Full year Results 2020

RNS Number : 4866S

Empiric Student Property PLC

17 March 2021

Empiric Student Property plc

("Empiric" or the "Company" or, together with its subsidiaries, the "Group")

FULL YEAR RESULTS FOR THE 12 MONTHS ENDED 31 DECEMBER 2020

Despite the pandemic disruption, 2020 was still a year of delivery and Empiric is well placed to drive future performance and improve returns for shareholders

Empiric Student Property plc (ticker: ESP), the owner and operator of premium student accommodation across the UK, today reports its annual results for the 12 months ended 31 December 2020.

Duncan Garrood, Chief Executive Officer of Empiric Student Property plc, said:

"As we entered 2020, we were making good progress against our medium-term objectives, creating an in-house operating platform, growing revenue, reducing costs, and increasing our operating margin and dividend cover. The pandemic clearly brought challenges, but we reacted quickly to support our customers and brand reputation.

We recognise that these are particularly challenging times for all students, and we remain committed to supporting and doing the right thing by each student on a case-by-case basis. Protecting and supporting our customers, colleagues and other stakeholders whilst underpinning the value of our assets, preserving sufficient liquidity, and protecting the long-term value of the Group for shareholders will continue to guide our actions.

The Group has remained resilient and is well placed to benefit from opportunities when the market recovers, and our underlying business outlook is positive with customer demand set to grow. Our Hello Student® brand proposition, especially in a COVID-19 affected world, gives us a competitive advantage with predominately self-contained studio apartments, and a friendly supportive service focused on student well-being. There is still more to be done to maximise the benefits of our operating model and we remain intensely focused on delivering further value for all our stakeholders.

On 31 March 2020, due to uncertainty created by COVID-19, the Group announced a number of actions to strengthen further its cash position. This included the Board's decision, whilst remaining mindful of its REIT tax obligations, to suspend dividend distributions until market conditions stabilised. The Board recognises the importance of the dividend to shareholders and will seek to resume dividends at an appropriate level as soon as there is sufficient clarity of outlook."

Financial performance

· Revenue in 2020 was £59.4 million, down 16% from £70.9 million in 2019. The decrease was due to three key factors:

o £6.5 million of refunds were provided to students for the period from April to September 2020, as we released students from their obligations on a case-by-case basis. We consider this action also supports shareholders as this helps protect our brand.

o Expected summer lets in 2020 of around £700,000 were lost due to the pandemic.

o At the start of the 2020/21 academic year, we reported revenue occupancy rates of 70%, compared to 94% in 2019/20. This meant that the final four months of the 2020 financial year had significantly reduced occupancy compared to 2019.

o The underlying performance was robust, and our like for like rental growth would have been 3.1%, excluding the COVID-19 refunds for academic year 2019/20.

o At this point, for the current academic year 2020/21 like for like rental growth is 1.8%.

· The business remained cash generative, with Adjusted Earnings of £13.9 million (2019: £26.7 million).

· Adjusted EPS is the most relevant measure of earnings when assessing dividend distributions. It decreased by 48% to 2.30 pence (2019: 4.43 pence), showing that the underlying operating business continues to generate cash despite the impact of the pandemic.

· Property costs were £22.7 million, down 3% both in total and on a per bed basis, as we cut discretionary costs and delayed expenditure where appropriate and continued to make efficiency improvements while also continuing to see the benefit of the operational transformation.

· Due to the COVID-19 pandemic reducing our occupancy levels, council tax has been suffered on our empty rooms which has reduced the cost savings we have made. If we exclude the impact of this increased council tax bill during the year, our average cost per bed fell by over 6%.

· The impact on revenue and property costs above produced a gross margin for the year of 61.9% (2019: 67.1%).

· Administration expenses were £9.8 million in 2020, lower than our initial guidance of £10 million (2019: £9.1 million).

· The net loss from a change in the fair value of investment properties during the year was £37.6 million (2019: £29.2 million gain), due to the following components.

o At our half year in August 2020, we reported a £42 million deduction in the portfolio valuation due to CBRE's assumption of 50% occupancy for the following 15 months. At the year-end, CBRE have revised this assumption to 60% occupancy for the following nine months, reducing the £42 million deduction to £21 million for the full year.

o £9 million of the decrease is in the valuation of operational assets over the year for two reasons:

§ There has been a polarisation in the valuation of prime vs. secondary assets which has resulted in a slight softening of the portfolio's Net Initial Yield from 5.55% to 5.61%.

