the sites in our portfolio
and include key suppliers in the climate scenario analysis,
to further expand our understanding of indirect climate-
related risks through the supply chain. The steps we
have taken to identify and manage each climate-related
issue have been based on our existing risk management
framework, to ensure a consistent and efficient
assessment and categorisation. Each climate-related
issue is classified using our rating system. Our process
ranks risks initially by their likelihood, then according to
its impact on the Group, to determine an inherent risk
score by multiplying likelihood and impact. Subsequently,
we rank each issue against the effectiveness of mitigating
controls in place, to determine the overall net risk score.
Risks with an inherent risk score of higher than nine are
deemed as material.
Transition Risks
Transition risks arise from indirect impacts of climate
change, including changes in government policy,
technology, and market conditions. Climate-related
transition risks specifically refer to risks associated with
the transition to a low-carbon economy.
There are several climate-related transition risks listed in
on page 60, which were identified as having a significant
and high gross risk potential at our sites. We are
responding to these risks and will continue to develop our
controls over the next two years.
Risk Rating Criteria.
Likelihood Factor Rating Impact Factor Rating Control Effectiveness Rating
Unlikely / Rare 1 Negligible / Insignificant 1 Very Effective 5
Possible / Seldom 2 Low / Marginal 2 Fairly Effective 4
Probable / Occasional 3 Medium / Serious 3 Partially Effective 3
Very Likely / Moderate 4 Significant / Critical 4 Hardly Effective 2
Almost Certain / Very Frequent 5 High / Catastrophic 5 Marginally Effective 1
Net inherent risks factor
Negligible (Dark green) – Inherent risk is equal to or lower than 2.
Low (Light green) – Inherent risk is between 3 and 5.
Medium (Yellow) - Inherent risk is between 6 and 8.
Significant (Amber) – Inherent risk is between 9 and 15 and qualifies as material.
High (Red) – Inherent risk above 15 qualifies as significant.
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ESG Report | continued
Risk rating
Significant
High
Climate-related transition risks and mitigations
Climate Risk Category Climate-Related Risk Description of Climate-related Risk Timeline and risk rating Scenario Mitigating Controls in Place
Policy & Legal
Increase in
regulation due to
climate change,
enhanced
emissions
reporting
obligations
As the UK aims to be net-zero by 2050, enhanced
regulations will likely be introduced over time,
encouraging businesses to reduce energy usage and
emissions.
The Group is impacted by increased UK Government
regulation, including UK ESOS, SECR and TCFD
regulation, as of 2022.
The costs and resources required to comply with
upcoming regulations will likely increase.
Short to medium
term
(2023-2037)
Gross risk -
<2°C
2-3°C
The Group considers both existing and
emerging legislation when assessing
climate-related risks. We have dedicated
internal resources and have commenced
collaboration with a third-party ESG
consultant, to ensure we remain compliant
with current and emerging regulations.
These costs on the business will be
relatively low, due to the relevant
proportion of our revenue.
It costs us between £60,000 and £150,000
per year to remain compliant with current
climate reporting requirements, which
we anticipate increasing within the short-
medium term.
Mandates on
and regulation of
existing products
and services
Mandates/regulations such as the Building Safety
Act and Building Safety Regulator, may become more
difficult to adhere to/meet, if the capacity of operations
is hindered by climate change-related events (supply
chain issues).
Sector-specific decarbonisation strategies (Heat
and Buildings Strategy and Future Homes Standard)
mean that our business must meet targets and
recommendations outlined by the frameworks (for
example, EPC grading by 2030).
Environment Act (2021) aims to improve air and water
quality, protect wildlife, increase recycling and reduce
plastic waste. The Act is part of a new legal framework
for environmental protection, as the UK is no longer
under EU laws, post-Brexit.
Short to medium
term
(2023-2037)
Gross risk -
<2°C
2-3°C
We have identified several risks associated
with compliance with regulatory mandates,
so mitigation measures can be established.
For example, H&S, External Wall System
(EWS), Electrical Safety Rules.
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Risk rating
Significant
High
Climate Risk Category Climate-Related Risk Description of Climate-related Risk Timeline and risk rating Scenario Mitigating Controls in Place
Market
Increased cost of
energy and raw
materials
Over the past few years, the escalation of worldwide
events, such as the Covid-19 pandemic and global
geopolitical issues, have caused widespread supply
chain disruptions.
We have identified risks associated with changes in
energy prices and utilities.
Unpredictable climate change impacts could
significantly affect supply chains. Reliance on an
undiversified supply chain can significantly damage
business operations and profitability.
Short to medium
term
(2023-2037)
Gross risk -
<2°C
2-3°C
To mitigate against the rising cost of
energy, we utilise price fixing, that is a part
of our energy procurement.
We will aim to substitute our materials for
lower-emission alternatives.
In 2023, initiatives included LED lighting
surveys at two sites and converting external
lighting at our Victoria Point, Manchester
site to LED lighting.
All recent refurbishments have been
upgraded to LED lighting. Additional
initiatives that progressed during 2023 and
will advance further in 2024, will include
a feasibility study for the implementation
of solar panels at 13 sites, a full portfolio
survey to identify the buildings that will
benefit from PV. Also, 14 sites will undergo
decarbonisation surveys, which will
contribute to the planned design to remove
all gas boilers. We have created action plans
for our 16 least energy-efficient properties,
including disposals and works undertaken.
Changing
consumer
preferences
The Group may be at risk of loss of revenue, reduced
profitability and reduced growth if it is unable to keep
pace with changing consumer preferences.
With sustainability growing in importance, customers
may change their market sentiment towards other
Purpose-Built Student Accommodation (PBSAs)
operators as more sustainable alternatives.
Short to medium
term
(2023-2037)
Gross risk -
<2°C
2-3°C
Our commitments to the planet are detailed
in the sustainability section of our website
and our standalone 2023 ESG report. The
report covers examples of our current and
future decarbonisation initiatives.
We demonstrate resilience and adaptability
to the changing demands of customers by
differentiating within the PBSA market with
a highly efficient, low embodied carbon
product and efforts to attract climate-
conscious customers.
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Risk rating
Significant
High
ESG Report | continued
Climate-related transition risks and mitigations
Climate Risk
Category
Climate-Related
Risk
Description of
Climate-related Risk
Timeline and
risk rating
Scenario Mitigating Controls
in Place
Reputation
Increased
stakeholder
concern
As the world transitions to a decarbonised economy,
stakeholders are likely to have increased focus on
environmental impacts. Failing to properly communicate
the manner of the Group’s efforts to reduce
environmental impact is likely to negatively impact
investor sentiment/ratings, potentially limiting access to
capital. With increased transparency comes increased
scrutiny. Therefore, there is a reputational risk of not
meeting publicly communicated targets.
Short to medium
term
(2023-2037)
Gross risk -
<2°C
2-3°C
We have allocated internal resources
through a Net-Zero strategy and
Engagement programme. Also, we have
engaged a third-party specialist, to ensure
compliance with current and emerging
regulations.
We have an aptitude for engaging with
climate change as outlined in the business’
ambitious climate-related goals/targets
for 2033 and 2050. This communication
reassures stakeholders that we are
proactive in this area.
We intend to continue to publish an annual
stand-alone ESG Report, to communicate
efforts to stakeholders, including
customers.
Technology
Substitute existing
products to
lower emissions
alternatives
As we are not a manufacturing entity, alternatives can
only be used in association with the provided services.
The cost to ensure our facilities are sustainable and
efficient is likely to increase as further investment into
resources and modern technologies may be required.
Short to medium
term
(2023-2037)
Gross risk -
<2°C
2-3°C
We have been proactive with efforts to
incorporate sustainability at the core of
our operations. For example, our Net-Zero
strategy and emission reduction targets
with specific KPIs. As we are on the journey
to reduce our carbon emissions, we can
position ourselves as being prepared for
changing customer demands.
Physical Risks
Physical risks can be categorised as either chronic or
acute. One-off events, for example, storms or floods,
are considered acute. Ongoing changes, such as higher
annual mean temperatures or rising sea levels, are
classified as chronic risks.
There are five potential physical risks of differing
magnitudes, which may impact our sites. For example,
flooding, rising mean temperatures, water stress, coastal
flooding and wildfires. These physical risks were assessed
using the same scoring methodology as transitional risks.
In this report we have listed only the risks that scored 9
and above on our inherent risk scoring methodology and
were classified as material. Non-material risks and their
assessment can be found in our standalone TCFD report.
We are witnessing rising mean temperatures and are
monitoring the potential implications for our operations,
but this is currently deemed a low impact. In the short
term, the other risks are not considered likely, based
on the results of climate scenario modelling and review
by the Board and ESG Committee. We will continue to
monitor these risks, to ensure we implement mitigating
actions, as required.
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ESG Report | continued
Climate-related physical risks and mitigations
Risk rating
Significant
High
Climate Risk
Category
Climate-Related
Risk
Description of
Climate-related Risk
Timeline Scenario Mitigating Controls
in Place
Acute
Heatwaves/
Extreme heat
All 27 sites will experience heatwaves in the short-
long term, under the Reactive and Inactive scenarios.
Periods of extreme heat/heatwaves may impact
students and staff, causing a decrease in productivity.
This may impact site operations and maintenance
activities.
To maintain optimal temperatures for students and
technology, there may be an increased demand for
cooling through air-conditioning units, leading to an
increase in energy costs, Scope 1 & 2 emissions and
power outages.
Students may decide to accommodate in areas where
there is adequate air-conditioning rather than in
older buildings that have not been retrofitted.
Certain construction materials and their properties
may change under extreme heat conditions.
Short to long term
(2023-2052)
Gross risk -
<2°C
2-3°C
We will target the establishment of
questionnaires for employees and students,
to understand the level of comfort, the impact
experienced and improvement suggestions.
Our summer occupancy rate is relatively low,
acting as a mitigant against heat waves impacts
on students using the accommodation during
the highest risk periods.
Climate-related opportunities
We are keen to embrace the opportunities presented by the transition to a low-carbon economy. These opportunities are highest in below 2°C scenario through investing in lower
emissions technology, helping to decarbonise our operations whilst reducing costs. Being proactive and transparent with our environmental efforts and future goals is strengthening
our market position with stakeholders, providing a competitive advantage to our business.
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Climate-related opportunities and response
Climate Opportunity
Category
Climate Related
Opportunity
Impact
description
Timeline Scenario Opportunity response
strategy
Technology
and changing
customer
behaviour
towards
products and
services
Decarbonising the
overall footprint
of our services.
Consumer
shift towards
sustainable
designs and
solutions
presents a
significant market
opportunity.
The transition to sustainable design and innovative
engineering solutions can aid lower emissions
from our sites, to provide us with a competitive
advantage. We recognise that customer preferences
have not fully aligned yet and lower emissions are
not currently the main reason for selecting our sites.
We believe in time that customer preferences are
likely to shift, with greater importance placed on
sustainability metrics, alongside other aspects
(cost, location and quality of the service).
Short to medium
term
(2023-2037)
<2°C
2-3°C
Our operations have proven to be flexible and
adaptable to meet and exceed expectations of
a sustainable PBSA provider.
Our ambition is to differentiate within the PBSA
market with a highly efficient, low embodied
carbon product and attract climate-conscious
customers.
A growing number of customers will be looking
to use our services, as we decarbonise our
operations through new energy-efficient
buildings and retrofitting obsolete buildings.
We anticipate that the upfront cost of
sustainable products will outweigh the
potential increase in revenue associated with
the demand for sustainable services.
Energy
resources
Use of lower-
emission sources
of energy
The implementation of energy-efficient technology
across operations, to meet our carbon reduction
targets will additionally manifest in monetary savings
in addition to a positive environmental impact.
Energy efficient technology will decrease our energy
consumption and the energy costs for our business.
The payback associated with lower-emission sources
of energy will mitigate the upfront cost of technology
investment.
Possible solar PV installation on our sites could further
reduce emissions and decrease utility bills. This would
reduce our reliance on the National grid and help
mitigate potential carbon tax.
Moreover, energy efficient assets pose higher
commercial value resulting in higher portfolio valuation.
Short to medium
term
(2023-2037)
<2°C
2-3°C
We are committed to decarbonising
operational emissions, aiming to be Net-Zero
across our operations, developments, property
portfolio and energy consumption by 2033. We
have set a wider target of being net-zero in all
our emissions (Scope 3) by 2050 or before.
Reputation
Becoming the
market leader in
the sustainable
design and
construction
industry
As customers and supply chain partners set their
own values/expectations for potential partners, we
take a strong position as a sustainability proactive
and reliable entity for future partnerships.
Short to medium
term
(2023-2037)
<2°C
2-3°C
Transparency in communicating environmental
values and strategy regarding climate change
and Net-Zero creates a strong market-leading
reputation.
Our expertise in deep refurbishment and
repurposing existing building stock continues to
create high-quality PBSA operations with a low
environmental impact and associated embodied
carbon via the reuse of existing buildings.
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Actions post mitigation controls
Climate Risk Category Climate-Related Risk Description of Climate-related Risk
Transitional –
Policy & Legal
Mandates on and regulation of
existing products and services
Existing and upcoming mandates/regulations have become permanent elements of the legal landscape. It is
highly probable that requirements for compliance will expand. Our efforts to mitigate this risk will decrease
the impact, but costs associated with compliance and the need to monitor the landscape will remain.
Physical – Acute and
Chronic
Heatwaves/ Extreme heat The likelihood of heatwaves cannot be mitigated by our efforts alone, as it is part of the global collective
action.
Given the lower occupancy during the summer months, it is possible to consider selecting the necessary
percentage of beds that will be suitable for such extreme weather. For example, we could analyse which
area of the property is exposed to the least volume of solar radiation, incorporating lower-level rooms that
benefit from shade provided by external objects (for example, neighbouring buildings, large trees) and install
removable canopies and water diffusers for the relevant period to create cooler leisure areas.
Following this assessment, we could place students who plan to remain in occupancy during the summer
months, in rooms more suitable for such events.
Physical – Chronic
Flooding The likelihood of flooding cannot be mitigated by our efforts alone, this is also part of the global collective
action.
Year-on-year review with meticulous site selection in low flood risk areas, understanding of supply chain
routes and potential impact on operations can lower the risk significantly.
Water stress The likelihood of water stress cannot be mitigated by our efforts alone, as it is part of the regional preparation
of the water system and local water authorities' readiness for the events.
Improved water management and reduced consumption will lower the risk. However, unless the option of
water storage for the needs of specific sites can be established, such risk cannot be fully mitigated.
In the next two years, we will consider researching the feasibility of this process for the sites at risk.
Sea level rise The likelihood of sea level rise cannot be mitigated by our efforts alone, this is part of a global collective action.
To further mitigate the risk, it is possible to collaborate with local authorities to further understand coastal
defences and flood prevention construction plans relevant to our sites. This information can be further used to
manage the property portfolio.
As this risk is determined longer term, there is no material impact anticipated in the immediate future and it
will be monitored on an annual basis through scenario analysis.
Wildfires The likelihood of wildfires cannot be mitigated by our efforts alone, as it is part of the global collective action
and readiness of local authorities and fire services for such events.
Continuing the programme of removal of flammable materials at our sites, this risk can be further mitigated.
Actions post mitigation controls
The risk level, likelihood, and impact of each individual climate-related risk was reviewed again following the implementation of mitigation controls. This review identified six climate-
related risks with a net risk still within the range of significant or higher. These risks were deemed material, but with mitigation measures it has helped to control these risks.
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Strategic Report 65
ESG Report | continued
As for any business, timely risk
management is essential to our success.
The process for identifying and recording
risks has been established and is
embedded within the business. We
acknowledge the presence of various risks
that could affect the realization of our
strategy. While it may be challenging to
foresee every risk, we have implemented
a strong risk management process to
identify, manage and mitigate potential
risks. The Board establishes the Group's
approach to identifying and managing
risks, and the oversight of risk is
delegated by the Board to the Audit and
Risk Committee. Please see page 32 for
a description of the risk management
process in place across the business.
Climate related risks were summarised for
review during the board-level workshop
conducted in August 2023 following
climate-scenario modelling. These were
compiled into an internal climate-risk
register that mimics the structure of
Group’s risk register with the appropriately
modified risk timeframes. The climate risk
register was then reviewed by the ESG
Committee and submitted to the Board
in December 2023, for final review and
sign off. Identified material risks were
further processed by the Audit and Risk
Committee for combining the results into
the Group’s risk register with allocation of
risk owners.
All climate-related risks were scored
on their likelihood and impact with
the inherent risk factor quantified.
Subsequently, mitigation controls and
future actions were established. Risks with
a higher scoring after the introduction
of mitigation controls were then re-
assessed, to determine the mitigation
measures available to further reduce net
risk. Climate-related risks that scored
significant or high according to the
scoring methodology in Table 4, which
also had post mitigation controls, which
were associated with a long-term (2038-
2052) time horizon and >3°C warming
scenario in the physical risks categories,
were not incorporated into the Group’s
overall Risk Register, due to the assessed
time horizon. However, those risks will be
reassessed annually, and the established
mitigation measures considered in a
timely manner.
Risk
Management
Metrics &
Targets
At the end of each financial year, the Board
reviews progress against annual targets
and key performance indicators and
agrees targets for the forthcoming year. In
December 2023, the Board reviewed the
progress against the 2023 targets. They
reviewed and approved the new targets for
2024 and 2025 as set out on page 71.
We strive to reduce greenhouse gas
(GHG) emissions across all sites, where
possible. We are committed to on-going
annual reporting on environmental
performance. We calculate and report on
Scope 1 and 2 GHG emissions, to provide
full transparency to stakeholders. This
process is aided by the support of a third-
party consultant. As this is our first year
following the TCFD guidelines, we have not
calculated our Scope 3 emissions, but a
data collection process to calculate Scope
3 emissions will commence in 2024. We
plan to report against all three scopes in
our 2024 ESG and Annual Reports.
We are committed to decarbonising
operational emissions, aiming to
achieve Net-Zero across our operations,
developments, property portfolio and
energy consumption by 2033 (Scopes
1 and 2). We have set a broader target
of being absolute net-zero in all our
emissions (including Scope 3) by 2050 or
sooner with 2019 defined as our baseline
year. The targets differ between scopes
due to the difficulties in compiling and
calculating Scope 3 data. We are working
to continuously improve our Scope 3 data
collection process and aim to refine our
Scope 3 target in the next two years. To
achieve this target, several initiatives have
been initiated. For example, 100 per cent
of electricity is obtained from 100 per
cent renewable sources and >55% of the
portfolio is targeted to be rated EPC B or
better by the end of 2024.
We intend to validate our net-zero target
with the Science Based Targets initiative
(SBTi) within the next two years.
Scope 1 and 2 Emissions
Following TCFD guidelines, we have
aligned our carbon-emission-reduction
strategy with the 1.5°C scenario outlined in
the Paris Agreement. We have set out our
2023 Scope 1 and 2 emissions on page 68.
No formal assurance is currently provided.
In accordance with SECR requirements,
the information below summarises our
energy usage, associated emissions,
energy efficiency actions, and energy
performance. It contains information
on Greenhouse Gas (GHG) emissions
required by the Companies Act 2006
(Strategic Report and Directors’ Report)
Regulations 2013 (the “Regulations”).
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.
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Strategic Report 66
Carbon emissions are
categorised as follows:
î Scope 1: Consumption and emissions
related to direct combustion of natural
gas, fuels utilised for transportation
operations, such as company vehicle
fleets and refrigerant gases.
î Scope 2: Consumption and emissions
from indirect emissions, relating to the
consumption of purchased electricity in
daily business operations.
Headlines
î 0.2% decrease in like for like electricity
consumption in 2023.
î 21% decrease in like for like water
consumption in 2023.
î 13% increase in like for like waste
obtained in 2023, this is a result of
more accurate data leading to fewer
estimations used compared to 2022.
Organisational Details
This report has been prepared for Empiric
Student Property plc 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.
Empiric has no overseas consumption
and associated emissions.
Organisational Boundary
The operational control approach is
used to consolidate the company’s
organisational boundary. The Company
owns 100% 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 1st January 2022.
Absolute indicators include like for like
properties and those which were acquired,
sold or included in the development
pipeline at any time since that date.
Reporting Period
The EPRA report is required annually and
requires data for two years to enable
comparison. The reporting period for
this document is 1 January 2022 to 31
December 2023, 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), which is based
on the GRI reporting standards (2016
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 tCO
2
e 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 five per
cent of the Group’s emissions and as such
have been deemed to be immaterial.
Energy Efficiency Actions
In the period covered by the
report we have:
î Retrofitted networked controlled panel
heaters with occupancy detection
across three sites.
î Installed Smart thermostatic valves
on multiple sites to reduce energy
consumption via heating.
î Upgraded/ replaced boiler plant with
more efficient equivalents at two sites.
î Undertook remedial works on the
installed solar panels across
multiple sites.
Waste Disposal
The data available from private waste
collections significantly increased in
2023 rising to 24 sites compared to
two previously. This allowed for a more
accurate representation of the waste
intensity which increased by 13 per cent
(from 0.24 to 0.28 tonnes/bed/year in like
for like properties). The average waste
obtained per bed was used to calculate
the waste obtained in properties which
relied on council waste disposal and the
relevant council recycling rates were
used to account for the proportions of
landfill, recycling and energy recovery
waste. For like for like properties there was
an increase of nine per cent in recycled
waste, a 32 per cent increase in waste to
landfill and a 52 per cent decrease of waste
processed in an energy recovery facility
(ERF). This is due to the increased private
contracts which often offer higher rates
of recycling compared to the responsible
local council.
Energy
Energy consumption saw an overall
decrease of one per cent in 2023 (from
4,558 to 4,570 kWh/bed/year in like for like
properties). This was a result of a 0.2 per
cent decrease in electricity consumption,
a three per cent decrease in energy
consumption from fuels and no change in
energy consumption from district heating.
With the purchase of green contracts, it
was assumed that for Scope 2 electricity
consumption 100 per cent of the energy
was from renewable sources.
GHG Emissions
GHG emissions saw an overall increase of
three per cent in 2023 (from 3,520 to 3,761
tCO
2
e/bed/year in like for like properties).
This is due to a seven per cent increase in
GHG emissions from electricity usage.