§ A reduction in Net Operating Income projections on secondary assets.

o £6 million of the decrease is on the value of our commercial portfolio, reflecting yields moving out.

o £2 million of the decrease is on our development assets, reflecting extended timetables on our development assets, which were put on hold for a period due to the pandemic.

· The overall result is a loss before tax of £24.0 million (2019: profit £54.8 million). No corporation tax was charged, as the Group fulfilled all of its obligations as a UK Real Estate Investment Trust ("REIT").

· Basic loss per share ("EPS") was therefore (3.97) pence and also (3.97) pence on a diluted basis (2019: earnings 9.08 pence and 9.07 pence diluted).

· Total dividends of 1.25 pence per share for 2020 (2019: 5.0 pence per share).

· At 31 December 2020, the portfolio was valued at £1,005 million, a decrease of 2% from prior year (31 December 2019: £1,029 million), due to the fall in fair value of investment properties detailed above, and £13 million spent on capital expenditure and developments during the year.

· As at 31 December 2020, we owned or were committed to owning 95 assets, representing 9,396 beds (31 December 2019: 95 assets, 9,401 beds). Of these, 91 were revenue-generating assets, with 8,887 beds (31 December 2019: 93 assets, with 8,830 beds).

· The EPRA Net Tangible Asset value ("NTA") per share as at 31 December 2020 was 105.00 pence, (31 December 2019: 110.21 pence, prior to adjusting for the 2019 fourth quarter dividend of 1.25 pence per share). The NTA is net of dividends paid during the year.

· At the year end, we had committed investment debt facilities of £420 million, of which £390 million (31 December 2019: £355 million) had been drawn down, resulting in an LTV of 35.4%* (31 December 2019: 32.9%), in line with our long-term target of 35% and below our stated maximum of 40%. The aggregate cost of our investment debt is 2.9%, with a weighted average term to maturity of 5.9 years at 31 December 2020. We fully complied with all of our banking covenants during the period and continue to do so.

· We have no re-financing requirements until November 2022 and have taken measures to preserve liquidity. The relationship with our lending banks is strong and we have also agreed waivers or an easing of covenant requirements on all of our debt, leaving us well placed to trade through until the market recovers and then maximise the value from our business to our shareholders and wider stakeholders.

Operational performance

· We were in good shape as we began 2020. We had completed the majority of our insourcing journey and were seeing the benefits through improved financial performance from our more robust operating model.

· Our underlying business (excluding the valuation impact on our portfolio) continued to trade profitably during 2020.

· 2020 was, however, a challenging year due to the COVID-19 pandemic, but the changes we have implemented over the past few years, and in this year, have ensured a more resilient business model.

o As a responsible owner and operator of predominantly direct-let, premium UK student accommodation, we implemented actions to ensure that we operated safely throughout the pandemic, continuing to provide COVID-19 secure homes, critical services, and enhanced programmes to ensure the safety and well-being of our students and colleagues.

o We experienced physical occupancy levels of above 50% during each of the three national lockdowns.

o During the year, we conducted a comprehensive review of the operational team structure, and as a result moved to a more optimal structure, which enables us to improve customer service delivery.

o In November 2020, we successfully launched our new revenue management system and all bookings for the academic year 2021/22 are now managed in-house.

· The COVID-19 pandemic has affected our ability to optimise the impact of our operational changes, in particular our asset disposal programme, and our ability to deliver a stable dividend to our shareholders.

· Whilst uncertainty remains, we are confident the changes made to our operations and the commitment of our staff will enable us to manage successfully through the COVID-19 challenges and put us in a strong position to drive sustainable shareholder value in the future.

Post Period End

· The Group supported its students throughout 2020 and remains committed to supporting students who have been further impacted by the UK Government's latest COVID-19 lockdown and associated restrictions. We continue to look favourably upon requests on a case-by-case basis from students seeking to amend their rent and lease obligations for the current semester if they are unable to occupy their rooms at this time. The rating we achieved in the recent National Student Housing Survey was significantly ahead of the average for the sector, which indicates that our students have appreciated this flexibility and unprecedented level of support.