Water
Water usage decreased by 21 per cent in
2023 (from 43 to 35 m
3
/bed/year in like for
like properties).
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Strategic Report 67
ESG Report | continued
Impact Area
Sustainability Performance Measures
(Environment)
Total Portfolio
EPRA Code Indicator Boundaries Units Absolute Performance Like-for-Like Performance
2022 2023 2022 2023 % change
Energy Elec - Abs, Elec - LfL Electricity Total landlord obtained energy consumption from electricity (Scope 2) kWh 20,511,433 19,453,387 17,634,330 17,596,291 0%
Proportion of energy consumption from renewable sources % 100% 100% 100% 100% 0%
Proportion of data estimated %
Coverage (% by bed) % 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 646,690 634,650 646,690 634,650
Proportion of energy consumption from renewable sources % 51% 51% 51% 51%
Proportion of data estimated % 0% 0% 0% 0%
Coverage (% by bed) % 100% 100% 100% 100%
Fuels - Abs, Fuels - LfL Fuels Total landlord obtained energy consumption from fuels (Scope 1) kWh 18,588,701 17,860,825 15,309,627 14,912,196
Scope 1 transport data kWh 0 0 0 0
Proportion of energy consumption from renewable sources % 0% 0% 0% 0%
Proportion of data estimated (%) %
Coverage (% by bed) % 100% 100% 100% 100%
Energy - Int Energy Intensity Total landlord obtained energy kWh/bed/year 4,319 4,166 4,540 4,481
No. of applicable
properties
Energy and associated GHG disclosure coverage – 88 87 82 71
GHG
emissions
GHG - Dir - Abs Direct Scope 1 emissions from landlord obtained consumption of fuels tCO
2
e 3,393 3,267 2,795 2,728 -2%
GHG - Ind - Abs Location Scope 2 emissions (location based) from landlord obtained
consumption of electricity
3,998 4,060 3,441 3,675 6%
GHG - Int GHG emissions
intensity
GHG emissions intensity from Scope 1 and 2 (location-based)
emissions
tCO
2
e/bed/
year
0.80 0.80 0.84 0.87 3%
Fugitive
Emissions
Emissions from leaks of GHG, for example from refrigeration
and air-conditioning units (Scope 1)
tCO
2
e N/A N/A N/A N/A N/A
Water Water-Abs, Water - LfL Water Total landlord obtained water from municipal water supplies m3 382,679 294,017 318,615 252,418
Proportion of data estimated % 16% 17% 13% 14%
Coverage (% by bed) % 100% 100% 100% 100%
Water-Int Landlord obtained water intensity m3/bed/year 42 32 43 34
Waste Waste-Abs, Waste - LfL Waste Total weight of waste to landfill Tonnes 1,256 1,623 982 1,294 0
Total weight of recycling waste Tonnes 742 822 586 637 0
Total weight of waste to energy recovery facility (ERF) Tonnes 240 121 232 111 0
Waste - Int Total waste obtained Tonnes/bed/
year
0.25 0.28 0.24 0.28 0
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 68
Impact Area
Performance based on Asset Type
Head office Student Accommodation
2022 (Abs) 2023 (Abs) 2022 (LfL) 2023 (LfL) % change 2022 (Abs) 2023 (Abs) 2022 (LfL) 2023 (LfL) % change
Energy 99,825 99,825 99,825 99,825 0% 20,411,608 19,353,562 17,534,505 17,496,466 0%
100% 100% 100% 100% 100% 100% 100% 100% 100% 0%
100% 100% 100% 100% 0% 0.15% 0.02% 0.17% 0.02% -90%
N/A N/A N/A N/A N/A 100% 100% 100% 100% 0%
646,690 634,650 646,690 634,650 -2%
51% 51% 51% 51% 0%
0% 0% 0% 0% 0%
100% 100% 100% 100% 0%
18,588,701 17,860,825 15,309,627 14,912,196 -3%
0 0 0 0 0%
0% 0% 0% 0% 0%
0.33% 0.00% 0.00% 0.00%
100% 100% 100% 100% 0%
N/A N/A N/A N/A N/A 4,319 4,166 4,538 4,481 -1%
1 1 1 1 0% 87 86 81 70 -14%
GHG
emissions
0 0 0 0 0% 3,393 3,267 2,795 2,728 -2%
19.304 20.671 19.304 20.671 7% 3,979 4,039 3,422 3,654 7%
N/A N/A N/A N/A N/A 0.80 0.80 0.84 0.87 3%
N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Water 382,679 294,017 318,615 252,418 -21%
16% 17% 13% 14% 3%
100% 100% 100% 100% 0%
42 32 43 34 -21%
Waste 0 0 0 0 0 1,256 1,623 982 1,294 32%
0 0 0 0 0 742 822 586 637 9%
0 0 0 0 0 240 121 232 111 -52%
0 0 0 0 0 0.25 0.28 0.24 0.28 13%
Footnotes/Assumptions
1. The proportion of the district heating
energy that comes from renewable
(biogenic) sources was 50.97% in
2021. The same fuel mix is assumed for
2022 and 2023 also.
2. Gas supplied to Empiric’s estate is
exclusively derived from fossil fuels.
3. 100% of the water withdrawn is
assumed to be from municipal water
supplies.
4. Head office energy consumption
is estimated based on the EPC
(https://find-energy-certificate.
service.gov.uk/energy-certifica
te/6507-6339-2002-1525-1506)
and assumed to be similar for both
reporting years.
5. Waste data was only available for a
proportion of Empiric’s portfolio.
This data has been extrapolated and
supplemented with waste collection
data from local councils where our
portfolio is located.
6. The majority of council waste
collection data was available for
2021/22 period at the time of
compiling the report. Where it wasn’t
available the most recent figure was
used in the calculations for 2023.
7. It is assumed that bins do not reach
capacity before collection. Based on
the information from the private waste
collection invoices an average waste
level is therefore assumed.
8. We have solar panels installed at
various sites but there is currently no
available data on the operation and
generation from these sites.
9. Due to the purchase of green
contracts, electricity consumption
across the portfolio is stated to have
no GHG emissions.
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 69
ESG Report | continued
Additional
environmental metrics
Biodiversity
We aim to improve biodiversity on sites,
wherever possible. Our site at St Marys,
Bristol has a living wall, which is watered
using a water efficient system. One of our
sites at Falmouth site has a green roof,
which has been inhabited by nesting birds.
All green spaces are maintained. However,
moving forward, we aim to improve
the quality of these sites, for example,
by creating meadows, beehives and
allotment areas for students where space
configuration allows.
Energy saving
As we advance on our journey to
become net-zero, we will aim to
substitute our materials to lower emission
alternatives, where possible. Our Foss
Studios Building will be all electric in 2024,
with a large part of the energy generation
targeted to be renewable energy
generated on-site.
During this financial year, the smart panel
heaters programme has saved 94 tonnes
of carbon compared to an onsite gas
boiler. Other energy saving initiatives
during the financial year are outlined
on page 48.
Waste management and plastics
We are using local and council led waste
collection services at most of our sites.
However, certain sites use a private
collection service, which provide more
accurate, site specific, waste data.
We encourage recycling at all our
properties and provide recycling facilities
with associated education and signage.
We have a program for mattress recycling.
As a matter of course, after 3-4 years of
use, mattresses are reconditioned and
recycled. We currently do not have any
targets set related to waste, we intend
to publish targets related to waste in the
2024 TCFD Report.
Water Management
We currently have several water initiatives.
Our largest site in York has an independent
water collection system. We are also
addressing potential water stress risks by
optimising water usage via low flow taps
and water management systems.
We acknowledge the need to explicitly
state our commitment to measuring water
consumption. In the next two years, we
aspire to enhance our comprehension
of water consumption at each of our
sites and establish a suitable baseline.
Subsequently, our focus will shift towards
implementing strategies to reduce water
usage and associated costs. This will be
complemented by the formulation of
water reduction targets, accompanied by
key performance indicators to track our
progress and ensure the effectiveness of
our conservation efforts. We currently do
not have any targets set related to water,
we intend to publish targets related to
water in the 2024 TCFD Report.
70Strategic Report
Empiric Student Property plc | Annual Report & Accounts 2023
2024 Description
Governance
Climate Risk
Management
– Monitor and review climate-related risks and mitigation controls
– Conduct a climate scenario analysis on our supply chain and supply routes
– Climate-scenario modelling year-on-year comparisons
– Financial modelling to understand impact of identified risks and
opportunities
Conflict
Management
– Launch bespoke conflict management training to employees with a focus
on risk mitigation. Identify sources of conflict and address them proactively,
reducing the risk of escalated disputes and legal issues
– Rollout lone worker devices
External
Benchmarking
– Consider and conclude on an appropriate external benchmarking study for
the Company to participate in from 2025 onwards
Environmental
Net Zero
Operations
– Over 40% of the portfolio by floor area to be fossil fuel free
– Lower like for like energy consumption to below 4,250 kWh per bed
– Complete the conversion of a further 12 buildings to net-zero operations
– Commission decarbonisation studies on all remaining properties
Greener
Solutions
Installation
– Record all onsite energy creation (PVs) across the portfolio
Emissions data
collection and
SBTi targets
– Improve Scope 3 emissions data collection
– Refine the emissions target, aligning to SBTi within the next two years
Green capex
– Install air source heat pumps (ASHPs) and PVs at >10 sites
– Roll out >3,000 in-room heating controls (Smart Panels, Smart TRVs or
meters)
– Full LED and PIR upgrades on >20 buildings that include plug and play fitting
to help with future maintenance costs
– Set climate related investment thresholds
Data gathering
– Use data to inform planned summer and winter education programs to
support energy efficiency behavioural change
Building Energy
Management
System (BEMS)
– Conduct BEMS surveys and upgrades at >30 sites
– Execute comprehensive Building Management System (BMS) upgrades
across the portfolio, allowing for remote monitoring, data collection and
control
– Record all onsite energy creation (PVs) across the portfolio
EPC Ratings
– >55% of portfolio to be rated EPC B or better
Future ESG commitments (subject to advisory shareholder vote)
2024 Description
Social
Health and
Safety
– Establish Legal Register
– Deliver Wellbeing Management System and Framework, including lone
working
– Deliver Incident Management Guides to ensure consistent management
and escalation of site-based incidents
– Complete dynamic risk assessments of all sites, specific to local area
– Create a Security Self-Assessment tool which will require teams to
objectively review the security in our properties and identify opportunities
for improvements to physical and personal security
Opportunities
for all
– Launch apprenticeship scheme
– Complete bespoke leadership development programme for future leaders
– Define diversity focus areas and targets
– Provide training and accreditation to maintenance operatives
Enhance mental
health and
wellbeing
– Achieve a net promoter score of +33
– Achieve employee engagement scores within the top 25
th
percentile of
externally benchmarked comparator group
– Mental Health First Aid training for all sites
Operations
– Improve customer response times targeting resolution within 72 hours on
70% of cases raised via the Student App
– Invest over 300 days in community or charitable support initiatives
Engagement
– Launch behaviour programme to engage employees and customers and
measure impact on energy use across a sample of sites
2025 Description
Net Zero
Operations
– Net Zero and Renewable Energy Guarantees of Origin (REGO)-approved
energy targets
– Develop full pathway to net zero following residual decarbonisation
studies completed in 2024
– Lower like for like energy consumption to below 3,900 kWh per bed
– 50% of assets to be fossil fuel free
Carbon
Development
– Develop a baseline whole life carbon intensity
– Measure whole life carbon to facilitate the setting an embodied carbon or
whole life carbon targets in 2025
Climate risk
management
– Conduct a climate scenario analysis on our supply chain and supply routes
with a focus on financial modelling
– Climate-scenario modelling year-on-year comparison
EPC Ratings
– >65% of portfolio rated EPC B or better
Health and Safety
– Install defibrillators at our largest sites
Operations
– Implement in-room recycling initiatives
Supply Chain
– Conduct key supplier survey to collect data about ESG engagement and
performance within the supply chain
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 71
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 KPls reported
on page 20 are the key metrics which the Board reviews, which are supplemented by further detailed reporting.
Also see details surrounding stakeholder engagement on page 52 and Board activities and principal decisions taken as set out on page 73.
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 as a representative body of
our workforce. 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.
Also see the Company’s activities surrounding mental health & wellbeing on page 54.
The need to foster the
Company’s business
relationships with
suppliers, customers
and others
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.
Also see details surrounding stakeholder engagement on page 52.
The impact of the
Company’s operations on
the community and the
environment
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 desirability of the
Company maintaining
a reputation for high
standards of business
conduct
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. One particular example is mental health welfare where the Board
pushed for greater support for both our people and our customers.
The need to act fairly
between members of the
Company
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.
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 72
June 2023: Appointment of PwC to assist the Board
to accelerate the roll out of the Post-Graduate strategy
in key cities
Decision taken
Following a period of market due diligence and financial
modelling the Board appointed PwC to assist with the
exploration of opportunities to accelerate the roll out
of the Post-Graduate strategy in key cities, following a
ringfencing of a prospective seed portfolio of suitable
properties which may form the basis of a future
joint venture.
Long-term success considerations
Following the transformation of the Group’s operational
capabilities, the Board’s strategic focus has been
on routes to growth as a means of leveraging the
operational platform.
The Post-Graduate strategy is compelling with a UK
market of over 800,000 students, and growing. The
Group’s ability to accelerate the roll out of its exclusive
Post-Graduate product is capital constrained and
therefore realising the value inherent in its roll out is
challenged. lntroducing a joint venture partner as a means
to execute this strategy, realise associated rental and
valuation growth, whilst releasing capital for reinvestment
elsewhere in the business is a means to leverage our
operational capabilities for the benefit of stakeholders.
Stakeholder impact considerations
Shareholders: Accretive earning proposition alongside
improving EBITDA margins with potential for valuation
growth and reinvestment of equity released into
Undergraduate opportunities;
Customers: Accelerated roll-out of a product designed
specifically to meet the needs of Post-Graduates, who
represent approximately 40 per cent of our customer
base; and
Principal decisions
Employees: Growth in beds under management and
improving the Company’s performance metrics provides
employees with greater opportunities in respect of both
experience and reward.
Outcome
Encouraging feedback has been received from
shareholders and employees, with initial conversations
with interested parties having been well received.
August 2023: Approval to refinance and consolidate
maturing debt facilities
Decision taken
With three debt facilities maturing during 2024 and 2025,
the decision was taken to refinance all three in early 2024
to consolidate facilities and push refinancing risk out
to 2028.
Long-term success considerations
The Group’s short dated debt maturities were held at
floating rates, which during a period of increased interest
rate volatility were causing undue concern given their
relative size in comparison to the Group’s overall debt
profile. With interest rates relatively stable in comparison
to the prior year, the decision was taken to refinance all
short dated expiries into a facility which would then be
hedged to provide improved interest rate protection and
remove near term refinancing risk.
Stakeholder impact considerations
Shareholders: Reduces potential volatility from future
earnings and dividend expectations and provides greater
comfort on longer term viability and risk management;
Lenders: Prudent management of refinancing risk and
maintenance of prudent covenant compliance;
Agents/suppliers: Longer term liquidity profile secured,
providing improved comfort on the Group’s financial
strength and stability; and
Employees: Consolidating lenders reduces administrative
burden allowing for more time to be invested with the
remaining lender group.
Outcome
The decision was well communicated and received
by lenders. Improved balance sheet with interest
rate security achieved with only a marginal increase
anticipated in financing costs.
The Strategic Report was approved by the Board on
13March 2024 and is signed on its behalf by:
Donald Grant | Director
Empiric Student Property plc | Annual Report & Accounts 2023
Strategic Report 73
Empiric Student Property plc | Annual Report & Accounts 2023
74Governance Report
Board of Directors
Mark Pain Duncan Garrood Donald Grant Alice Avis MBE Martin Ratchford Clair Preston-Beer
Non-executive Chairman Chief Executive Officer Chief Financial and SustainabilityOfficer Senior Independent non-executiveDirector Non-executive Director Non-executiveDirector
Appointed 1 September 2018 28 September 2020 12 September 2022 1 March 2019 1 October 2021 1 July 2022
Independent Yes No No Yes Yes Yes
Committee
Memberships
N
E
R
E E
A
R
N
E
A
R
N
E
Relevant Skills
and Experience
î Chartered accountant
î Strong financial, customer and shareholder focus
î Extensive experience of executive and non-executive
roles in the real estate, financial services and
consumer/leisure sectors
î Strong operational, sales and marketing skills
î Extensive experience of executiveroles in the
consumer/leisure sectors
î Significant expertise in the consumer/leisure sectors
î Chartered accountant
î Over 20 years’ experience in the listed real estate
and financial services sectors, covering finance,
tax, regulatory compliance, HR, IT and
company secretarial
î Extensive experience in marketing, e-commerce,
strategy and operations in the consumer
goods/retail sectors
î Executive and non-executive expertise in FTSE 100/
UK and international entrepreneurial organisations
î Chartered accountant
î Over 20 years’ experience in executive and leadership
roles in the UK/international listed real estate, funds
and student accommodation sectors
î Expertise in structured real estate debt and equity
financing and systems and control environments
î Significant expertise in large hospitality/
retail businesses
î Extensive experience in international franchising/
business transformation
Principal External
Appointments
î Chairman – AXA UK
î Senior Independent Director
– Close Brothers Group plc
î None î None
î Non-executive Director
– BGF (the Business Growth Fund)
î Non-executive Director
– The Edrington Group Limited
î Non-executive Director – iPulse Limited
î Chief Finance Officer at Frasers Property UK Limited,
a Frasers Property group company
î Managing Director – Local Pubs – Greene King
Significant
Previous External
Experience
î Group Finance Director – Abbey National PLC
î Group Finance Director – Barratt Developments PLC
î 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
î Vice Chairman and Senior Independent Director
– Yorkshire Building Society
î CEO – Ten Entertainment Group Plc
î CEO – Bills Restaurants
î CEO – Punch Taverns plc
î President – M.H. Alshaya
î Commercial Director – BAA plc
î Chief Financial Officer – RDI REIT P.L.C
î Group Financial Controller
– Capital & Counties Properties PLC
î Head of Finance – Liberty International PLC
î Head of Financial & Regulatory Control (EMEA)
– BCG Partners / Cantor Fitzgerald
î Executive chairman – Lumene Oy
î CEO – Sanctuary Spa Group
î Marketing and E-Commerce Director
– Marks and Spencer PLC
î Global brand Director, Johnnie Walker – Diageo PLC
î Finance Director, Real Estate andFunds
– Thomas Cook plc
î Head of Europe, Finance – BritishLand PLC
î Finance Director – The Unite GroupPLC
î Managing Director – Costa Coffee, Middle East & Asia
î Chief Operating Officer – Costa Coffee, UK
î Franchise Director – Costa Coffee, UK
Committees
N
Nomination
A
Audit and Risk
R
Remuneration
E
ESG
Chair
Contents Generation – Page Contents Generation – Sub Page
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75
Empiric Student Property plc | Annual Report & Accounts 2023
Governance Report
Mark Pain Duncan Garrood Donald Grant Alice Avis MBE Martin Ratchford Clair Preston-Beer
Non-executive Chairman Chief Executive Officer Chief Financial and SustainabilityOfficer Senior Independent non-executiveDirector Non-executive Director Non-executiveDirector
Appointed 1 September 2018 28 September 2020 12 September 2022 1 March 2019 1 October 2021 1 July 2022
Independent Yes No No Yes Yes Yes
Committee
Memberships
N
E
R
E E
A
R
N
E
A
R
N
E
Relevant Skills
and Experience
î Chartered accountant
î Strong financial, customer and shareholder focus
î Extensive experience of executive and non-executive
roles in the real estate, financial services and
consumer/leisure sectors
î Strong operational, sales and marketing skills
î Extensive experience of executiveroles in the
consumer/leisure sectors
î Significant expertise in the consumer/leisure sectors
î Chartered accountant
î Over 20 years’ experience in the listed real estate
and financial services sectors, covering finance,
tax, regulatory compliance, HR, IT and
company secretarial
î Extensive experience in marketing, e-commerce,
strategy and operations in the consumer
goods/retail sectors
î Executive and non-executive expertise in FTSE 100/
UK and international entrepreneurial organisations
î Chartered accountant
î Over 20 years’ experience in executive and leadership
roles in the UK/international listed real estate, funds
and student accommodation sectors
î Expertise in structured real estate debt and equity
financing and systems and control environments
î Significant expertise in large hospitality/
retail businesses
î Extensive experience in international franchising/
business transformation
Principal External
Appointments
î Chairman – AXA UK
î Senior Independent Director
– Close Brothers Group plc
î None î None
î Non-executive Director
– BGF (the Business Growth Fund)
î Non-executive Director
– The Edrington Group Limited
î Non-executive Director – iPulse Limited
î Chief Finance Officer at Frasers Property UK Limited,
a Frasers Property group company
î Managing Director – Local Pubs – Greene King
Significant
Previous External
Experience
î Group Finance Director – Abbey National PLC
î Group Finance Director – Barratt Developments PLC
î 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
î Vice Chairman and Senior Independent Director
– Yorkshire Building Society
î CEO – Ten Entertainment Group Plc
î CEO – Bills Restaurants
î CEO – Punch Taverns plc
î President – M.H. Alshaya
î Commercial Director – BAA plc
î Chief Financial Officer – RDI REIT P.L.C
î Group Financial Controller
– Capital & Counties Properties PLC
î Head of Finance – Liberty International PLC
î Head of Financial & Regulatory Control (EMEA)
– BCG Partners / Cantor Fitzgerald
î Executive chairman – Lumene Oy
î CEO – Sanctuary Spa Group
î Marketing and E-Commerce Director
– Marks and Spencer PLC
î Global brand Director, Johnnie Walker – Diageo PLC
î Finance Director, Real Estate andFunds
– Thomas Cook plc
î Head of Europe, Finance – BritishLand PLC
î Finance Director – The Unite GroupPLC
î Managing Director – Costa Coffee, Middle East & Asia
î Chief Operating Officer – Costa Coffee, UK
î Franchise Director – Costa Coffee, UK
(designated Director for
the workforce)
R
N
E
A
Contents Generation – Page Contents Generation – Sub Page
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Empiric Student Property plc | Annual Report & Accounts 2023
76Governance Report
Chairman’s Introduction to Corporate Governance
Our Approach to Corporate Governance
As Chairman I am responsible for leading the Board
and ensuring that we maintain 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
deliver our strategy responsibly and the way we operate
our business reflects the Company’s values and culture
in an ethical and transparent manner for the benefit of
all our stakeholders.