· We also remain committed to supporting residents who currently occupy their rooms at the Group's properties. Our accommodation is a person's home and often residents do not have alternative accommodation. This is particularly important for international students who comprise around 60% of Hello Student's residents for the current academic year 2020/21. All our buildings remain open, staffed, maintained, and operating strictly in line with Government guidance and we are ensuring that our residents, colleagues, business partners and the communities in which we operate remain safe and secure, and their well-being remains a key priority.

· Following further progress with the late checking-in of students and adjusting for the support we have provided to students since January 2021 as a result of the current national lockdown, revenue occupancy remains at 65% currently, which includes 2% of students still to check-in now or at a later date in the academic year. The collection of rents remains in line with our usual collection profile and the physical occupancy level in our buildings is currently approximately 57% of total operational rooms.

· Current bookings for the 21/22 academic year are 20%, significantly slower than in pre Covid-19 cycles, although we have started to see an uplift in bookings since the Government's recent announcement of the roadmap to exit lockdown.

· Universities are very late in advising places for the 2021/22 academic year and we expect the sales cycle to be significantly back ended. We welcome the vaccination programme, and this gives us cautious optimism about a return to increasingly normal levels of occupancy. UCAS applications for the 2021/22 academic year are also encouraging, with the non-EU international market up by 17% overall, and within this, Chinese applications are up by 21%. UK applications are also showing strong demand growth reflecting an increase of 11% so far.

· The Group recently completed on the sale of three properties in Portsmouth for £7.4 million, above the latest book value as at 31 December 2020.

Notes

* Total drawn borrowings, net of cash and fixed term deposits, as a percentage of Gross Asset Value.

FOR FURTHER INFORMATION ON THE COMPANY, PLEASE CONTACT:

Empiric Student Property plc	(via Maitland/AMO below)
Duncan Garrood (Chief Executive Officer)
Lynne Fennah (Chief Financial & Operating Officer)

Jefferies International Limited	020 7029 8000
Stuart Klein
Tom Yeadon

RBC Europe Limited (trading as RBC Capital Markets)	020 7653 4000
Charlie Foster Marcus Jackson

Maitland/AMO (Communications Adviser)	07747 113 930
James Benjamin	empiric-maitland@maitland.co.uk

The Company's LEI is 213800FPF38IBPRFPU87.

Further information on Empiric can be found on the Company's website at www.empiric.co.uk .

Notes:

Empiric Student Property plc is a leading provider and operator of modern, predominantly direct-let, premium student accommodation located in high-demand university towns and cities across the UK. Investing in both operating and development assets, Empiric is a fully integrated operational student property business focused on premium studio-led accommodation managed through its Hello Student® operating platform, that is attractive to affluent growing student segments.

The Company, an internally managed real estate investment trust ("REIT") incorporated in England and Wales, listed on the premium listing segment of the Official List of the Financial Conduct Authority and was admitted to trading on the main market for listed securities of the London Stock Exchange in June 2014.

Results Presentation

The Company presentation for investors and analysts will take place via a webcast and conference call at 8.30am on the day .

This Company presentation is available from 7am today via the Company website:

http://www.empiric.co.uk/investor-information/company-documents

For those who wish to access the live webcast, please register here:

https://www.investis-live.com/empiric/603e5228dd22a114007da96d/wlww

For those who wish to access the live conference call, please contact Maitland/AMO at empiric-maitland@maitland.co.uk or by telephone on +44 (0) 20 7379 5151.

The recording of the webcast/conference call will also be made available later in the day via the Company website: http://www.empiric.co.uk/investor-information/company-documents

Annual Report

Hard copies of the Annual Report and Accounts will be sent to shareholders, along with the proxy form and notice for Annual General Meeting to be held on 25 May 2021. These documents will also be made available on the Company's website at www.empiric.co.uk . In accordance with Listing Rule 9.6.1, copies of these documents will be submitted to the National Storage Mechanism and will be available for viewing shortly at https://data.fca.org.uk/#/nsm/nationalstoragemechanism .

STRATEGIC REPORT

Chairman's Statement

Sustainable long term growth delivery

"Our people have shown tireless commitment and skill in addressing the challenges posed by the COVID-19 pandemic. We kept all of our properties open and appropriately staffed, whilst continuing to serve our customers in a safe, secure environment. We remain committed to supporting and doing the right thing by each student on a case-by-case basis."

As we entered 2020 we were making good progress against our medium-term objectives; creating an in-house operating platform, growing revenue, reducing costs, and increasing our operating margin and dividend cover.