Our approach to corporate governance is based upon
the principles and provisions of the 2018 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 2023.
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 can be found on
the Company’s website www.empiric.co.uk
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 is 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 Chief Executive Officer set a tone of
openness and thoroughness, which is upheld by the Board
with Directors holding themselves to high standards of
integrity. The Board continues to be agile, which enables
opportunities to be addressed at short notice.
“ We structure our Board, its
Committees and its operations
in a manner which ensures
we deliver our strategy in a
responsible manner for the
benefit of all our stakeholders.”
Mark Pain | Non-executive Chairman
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77
Empiric Student Property plc | Annual Report & Accounts 2023
Governance Report
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.
Read more on | page 84
Audit and Risk
Committee
Ensures the Group’s
financial reporting and risk
management is properly
monitored, controlled
and reported.
Read more on | page 87
Remuneration
Committee
Reviews remuneration
of executives and
senior leadership team
in accordance with
shareholder approved policy.
Read more on | page 92
ESG
Committee
Safeguards the interests,
and monitors engagement
with, stakeholders to
ensure the Company
demonstrates sound social
and environmental risk
management.
Read more on | page 46
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.
There were no changes in Board membership during the year. The activities of the
Nomination Committee are set out in its report on page 84.
Biographical information of each Directors is set out on page 74.
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.
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 85.
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
î Leading the Board and ensuring its effectiveness;
î Reviewing the Company’s general progress and long-term
development; and
î Ensuring the Company is meeting its responsibilities to all
stakeholders.
Chief Executive
Officer
î Leading and developing the Company’s profitable operation
and development;
î Overseeing all activities of the business and leading the sales,
marketing and operations functions;
î Ensuring the objectives are in line with operational activities;
and
î Creating shareholder value over the long term.
Chief Financial and
Sustainability
Officer
î Overseeing sustainability across the business;
î Leading the finance and IT functions;
î Producing timely and accurate financial information and
analysis;
î Raising and managing debt;
î Ensuring tax and regulatory compliance; and
î Maintaining financial control.
Board position Primary Responsibilities
Senior
Independent
non-executive
Director
î Acting as a sounding board for the Chairman and intermediary
for other Directors when required;
î Leading the evaluation of the Chairman on behalf of the other
Directors; and
î Being available to shareholders to raise their concerns if they
cannot be resolved through other channels.
Non-executive
Directors
î Providing constructive challenge;
î Overseeing the Senior Leadership Team’s progress on
implementing strategy and meeting objectives; and
î Monitoring the reporting of performance.
Board meetings
The Board holds regular formal, scheduled meetings with additional meetings scheduled
as business needs require. The agenda for each meeting is typically agreed 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 nine Board meetings held, which comprised four quarterly
Board meetings, four Board update calls and a strategy day. The table below shows the
Directors’ attendance at those Board meetings. The figures in brackets show the number
of meetings each Director was eligible to attend.
At least once a year, the non-executives hold informal meetings without the executives
present.
Meetings
Mark Pain 9 (9)
Duncan Garrood 9 (9)
Donald Grant 9 (9)
Alice Avis 9 (9)
Martin Ratchford 9 (9)
Clair Preston-Beer 9 (9)
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 2023, all of the non-executive
Directors, including the Chairman, are considered to be independent for the purposes of
the Code.
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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 the Company’s registered office
and at each Annual General Meeting.
Directors who may be appointed to the Board during the year are required to be elected
by shareholders at the next Annual General Meeting. 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.
Board induction and training
All Directors receive a thorough formal induction upon appointment. This includes 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 Directors and external appointments
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 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 84 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:
î health and safety update;
î CEO report;
î macro and sectorial update;
î a review of the performance of the property portfolio;
î 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);
î consideration of strategy and strategic opportunities;
î review of financial performance, financial and liquidity forecasts and debt
management;
î sales and marketing activities, including pricing strategy;
î an update on investor relations and shareholder analysis;
î a report on shareholder feedback and engagement;
î reports of the Committees;
î updates on regulatory, compliance or governance matters advised by the Company
Secretary or other advisers; and
î a report on public relations and press commentary.
These agenda items are also included within a comprehensive set of Board papers
circulated ahead of each Board meeting.
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Board activities, keys decisions and stakeholder impact
Strategic topic Area of focus Key decisions taken and key stakeholders impact
Customer
Ensure the continued
safety, well-being and
satisfaction of our
customers;
2023 Global Student
Living results and
customer feedback.
Decision taken
Refurbishment programme, related timing and impact on customers;
Appointment of dedicated Wellbeing Manager and Chief Operating Officer;
External audit of Health & Safety practices.
Stakeholder impact considerations
Customers: Communication plan and tenancy length. Consideration of feedback received, overall
satisfaction and available support;
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 remain motivated and engaged.
People
Engagement survey and
retention rate;
Pay and reward in the
context of inflation
related cost of living
pressures;
Wellbeing.
Decisions taken
2024 compensation review and pension enhancement;
Approved operational strategy and budget;
Appointment of Wellbeing Manager.
Stakeholder impact considerations
Employees: Cost of living pressures; maintaining proportionality with Director pay; mental health &
wellbeing support; appropriate training provision;
Customers: Quality and continuity of service;
Shareholders: Impact on returns and distributions.
Strategy
Validation of Post-
Graduate strategy
including related due
diligence and financial
modelling;
Non-core disposal
program, including
consideration of offers
received;
Acquisitions and
refurbishments.
Decisions taken
Appointment of PwC to assist the Board to explore opportunities to accelerate the roll-out of the Post-
Graduate strategy in key cities. Ringfencing seed portfolio of suitable properties which would form the
basis of a future joint venture;
Continued disposal of non-core assets;
Acquisition of former office building in Bristol;
Approval of refurbishment programme.
Stakeholder impact considerations
Shareholders: Growth and total return enhancement, coupled with a compelling equity story;
Customers: Communication and continuity of service provision;
Community: Developmental impacts; engagement with local residents;
Employees: TUPE transfer considerations, communication and engagement.
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Strategic topic Area of focus Key decisions taken and key stakeholders impact
Capital allocation
Refinancing and capital
allocation to ensure
ongoing liquidity and
covenant headroom
Investor engagement
Decisions taken
Consolidation of debt facilities and refinancing short term expiries;
Interest rate and energy hedging;
Dividend payments and related guidance;
Stakeholder impact considerations
Lenders: Maintaining prudent covenant compliance and management of refinancing risk;
Shareholders: Appropriate risk management and gearing; open communication, clear guidance and
expectation management;
Agents/consultants: Long-term liquidity planning providing for prompt and fair payment terms.
Marketing and sales
Review of pricing
approach for launch of
academic year 2024/25.
In-depth review of
customer feedback.
Decision taken
Pricing strategy approved with the aim of achieving balance between inflationary pressure and
affordability, informed by lessons learnt from previous years data and customer feedback;
Continued roll-out of Hello Student branding.
Stakeholder impact considerations
Customers: Affordability; cost of living pressures; engagement;
Shareholders: Impact on sustainable returns and related earnings and distribution guidance.
ESG
Implementation of net
zero strategy, target
setting and stakeholder
buy-in.
Capital allocation to
green initiatives
Wellbeing of our
customers and our
people.
Decision taken
Interim targets agreed and two year plan to be subject to advisory shareholder vote at AGM;
Commitment to enhance capital allocation to green initiatives to accelerate implementation;
Appointment of experienced Wellbeing Manager.
Stakeholder impact considerations
Environment: Becoming a sustainable business and contributing to the communities in which we operate;
Shareholders: Impact on returns and delivery against commitments made;
Customers/employees: Impact of implementation plans and wellbeing.
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Chairman’s Introduction to Corporate Governance | continued
Strategy
In June, 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 and members of the senior leadership team and other external
specialists delivered a number of presentations. The focus this year was structured
toward providing in-depth analysis and diligence on the UK’s post-graduate market,
including those universities that had the strongest fundamentals for post-graduates and
what their priorities are when selecting accommodation. The meetings were carefully
structured to achieve a balance between presentation, debate and discussion.
Engagement with stakeholders
The executive Directors and the Board as a whole make themselves available at various
points during the year to ensure an understanding of the views of the Company’s key
stakeholders to ensure these are taken into account in strategic discussion and
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 52.
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.
Having completed an externally facilitated evaluation in 2022, the 2023 Board evaluation
was completed internally by the Chairman and the Company Secretary. The evaluation
assessed the effectiveness of the Board in the delivery of the 2023 Board objectives.
The key topics covered in the evaluation included:
î strategic plan and culture;
î customer service;
î workforce engagement;
î ESG and value creation;
î Board dynamics and the functioning of the Board;
î quality of debate and challenge; and
î the delivery of a number of important themes from previous reviews, including changes
in the operating environment.
The Board effectiveness review concluded that the Board and committees continued to
operate effectively throughout 2023. Following the review, further enhancements were
proposed for 2024 which are set out in the table below.
Key findings 2024 action plan
Increased focus on delivering ESG
strategy with further development,
and validation of ESG key performance
indicators.
Net zero strategy to be revalidated for
the period 2024-2025 and be subject
to an advisory vote at the 2024 annual
general meeting.
Review succession plans to cover Board
succession and talent management of
the executive team.
Plans to be further developed for all
Board members .
Talent mapping to be completed for
Board and executives
Further time to be allocated to discussing
the Group’s organisational culture.
Time to be specifically allocated to the
topic on the annual Board runway.
Update on actions arising from the 2022 Board evaluation
The table below outlines the improvement areas identified following the externally facilitated
Board evaluation in 2022, together with the progress made on these during 2023.
Key findings 2024 action plan
Linking the strategy and plan with more
explicit milestones and KPIs that can be
tracked more frequently.
Strategic KPIs dashboard incorporating
corporate, financial and ESG targets
presented and discussed at each Board
meeting.
Establishing clear measurable ESG plans
and milestones.
Tender process for lead ESG advisor
completed.
Recruitment and onboarding of an Energy
Project Manager.
Implementation plan established for
2023 and 2024 with aligned budget.
Further enhancing external reporting and
investor relations.
Significant improvement in the quality
and timeliness of external reports.
Active investor relation programme
during 2023, with numerous meetings
and site tours and conference
representation including the regular
results focussed roadshows, which were
well attended.
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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 believes 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 again noted to have been made against areas of opportunity
for improvement. 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:
î 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 126 for more
information);
î 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;
î 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 2026. Further details are set out in the Viability
Statement on page 37, and in the Principal Risks and Uncertainties section on page 32;
î 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 32 to 36:
î 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; and
î during the financial year the Company has complied with the provisions of the UK
Corporate Governance Code 2018.
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 page 32
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 biannual 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 from both the internal Auditor and management are
provided 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 87 to 91.
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 38 to 41. 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 2025.
Mark Pain | Non-executive Chairman
13 March 2024
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Nomination Committee Report
“ The Company has benefited
from an experienced and stable
leadership team this year and
has delivered an excellent set
of results.”
Mark Pain | Nomination Committee Chairman
Committee membership and meetings
Meetings
Mark Pain 2 (2)
Alice Avis 2 (2)
Martin Ratchford 2 (2)
Clair Preston-Beer 2 (2)
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, is 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 twice during the year and was
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
appointment of the Chief Operating Officer, the
promotion of the Sales & Marketing Director and Property
Director, succession planning for the Board, the Executive
and the Senior Leadership Team and a review of the size,
structure and capability of the Company’s Board.
Appointment of Chief Operating Officer
Although not a Board position, the Committee oversaw
the appointment and induction of the Chief Operating
Officer, Joanne Pollard, who joined the Company
in October 2023. Joanne brings over ten years of
operational experience in student housing and the wider
living sector. Upon appointment, a comprehensive
induction to the business was provided by the executives
which was followed by an inspection of all operational
sites. Joanne’s appointment is pivotal to the Company’s
growth aspirations and we are delighted to have her join
the business.
Promotion of Sales & Marketing Director and
Property Director
Following the appointment of the Chief Operating Officer,
and to further support the executives with the execution
of the Company’s growth strategy, two further promotions
were approved with effect from 1 January 2024.
The Sales & Marketing Director, Gemma Le Marquer,
becomes the Company’s Chief Customer Officer and Will
Atkinson, Property Director, becomes Chief Investment
Officer. Both roles remain below Board level.
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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.
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. A bespoke leadership
development program will be introduced during 2024
for those employees one compensation band below the
executive. It is envisaged therefore that as vacancies arise,
consideration will be given to both external and internal
candidates.
The Committee will continue to review the Board’s
succession plans throughout 2024.
Tenure
Tenure To step down by
Independent non-executive Directors
Mark Pain 5 years September 2027
Alice Avis 4 years March 2028
Martin Ratchford 2 years October 2030
Clair Preston-Beer 1 year July 2031
Executive Directors
Duncan Garrood 3 years n/a
Donald Grant 1 year n/a
Independence and re-election
All Directors are subject to annual re-election at the
Annual General Meeting, and the Board will recommend
reappointment as part of the Notice of Meeting.
Prior to recommending the reappointment of any Director
to the Board, the Committee assesses their continued
independence, the time commitment required, any over
boarding 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
74 to 75.
Diversity and Inclusion
The Committee recognises the benefits of diversity in
its broadest sense, including gender, ethnicity, age and
educational and professional background.
We will continue to target diversity throughout the
Company and will comply with all emerging best practice
in this area.
In accordance with LR 9.8.6R the Company can confirm
that as at 31 December 2023:
1. the Company has two women on the Board, equating
to 33.3% representation;
2. Alice Avis holds the position of Senior Independent
Director, and is also the employee’s representative on
the Board; and
3. no Board Directors are from an ethnic background.
It is the responsibility of the Nominations Committee
to review the composition of the Board, and the
appointment of Directors and senior management.
The Company is aware that it has not met the targets
for Board diversity for (1) and (3) above, however the
Nominations Committee will endeavour to meet these
targets as vacancies arise and, while this is not expected
in the near term due to length of the current Board
member’s individual tenures, we will ensure that if and
when vacancies do arise a diverse list of candidates
is considered. The composition of the current Board
continues to work well, both in terms of the nature of
experience and size, but this matter will continue to be
reviewed by the Nominations Committee and will be
reported on annually.
The tables on page 86 show representation on the Board
and within Executive Management as at 31 December
2023. No changes have occurred since the date on which
this Annual Report was approved.
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Gender representation
Number
of Board
members
Percentage
of the Board
Number
of Senior
positions on
the Board
(CEO, CFO,
SID and
Chair)
Number in
Executive
Management
Percentage
of Executive
Management
Numbers
across the
Group
Men 4 66.6 3 3 60 201
Women 2 33.3 1 2 40 147
Other – – – – –
Not specific – – – – –
As discussed above, Joanne Pollard was appointed during the financial year as Chief
Operating Officer. In line with Company policy, a diverse list of possible candidates
was reviewed, with a range of ethnicity, age and gender and the best candidate chosen.
Joanne’s appointment has strengthened the expertise of the management team and
improved the gender diversity within that group. Below the Board, 29 per cent of
the senior leadership team are female, with females representing 42 per cent of all
employees. More information about gender diversity in the Group as a whole can be
found on page 49.
Gender representation on the Board Committees
The level of gender diversity is exceeded on all the Board Committees, except on the ESG
Committee, which is attended by all Directors.
Nominations
Committee
Audit and Risk
Committee
Remuneration
Committee
ESG
Committee
Men 2 (Chair) 1 (Chair) 2 4 (Chair)
Women 2 2 2 (Chair) 2
The Chairs are chosen according to appropriate qualification or experience. The
Chairman chairs the Nominations and the ESG Committee, to ensure the long term
success of the Company. Martin Ratchford as a chartered accountant, chairs the
Audit and Risk Committee, and Alice Avis, having the requisite experience, chairs the
Remuneration Committee.
Ethnicity representation
Number
of Board
members
Percentage
of the Board
Number
of Senior
positions on
the Board
(CEO, CFO,
SID and
Chair)
Number in
Executive
Management
Percentage
of Executive
Management
Numbers
across the
Group
White British
or other White
6 100 4 5 100 165
Mixed/multiple
ethnic groups
– – – – – 12
Asian – – – – – 25
Black/Africa/
Caribbean/
Black British
– – – – – 7
Other – – – – – –
Not specified – – – – – 139
A summary of the Company’s Diversity Policy can be found on page 49 and has been
applied throughout the year. Information on gender and ethnicity is collected from each
employee by the People team during the onboarding period, on an optional basis.
There is no representation of ethnic minorities on the Board or Senior Management, but
across the Group, 21 per cent of responding employees identified as being from an ethnic
minority. All employees are based in the UK.
The Company has invested in additional support and career pathways to increase
diversity in the workforce by launching an accredited Institute of Leadership and
Management (ILM) qualification with the first cohort comprising 56 per cent female
leaders from across the organisation. The programme will complete in 2024. A further
internal development programme is due to be launched in 2024.
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
13 March 2024
Nomination Committee Report | continued
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Audit and Risk Committee Report
“ In line with best practice the
Committee has completed a
comprehensive tender process
for the external Auditor, with a
focus on audit quality, value and
cultural alignment. Pleasingly, the
quality and integrity of financial
management and reporting
continues to improve.”
Martin Ratchford | Audit and Risk Committee
Chairman
Committee membership and meetings
Meetings
Mark Pain 3 (3)
Alice Avis 3 (3)
Clair Preston-Beer 3 (3)
Audit and Risk Committee Chair’s overview
The Committee has continued its role of governance
and oversight of the Group’s financial reporting, risk
management, internal controls, assurance processes
and external audit. This is conducted on behalf of the
Board, as set out in the Committee’s terms of reference,
serving to protect the interests of shareholders. Following
the Company’s promotion to the FTSE 250 in 2023, the
Committee revisited the Financial Reporting Council’s
Minimum Standard for Audit Committees and the External
Audit and was satisfied that its activities and operations
throughout the year complied.
The Committee undertook a formal tender process for
the external audit, following the best practice guidelines
set out by the Financial Reporting Council. The process
followed is laid out in detail below. This resulted in
BDO LLP being reappointed and the lead audit partner
rotated. The Committee unanimously agreed BDO LLP
demonstrated robust industry experience and quality
audit team with the strongest cultural alignment to the
business.
Building on work done to date, the Committee has been
active in ensuring all appropriate steps have been taken to
further enhance the internal control environment, with the
support of Grant Thornton LLP, who have been reviewing
controls on a scheduled basis.
I hope that readers of the accounts find the information
set out below useful.
Committee composition and operations
The Committee comprises three independent non-
executive Directors. The Board continues to be satisfied
that Martin Ratchford has the recent and relevant financial
experience required to chair the Committee.
The Committee met three times during the year, in March,
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 March and August the external auditor and
valuer were invited to attend to present their respective
reports and valuations to the Committee. The Committee
holds private meetings with the external and internal
auditor without management being present, in order to
ensure open and direct feedback is possible.
The Internal Auditor also attended to present reports
and findings from their work throughout the year and in
December, following the conclusion of the Group’s risk
management review, they also presented their internal
audit plan for the forthcoming year for the Committee’s
consideration and approval.
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. Following its annual review,
the Company’s policy for the provision of non-audit
services continues to align with the Financial Reporting
Council’s Revised Ethical Standards published in
December 2019.
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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
the internal control environment and to report to the
Board as appropriate. Specifically the Committee:
î reviews the work of both the external and internal
auditor and the Group’s independent valuer;
î 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;
î considers significant financial reporting issues,
judgements and estimates exercised by management in
the preparation of financial information;
î 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;
î 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;
î oversees audit tenders and confirms appointment;
î considers and approves audit plans;
î 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
î 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 2023
During the year the following matters were considered
and discussed:
î reports from the Company’s valuer, CBRE;
î reports from the Company’s external auditor, BDO LLP,
regarding the 2022 full year results, the 2023 interim
results and the 2023 year end audit plan;
î reports from the Company’s internal auditor, Grant
Thornton LLP, including the 2024 internal audit plan;
î tender and appointment of the external auditor;
î reports from the Financial Controller;
î risk management process and related disclosures;
î financial stress testing and covenant compliance;
î viability and going concerns assessment and related
disclosures;
î 2022 report and accounts;
î 2023 interim statement;
î effectiveness of internal controls;
î independence and effectiveness of the external and
internal auditor;
î significant areas of estimation and judgement;
î accounting for the cost of cladding remediation and fire
safety;
î REIT compliance;
î consideration of parental guarantee to facilitate audit
exemption of certain subsidiary entities;
î review of business continuity and crisis management
plans;
î review of whistleblowing, cyber security and anti-
bribery policies and procedures;
î review of Company’s policy is respect of non-audit fees;
î review of the related parties register; and
î review of terms of reference.
Tender process for the external Auditor
BDO LLP have been the Group’s external auditors since
listing in 2014. With Thomas Edward Goodworth, the
Group’s current external audit partner, scheduled to step
down at the conclusion of the audit process for the year
ended 31 December 2023, the Committee concluded in
2022 that a competitive tender process should be carried
out during 2023.
A tender process was conducted in line with best practice
guidelines provided by the Financial Reporting Council.
A shortlist of three approved firms was selected to
participate in the tender process, with representation
from both within and outside the ‘Big Four’, each of
which demonstrated the requisite depth of expertise
of the operational real estate sector. Each firm invited
accepted the Company’s invitation to tender and was
asked to submit a comprehensive proposal in line with a
predetermined brief.
The Committee initially met with all three firms informally
to provide an opportunity for the candidate firms to ask
questions of the Committee members prior to submission
of their respective tender documents.
Following submission of each firms proposal, a second
formal meeting and presentation to the Committee was
scheduled. The process was designed to test each firm’s
qualification, expertise and resources, effectiveness,
independence and objectivity. The Committee members
independently completed a scorecard and subsequently
undertook a discussion of the merits of each firm.
After due consideration, the Committee expressed a
preference that BDO LLP be reappointed as the Group’s
external Auditor from 1 January 2024. It was considered
that BDO LLP demonstrated robust industry experience
and a quality audit team with the strongest cultural
alignment to the business.
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In line with best practice, the Committee recommended
two candidate firms to the Board for further
consideration, following which the reappointment of
BDO LLP was confirmed. Thomas Edward Goodworth will
therefore be replaced as lead partner by Richard Levy of
BDO LLP following conclusion of the audit for the year
ended 31 December 2023.
The Committee has therefore recommended a
resolution for BDO LLP’s reappointment be proposed to
shareholders at the forthcoming Annual General Meeting.
External Auditor and non-audit services
The effectiveness of the external audit is assessed by
the Committee partly through audit risk identification
reports at the start of the audit cycle. Significant risks are
identified, tracked, and the Committee ensures there is
sufficient focus and challenge, especially to material areas
with the greatest level of judgement.
The Committee considered BDO LLP’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 and
management regularly liaise with the lead audit partner to
discuss any issues arising from the audit on a timely basis
to ensure cost effectiveness. And I also meet with the
external lead audit partner several times throughout the
year outside the formal Committee.
The Group’s policy in regard to non-audit services is
reviewed by the Committee annually and is aligned to
the Financial Reporting Council’s ethical guidance which
stipulates acceptable services which are sufficiently
related to the audit and caps total fees for such services
to be limited to no more than 70 per cent of the average
audit fees paid in the last three financial years.
During the year, BDO LLP did not provide any non-audit
services, other than activities required for regulatory
reasons, being the review of the Company’s Interim
Statement.
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
Year ended
31 December
2023
Year ended
31 December
2022
Audit and related fees
1
0.5 0.5
Non-audit fees
2
0.1 -
Total 0.6 0.5
1 Audit and related fees for the year ended 31 December 2023 includes
£0.1 million arising in respect of the audit for the year ended 31
December 2022
2 Non-audit fees of £53,500 relate to the review of the Company’s
interim statement (2022: £49,275)
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:
î 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;
î publications provided to management throughout
the year on emerging issues and financial reporting
updates;
î quality of written reports submitted to the Committee
which were clear and concise with presentations at
meetings being considered as balanced, clear and
understandable;
î safeguards that limit the amount of non-audit services
provided by BDO LLP aimed at protecting their
independence;
î consultation with management that demonstrated the
auditor’s competency and experience necessary to
perform effectively in their role; and
î 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.
Internal control environment
The Group is making good progress in enhancing the
control environment in which it operates. The Committee
continues to review the effectiveness of the internal
control environment throughout the year. Reports
prepared by the internal Auditor, the Financial Controller
and CFSO were reviewed and challenged. I met the lead
partner at Grant Thornton LLP without management to
ensure open and transparent feedback is possible.
The Committee was satisfied that no significant
weaknesses were identified and concluded that the
internal auditor and the control environment were
effective and that the internal control environment was
appropriate for a Company of our size and complexity.
Grant Thornton LLPs internal audit plan was devised to
provide external assurance on the control environment
pertinent to key risk areas, including the operational
effectiveness of critical mitigating controls.
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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
and again, I meet the key personnel from CBRE outside
the formal Committee process to challenge valuation
assumptions and ensure independence was assessed
fairly.
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 management’s 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 37.
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
2023. 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 2023.
Risk management
A process for identifying and recording risks has been
established and is embedded 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 a financial, reputational and
timeframe 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. Further potential mitigation strategies
are then considered for all principal risks.
The most notable changes this year were:
î far reaching climate change concerns precipitated an
upgrade of this emerging risk to a principal risk concern
of the business;
î concerns regarding utility costs which are widely
expected to remain higher for longer;
î risk of governmental policy change resulting from the
forthcoming general election; and
î risk of disruption resulting from a cyber incident.
Full disclosure of the Group’s principal risks are set out on
pages 32 to 36.
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.
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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 Financial and
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 forming a conclusion, the Committee considered
information provided throughout the year, together with
the following:
î the controls in place for the production of the Annual
Report, including the verification processes to confirm
its factual content;
î 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;
î a cross check between Board Minutes and the Annual
Report is undertaken to ensure that reporting is
balanced; and
î whether information is presented in a clear and concise
manner to facilitate users access and understanding of
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 2023, 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 112.
Should any stakeholders wish to contact me, I can be
reached via the ‘Get in touch’ link on the Investors page
of the Company’s website 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
13 March 2024
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Remuneration Committee Report
“ We design our remuneration
arrangements to provide
alignment with the Company’s
purpose and strategy to ensure
rewards across our team are fair
and performance-based.”
Alice Avis MBE | Remuneration Committee
Chairman
Committee membership and meetings
Meetings
Alice Avis 5 (5)
Mark Pain 5 (5)
Martin Ratchford 5 (5)
Clair Preston-Beer 5 (5)
Statement from the Chairman of the
Remuneration Committee
Committee composition and operations
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 are retained to provide advice to the
Committee, where required.
Key activities during 2023
î Alignment of the Company’s strategy and executive
objectives with shareholders’ interests
î Reward Decisions
î Employee engagement
î Remuneration and benefits of wider workforce, including
consideration of on-going inflationary pressure
î Gender pay report
î CEO pay ratio, internal proportionality and LTIP vesting
Dear Shareholder,
On behalf of the Board, I am pleased to present the
Directors’ Remuneration Report for the year ended 31
December 2023.
The report is divided into three parts:.
î The Annual Statement which summarises the
remuneration outcomes in 2023, the key decisions
taken and how the Remuneration Policy (‘Policy’) will be
applied in the current financial year;
î A summary of the Remuneration Policy which was
approved by shareholders at the Annual General
Meeting on 24 May 2023.; and
î The Annual Report on Remuneration which sets out full
details of all remuneration matters.
We greatly value engagement with our shareholders and
the constructive feedback we receive on remuneration
issues. In 2023, following consultation with major
shareholders, the new Remuneration Policy was submitted
for shareholder approval and we were pleased to receive
91.9% of votes in favour.
I look forward to your continued support at the
forthcoming Annual General Meeting, and will be available
to address any questions you might have in respect to the
Committee’s activities.
Alice Avis MBE | Remuneration Committee Chairman
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Annual Statement
2023 performance and reward
As set out in the statements from the Chairman and CEO,
the Company has again delivered strong financial and
operational results, with revenue occupancy at 99 per
cent and like-for-like rental growth of 10.5 per cent for
the academic year 2023/24. For the financial year to 31
December 2023, alongside improving LTV the Company
has delivered a total accounting return of 7.6 per cent,
driven by a 27 per cent increase in dividends paid or
declared and portfolio valuation growth of three per
cent like-for-like. Against the backdrop of challenging
macroeconomic headwinds, this is a strong achievement.
In November 2023, with increasing confidence in the
Company’s earnings outlook, the Board confirmed its
intention to increase its dividend target for the 2023
financial year from 3.25 pence per share to 3.5 pence per
share, and today has declared its final quarterly dividend
in line with this target.
The Company 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. During the year the Company
has succeeded in achieving further improvement in
overall customer satisfaction scores. This is reflected in
the results from the latest annual GLSI survey which shows
our Net Promoter Score improved from +27 to +30.5,
significantly outperforming the benchmark All Private
Halls score which received +13. During the year, GSLI
awarded our operational brand, Hello Student, Platinum
Operator certification, the highest certification possible.
This is in no small part, testament to the engagement of
our people who deliver great customer service and to
whom I’d like to extend the Board’s sincere appreciation.
This strong corporate performance together with
significant progress against personal strategic objectives,
namely, adaption of strategy, improvement in culture,
engagement and customer service, implementation of
our ESG strategy, expansion of our investor relations
programme and significant progress in debt management
has resulted in a formulaic outcome for Duncan Garrood
and Donald Grant’s annual bonus of 65.8 per cent of
the 2023 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 appropriately aligned to performance and
strategic progress, whilst balancing the importance of
retaining and motivating the team and that it therefore
represented a fair recognition of performance.
The three-year performance period for the LTIP awards
granted to Duncan Garrood on 10 November 2020 and 22
April 2021 ended during 2023. These awards were subject
to two equally weighted performance conditions, relative
Total Shareholder Return and Total Return (being growth
in NAV per share plus dividend paid).
Taking both performance measures collectively,
vesting of 50 per cent was achieved in respect of the 10
November 2020 award date, with 75.2 per cent achieved
in respect of the 22 April 2021 award date. In line with the
Remuneration Policy, vested awards remain subject to
a further two-year holding period before they become
exercisable. The Committee believes that the LTIP
continues to promote the right behaviours to support
the Company’s strategy, performance and values. These
are the first LTIP awards to vest since 2017 and reflect the
excellent progress delivered by Duncan Garrood and his
team over the past three years.
Full details of the 2023 reward outcomes are set out on
pages 99 to 106.
Workplace Engagement and Remuneration
Our employees play a critical role in delivering the
outstanding 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 are proud members of the Real
Living Wage Foundation.
During 2023, the Committee reviewed pay and benefits
across the wider workforce, with particular consideration
given to the impact of the rate of inflation and the impact
of the Real Living Wage increase of ten per cent. The
annual pay review, which was effective from 1 January
2024, resulted in an average salary increase of 4.4 per
cent, with our lowest paid employees receiving increases
in line with the Real Living Wage, which for 2023 was
above the rate of inflation.
During the year, we have offered employees the option
to move their pension contributions to a salary exchange
scheme, offered healthcare benefits to all employees and
awarded all employees with a £50 ‘thank you’ gift voucher
prior to Christmas.
The Company launched a Sharesave scheme in July 2021,
allowing employees the opportunity to buy into the
success of the Company. Of eligible employees, 24 per
cent now participate in the scheme.
Having reviewed employee compensation arrangements,
the Committee is satisfied that employee pay and
conditions remain fair and proportionate.
The One Team Collective (“OTC”) is the Group workforce
advisory panel consisting of 11 representatives from
across the Group. Its focus is to support and facilitate
two-way communication and feedback between the
workforce and senior leaders on topics raised by
employees. As the Company’s Senior Independent
Director and Remuneration Committee Chair, I was
appointed to lead workforce engagement on behalf of
the Board. In 2023 I met with the OTC three times to
discuss key topics distilled from their meetings. Relevant
issues and insights from these sessions were then shared
with the Board to inform discussion. Additionally I have
shared with the OTC the structure, role and remit of the
Remuneration Committee and how our remuneration
practices help support the delivery of strategy, inviting
questions and discussion from the OTC.
We undertake a colleague engagement survey twice
a year. The latest survey shows a strong result with
an engagement score of 85 per cent, a one per cent
increase on 2022. Those responding stated they would
recommend the Group as “a great place to work” and its
properties, “a great place to stay”.
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We continually review our offering to employees based
on feedback and market insights. Strong employee
engagement and investment in training and development
coupled with improvements made to pay and benefits
across the workforce have helped to increase our
employee retention rate by seven per cent to 85 per cent
in the year to 31 December 2023.
Gender Pay
The Group believes that creating a diverse and gender
balanced workforce enhances the customer experience
and improves the experience employees have at work. We
provide learning and development opportunities for all
team members and champion internal progression for all.
We are required to report upon the gender pay gap within
our subsidiary, Hello Student Management Limited.
Analysis based on data to 5 April 2023 demonstrates that
the mean gender pay gap is -0.8 per cent (with females
paid more than males) and the mean gender bonus gap is
-19.2 per cent (females paid higher bonuses than males).
This represents an improvement on the prior year which is
attributed to an increase in female representation in the
upper middle quartile by 0.9 per cent and upper quartile
by 4.2 per cent.
We are pleased with the progress made to date but remain
committed to improving our position and aim to attract
a diverse selection pool for vacancies and ensure we
recruit the most suitable candidate for a role regardless of
gender. The Committee is satisfied that equivalent roles
attract equivalent remuneration, regardless of gender.
Full details with a supporting narrative are published on
our Hello Student website, www.hellostudent.co.uk, and
are prepared in line with the UK Equality Act 2010 (Gender
Pay Gap Information) Regulations Act 2017.
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 55:1 with
full details set out on page 107. 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.
The ratio is higher than previous years because it
unusually includes the value of two vested LTIP awards
that were granted to Duncan Garrood in November 2020
and April 2021. Although these awards were granted in
separate financial years, the reporting regulations require
them to both be recognised in the 2023 single figure as
their respective performance periods both ended in 2023.
Excluding the value of vesting LTIP awards, which are
subject to a further two-year holding period before
they become exercisable, the pay ratio remains below
2019 pre-Pandemic median, 25th and 75th percentiles,
demonstrating our continued investment in the pay and
reward of our workforce.
2024 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
of employees (4.4 per cent), as well as shareholder
expectations. As a result, both were awarded a salary
increase of three per cent with effect from 1 January 2024.
The executive bonus plan arrangements for 2024 will
follow the same structure as in 2023, with a maximum
annual opportunity restricted to 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, as in
2023, are based on revenue, EBITDA and dividend. One
third of the maximum opportunity is linked to specific
individual objectives based on strategic key performance
indicators and will continue to include ESG related
objectives.
Both executive Directors will receive LTIP awards in 2024,
as was the case in 2023, over shares worth 150 per cent
of salary. As in 2023, the vesting of the LTIP award will
be subject to two performance measures, relative Total
Shareholder Return and Total Return, each representing
50 per cent of the award for the performance period
1 January 2024 to 31 December 2026.
Strategic and Shareholder Alignment
In setting executive remuneration in 2024, the Committee
has continued to seek alignment with the Company’s
strategic priorities and shareholder interests. In particular:
î 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;
î executives are aligned with the principle of shareholder
value creation through participation in the long-term
incentive plan that rewards growth in Net Asset Value
plus dividends and relative shareholder returns;
î 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
î 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 2024, as well as how Directors were paid in 2023,
are set out on pages 98 to 103.
There will be an advisory shareholder vote on this section
of the Remuneration Report at our 2024 Annual General
Meeting. In addition to the advisory vote to approve the
Remuneration Report, shareholders will be asked at the
meeting to approve the 2024 LTIP. This plan replaces
the 2014 LTIP which has reached the end of its ten-year
life. Key terms of the 2024 LTIP, which are fundamentally
unchanged from the 2014 LTIP, are set out in the Notice of
Annual General Meeting.
Alice Avis MBE | Remuneration Committee Chairman
13 March 2024
Remuneration Committee Report continued
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Summary of the Remuneration Policy
There is no shareholder vote on the Remuneration Policy at the 2024 Annual General Meeting, but for shareholders’ reference, a summary of the policy containing the Policy Tables for
the executive Directors, the Chairman and non-executive Directors has been included below. The full Policy can be found on pages 87 to 94 of the Annual Report & Accounts 2022,
which is available on our website at www.empiric.co.uk.
It is currently envisaged that the Policy will next be presented to Shareholders for approval at the 2026 Annual General Meeting.
Remuneration Policy Table 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.
Fixed cash paid monthly, generally
reviewed annually. The review takes
into consideration a number of factors,
including but not limited to:
î the individual Director’s role,
experience and performance;
î business performance;
î relevant data on remuneration levels
paid for comparable roles; and
î pay and conditions elsewhere in the
Company.
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:
î Salary increases for Executive Directors
will typically not exceed the average
salary increase (in percentage of salary
terms) for other permanent employees.
î Increases may be made above this in
certain circumstances, such as:
î progression within the role;
î increase in scope and responsibility of
the role;
î increase in experience where an
individual has been recruited on a lower
salary initially; and
î increase in size and complexity of the
Company.
None
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.
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
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96Governance Report
Component Purpose and link to strategy Operation Maximum Performance framework
Pension To provide market-
competitive retirement
benefits.
The Company either contributes
to the Directors’ personal pension
arrangements or direct to their
pension plans.
Alternatively, Directors may receive a
cash allowance in lieu of pension.
All Director’s pension provision capped
in line with provision available to the
majority of the workforce, currently
7.5% of salary.
None
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.
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.
Remuneration Committee Report continued
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Component Purpose and link to strategy Operation Maximum Performance framework
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.
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.
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.
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 Table for the Chairman and non-executive Directors
Purpose and link
to strategy Operation Opportunity
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.
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.
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Annual Report on Remuneration
The Annual Report on Remuneration will be subject to an advisory shareholder vote at the
2024 Annual General Meeting.
Implementation of the Remuneration Policy in 2024
This section provides an overview of how the Committee is proposing to implement the
Remuneration Policy during 2024.
Base salary
The executives’ salaries were increased by 3.0 per cent with effect from 1 January 2024.
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 (4.4 per cent).
Their prior year salaries alongside current salaries, are set out below. For information, an
annual salary increase of 4.0 per cent was awarded to both executive Directors in 2023.
Executive Director Prior salary Current salary
Duncan Garrood £426,400 fixed
1 January 2023
£439,192 with effect from
1 January 2024
Donald Grant £301,600 fixed
1 January 2023
£310,648 with effect from
1 January 2024
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 2024 these continue
to be 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.
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 out turn against these measures will be disclosed in the Remuneration
Report for the year ending 31 December 2024. Any bonus pay out will be subject to the
Committee confirming that, in its assessment, the financial out turns 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.
LTIP
Duncan Garrood and Donald Grant will receive LTIP awards for 2024 equivalent to 150
per cent of salary, with the number of shares usually 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. As in 2023, 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 2024 to 31 December 2026, 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 2024
to 31December 2026.
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 2024
is outlined in the table below. This fee structure had, until this year, 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.
Remuneration Committee Report continued
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Annual fee (£)
(to apply from 1 April 2023) (to apply from 1 April 2024)
Base fee £40,000 £41,200 (+3.0%)
Audit Committee Chairman £48,000 £49,440 (+3.0%)
Remuneration Committee Chairman £48,000 £49,440 (+3.0%)
Senior Independent Director £49,000 £50,470 (+3.0%)
Senior Independent Director & Committee Chair £52,500 £54,075 (+3.0%)
Chairman of the Board £115,000 £135,000 (+17.4%)
During the year, the Remuneration Committee undertook a review of the fee paid to the Company Chairman. The current fee has not been increased since 2016 and, as a result, is now
one of the lowest in the FTSE All-Share. The Committee’s view is that this is not consistent with its development into a FTSE 250 company or the enhanced level of time commitment
associated with the Chairman’s role as the Company has grown in recent years. In order to address this issue, the Committee intends to position the fee at a more market competitive
level. This will be a phased process with an initial increase in fee to £135,000 from 1 April 2024.
Other non-executive Directors have received a three per cent increase, in line with the executive Directors. This increase will also apply from 1 April 2024.
Remuneration outcome in 2023
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 2023 alongside the equivalent data for the
previous year.
Year ended 31 December 2023
Salary
and fees
(£)
Benefits
(£)
Pension
(£)
Total Fixed
(£)
Annual
bonus (£)
Long-term
incentives
(£)
Total
Variable
(£)
Total
(£)
Executive Directors
Duncan Garrood 426,400 18,138 31,980 476,518 308,628 728,773 1,037,401 1,513,919
Donald Grant 301,600 13,490 22,620 337,710 218,298 – 218,298 556,008
Non-Executive Directors
Mark Pain 115,000 – – 115,000 – – – 115,000
Alice Avis 52,500 – – 52,500 – – – 52,500
Martin Ratchford 48,000 – – 48,000 – – – 48,000
Clair Preston-Beer 40,000 – – 40,000 – – – 40,000
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Year ended 31 December 2022
Salary
and fees
(£)
Benefits
(£)
Pension
(£)
Total Fixed
(£)
Annual
bonus (£)
Long-term
incentives
(£)
Total
Variable
(£)
Total
(£)
Executive Directors
Duncan Garrood 410,000 17,887 30,750 458,637 277,816 – 277,816 736,453
Donald Grant
1
88,859 3,874 6,692 99,425 – – – 99,425
Lynne Fennah
2
270,088 11,751 40,513 322,352 – – – 322,352
Non-Executive Directors
Mark Pain 115,000 – – 115,000 – – – 115,000
Stuart Beevor
3
20,000 – – 20,000 – – – 20,000
Alice Avis
4
51,136 – – 51,136 – – – 51,136
Martin Ratchford 48,000 – – 48,000 – – – 48,000
Clair Preston-Beer
5
20,000 – – 20,000 – – – 20,000
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.
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
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 conditions for the awards granted in both November 2020 (the 2020 LTIP award granted shortly after Duncan Garrood’s appointment) and April 2021 (the
standard 2021 LTIP grant) had been met in part. The November 2020 awards have been valued at 92.0 pence per share (share price at date of vesting) and £48,400 of the value relates
to share price appreciation during the vesting period. The April 2021 awards have been valued at 90.5 pence (average share price for the fourth quarter of 2023) and £93,367 of the
value relates to share price appreciation during the vesting period.
Pension: Duncan Garrood and Donald Grant have received a Company contribution worth 7.5 per cent of base salary. In 2022, Lynne Fennah received a contribution of 15 per cent of
base salary. All executive Directors elected to receive a cash allowance in lieu of pension.
Additional disclosures in respect of the single figure table (audited)
2023 annual bonus
Duncan Garrood and Donald Grant participated in the 2023 annual bonus scheme with a maximum annual bonus opportunity restricted to 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 2023 was determined by three equally weighted financial
measures, which when combined account for two thirds of the maximum opportunity. These financial measures are based on revenue, EBITDA and dividend. One third of the maximum
opportunity is linked to specific individual objectives based on strategic key performance indicators, including ESG related objectives.
Remuneration Committee Report continued
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Achievement against financial performance targets for both Duncan Garrood and Donald Grant are set out below:
Financial performance measure
Proportion of bonus
determined by measure
Threshold
Performance
0% payable
Maximum
performance
100% payable
Actual
performance
% of maximum
bonus payable
Absolute revenue
1
22.2% £77.2m £81.6m £80.5m 16.7%
EBITDA
1
22.2% £40.5m £42.7m £42.1m 16.2%
Dividends paid, declared and fully covered 22.2% 3.25 pence 4.0 pence 3.5 pence 7.4%
Total out turn on financial performance measures 66.6% 40.3%
1 Following the planned sale of six properties during the year as discussed on page 29, the original budget was reforecast with the contribution of the disposed assets removed from their point of sale for the remainder of the year. In
line with standard practice for mid-year acquisitions and disposals, the Remuneration Committee formulaically adjusted the original revenue and EBITDA targets to ensure they remained consistent with the principles of the budget
and that the ownership of the assets reflected in actual performance.
Achievement against individual performance objectives are set out below:
Duncan Garrood
Objective Out turn Outcome
The adaptation of the corporate strategy for new market conditions, including:
a) Adapt the three-year plan to deliver Total Accounting Returns to target;
b) Like-for-like rental growth above 6 per cent;
c) Deliver an accelerated implementation of green capex investments with IRR
above 8 per cent;
d) Dispose of at least £50.0m of segment D properties by year.
Successfully progressed implementation of corporate strategy with like-for-like
rental growth of 7.0 per cent for the 2023 financial year and 10.5 per cent for the
academic year 2023/24. Delivered one-year total accounting return of 7.6 per cent.
Green capex of £1.1 million invested delivering returns in line with target.
Asset disposals of non-core properties below target at £43.4 million.
Develop workplace engagement and culture to deliver improved customer service,
internal talent development and health & safety compliance, in particular:
a) Employee survey to deliver an employee engagement score of 85 per cent or
above;
b) Health & safety compliance at 95 per cent or above. All Fire safety exposures
identified and resolved;
c) Internal promotions to rise to 45 per cent;
d) Reduction in total voluntary turnover to 20 per cent.
Maintained outstanding workplace engagement at 85 per cent and health & safety
compliance at 95 per cent.
Of all eligible vacancies in 2023, 51 per cent were filled by means of internal
promotion.
Excellent progress made on reducing voluntary turnover to 15 per cent.
Develop and deliver tangible customer service improvements, including:
a) Year-end NPS +30 or more measured by GSLI;
b) Resolve 75% of service requests from the customer app within 72 hours;
c) Develop and deliver a safety culture shift programme, whereby customers safety
satisfaction scores increase, as measure on GSLI.
Great progress made on improving the customer service focus with Net Promoter
Score rising again to +30.5 and achieving Platinum Operator status from GSLI.
Over 17,000 maintenance requests were resolved during 2023, 59.6 per cent of
which within 72 hours.
In the 2023 GSLI survey, 86 per cent of customers rated their safety satisfaction
either Good or Very Good, a two per cent increase on the prior year.
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Donald Grant
Objective Out turn Outcome
The adaptation of strategy for new market conditions, including:
a) Develop the three-year plan to deliver Total Accounting Returns to target;
b) Implement cost reduction plan to ensure overheads not to exceed 17.5 per cent
of revenue;
c) Remove 2024 & 2025 refinancing risks;
d) Develop and implement utility risk mitigation plan prior to the expiry of energy
hedging contracts.
Successfully progressed implementation of corporate strategy with like-for-like
rental growth of 7.0 per cent for the 2023 financial year and 10.5 per cent for the
academic year 2023/24. Delivered one-year total accounting return of 7.6 per cent.
Administrative overheads were £14.0m, a relatively modest 4.5 per cent increase
on the prior year, representing 17.4 per cent of revenue.
2024 refinancing risk removed with terms agreed and agreements in solicitor’s
hands to refinance 2025 expiry.
Strategy agreed and energy price risk significantly mitigated with hedging in place
to cover 50 per cent of assumed consumption in 2025 and 2026.
Execute Net Zero implementation plan and enhance stakeholder engagement and
communication, through:
a) Develop the implementation of the Net Zero strategic plan to include. reporting
metrics, with annual targets and measurable actions identified for both 2023 &
2024;
b) Deliver at least two further carbon natural properties;
c) Manage EPC risk;
d) Improve stakeholder engagement through expansion of IR programme;
e) Manage guidance and consensus.
Two year Net Zero implementation plan established and agreed, with
implementation in progress.
Four carbon neutral properties to be delivered in early 2024, outside target for
2023.
Significant improvement in EPC ratings with 51 per cent now rated EPC B or better,
a level achieved a year earlier than targeted.
Significant increase in investor relations activity during the year, including
numerous site tours with investors and other key stakeholders.
Clear guidance provided and consensus tracking comfortably within target.
Develop finance and IT to become best-in-class functions, by:
a) Improved structure, capabilities and engagement of the respective teams to be
measured by an improved internal service score of +20 per cent;
b) Well-developed, IT strategic plan with cost & benefit analysis;
c) Improved risk management process and embed within the business.
Structure and capability of respective functions greatly improved with
engagement also improving, albeit slower than planned. Internal service score
target missed.
IT leadership embedded with strategic plan formulated and Board approved.
Risk management process established with formal review performed biannually.
Key:
Some progress
Good progress
Excellent progress
The tables below summarise the annual bonus awards made in respect of the 2023 financial year. Although Policy maximum is set at 150 per cent, the Committee had committed to an
annual maximum in respect of 2023 of 110 per cent.
Duncan Garrood
Proportion of bonus
determined by measure
% of maximum
bonus payable
Total out turn on financial performance measures 66.6% 40.3%
Individual specific objectives
1
33.4% 25.5%
Total before application of Committee discretion 65.8%
Total after application of Committee discretion 65.8%
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Donald Grant
Proportion of bonus
determined by
measure
% of maximum
bonus payable
Total out turn on financial performance measures 66.6% 40.3%
Individual specific objectives
1
33.4% 25.5%
Total before application of Committee discretion 65.8%
Total after application of Committee discretion 65.8%
1 Individual objectives were subject to a dividend related unlock. This element of the annual bonus would not unlock unless a minimum 3.25 pence per share fully covered dividend had been paid or declared to shareholders in respect
to the financial year. This unlock was achieved.
Bonus award
percentage
of 2023 maximum Bonus paid in cash
Bonus awarded in
deferred shares
1
Total bonus
Duncan Garrood 65.8% £185,177 £123,451 £308,628
Donald Grant 65.8% £130,979 £ 87,319 £218,298
1 To be settled in shares following a three year vesting period from date of grant.
LTIP Vesting
During 2023, the performance period for two LTIP award dates ended. The Committee determined that the performance conditions for awards granted on 10 November 2020 and 22
April 2021 had been partially met, as illustrated below.
10 November 2020 award
Weighting
0%
vesting
25%
vesting
100%
vesting
Performance
achieved
Vesting level (% of
maximum)
TSR relative to FTSE All-Share Real Estate peer group
3 years to 30 September 2023 50% Below median Median Upper quartile Above upper quartile 100%
Total Return (CAGR)
3 years to 30 June 2023 50% Less than 6% 6% 10% 5.27% 0%
Overall vesting 50.0%
22 April 2021 award
Weighting 0% vesting 25% vesting 100% vesting Performance achieved
Vesting level (% of
maximum)
TSR relative to FTSE All-Share Real Estate peer group
3 years to 31 December 2023 50% Below median Median Upper quartile Above upper quartile 100%
Total Return (CAGR)
3 years to 31 December 2023 50% Less than 6% 6% 10% 7.36% 50.5%
Overall vesting 75.2%
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In line with the Remuneration Policy, vested awards remain subject to a further two year holding period before they become exercisable, however the value of the vesting awards are
included within the single figure remuneration table for the year ended 31 December 2023.
Scheme interests awarded during the financial year (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 and Donald Grant on 14 April 2023.
Type of award
Maximum
number
of shares
Face value
£
Threshold
vesting
End of
performance
period
Duncan Garrood LTIP 722,233 639,600 25% of award 31 December 2025
Donald Grant LTIP 510,848 452,400 25% of award 31 December 2025
Both executive Directors were entitled to an LTIP award over shares worth 150 per cent of their annual salary at the start of the year. The maximum number of shares awarded (and their
face value in the above table) was calculated using a Company share price of 88.56 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 2023.
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 2023 to 31 December 2025, 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 2023 to 31 December 2025.
Payments to past directors (audited)
There were no payments to past Directors during 2023, 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 were 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 continued to receive her salary, benefits and pension payments until the end of her
notice period on 31 May 2023. 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 2023.
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 vested on 8 April 2023, to which she remains entitled and have not yet been exercised.
All unvested LTIP awards lapsed upon resignation.
Remuneration Committee Report continued
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Governance Report
Statement of Directors’ shareholdings and share interests (audited)
The table below shows the Directors’ share ownership as at 31 December 2023.
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).
Dividends received
during the year ended
31 December 2023
Beneficially
owned shares at
31 December 2023
(number of shares) % of salary
1
Vested LTIP awards not yet
exercisable
2
(number of shares)
Outstanding LTIP awards subject
to performance and employment
conditions as at
31 December 2023
3
(number of shares)
Outstanding annual bonus awards
subject to employment conditions
as at 31 December 2023
4
(number of shares)
Mark Pain £3,438 100,000 n/a – – –
Duncan Garrood £3,201 93,122 20.7% 801,875 1,424,047 145,567
Donald Grant £311 33,177 10.4% – 510,848 –
Alice Avis £1,843 53,600 n/a – – –
Martin Ratchford – – n/a – – –
Clair Preston-Beer – – n/a – – –
Lynne Fennah (former Director) £5,067 147,418 n/a – – 88,273
Stuart Beevor (former Director) £688 20,000 n/a – – –
1 Value-based on salary effective from 1 January 2023 and the closing share price on 29 December 2023 of 94.8 pence.
2 Vested awards subject to two-year holding period. 200,000 shares will become exercisable from 10 November 2025 with a further 635,834 shares becoming exercisable from 22 April 2026.
3 These are outstanding LTIP awards subject to the performance conditions disclosed in this or previous Remuneration Reports.
4 These are outstanding deferred awards granted pursuant to the annual bonus plan.
Between 31 December 2023 and the date of this Report, there were no changes in the shareholdings outlined in the above table.
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106Governance Report
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
Dec-21Jun-21 Dec-23Dec-22Jun-22 Jun-23Dec-20Jun-20Dec-19Jun-19Dec-18Jun-18Dec-17Jun-17Dec-16Jun-16Dec-15Jun-15Dec-14Jun-14
Empiric Student Property FTSE All Share Index FTSE 350 REIT Index
60
80
100
120
140
160
180
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 out turns 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
2018
1
12 months
ended
31 December
2019
12 months
ended
31 December
2020
2
12 months
ended
31 December
2021
12 months
ended
31 December
2022
12 months
ended
31 December
2023
CEO single figure of remuneration £576,263 £748,160 £314,455 £731,442 £539,500 £670,557 £361,041 £491,829 £736,453 £1,513,919
Annual bonus pay out (% of maximum) 100% 100% 50% 0% 25.1% 42% 0% 10% 61.6% 65.8%
LTIP vesting n/a n/a n/a 63.7% 0% 0% 0% 0% 0% 60.7%
3
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.
3 The performance period of two LTIP awards ended during the financial year to 31 December 2023. The first, an award of 400,000 nil-cost options, awarded on 10 November 2020, shortly after Duncan Garrood’s appointment,
achieved 50 per cent vesting. The second, an award of 800,000 nil-cost options was the standard annual grant awarded on 22 April 2021 achieved 75.2 per cent vesting. Both vesting awards are subject to a further two-year holding
period before they become exercisable, but as the performance period has ended, the value of the vesting awards are included with the single figure remuneration table for the year ended 31 December 2023. The figure shown here is
the weighted average of the two vesting percentages.
Remuneration Committee Report continued
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Governance Report
CEO Pay Ratio
The UK Companies (Miscellaneous Reporting) Regulations 2018 introduced 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 99.
The Committee assesses whether the year on year movement in the ratio is consistent with the Company’s performance and employee reward decisions.
Year Method 25th percentile pay Median pay 75th percentile pay
2023 Option A 60:1 55:1 42:1
2022 Option A 32:1 30:1 23:1
2021 Option A 25:1 22:1 17:1
2020 Option A 14:1 17:1 18:1
2019 Option A 33:1 31:1 25:1
Lower quartile Median quartile Upper quartile
Method Total pay and benefits Salary Total pay and benefits Salary Total pay and benefits Salary
2023 Option A £25,391 £24,044 £27,463 £24,044 £35,774 £30,663
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 2023 (348 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 2023 ratio is higher than previous years because it unusually includes the value of two vested LTIP awards that were granted to Duncan Garrood in November 2020 and April
2021. Although these awards were granted in separate financial years, the reporting regulations require them to both be recognised in the 2023 single figure as their respective
performance periods both ended in 2023. Excluding the value of vesting LTIP awards, which are subject to a further two-year holding period before they become exercisable, the pay
ratio remains below 2019 pre-Pandemic median, 25th and 75th percentiles, demonstrating our continued investment in the pay and reward of 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 Real 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.
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108Governance Report
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 2022 and 2023 (plus between
2021 and 2022 as set out in the prior year’s Remuneration Report). The table is presented for those Directors who held Board positions in both 2023 and 2022, therefore Donald Grant,
Clair Preston-Beer, Lynne Fennah & Stuart Beevor are not included as they did not hold office throughout both the current and prior 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 99. Average
employee disclosure is based on the full Group because the number of employees employed by the parent company is considered too small to provide a meaningful comparison.
Year to
31 December 2023
Mark Pain
change
Alice Avis
change
Martin Ratchford
change
Duncan Garrood
change
Average employee
change
Base salary / fee +0% +0% +0% +4.0% +8.3%
Benefits +0% +0% +0% +1.4% +5.7%
Annual bonus +0% +0% +0% +11.1% +15.8%
Year to
31 December 2022
Mark Pain
change
Alice Avis
change
1
Martin Ratchford
change
Duncan Garrood
change
Average employee
change
Base salary / fee +0% +21.0% +0% +2.5% +6.9%
Benefits +0% +0% +0% +0.3% +18.2%
Annual bonus +0% +0% +0% +531% +111.4%
Year to
31 December 2021
Mark Pain
change
Alice Avis
change
4
Martin Ratchford
change
2
Duncan Garrood
change
3
Average employee
change
Base salary +0% +5.6% +0% +0% +4.0%
Benefits +0% +0% +0% +0% +0%
Annual bonus +0% +0% +0% +100% -100%
Year to
31 December 2020
Mark Pain
change
Alice Avis
change
Martin Ratchford
change
Duncan Garrood
change
Average employee
change
Base salary +0% +0% +0% +0% +10.0%
Benefits +0% +0% +0% +0% +0%
Annual bonus +0% +0% +0% +0% +100%
1 Alice Avis assumed the Chair of the Remuneration Committee following Stuart Beevor’s retirement and her fee was adjusted accordingly
2 Martin Ratchford joined the Board on 1 October 2021
3 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.
4 Alice Avis was appointed Senior Independent Director from 1 October 2021 with her fee adjusted accordingly from this date.
Remuneration Committee Report continued
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Governance Report
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.
Year ended
31 December
2023
Year ended
31 December
2022
Total staff costs (Note 6 to the financial statements) £16.6m £13.9m
Total dividends £20.7m £15.2m
Internal Advice
No individual was present when their own remuneration was being discussed. The
Company Secretary acted as secretary to the Committee. The executives, Chief
Operating Officer and Head of People 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, incentive design, market
practice and the valuation of share awards inline with International Financial Reporting
Standards. Deloitte was paid £17,340 in fees during the year ended 31 December 2023 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.
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:
î Clarity: This Remuneration Report provides a straightforward and transparent
disclosure of our executive remuneration arrangements.
î 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.
î Predictability: The Policy Tables on pages 95 to 97 contain maximum opportunity levels
for executive Directors’ bonus and LTIP awards and pension provision. The charts on
page 92 of the Annual Report & Accounts 2022 provide an illustration of the potential
total reward opportunity for the executive Directors.
î 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.
î 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
At the Annual General Meeting of the Company held on 24 May 2023, shareholder
support was received for the proposed resolutions on remuneration, as summarised
below:
Votes for Votes against Votes withheld
Approval of the Directors’
Remuneration Report 387,634,869 (88.7%) 49,363,221 (11.3%) 34,409
Approval of the Remuneration
Policy 401,730,425 (91.9%) 35,262,666 (8.1%) 39,408
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.
This report was approved by the Board on 13 March 2024.
On behalf of the Board
Alice Avis MBE | Remuneration Committee Chairman
13 March 2024
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110Governance 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 2023.
The Strategic Report on pages 01 to 73 comprise the
Management Report, for the purposes of Disclosure
Guidance and Transparency Rule 4.1.5R.
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:
î Description of the business model can be found on
page 08.
î Future developments and outlook are contained within
the CEO report on page 16.
î Important events which have taken place since the end
of the financial year are set out on page 142.
î Details of financial instruments and financial risk
management objectives and policies are detailed on
page 143.
î 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 32.
î The Group’s viability statement is set out on page 37.
î Disclosures regarding the employment of disabled
people, human rights, social matters, employee
engagement and TCFD disclosures are contained within
the ESG report on page 46.
î The diversity policy of the Group and related targets
are set out on page 49 and the diversity and inclusion
statement can be found on page 49.
î How the Board fosters business relationships with
customers and suppliers is set out on page 52.
î Principal decisions taken during the year are set out on
page 73.
î Details regarding the Group’s anti-bribery policy can be
found on page 51.
î Environmental and greenhouse gas reporting can be
found on page 68.
Financial results and dividends
The financial results for the year can be found in the Group
Statement of Comprehensive Income on page 120.
Details of dividends paid and declared for the year are set
out on page 135. No dividends were waived during the year.
Directors
The names of the Directors of the Company who served
during the year are set out on pages 74 to 75. The
biographical details of the current Board are on page 74.
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 105.
Political donations
The Company made no political donations and incurred
no political expenditure during the year.
Share capital
At 31 December 2023, the total number of ordinary shares
in issue as per Note 19 to the financial statements was
603,437,683.
Restrictions on transfer of securities in the Company
There are no restrictions on the transfer of securities in
the Company, except pursuant to:
î the Listing Rules of the Financial Conduct Authority
(the “Listing Rules”), whereby certain individuals require
approval to deal in the Company’s shares; and
î 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
126. 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
2023 is appropriate.
Substantial shareholdings
As at 29 February 2024, 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:
as at 29 February 2024
Shareholder
Number of
ordinary
shares
Percentage
of ordinary
shares
Investec Wealth & Investment 49,446,213 8.19%
Blackrock 43,884,908 7.27%
Premier Miton Investors 38,002,362 6.30%
CCLA Investment Management 33,883,158 5.62%
Janus Henderson Investors 27,514,113 4.56%
East Riding of Yorkshire 27,076,822 4.49%
Legal & General 19,528,273 3.24%
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Governance Report
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 24 May
2023, the Directors were granted a general authority to
allot shares or grant rights to subscribe for or convert any
securities into ordinary shares up to an aggregate nominal
amount equal to £2,011,173, as well as an additional
authority to allot shares for the same amount on a rights
issue only.
Of these ordinary shares, the Directors were granted
authority to issue up to an aggregate nominal amount of
£603,352 of equity securities on a non-pre-emptive basis
and wholly for cash. All of these authorities will expire at
the conclusion of the Company’s 2024 Annual General
Meeting.
At the 24 May 2023 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 60,335,188
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 2024 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 76.
Independent Auditor
BDO LLP has expressed its willingness to continue as
auditor for the financial year ending 31 December 2024
and a resolution relating to its reappointment will be
tabled at the Annual General Meeting on 22 May 2024.
Disclosure of information to Auditor
The Directors who were members of the Board at the time
of approving the Directors’ Report have confirmed that:
î so far as each Director is aware, there is no relevant
audit information of which the Company’s auditor is not
aware; and
î 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 2024 Annual General Meeting will be held at 11:00
a.m. on 22 May 2024. The notice of meeting will be sent to
shareholders in April 2024.
This report was approved by the Board on 13 March 2024.
Donald Grant | Director
13 March 2024
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112Governance Report
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 in accordance with UK
adopted international accounting standards and have
elected to prepare the company financial statements in
accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting
Standards comprising FRS 101 ‘Reduced Disclosure
Framework’, and applicable law).
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:
î select suitable accounting policies and then apply them
consistently;
î make judgements and accounting estimates that are
reasonable and prudent;
î for the Group financial statements, state whether they
have been prepared in accordance with UK-adopted
International Accounting Standards, subject to any
material departures disclosed and explained in the
financial statements;
î for the Company financial statements, state whether
applicable UK Accounting Standards have been
followed, subject to any material departures disclosed
and explained in the financial statements;
î 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
î 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.
Directors’ responsibilities pursuant to DTR4
The Directors confirm that to the best of their knowledge:
î 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;
î 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
î 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
13 March 2024
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Financial Statements
Independent auditor’s report to the members of Empiric Student Property plc
OPINION ON THE FINANCIAL STATEMENTS
In our opinion:
î 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 2023 and of the Group’s profit for the year
then ended;
î the Group financial statements have been properly prepared in accordance with UK
adopted international accounting standards;
î the Parent Company financial statements have been properly prepared in accordance
with United Kingdom Generally Accepted Accounting Practice, including Financial
Reporting Standard 101 “Reduced Disclosure Framework”; and
î 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 2023 which
comprise the Consolidated Statement of Comprehensive Income, the Consolidated
Statement of Financial Position, the Company Statement of Financial Position, the
Consolidated Statement of Changes in Equity, the Company Statement of Changes in
Equity, the Consolidated Statement of Cash Flows and notes to the financial statements,
including a summary of material 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
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.
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 ended 30 June 2015 and subsequent financial periods. The period of total
uninterrupted engagement including retenders and reappointments is 10 years, covering
the years ended 30 June 2015 to 31 December 2023. 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 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. 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 included;
î We assessed the appropriateness of the going concern period, being to 31 December
2025 in light of the nature of operations being linked to the academic year cycle and
future loan maturities.
î We assessed the appropriateness of the Group’s and Parent Company’s cash flow
forecasts in the context of the Group’s and Parent Company’s 31 December 2023
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 currently obtained for the next student year.
î 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.
î 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 and Parent
Company’s future financial performance.
î Where facilities were refinanced during the year and 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.
î We reviewed the disclosures relating to the going concern basis of preparation
and considered whether these were consistent with the Directors’ going concern
assessment.
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.
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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.
Overview
Coverage
100% (2022: 100%) of Group profit before tax
100% (2022: 100%) of Group revenue
100% (2022: 100%) of Group total assets
Key audit matters
2023 2022
Valuation of investment property (excluding
properties under development) Yes Yes
Going Concern No Yes
The Going Concern assumption is no longer considered to be a key
audit matter due to the Group’s current and forecast occupancy and
the refinancing of loan facilities post year end.
Materiality
Group financial statements as a whole
£11,500,000 (2022:£11,500,000) based on 1% (2022: 1%)
of Group total assets
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.
Climate change
Our work on the assessment of potential impacts on climate-related risks on the Group’s
operations and financial statements included:
î Enquiries and challenge of management to understand the actions they have taken to
identify climate-related risks and their potential impacts on the financial statements
and adequately disclose climate-related risks within the annual report;
î Our own qualitative risk assessment taking into consideration the sector in which the
Group operates and how climate change affects this particular sector; and
î Review of the minutes of Board and Audit Committee meeting and other papers
related to climate change and performed a risk assessment as to how the impact of
the Group’s commitment as set out in the Task Force on Climate-related Financial
Disclosures (“TCFD”) may affect the financial statements and our audit.
We challenged the extent to which climate-related considerations, including the
expected cash flows from the initiatives and commitments have been reflected, where
appropriate, in management’s going concern assessment and viability assessment
and in management’s judgements and estimates in relation to the Investment Property
portfolio.
Based on our risk assessment procedures, we did not identify there to be any Key Audit
Matters materially impacted by climate-related risks and related commitments.
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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Financial Statements
Key audit matter How the scope of our audit addressed the key audit matter
Valuation of Investment
Property (excluding
commercial properties
and properties under
development)
Refer to Note 1.5
(Accounting Policies)
and Note 11 (Investment
Property).
We addressed the risk of
revenue recognition for
student rental income
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.
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
assessed through evaluating the design and operating effectiveness of relevant controls which
record and calculate straight line rent over the lease term and performing a reconciliation of total
revenue for student rental income to underlying cash receipts), number of beds per property,
projected capital expenditures, 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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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
2023
£
2022
£
2023
£
2022
£
Materiality £11,500,000 £11,500,000 £10,350,000 £10,350,000
Basis for
determining
materiality
1% of Group Total Assets 2% of Total Assets, capped at 90%
of Group materiality
Rationale for
the benchmark
applied
We determined that Group
Total Assets would be the most
appropriate basis for determining
overall materiality as we consider
this to be one of its principal
considerations for users of the
financial statements in assessing
the financial performance of the
Group.
We determined that Parent
Total Assets would be the most
appropriate basis for determining
materiality as we consider
this to be one of its principal
considerations for users of the
financial statements in assessing
the financial performance of the
Parent. This is capped at 90%
of Group materiality given the
assessment of aggregation risk.
Performance
materiality
£8,025,000 £8,025,000 £4,465,720 £4,739,250
Basis for
determining
performance
materiality
75% of materiality - in determining performance materiality we have
considered the following factors:
• Our risk assessment, including our assessment of the Group’s and
the Parent Company’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.
Specific materiality
We also determined that for certain classes of transactions and account balances 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 £1,200,000 (2022: £1,030,000). This materiality is applied
to test those items which do or may impact the measurement of 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% (2022: 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 (2022:£230,000) and for amounts impacting
EPRA earnings in excess of £60,000 (2022: £52,000). We also agreed to report
differences below this threshold 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.
We have nothing to report in this regard.
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.
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.
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Financial Statements
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 126; 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 37.
Other Code
provisions
• Directors’ statement on fair, balanced and understandable set
out on page 91;
• Board’s confirmation that it has carried out a robust assessment
of the emerging and principal risks set out on page 90;
• The section of the annual report that describes the review of
effectiveness of risk management and internal control systems
set out on page 89; and
• The section describing the work of the audit committee set out
on page 88.
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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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:
Non-compliance with laws and regulations
Based on:
î Our understanding of the Group and the industry in which it operates;
î Discussion with management and those charged with governance (including the Audit
and Risk Committee); and
î Obtaining and understanding of the Group’s policies and procedures regarding
compliance with laws and regulations;
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.
The Group is also subject to laws and regulations where the consequence of non-
compliance could have a material effect on the amount or disclosures in the financial
statements, for example through the imposition of fines or litigations. We identified such
laws and regulations to be the Fire Safety (England) Regulations 2022.
Our procedures in response to the above included:
î 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;
î 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;
î 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;
Fraud
We assessed the susceptibility of the financial statements to material misstatement,
including fraud. Our risk assessment procedures included:
î Enquiry with management and those charged with governance, including the Audit
Committee, regarding any known or suspected instances of fraud;
î Obtaining an understanding of the Group’s policies and procedures relating to:
î Detecting and responding to the risks of fraud; and
î Internal controls established to mitigate risks related to fraud.
î 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 actual or potential claims or fraud;
î Discussion amongst the engagement team as to how and where fraud might occur in
the financial statements;
î Performing analytical procedures to identify any unusual or unexpected relationships
that may indicate risks of material misstatement due to fraud; and
î Considering remuneration incentive schemes and performance targets and the related
financial statement areas impacted by these.
Based on our risk assessment, 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 respect of the above included:
î We addressed the risk of revenue recognition for student rental income through
involving internal IT specialists who reviewed the design and operating effectiveness
of relevant controls which automatically record and calculate straight line rent over
the lease term. We also performed a reconciliation of total revenue for student rental
income to underlying cash receipts. In addition, we tested a sample of manual journals
processed during the year to supporting documentation and evaluating whether there
was evidence of management override due to fraud; and
î 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.
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Financial Statements
We also communicated relevant identified laws and regulations and potential fraud risks
to all engagement team members who were all deemed to have appropriate competence
and capabilities 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
13 March 2024
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
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120Financial Statements
Note
Year ended
31 December
2023
| Consolidated Statement of Comprehensive Income | |||
| Year ended | |||
| 31 December | |||
| 2022 | |||
| £m | £m | ||
| Continuing operations | |||
Revenue | 2 | ||
Property expenses | 3 | ( | ( |
Gross profit | |||
Administrative expenses | 4 | ( | ( |
Change in fair value of investment property | 11 | ||
Operating profit | |||
Finance costs | 5 | ( | ( |
Finance income | 5 | ||
Derivative fair value movement | ( | ||
Net (loss)/gain on disposal of investment property | ( | ||
Profit before income tax | |||
Corporation tax | 7 | ||
Profit for the year and total comprehensive income | |||
Earnings per share expressed in pence per share | 8 | ||
Basic | |||
Diluted |
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Financial Statements
Consolidated Statement of Financial Position
| At | At | At | At | |||
| 31 December | 31 December | 31 December | ||||
| 2023 | 2022 | 2023 | ||||
| Note | £m | £m | Note | £m | ||
| ASSETS | ||||||
| Non-current assets | ||||||
Investment property – Operational Assets | 11 | |||||
Investment property – Development Assets | 11 | |||||
Property, plant and equipment | 13 | |||||
Intangible assets | 12 | |||||
Right of use asset | ||||||
Total non-current assets | ||||||
| Current assets | ||||||
Trade and other receivables | 14 | |||||
Assets classified as held for sale | 15 | |||||
Cash and cash equivalents | 16 | |||||
Derivative fair value | ||||||
Total current assets | ||||||
Total assets | ||||||
| LIABILITIES | ||||||
| Current liabilities | ||||||
Trade and other payables | 17 | |||||
Borrowings | 18 | |||||
Lease liability | ||||||
Deferred income | 17 | |||||
Total current liabilities | ||||||
| Non-current liabilities | ||||||
Borrowings | 18 | |||||
Lease liability | ||||||
Total non-current liabilities | ||||||
Total liabilities | ||||||
Total net assets |
| 31 December | |||
| 2022 | |||
| £m | |||
| Equity | |||
Called up share capital | 19 | ||
Share premium | 20 | ||
Capital reduction reserve | 21 | ||
Retained earnings | |||
Total equity | |||
Total equity and liabilities | |||
Net Asset Value per share basic (pence) | 9 | ||
Net Asset Value per share diluted (pence) | 9 | ||
EPRA NTA per share (pence) | 9 |
These financial statements were approved by the Board of Directors on 13 March 2024
and signed on its behalf by:
Donald Grant | Director
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122Financial Statements
Company Statement of Financial Position
Note
At
31 December
2023
£m
At
31 December
2022
£m
Fixed assets
Investments in subsidiaries 30 222.6 222.6
Property, plant and equipment 13 0.7 1.0
Intangible assets 12 3.1 1.9
Right of use asset 1.2 1.3
Total fixed assets 227.6 226.8
Current assets
Amounts due from Group undertakings 14 391.4 400.5
Trade and other receivables 14 0.7 0.3
Cash and cash equivalents 16 2.4 4.3
Total current assets 394.5 405.1
Current creditors
Amounts due to Group undertakings 17 111.0 87.8
Trade and other payables 17 3.4 3.1
Lease Liability 0.1 0.1
Total current creditors 114.5 91.0
Total assets less current liabilities 507.6 540.9
Net current assets 280.0 314.1
Non-current creditors
Lease liability 1.0 1.2
Total non-current creditors 1.0 1.2
Total net assets 506.6 539.7
Note
At
31 December
2023
£m
At
31 December
2022
£m
Capital and reserves
Called up share capital 19 6.0 6.0
Share premium 20 0.3 0.3
Capital reduction reserve 21 424.1 444.7
Retained earnings 76.2 88.7
Total capital and reserves 506.6 539.7
The Company made a loss for the year of £13.1 million (2022: profit of £45.9 million).
These financial statements were approved by the Board of Directors on 13 March 2024
and signed on its behalf by:
Donald Grant | Director
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Financial Statements
Consolidated Statement of Changes in Equity
| Capital | |||||
| Called up | Share | reduction | Retained | Total | |
| share capital | premium | reserve | earnings | equity | |
| Year ended 31 December 2023 | £m | £m | £m | £m | £m |
Balance at 1 January 2023 | |||||
Profit for the year | |||||
Total comprehensive income for the year | |||||
Share-based payments | |||||
Reserves transfer | ( | ||||
Dividends | ( | ( | |||
Amounts recognised directly in equity | ( | ( | |||
Balance at 31 December 2023 | |||||
Balance at 1 January 2022 | |||||
Profit for the year | |||||
Total comprehensive income for the year | |||||
Share-based payments | |||||
Dividends | ( | ( | |||
Amounts recognised directly in equity | ( | ( | |||
Balance at 31 December 2022 |
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124Financial Statements
Company Statement of Changes in Equity
Year ended 31 December 2023
Called up
Share
capital
£m
Share
premium
£m
Capital
reduction
reserve
£m
Retained
earnings
£m
Total
equity
£m
Balance at 1 January 2023 6.0 0.3 444.7 88.7 539.7
Loss for the year – – – (13.1) (13.1)
Total comprehensive income for the year – – – (13.1) (13.1)
Share-based payments – – – 0.7 0.7
Reserves transfer – – 0.1 (0.1) –
Dividends – – (20.7) – (20.7)
Amounts recognised directly in equity – – (20.6) 0.6 (20.0)
Balance at 31 December 2023 6.0 0.3 424.1 76.2 506.6
Balance at 1 January 2022 6.0 0.3 459.9 42.1 508.3
Profit for the year – – – 45.9 45.9
Total comprehensive income for the year – – – 45.9 45.9
Share-based payments – – – 0.7 0.7
Dividends – – (15.2) – (15.2)
Amounts recognised directly in equity – – (15.2) 0.7 (14.5)
Balance at 31 December 2022 6.0 0.3 444.7 88.7 539.7
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Financial Statements
Consolidated Statement of Cash Flows
| Year ended | Year ended | |
| 31 December | 31 December | |
| 2023 | 2022 | |
| £m | £m | |
| Cash flows from operating activities | ||
Profit before income tax | ||
Share-based payments expense | ||
Depreciation and amortisation | ||
Finance costs | ||
Finance income | ( | |
Loss/(gain) on disposal of investment property | ( | |
Change in fair value of investment property | ( | ( |
Change in fair value of derivative | ||
(Increase)/decrease in trade and other receivables | ||
(Decrease)/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 | ||
Finance income | ||
Net cash flows from/(used in) investing activities | ( |
| Year ended | Year ended | |
| 31 December | 31 December | |
| 2023 | 2022 | |
| £m | £m | |
| Cash flows from financing activities | ||
Dividends paid | ( | ( |
Bank borrowings drawn | ||
Bank borrowings repaid | ( | ( |
Loan arrangement fee paid | ( | ( |
Lease liability paid | ( | ( |
Interest rate cap premium | ( | |
Finance costs | ( | ( |
Net cash flows used in financing activities | ( | ( |
(Decrease)/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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Notes to the Financial Statements
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Financial Statements
1. ACCOUNTING POLICIES continued
1.4 Going Concern continued
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1. ACCOUNTING POLICIES continued
1.5 Significant Accounting Estimates and Judgements continued
Summary of Material Accounting Policies
Notes to the Financial Statements | continued
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Financial Statements
1. ACCOUNTING POLICIES continued
1.5 Significant Accounting Estimates and Judgements continued
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1. ACCOUNTING POLICIES continued
1.5 Significant Accounting Estimates and Judgements continued
| 2. REVENUE | ||
| Group | ||
| Year ended | Year ended | |
| 31 December | 31 December | |
| 2023 | 2022 | |
| £m | £m | |
Student rental income | 79.0 | 71.4 |
Commercial rental income | 1.5 | 1.6 |
Total revenue | 80.5 | 73.0 |
| 3. PROPERTY EXPENSES | ||
| Group | ||
| Year ended | Year ended | |
| 31 December | 31 December | |
| 2023 | 2022 | |
| £m | £m | |
Direct site costs (income generating properties) | 5.0 | 5.7 |
Technology services | 0.7 | 0.6 |
Site office and utilities | 14.3 | 12.2 |
Cleaning and service contracts | 3.3 | 3.3 |
Repairs and maintenance | 1.9 | 2.2 |
Total property expenses | 25.2 | 24.0 |
Notes to the Financial Statements | continued
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Financial Statements
| Group | ||
| Year ended | Year ended | |
| 31 December | 31 December | |
| 2023 | 2022 | |
| £m | £m | |
| Finance costs | ||
Interest expense on bank borrowings | 16.2 | 14.0 |
Amortisation of loan transaction costs | 1.2 | 1.0 |
17.4 | 15.0 | |
| Finance income | ||
Interest received on bank deposits | 0.2 | – |
Net finance costs | 17.2 | 15.0 |
6. EMPLOYEES AND DIRECTORS
Group | Company | |||
| Year ended | Year ended | Year ended | Year ended | |
| 31 December | 31 December | 31 December | 31 December | |
| 2023 | 2022 | 2023 | 2022 | |
| £m | £m | £m | £m | |
Wages and salaries | 12.3 | 10.7 | 5.2 | 4.4 |
Pension costs | 0.7 | 0.5 | 0.5 | 0.2 |
Cash bonus | 1.3 | 0.9 | 0.9 | 0.5 |
Share-based payments | 0.9 | 0.7 | 0.9 | 0.7 |
National insurance | 1.4 | 1.1 | 0.6 | 0.6 |
16.6 | 13.9 | 8.1 | 6.4 | |
| Less: Hello Student employee costs | ||||
included within property expenses | (7.7) | (6.5) | – | – |
| Amounts included in administrative | ||||
expenses | 8.9 | 7.4 | 8.1 | 6.4 |
The average monthly number of employees: | ||||
Management – Company | 5 | 8 | 5 | 8 |
Administration – Company | 60 | 52 | 60 | 52 |
| Operations – Hello Student | ||||
Management Limited | 293 | 280 | – | – |
358 | 340 | 65 | 60 |
Directors’ remuneration
| Group | ||
| Year ended | Year ended | |
| 31 December | 31 December | |
| 2023 | 2022 | |
| £m | £m | |
Salaries and fees | 1.0 | 1.1 |
Pension costs | 0.1 | 0.1 |
Bonus | 0.5 | 0.3 |
Share-based payments | 0.6 | 0.6 |
2.2 | 2.1 |
A summary of the Directors’ emoluments, including the disclosures required by the
Companies Act 2006 is set out in the Directors’ Remuneration Report.
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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:
î 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;
î at least 75% of the Group’s total profits must arise from the tax-exempt property rental
business; and
î at least 90% of the tax exempt profit of the property rental business (excluding gains)
of the accounting period must be distributed.
In addition, the full UK corporation tax exemption in respect of the profits of the property
rental business will not be available if the profit financing cost ratio in respect of the
property rental business is less than 1.25.
The Directors intend that the Group should continue as a REIT for the foreseeable future,
with the result that deferred tax is not required to be recognised in respect of temporary
differences relating to the property rental business.
| Group | ||
| Year ended | Year ended | |
| 31 December | 31 December | |
| 2023 | 2022 | |
| £m | £m | |
| Current tax | ||
Income tax charge for the year | – | – |
Adjustment in respect of prior year | – | – |
Total current income tax charge in the income statement | – | – |
| Deferred tax | ||
Total deferred income tax charge in the income statement | – | – |
Total current income tax charge in the income statement | – | – |
The tax assessed for the year is lower than the standard rate of corporation tax in the year | ||
Profit for the year | 53.4 | 67.7 |
Profit before tax multiplied by the rate of corporation tax in the UK of 23.5% (2022: 19%) | 12.5 | 12.9 |
Exempt property rental profits in the year | (9.1) | (6.4) |
Exempt property revaluations in the year | (7.1) | (8.7) |
| Effects of: | ||
Non-allowable expenses | 0.1 | 0.2 |
Unutilised current year tax losses | 3.6 | 2.0 |
Total current income tax charge in the income statement | – | – |
No deferred tax asset has been recognised in respect of gross tax losses of £48.8
million (2022: £34.5 million), accelerated capital allowances of £3.8 million (2022: £2.7
million) and share based payments of £2.1 million (2022: £1.5 million) on the basis that
the business is not expected to generate taxable profits in future periods against which
these amounts can be applied. Therefore, a deferred tax asset of £13.1 million (2022: £9.7
million) has not been recognised in respect of such timing differences.
An increase in the UK corporation rate from 19% to 25% (effective 1 April 2023) was
substantively enacted on 24 May 2021, therefore a hybrid rate of 23.5% has been used.
By virtue of the Company’s status as a UK REIT, this should not materially increase the
Company’s future current tax charge. The deferred tax at 31 December 2023 has been
calculated based on these rates, reflecting the expected timing of reversal of the related
temporary differences.
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Financial Statements
8. EARNINGS PER SHARE
The number of shares used in the calculation of basic earnings per share is based on the
time weighted average number of shares throughout the year.
Basic EPS is calculated by dividing the earnings attributable to ordinary shareholders by
the weighted average number of ordinary shares outstanding during the year.
Diluted EPS is calculated using the weighted average number of shares adjusted to
assume the conversion of all dilutive potential ordinary shares.
EPRA EPS, reported on the basis recommended for real estate companies by EPRA, is
a key measure of the Group’s operating results, and used by the Board to assess the
Group’s dividend payments.
The calculation of each of the measures set out below:
Year to 31 December 2023
| Calculation | Calculation of | |||
| Calculation of | Calculation of | of EPRA basic | EPRA diluted | |
| basic EPS | diluted EPS | EPS | EPS | |
| £m | £m | £m | £m | |
Earnings per IFRS statement of comprehensive income | 53.4 | 53.4 | 53.4 | 53.4 |
| Adjustments to remove: | ||||
| Loss on disposal of investment | ||||
property | – | – | 0.6 | 0.6 |
| Changes in fair value of investment | ||||
property (Note 11) | – | – | (30.1) | (30.1) |
| Loss on derivative financial | ||||
instruments | 0.2 | 0.2 | ||
Earnings | 53.4 | 53.4 | 24.1 | 24.1 |
| Weighted average number | ||||
of shares (m) | 603.4 | 603.4 | 603.4 | 603.4 |
| Adjustment for employee share | ||||
options (m) | – | 4.6 | – | 4.6 |
Total number shares (m) | 603.4 | 608.0 | 603.4 | 608.0 |
Earnings per share (pence) | 8.8 | 8.8 | 4.0 | 4.0 |
| Calculation | Calculation of | |||
| Calculation of | Calculation of | of EPRA basic | EPRA diluted | |
| basic EPS | diluted EPS | EPS | EPS | |
| Year to 31 December 2022 | £m | £m | £m | £m |
Earnings per IFRS statement of comprehensive income | 67.7 | 67.7 | 67.7 | 67.7 |
| Adjustments to remove: | ||||
| Gain on disposal of investment | ||||
property | – | – | (1.5) | (1.5) |
| Changes in fair value of investment | ||||
property (Note 11) | – | – | (45.6) | (45.6) |
Earnings | 67.7 | 67.7 | 20.6 | 20.6 |
| Weighted average number | ||||
of shares (m) | 603.3 | 603.3 | 603.3 | 603.3 |
| Adjustment for employee share | ||||
options (m) | – | 3.9 | – | 3.9 |
Total number shares (m) | 603.3 | 607.2 | 603.3 | 607.2 |
Earnings per share (pence) | 11.2 | 11.1 3.4 3.4 |
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134Financial Statements
9. NET ASSET VALUE PER SHARE
The principles of the three EPRA measures are set out below:
EPRA Net Reinstatement Value (“NRV”): Assumes that entities never sell assets and aims
to represent the value required to reinstate entity assets.
EPRA Net Tangible Assets (“NTA”): Assumes that entities buy and sell assets, which
crystalises unavoidable deferred tax.
EPRA Net Disposal Value (“NDV”): Represents the shareholders’ value under a disposal
scenario, where deferred tax, financial instruments and certain other adjustments are
calculated to the full extent of their liability, net of any resulting tax. As the Group is a
REIT, no adjustment is made for deferred tax.
The Group considers EPRA NTA to be the most relevant measure and this is used as the
Group’s primary NAV measure.
A reconciliation of the three EPRA NAV metrics from IFRS NAV is shown in the table below.
NAV | EPRA NAV measures | |||
| EPRA | EPRA | EPRA | ||
| IFRS | NTA | NRV | NDV | |
| Year ended 31 December 2023 | £m | £m | £m | £m |
| Net assets per Statement | ||||
of Financial Position | 734.2 | 734.2 | 734.2 | 734.2 |
| Adjustments: | ||||
Fair value of fixed rate debt | – | – | – | 10.5 |
Derivative fair value | – | (0.1) | (0.1) | – |
Purchaser’s costs 1 | – | – | 37.1 | – |
| Net assets used in per share | ||||
calculation | 734.2 | 734.1 | 771.2 | 744.7 |
| Number of shares in issue | ||||
Issued share capital (m) | 603.4 | 603.4 | 603.4 | 603.4 |
| Issued share capital plus employee | ||||
options (m) | 608.0 | 608.0 | 608.0 | 608.0 |
| Net Asset Value per share | ||||
| Basic Net Asset Value per share | ||||
(pence) | 121.7 | |||
| Diluted Net Asset Value per share | ||||
(pence) | 120.8 | 120.7 | 126.8 | 122.5 |
Year ended 31 December 2022
NAV | EPRA NAV measures | |||
| EPRA | EPRA | EPRA | ||
| IFRS | NTA | NRV | NDV | |
| £m | £m | £m | £m | |
| Net assets per Statement of Financial | ||||
Position | 700.8 | 700.8 | 700.8 | 700.8 |
| Adjustments: | ||||
Fair value of fixed rate debt | – | – | – | 15.3 |
| Purchaser’s costs | – | – | 38.5 | – |
| Net assets used in per share | ||||
calculation | 700.8 | 700.8 | 739.3 | 716.1 |
| Number of shares in issue | ||||
Issued share capital (m) | 603.4 | 603.4 | 603.4 | 603.4 |
| Issued share capital plus employee | ||||
options (m) | 607.2 | 607.2 | 607.2 | 607.2 |
| Net Asset Value per share | ||||
| Basic Net Asset Value per share | ||||
(pence) | 116.1 | |||
| Diluted Net Asset Value per share | ||||
(pence) | 115.4 | 115.4 | 121.8 | 117.9 |
1
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.
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Financial Statements
| Group and Company | ||
| Year ended | Year ended | |
| 31 December | 31 December | |
| 2023 | 2022 | |
| £m | £m | |
| Interim dividend of 0.625 pence per ordinary share in respect | ||
of the quarter ended 31 December 2021 | 3.8 | |
| Interim dividend of 0.625 pence per ordinary share in respect | ||
of the quarter ended 31 March 2022 | 3.8 | |
| Interim dividend of 0.625 pence per ordinary share in respect | ||
of the quarter ended 30 June 2022 | 3.8 | |
| Interim dividend of 0.625 pence per ordinary share in respect | ||
of the quarter ended 30 September 2022 | 3.8 | |
| Interim dividend of 0.875 pence per ordinary share in respect | ||
of the quarter ended 31 December 2022 | 5.3 | |
| Interim dividend of 0.8125 pence per ordinary share in respect | ||
of the quarter ended 31 March 2023 | 4.9 | |
| Interim dividend of 0.8125 pence per ordinary share in respect | ||
of the quarter ended 30 June 2023 | 4.9 | |
| Interim dividend of 0.9375 pence per ordinary share in respect | ||
of the quarter ended 30 September 2023 | 5.6 | |
20.7 | 15.2 |
| Group | |||||
| Investment | Investment | Total | Property | Total | |
| property | property | operational | under | investment | |
| freehold | long leasehold | assets | development | property | |
| Year ended 31 December 2023 | £m | £m | £m | £m | £m |
As at 1 January 2023 | 920.4 | 142.0 | 1,062.4 | 3.3 | 1,065.7 |
Capital expenditure | 29.7 | 2.8 | 32.5 | – | 32.5 |
| Sale of investment | |||||
property | (12.0) | (18.2) | (30.2) | – | (30.2) |
| Transfer to held for sale | |||||
asset | (22.4) | – | (22.4) | – | (22.4) |
| Change in fair value | |||||
during the year | 24.3 | 6.1 | 30.4 | (0.3) | 30.1 |
As at 31 December 2023 | 940.0 | 132.7 | 1,072.7 | 3.0 | 1,075.7 |
| Group | |||||
| Investment | |||||
| Investment | property | Total | Property | Total | |
| property | long | operational | under | investment | |
| freehold | leasehold | assets | development | property | |
| £m | £m | £m | £m | £m | |
As at 1 January 2022 | 835.5 | 131.7 | 967.2 | 28.7 | 995.9 |
Capital expenditure | 12.9 | 2.3 | 15.2 | 15.2 | 30.4 |
Property acquisitions | 19.3 | – | 19.3 | – | 19.3 |
Reclassification | (8.6) | 8.6 | – | – | – |
| Transfer of completed | |||||
developments | 52.9 | – | 52.9 | (52.9) | – |
| Sale of investment | |||||
property | (11.8) | – | (11.8) | – | (11.8) |
| Transfer to held for sale | |||||
asset | (13.7) | – | (13.7) | – | (13.7) |
| Change in fair value | |||||
during the year | 33.9 | (0.6) | 33.3 | 12.3 | 45.6 |
As at 31 December 2022 | 920.4 | 142.0 | 1,062.4 | 3.3 | 1,065.7 |
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136Financial Statements
11. INVESTMENT PROPERTY continued
The valuation of all property assets uses market evidence and includes assumptions
regarding income expectations and yields that investors would expect to achieve on
those assets over time. Those assumptions also reflect the high level of current interest
rates and the high inflationary environment. Many external economic and market factors,
such as interest rate expectations, bond yields, the availability and cost of finance and
the relative attraction of property against other asset classes, could lead to a reappraisal
of the assumptions used to arrive at current valuations. In adverse conditions, this
reappraisal can lead to a reduction in property values and a loss in Net Asset Value.
The table below reconciles between the fair value of the investment property per
the Consolidated Statement of Financial Position and investment property per the
independent valuation performed in respect of each year end.
| Group | ||
| As at | As at | |
| 31 December | 31 December | |
| 2023 | 2022 | |
| £m | £m | |
Value per independent valuation report | 1,097.9 | 1,078.9 |
Add: Head lease | 0.2 | 0.5 |
Deduct: Assets classified as held for sale | (22.4) | (13.7) |
Fair value per Consolidated Statement of Financial Position | 1,075.7 | 1,065.7 |
Fair Value Hierarchy
The following table provides the fair value measurement hierarchy for investment
property:
| Quoted | ||||
| prices | Significant | Significant | ||
| inputs | observable | unobservable | ||
| markets | inputs | inputs | ||
| Total | (Level 1) | (Level 2) | (Level 3) | |
| Date of valuation 31 December 2023 | £m | £m | £m | £m |
| Assets measured at fair value: | ||||
Student property | 1,082.1 | – | – | 1,082.1 |
Commercial property | 15.8 | – | – | 15.8 |
As at 31 December 2023 | 1,097.9 | – | – | 1,097.9 |
| Quoted prices | Significant | Significant | ||
| in active | observable | unobservable | ||
| markets | inputs | inputs | ||
| Total | (Level 1) | (Level 2) | (Level 3) | |
| Date of valuation 31 December 2022 | £m | £m | £m | £m |
| Assets measured at fair value: | ||||
Student property | 1,046.5 | – | – | 1,046.5 |
Commercial property | 19.2 | – | – | 19.2 |
As at 31 December 2022 | 1,065.7 | – | – | 1,065.7 |
There have been no transfers between Level 1 and Level 2 during the year, nor have there
been any transfers between Level 2 and Level 3 during the year.
The valuations have been prepared on the basis of market value which is defined in the
RICS Valuation Standards, as:
“The estimated amount for which a property should exchange on the date of valuation
between a willing buyer and a willing seller in an arm’s-length transaction after proper
marketing wherein the parties had each acted knowledgeably, prudently and without
compulsion.”
Market value as defined in the RICS Valuation Standards is the equivalent of fair value
under IFRS.
The following descriptions and definitions relate to valuation techniques and key
unobservable inputs made in determining fair values. The valuation techniques for
student property uses a discounted cash flow with the following inputs:
(a) Unobservable input: Rental income
The rent at which space could be let in the market conditions prevailing at the date of
valuation. Range £96 per week–£493 per week with a weighted average weekly rent of
£219 (31 December 2022: £91–£461 per week, weighted average £184).
(b) Unobservable input: Rental growth
The estimated average increase in rent based on both market estimations and
contractual arrangements. Assumed rental growth of 6.2% used in valuations (31
December 2022: growth of 5.2%).
(c) Unobservable input: Net initial yield
The net initial yield is defined as the initial net income as a percentage of the market value
(or purchase price as appropriate) plus standard costs of purchase.
Range: 4.5%–8.9%, with a weighted average of 5.5% (31 December 2022: 4.5%–8.7%,
weighted average 5.2%).
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Financial Statements
11. INVESTMENT PROPERTY continued
(d) Unobservable input: Physical condition of the property
| +0.25% | |||||
| change | change | ||||
| in yield | in yield | ||||
| £m | £m | ||||
| (Decrease)/increase | |||||
in the fair value of investment property | (4.9) | (45.1) | 45.0 | 55.5 | (50.5) |
| 15% increase | -3% change | +3% change | -0.25% | +0.25% | |
| in cost of EWS | in rental | in rental | change | change | |
| Works | income | income | in yield | in yield | |
| As at 31 December 2022 | £m | £m | £m | £m | £m |
| (Decrease)/increase | |||||
in the fair value of investment property | (3.4) | (43.3) | 45.6 | 54.3 | (47.2) |
| 12. INTANGIBLE ASSETS | |
| Group and | |
| Company | |
| NAVision | |
| development | |
| Year ended 31 December 2023 | £m |
| Costs | |
As at 1 January 2023 | 3.0 |
Additions | 1.6 |
As at 31 December 2023 | 4.6 |
| Amortisation | |
As at 1 January 2023 | (1.1) |
Charge for the year | (0.4) |
As at 31 December 2023 | (1.5) |
| Net book value | |
As at 31 December 2023 | 3.1 |
| Group and | |
| Company | |
| NAVision | |
| development | |
| Year ended 31 December 2022 | £m |
| Costs | |
As at 1 January 2022 | 2.2 |
Additions | 0.8 |
As at 31 December 2022 | 3.0 |
| Amortisation | |
As at 1 January 2022 | (0.9) |
Charge for the year | (0.2) |
As at 31 December 2022 | (1.1) |
| Net book value | |
As at 31 December 2022 | 1.9 |
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138Financial Statements
13. PROPERTY, PLANT AND EQUIPMENT
Group | Company | |||||
| Fixtures | Fixtures | |||||
| and | Computer | and | Computer | |||
| fittings | equipment | Total | fittings | equipment | Total | |
| Year ended 31 December 2023 | £m | £m | £m | £m | £m | £m |
| Costs | ||||||
As at 1 January 2023 | 1.7 | 0.6 | 2.3 | 1.7 | 0.3 | 2.0 |
Additions | 0.1 | – | 0.1 | – | – | – |
As at 31 December 2023 | 1.8 | 0.6 | 2.4 | 1.7 | 0.3 | 2.0 |
| Depreciation | ||||||
As at 1 January 2023 | (0.8) | (0.4) | (1.2) | (0.8) | (0.2) | (1.0) |
Charge for the year | (0.3) | (0.1) | (0.4) | (0.2) | (0.1) | (0.3) |
As at 31 December 2023 | (1.1) | (0.5) | (1.6) | (1.0) | (0.3) | (1.3) |
| Net book value | ||||||
As at 31 December 2023 | 0.7 | 0.1 | 0.8 | 0.7 | – | 0.7 |
Year ended 31 December 2022
Group | Company | |||||
| Fixtures | Fixtures | |||||
| and | Computer | and | Computer | |||
| fittings | equipment | Total | fittings | equipment | Total | |
| £m | £m | £m | £m | £m | £m | |
| Costs | ||||||
As at 1 January 2022 | 0.9 | 0.4 | 1.3 | 0.9 | 0.2 | 1.1 |
Additions | 0.8 | 0.2 | 1.0 | 0.8 | 0.1 | 0.9 |
As at 31 December 2022 | 1.7 | 0.6 | 2.3 | 1.7 | 0.3 | 2.0 |
| Depreciation | ||||||
As at 1 January 2022 | (0.6) | (0.3) | (0.9) | (0.6) | (0.2) | (0.8) |
Charge for the year | (0.2) | (0.1) | (0.3) | (0.2) | – | (0.2) |
As at 31 December 2022 | (0.8) | (0.4) | (1.2) | (0.8) | (0.2) | (1.0) |
| Net book value | ||||||
As at 31 December 2022 | 0.9 | 0.2 | 1.1 | 0.9 | 0.1 | 1.0 |
Group | Company | |||
| 31 December | 31 December | 31 December | 31 December | |
| 2023 | 2022 | 2023 | 2022 | |
| £m | £m | £m | £m | |
Trade receivables | 1.4 | 1.4 | – | – |
Other receivables | 1.6 | 2.2 | 0.3 | 0.1 |
Prepayments | 3.3 | 3.2 | 0.4 | 0.1 |
VAT recoverable | 0.2 | 0.2 | – | 0.1 |
6.5 | 7.0 | 0.7 | 0.3 | |
| Amounts due from Group | ||||
undertakings | – | – | 391.4 | 400.5 |
6.5 | 7.0 | 392.1 | 400.8 | |
| In the Company, amounts owed from Group undertakings are classified as due within one |
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Financial Statements
14. TRADE AND OTHER RECEIVABLES continued
15. HELD FOR SALE ASSETS
Management considers that three properties (2022: one property) meet the conditions
relating to assets held for sale under IFRS 5: Non-current Assets Held for Sale. The
combined fair value in these financial statements is £22.4 million (2022: £13.7 million).
With the assets being actively marketed, management expects the sales to be completed
in 2024.
All assets held for sale fall within ‘Level 3’ as defined by IFRS. There have been no transfers
within the fair value hierarchy during the year.
Group | Company | |||
| 31 December | 31 December | 31 December | 31 December | |
| 2023 | 2022 | 2023 | 2022 | |
| £m | £m | £m | £m | |
Trade payables | 1.3 | 1.9 | 0.3 | 0.6 |
Other payables | 4.2 | 5.4 | 0.2 | 0.3 |
Accruals | 17.9 | 17.5 | 2.9 | 2.2 |
23.4 | 24.8 | 3.4 | 3.1 | |
| Amounts owed to Group | ||||
undertakings | – | – | 111.0 | 87.8 |
23.4 | 24.8 | 114.4 | 90.9 | |
| The Directors consider that the carrying value of trade and other payables approximates | ||||
| to their fair value. | ||||
| Amounts owed to Group undertakings are interest free and repayable on demand. | ||||
| At 31 December 2023, there was deferred rental income of £34.9 million (2022: £33.1 |
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| Group | ||||||
| Bank | Bank | Bank | Bank | |||
| borrowings | borrowings | borrowings | borrowings | |||
| drawn | undrawn | Total | drawn | undrawn | Total | |
| 31 December | 31 December | 31 December | 31 December | 31 December | 31 December | |
| 2023 | 2023 | 2023 | 2022 | 2022 | 2022 | |
| £m | £m | £m | £m | £m | £m | |
At 1 January | 391.2 | 20.0 | 411.2 | 375.0 | 67.5 | 442.5 |
| Bank borrowings | ||||||
repaid | (30.9) | 24.6 | (6.3) | (20.0) | (11.3) | (31.3) |
| Part cancellation | ||||||
| of revolving credit | ||||||
facility | – | (22.6) | (22.6) | – | – | – |
| Unsecured facility | ||||||
refinanced | – | 20.0 | 20.0 | – | – | – |
| Bank borrowings | ||||||
drawn in the year | – | – | – | 36.2 | (36.2) | – |
At 31 December | 360.3 | 42.0 | 402.3 | 391.2 | 20.0 | 411.2 |
| Group | ||
| 31 December | 31 December | |
| 2023 | 2022 | |
| Non-current | £m | £m |
Balance brought forward | 391.2 | 330.0 |
Total bank borrowings in the year | – | 36.2 |
Bank borrowings becoming non-current in the year | – | 45.0 |
Less: Bank borrowings becoming current in the year | (57.7) | – |
Less: Bank borrowings repaid during the year | (30.9) | (20.0) |
Bank borrowings drawn: due in more than one year | 302.6 | 391.2 |
Less: Unamortised costs | (2.4) | (4.7) |
Bank borrowings due in more than one year | 300.2 | 386.5 |
| Group | ||
| 31 December | 31 December | |
| 2023 | 2022 | |
| Current | £m | £m |
Balance brought forward | – | 45.0 |
Total bank borrowings in the year | – | – |
Less: Bank borrowings becoming non-current in the year | – | (45.0) |
Bank borrowings becoming current in the year | 57.7 | – |
Bank borrowings drawn: due in less than one year | 57.7 | – |
Less: Unamortised costs | (1.2) | – |
Bank borrowings due in less than one year | 56.5 | – |
| Maturity of Bank Borrowings |
| Group | ||
| 31 December | 31 December | |
| 2023 | 2022 | |
| £m | £m | |
Repayable in less than one year | 57.7 | – |
Repayable between one and two years | 45.4 | 64.0 |
Repayable between two and five years | 206.1 | 70.0 |
Repayable in over five years | 51.1 | 257.2 |
Bank borrowings | 360.3 | 391.2 |
Notes to the Financial Statements | continued
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18. BANK BORROWINGS continued
| Group | ||
| 31 December | 31 December | |
| 2023 | 2022 | |
| £m | £m | |
Carrying value of fixed rate borrowings | 270.9 | 277.2 |
Fair value adjustment | (10.5) | (15.3) |
Fair value of fixed rate borrowings | 260.4 | 261.9 |
Group and Company | Group and Company | |||
| 31 December | 31 December | 31 December | 31 December | |
| 2023 | 2023 | 2022 | 2022 | |
| Number | £m | Number | £m | |
Balance brought forward | 603,351,880 | 6.0 | 603,203,052 | 6.0 |
| Share options exercised | ||||
| (including dividend | ||||
equivalence) | 85,803 | – | 148,828 | – |
Balance carried forward | 603,437,683 | 6.0 | 603,351,880 | 6.0 |
| Group and Company | ||
| 31 December | 31 December | |
| 2023 | 2022 | |
| £m | £m | |
Balance brought forward | 0.3 | 0.3 |
Balance carried forward | 0.3 | 0.3 |
| Group and Company | ||
| 31 December | 31 December | |
| 2023 | 2022 | |
| £m | £m | |
Balance brought forward | 444.7 | 459.9 |
Reserves transfer | 0.1 | – |
Less interim dividends declared and paid per Note 10 | (20.7) | (15.2) |
Balance carried forward | 424.1 | 444.7 |
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| Group | ||
| 31 December | 31 December | |
| 2023 | 2022 | |
| £m | £m | |
Less than one year | 20.1 | 56.2 |
Between one and two years | 1.2 | 1.5 |
Between two and three years | 1.1 | 1.4 |
Between three and four years | 0.9 | 1.3 |
Between four and five years | 0.7 | 1.1 |
More than five years | 5.9 | 6.0 |
Total | 29.9 | 67.5 |
| The above relates to assured shorthold tenancies (ASTs) and commercial leases in place |
26. SUBSEQUENT EVENTS
On 8 January 2024, 11 subsidiaries of the Group entered a solvent members voluntary
liquidation in the ordinary course of business. Please refer to Note 30 for further details.
On 16 February 2024, the Group completed on the acquisition of 32-36 College House,
Bristol for consideration of £5.6 million.
On 6 March 2024, the UK Government announced the abolition of Multiple Dwellings
Relief (“MDR”) by repealing Schedule 6B of the Finance Act 2023. The removal of MDR will
increase purchaser cost assumptions applied to valuations of the Group’s Investment and
Held for Sale properties. Full purchaser cost assumptions are already in place in respect
of a number of the Group’s property valuations and this change does not currently apply
to Scottish or Welsh properties. On the assumption that it will, the estimated impact of
this change is a £35 million reduction in the aggregate valuation of Investment and Held
for Sale properties at 31 December 2023.
On 6 March 2024, the Group repaid an expiring debt facility of £13.7 million and on
7 March 2024, the Group completed a refinancing of two further expiring debt facilities
totalling £44.0 million. A new facility, currently drawn to £44.4 million, will expire in March
2031. Following the acquisition of an interest rate cap for £1.7 million, the refinancing is
anticipated to increase the Group’s weighted average cost of debt from 4.3 per cent to
4.6 per cent.
27. SHARE-BASED PAYMENTS
The Company operates two equity-settled share-based remuneration schemes for
Executive Directors (deferred annual bonus and LTIP schemes) and certain members of
the Senior Leadership Team (“SLT”) who participate in the LTIP scheme. The details of the
schemes are included in the Remuneration Committee Report. The Group also operates a
Save As You Earn (SAYE) scheme for employees.
Notes to the Financial Statements | continued
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27. SHARE-BASED PAYMENTS continued
On 14 April 2023, the Company granted nil-cost options over a total of 1,233,081 (Duncan
Garrood 722,233 and Donald Grant 510,848) ordinary shares pursuant to the Empiric
Student Property plc Long Term Incentive Plan for the 2023 financial year.
During the year, the Company granted nil-cost options over a total of 343,885 ordinary
shares to members of the SLT pursuant to the Empiric Student Property plc Long Term
Incentive Plan for the 2023 financial year.
During the year, the Company granted options over a total of 183,742 ordinary shares in
relation to the Save As You Earn scheme at an exercise price of £0.79. The earliest date on
which the options will become exercisable is 1 July 2026.
During the year, the Company granted deferred bonus share awards of 125,483 to Duncan
Garrood, Chief Executive Officer.
Of the nil-cost options, 88,273 are currently exercisable. The weighted average remaining
contractual life of these options was 1.2 years (2022: 2.0 years).
During the year to 31 December 2023 the amount recognised relating to these option
plans was £0.7 million (2022: £0.7 million).
The awards have the benefit of dividend equivalence. The Remuneration Committee will
determine on or before vesting whether the dividend equivalent will be provided in the
form of cash and/or shares.
31/12/2023 | 31/12/2022 | 31/12/2021 | 31/12/2020 | 31/12/2019 | 31/12/2018 | ||
| Outstanding | |||||||
| number brought | |||||||
forward | 3,756,874 | 3,446,320 | 2,314,539 | 1,250,045 | 1,051,708 | 1,47 | 7,817 |
Granted during the period | 1,886,191 | 2,430,279 | 1,725,577 | 1,064,494 | 604,134 | 439,022 | |
Vested and exercised during the period | (80,116) | (127,492) | (35,779) | – | (129,253) | (139,325) | |
Lapsed during the period | (696,850) | (1,992,233) | (558,017) | – | (276,544) | (725,806) | |
| Outstanding | |||||||
| number carried | |||||||
forward | 4,866,099 | 3,756,874 | 3,446,320 | 2,314,539 | 1,250,045 | 1,051,708 | |
| The fair value on date of grant for the nil-cost options under the LTIP Awards and Annual |
Bonus Awards were priced using the Monte Carlo pricing model.
The following information is relevant in the determination of the fair value of the options
granted in the year, for those related to market based vesting conditions:
| LTIPs (market | LTIPs (Total | |||
| Deferred | based | Return | ||
| bonus shares | conditions) | conditions) | SAYE Award | |
(a) Share price at grant date of | £0.94 | £0.94 | £0.94 | £0.91 |
(b) Exercise price of | £nil | £nil | £nil | £0.79 |
(c) Vesting period | 3 years | 3 years | 3 years | 3 years |
(d) Expected volatility of | N/A | 27.5% | N/A | 30.2% |
(e) Risk-free rate of | N/A | 3.5% | N/A | 3.8% |
The volatility assumption is based on a statistical analysis of daily share prices of
comparator companies over the last three years.
The TSR performance conditions have been considered when assessing the fair value of
the options.
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28. FINANCIAL RISK MANAGEMENT continued
Credit ratings (Moody’s) | Long-term | Outlook |
AIB Group | A3 | Stable |
Canada Life | Aa3 | Stable |
Mass Mutual | Aa3 | Stable |
Scottish Widows | A2 | Stable |
Lloyds Bank Plc | Aa3 | Stable |
NatWest | Aa3 | Stable |
Notes to the Financial Statements | continued
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28. FINANCIAL RISK MANAGEMENT continued
| Group | ||||||
| Less than 3 | 3 to 12 | 1 to 5 | Greater than | |||
| On demand | months | months | years | 5 years | Total | |
| £m | £m | £m | £m | £m | £m | |
| At 31 December | ||||||
| 2023 | ||||||
| Bank borrowings | ||||||
and interest | – | 17.6 | 54.8 | 286.3 | 54.6 | 413.3 |
Trade and other payables | – | 23.4 | – | – | – | 23.4 |
– | 41.0 | 54.8 | 286.3 | 54.6 | 436.7 |
| Group | ||||||
| Less than 3 | 3 to 12 | 1 to 5 | Greater than | |||
| On demand | months | months | years | 5 years | Total | |
| £m | £m | £m | £m | £m | £m | |
| At 31 December | ||||||
| 2022 | ||||||
| Bank borrowings | ||||||
and interest | – | 3.9 | 11.7 | 178.3 | 266.4 | 460.3 |
Trade and other payables | – | 24.8 | – | – | – | 24.8 |
– | 28.7 | 11.7 | 178.3 | 266.4 | 485.1 |
| Company | ||||||
| Less than 3 | 3 to 12 | 1 to 5 | Greater than | |||
| On demand | months | months | years | 5 years | Total | |
| £m | £m | £m | £m | £m | £m | |
| At 31 December | ||||||
| 2023 | ||||||
| Bank borrowings | ||||||
and interest | – | – | – | – | – | – |
Trade and other payables | – | 3.4 | – | – | – | 3.4 |
– | 3.4 | – | – | – | 3.4 |
| Company | ||||||
| Less than 3 | 3 to 12 | 1 to 5 | Greater than | |||
| On demand | months | months | years | 5 years | Total | |
| £m | £m | £m | £m | £m | £m | |
| At 31 December | ||||||
| 2022 | ||||||
| Bank borrowings | ||||||
and interest | – | – | – | – | – | – |
Trade and other payables | – | 3.1 | – | – | – | 3.1 |
– | 3.1 | – | – | – | 3.1 |
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.
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| Company | ||
| 31 December | 31 December | |
| 2023 | 2022 | |
| £m | £m | |
As at 1 January | 222.6 | 187.6 |
Additions in the year | – | 41.4 |
Disposals | – | (6.4) |
Balance at 31 December | 222.6 | 222.6 |
Company | Status | Ownership | Principal activity |
Brunswick Contracting Limited | Active** | 100% | Property Contracting |
Empiric (Alwyn Court) Limited | Active** | 100% | Property Investment |
Empiric (Baptists Chapel) Limited | Active** | 100% | Property Investment |
Empiric (Bath Canalside) Limited | Active** | 100% | Property Investment |
Empiric (Bath James House) Limited | Active** | 100% | Property Investment |
Empiric (Bath JSW) Limited | Active** | 100% | Property Investment |
Empiric (Bath Oolite Road) Limited | Active** | 100% | Property Investment |
Empiric (Bath Piccadilly Place) Limited | Active** | 100% | Property Investment |
Empiric (Birmingham Emporium) Limited Active** | 100% | Property Investment | |
Empiric (Birmingham) Limited | Active** | 100% | Property Investment |
Empiric (Bristol St Mary’s) Leasing Limited | Active** | 100% | Property Leasing |
Empiric (Bristol St Mary’s) Limited | Active** | 100% | Property Investment |
Empiric (Bristol) Leasing Limited | Dormant* | 100% | Property Leasing |
Company | Status | Ownership | Principal activity |
Empiric (Bristol) Limited | Active** | 100% | Property Investment |
Empiric (Buccleuch Street) Limited | Active** | 100% | Property Investment |
| Empiric (Canterbury Franciscans) | |||
Limited | Active** | 100% | Property Investment |
| Empiric (Canterbury Pavilion Court) | |||
Limited | Active** | 100% | Property Investment |
| Empiric (Cardiff Wndsr House) Leasing | |||
Limited | Dormant | 100% | Property Leasing |
Empiric (Cardiff Wndsr House) Limited | Active** | 100% | Property Investment |
Empiric (Centro Court) Limited | Active | 100% | Property Investment |
Empiric (Claremont Newcastle) Limited | Active** | 100% | Property Investment |
Empiric (College Green) Limited | Active** | 100% | Property Investment |
| Development | |||
Empiric (Developments) Limited | Active | 100% | Management |
Empiric (Durham St Margarets) Limited | Active** | 100% | Property Investment |
Empiric (Edge Apartments) Limited | Active** | 100% | Property Investment |
Empiric (Edinburgh KSR) Leasing Limited Active** | 100% | Property Leasing | |
Empiric (Edinburgh KSR) Limited | Active** | 100% | Property Investment |
| Empiric (Edinburgh South Bridge) | |||
Limited | Active** | 100% | Property Investment |
| Empiric (Exeter Bishop Blackall School) | |||
Limited | Active | 100% | Property Investment |
| Empiric (Exeter Bonhay Road) Leasing | |||
Limited* | Dormant* | 100% | Property Leasing |
Empiric (Exeter Bonhay Road) Limited | Active** | 100% | Property Investment |
Empiric (Exeter City Service) Limited | Dormant | 100% | Property Investment |
Empiric (Exeter DCL) Limited | Active** | 100% | Property Investment |
Empiric (Exeter Isca Lofts) Limited | Active** | 100% | Property Investment |
Empiric (Exeter LL) Limited | Active** | 100% | Property Investment |
| Empiric (Falmouth Maritime Studios) | |||
Limited | Active** | 100% | Property Investment |
Notes to the Financial Statements | continued
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Financial Statements
Company | Status | Ownership | Principal activity | ||||
| Empiric (Leicester 134 New Walk) | |||||||
Limited | Active** | 100% | Property Investment | ||||
| Empiric (Leicester 136-138 New Walk) | |||||||
Limited | Active** | 100% | Property Investment | ||||
| Empiric (Leicester 140-142 New Walk) | |||||||
Limited | Active | 100% | Property Investment | ||||
| Empiric (Leicester 160 Upper New Walk) | |||||||
Limited | Active | 100% | Property Investment | ||||
Empiric (Leicester Bede Park) Limited | Active | 100% | Property Investment | ||||
| Empiric (Leicester De Montfort Square) | |||||||
Limited | Active** | 100% | Property Investment | ||||
| Empiric (Leicester Hosiery Factory) | |||||||
Limited | Active | 100% | Property Investment | ||||
| Empiric (Leicester Peacock Lane) | |||||||
Limited | Active** | 100% | Property Investment | ||||
| Empiric (Leicester Shoe & Boot Factory) | |||||||
Limited | Active | 100% | Property Investment | ||||
| Empiric (Huddersfield Oldgate House) | |||||||
Leasing Limited | Dormant* | 100% | Property Leasing | ||||
| Empiric (Huddersfield Oldgate House) | |||||||
Limited | Active** | 100% | Property Investment | ||||
| Empiric (Huddersfield Snow Island) | |||||||
Leasing Limited | Active | 100% | Property Leasing | ||||
| Empiric (Lancaster Penny Street 1) | |||||||
Limited | Active** | 100% | Property Investment | ||||
| Empiric (Lancaster Penny Street 2) | |||||||
Limited | Active** | 100% | Property Investment | ||||
| Empiric (Lancaster Penny Street 3) | |||||||
Limited | Active** | 100% | Property Investment | ||||
Empiric (Leeds Algernon) Limited | Active** | 100% | Property Investment | ||||
Empiric (Leeds Mary Morris) Limited | Dormant* | 100% | Property Investment | ||||
Empiric (Leeds Pennine House) Limited | Active** | 100% | Property Investment | ||||
Empiric (Leeds St Marks) Limited | Active** | 100% | Property Investment |
30. INVESTMENTS IN SUBSIDIARIES continued
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Company | Status | Ownership | Principal activity | ||||
Empiric (Southampton) Limited | Active** | 100% | Property Investment | ||||
| Empiric (St Andrews Ayton House) | |||||||
Leasing Limited | Active** | 100% | Property Leasing | ||||
| Empiric (St Andrews Ayton House) | |||||||
Limited | Active | 100% | Property Investment | ||||
Empiric (St Peter Street) Limited | Active** | 100% | Property Investment | ||||
| Immediate Holding | |||||||
Empiric Investments (Eight) Limited | Dormant | 100% | Company | ||||
Empiric (Stirling Forthside) Limited | Dormant* | 100% | Property Investment | ||||
Empiric (Stoke Caledonia Mill) Limited | Active** | 100% | Property Investment | ||||
Empiric (Summit House) Limited | Active | 100% | Property Investment | ||||
Empiric (Talbot Studios) Limited | Active** | 100% | Property Investment | ||||
Empiric (Trippet Lane) Limited | Active** | 100% | Property Investment | ||||
| Empiric (Twickenham Grosvenor Hall) | |||||||
Limited | Active** | 100% | Property Investment | ||||
Empiric (York Foss Studios 1) Limited | Active** | 100% | Property Investment | ||||
| Empiric (Portsmouth Europa House) | |||||||
Limited | Active | 100% | Property Investment | ||||
| Empiric (Portsmouth Kingsway House) | |||||||
Limited | Active | 100% | Property Investment | ||||
Empiric (Portsmouth Registry) Limited | Active | 100% | Property Investment | ||||
| Empiric (Provincial House) Leasing | |||||||
Limited | Active** | 100% | Property Leasing | ||||
Empiric (Provincial House) Limited | Active** | 100% | Property Investment | ||||
| Empiric (Reading Saxon Court) Leasing | |||||||
Limited | Active** | 100% | Property Leasing | ||||
Empiric (Reading Saxon Court) Limited | Active** | 100% | Property Investment | ||||
Empiric (Snow Island) Limited | Active** | 100% | Property Investment | ||||
| Empiric (Southampton Emily Davies) | |||||||
Limited | Active | 100% | Property Investment | ||||
Empiric (Southampton) Leasing Limited | Active** | 100% | Property Leasing |
30. INVESTMENTS IN SUBSIDIARIES continued
Notes to the Financial Statements | continued
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Financial Statements
Company | Status | Ownership | Principal activity |
| Immediate Holding | |||
Empiric Investments (One) Limited | Dormant | 100% | Company |
| Immediate Holding | |||
Empiric Investments (Two) Limited | Active | 100% | Company |
| Immediate Holding | |||
Empiric Investments (Three) Limited | Active** | 100% | Company |
| Immediate Holding | |||
Empiric Investments (Four) Limited | Active | 100% | Company |
| Immediate Holding | |||
Empiric Investments (Five) Limited | Active | 100% | Company |
| Immediate Holding | |||
Empiric Investments (Six) Limited | Active** | 100% | Company |
| Immediate Holding | |||
Empiric Investments (Seven) Limited | Active** | 100% | Company |
| Property | |||
Hello Student Management Limited | Active | 100% | Management |
| Empiric Student Property Trustees | |||
Limited | Dormant | 100% | Trustee |
31. ALTERNATIVE PERFORMANCE MEASURES
The below sets out our alternative performance measures.
Gross margin – Gross profit expressed as a percentage of rental income. A business KPI
to monitor how efficiently we are running our buildings.
| Group | ||
| 31 December | 31 December | |
| 2023 | 2022 | |
| Gross Margin | £m | £m |
Revenue | 80.5 | 73.0 |
Property Expenses | (25.2) | (24.0) |
Gross profit | 55.3 | 49.0 |
Gross Margin calculated as Gross profit/Revenue | 68.7% | 67.1% |
Total accounting return – The growth of EPRA NTA per share plus dividends per share
measured as a percentage. A key business indicator used to monitor the level of overall
return the Group is generating.
| Group | ||
| 31 December | 31 December | |
| 2023 | 2022 | |
| Total accounting return | £m | £m |
EPRA NTA per share at start of year | 115.4 | 106.7 |
EPRA NTA per share at end of year | 120.7 | 115.4 |
EPRA NTA growth per share in period | 5.3 | 8.7 |
Dividend per share paid in year | 3.4 | 2.5 |
Dividends plus growth in EPRA NTA | 8.7 | 11.2 |
| Total accounting return calculated as Dividends plus EPRA | ||
NTA Growth in year per share/ NTA at start of year | 7.6% | 10.5% |
30. INVESTMENTS IN SUBSIDIARIES continued
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31. ALTERNATIVE PERFORMANCE MEASURES continued
| Group | ||
| 31 December | 31 December | |
| 2023 | 2022 | |
| Property Loan to value (“LTV”) | £m | £m |
Bank borrowings drawn | 360.3 | 391.2 |
Less cash held at the year end | (40.5) | (55.8) |
Net borrowings | 319.8 | 335.4 |
Property valuation | 1,097.9 | 1,078.9 |
Property LTV calculated as net borrowings / property valuation | 29.1% | 31.1% |
Notes to the Financial Statements | continued
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Financial Statements
Five Year Historical Record
31 December
2023
£m
31 December
2022
£m
31 December
2021
£m
31 December
2020
£m
31 December
2019
£m
Revenue 80.5 73.0 56.0 59.4 70.9
Direct costs (25.2) (24.0) (23.1) (22.7) (23.4)
Gross profit 55.3 49.0 32.9 36.7 47.5
Gross margin 68.7% 67.1% 58.8% 61.8% 67.0%
Administrative expenses (14.0) (13.4) (10.6) (9.8) (9.2)
Operating profit 41.3 35.6 22.3 26.9 38.3
Property revaluation 30.1 45.6 17.6 (37.6) 29.2
Net finance costs (17.2) (15.0) (12.4) (13.3) (12.7)
Derivative fair value movement (0.2) – – – –
Gain/(loss) on disposals (0.6) 1.5 1.7 – –
Net profit/(loss) 53.4 67.7 29.2 (24.0) 54.8
EPRA EPS (pence) 4.0 3.4 1.7 2.3 4.2
Portfolio valuation
1
1,098.1 1,079.4 995.9 1,005.1 1,029.1
Borrowings (356.7) (386.5) (371.0) (385.3) (349.8)
Other net assets/(liabilities) (7.2) 7.9 22.7 13.5 (14.5)
Net assets 734.2 700.8 647.6 633.3 664.8
EPRA NTA 734.1 700.8 647.6 633.3 664.8
EPRA NTA per share 120.7 115.4 106.8 104.6 110.0
Shares in issue 603,437,683 603,351,880 603,203,052 603,160,940 603,160,940
Weighted average cost of debt 4.3% 4.0% 3.0% 2.9% 3.2%
Weighted average debt maturity 3.9 years 4.8 years 4.9 years 5.9 years 6.6 years
Property LTV 29.1% 31.1% 33.1% 35.4% 32.9%
EPRA LTV 30.6% 32.7%
1
Includes properties classified as held for sale and under development.
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Empiric Student Property plc | Annual Report & Accounts 2023
152Financial Statements
Glossary
Alternative Performance Measures (“APM”) – Performance measures to supplement
IFRS to provide users of the Annual Report with a better understanding of the underlying
performance of the Group’s property portfolio.
Colleague Engagement – Calculated using the results of our biannual colleague
engagement surveys.
Company – Empiric Student Property plc.
Dividend Cover – EPRA earnings divided by dividends declared for the year.
Dividend pay-out ratio – Dividends declared relative to EPRA earnings.
EPRA – European Public Real Estate Association.
EPRA basic EPS – EPRA Earnings divided by the weighted average number of ordinary
shares outstanding during the period (refer to Note 8).
EPRA diluted EPS - EPRA Earnings divided by the weighted average number of shares
during the period, taking into account all potentially issuable shares.
EPRA Earnings – the IFRS profit after taxation excluding investment and development
property revaluations, gains/losses on investing property disposals and changes in the
fair value of financial instruments.
EPRA Loan to Value – a measure of gearing, calculated as gross borrowings without
deducting unamortised financing costs, less cash and adjusted for net receivables or
payables and intangibles, divided by gross portfolio valuation.
EPRA Net Disposal Value (“NDV”) – Represents the shareholders’ value under a disposal
scenario, The value of the company assuming assets are sold, and the liabilities are
settled and not held to maturity.
EPRA Net Reinvestment Value (“NRV”) – The value of the assets on a long-term basis,
assets and liabilities are not expected to crystallise under normal circumstances.
EPRA Net Tangible Assets (“NTA”) – Assumes the underlying value of the company
assuming it buys and sells assets.
Gross margin – Gross profit expressed as a percentage of revenue.
Group – Empiric Student Property plc and its subsidiaries.
Hello Student – Our customer-facing brand and operating platform.
HMO – Houses in multiple occupation.
IFRS – International Financial Reporting Standards.
IFRS EPS – IFRS earnings divided by the weighted average number of ordinary shares
outstanding during the period.
Like for like rental growth – Compares the growth in rental income for operational assets,
throughout both the current and comparative year, and excludes acquisitions, disposals
and developments.
Like for like valuation (gross) – Compares the growth in capital values of the Group’s
standing portfolio from the prior year end to the current year end, excluding acquisitions
and disposals.
Like for like valuation (net) – Compares the growth in capital values of the Group’s
standing portfolio from the prior year end to the current year end, excluding acquisitions,
disposals, capital expenditure and development properties.
Property loan to value or Property LTV – Borrowings net of cash, as a percentage of
portfolio valuation.
Net Asset Value or NAV – Net Asset Value is the net assets in the Statement of Financial
Position.
PBSA – Purpose Built Student Accommodation.
Postgrad – Postgraduate students who have successfully completed an undergraduate
course and are undertaking further studies at a more advanced level.
RCF – Revolving credit facility.
REIT – Real estate investment trust.
Revenue Occupancy – Calculated as the percentage of our Gross Annualised Revenue we
have achieved for an academic year.
RICS – Royal Institution of Chartered Surveyors.
SONIA – Sterling Over Night Index Average is the effective reference for overnight
indexed swaps for unsecured transactions in the Sterling market. The SONIA itself is a
risk-free rate.
Total accounting return – The growth in EPRA NTA over the period plus dividends paid
for the period expressed as a percentage of opening EPRA NTA.
Weighted average cost of debt – Debt weighted by value multiplied by the interest rate.
Weighted average debt maturity – The weighted average term of our debt facilities at
the balance sheet date.
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153
Empiric Student Property plc | Annual Report & Accounts 2023
Financial Statements
Company Information and Corporate Advisers
Empiric Student Property plc
1st Floor Hop Yard Studios
72 Borough High Street
London, SE1 1XF
t +44 (0)20 8078 8791
e info@empiric.co.uk
More information on
www.empiric.co.uk
Company Registration Number: 08886906
Incorporated in the UK
(Registered in England)
Empiric Student Property plc is a public company limited by shares
Registered Office
DIRECTORS AND ADVISERS
Directors
Mark Pain (Chairman)
Duncan Garrood (Chief Executive Officer)
Donald Grant (Chief Financial and Sustainability Officer)
Alice Avis (Non-Executive Director, Senior Independent Director)
Martin Ratchford (Non-Executive Director)
Clair Preston-Beer (Non-Executive Director)
Broker and Joint Financial Adviser
Jefferies International Ltd
100 Bishopsgate
London, EC2N 4JL
Broker and Joint Financial Adviser
Peel Hunt LLP
7th Floor
100 Liverpool Street
London, EC2M 2AT
Legal Adviser to the Company
Gowling WLG (UK) LLP
4 More London Riverside
London, SE1 2AU
Company Secretary
Apex Secretaries LLP
6th Floor, Bastion House
140 London Wall
London, EC2Y 5DN
Registrar
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol, BA13 6ZZ
External Auditor
BDO LLP
55 Baker Street
London, W1U 7EU
Communications Adviser
FTI Consulting LLP
200 Aldersgate
Aldersgate Street
London, EC1A 4HD
Valuer
CBRE Limited
Henrietta House
Henrietta Place
London, W1G 0NB
Tax Adviser
KPMG
15 Canada Square
London, E14 5GL
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Empiric Student Property plc | Annual Report & Accounts 2023
154Financial Statements
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Empiric Student Property plc Annual Report & Accounts 2023
Empiric Student Property plc
1st Floor Hop Yard Studios
72 Borough High Street
London
SE1 1XF
T +44 20 8078 8791
E info@empiric.co.uk
More information on
www.empiric.co.uk
Empiric Student Property plc Annual Report & Accounts 2023