H owever, since March 2020, we have, like many others, faced challenges on an unprecedented scale as a result of the COVID-19 pandemic which has caused significant disruption to our business and had a substantial impact on our financial performance. Nevertheless, we remain well positioned to continue to respond effectively to the challenge today and into the future.

Our People

Our continued progress is only possible because of the dedication and ability of all of our people. I would like to thank everyone in our business for their contribution over the past year.

The views of our people are extremely important because they are at the heart of our customer proposition and core to us living our brand. We carried out two colleague engagement surveys in 2020. Response rates were over 70% and engagement scores were in excess of 80%. Comments provided by survey respondents helped the business and Board to understand what needs to be done to make Empiric a great place to work.

Our Colleague Forum, formed of colleagues across the Group, met ten times during the year to discuss a variety of topics.

Health and Safety

Having insourced our FM activities, we now have complete control of our health and safety environment. We continue to enhance our monitoring and make our buildings as safe as possible.

Environmental, Social and Governance ("ESG")

Having spent the past two and a half years restructuring the business, insourcing, and building a responsible and effective operating platform, we are now in a position to reflect on: how we perform as stewards of the environment, how we meet our social obligations to employees, suppliers, customers and the communities in which we operate to deliver a more resilient, sustainable and responsible business and create further value to our stakeholders.

At the core of our proposition is a commitment to create a sustainable, positive, environmental, social and economic legacy for our shareholders, customers, colleagues and wider stakeholders.

During 2020 we created a Board-level ESG committee, which will meet quarterly, tasked with providing a roadmap to deliver a significant step change in our approach to ESG which is a strategic priority for the next 12 months. This will further help us to confirm and disclose the actual and potential impacts of ESG-related risks and opportunities that are material to our business, strategy, and financial planning.

Board Appointments and Succession

On 18 March 2020 we announced that Tim Attlee would be stepping down from his role as Chief Executive Officer of the Company at the end of June 2020. Tim co-founded and helped float Empiric in 2014. As the Company's Chief Investment Officer, Tim led the Company's asset acquisition and development programme.

On 26 June, after a rigorous selection process, we appointed Duncan Garrood as our new Chief Executive. Duncan is an experienced and proven business leader with excellent business development and operational capabilities in PLCs and large privately- owned businesses in the UK and overseas. He has strong operational, sales and marketing skills, and extensive experience in commercial businesses with significant real estate assets. Duncan joined Empiric on 28 September 2020.

The Board effectiveness review concluded that the Board and its Committees continued to operate effectively throughout 2020.

Dividends

On 17 February 2020, the Board declared a dividend of 1.25 pence per ordinary share in respect of the quarter ended 31 December 2019, which was paid on 20 March 2020.

The Board is mindful of the importance of the dividend to many shareholders and will seek to resume dividends at an appropriate level as soon as there is sufficient clarity of outlook. For this, we would need to see more commitment in the approach of universities to face-to-face teaching and a significant improvement in occupation and rental income.

AGM

Our 2020 AGM will be held on 25 May 2021. We are monitoring developments in UK regulations in relation to how AGMs may be held during this period. Further details about the AGM will be provided in the AGM Notice.

Looking Forward

The operational transformation of the business is largely complete, and we are now embedding and driving sustainable performance from our new operating model. There is still more to be done to deliver the performance we are capable of and we remain focused intensely on delivering for all our stakeholders.

At the time of writing, we are facing the challenges being posed by the COVID-19 pandemic. We remain vigilant and are closely monitoring the situation and will provide updates as appropriate. Protecting and supporting our customers, colleagues and other stakeholders whilst underpinning the value of our assets for shareholders will continue to guide our actions over the coming months.

MARK PAIN

Non-Executive Chairman

16 March 2021

Handling the COVID-19 crisis

Our response to the COVID-19 pandemic has been underpinned by three key priorities: keeping our people, customers and communities safe, maintaining critical services for our customers while supporting their wellbeing and protecting value for our shareholders.

Our Senior Leadership Team has shown tireless commitment and skill in responsibly addressing the challenges posed by the COVID-19 pandemic. We kept all of our properties open, COVID-19 secure and appropriately staffed, serving our customers in a safe, secure environment.

Colleague Engagement Score
83%
(2019: 75%)

At a Glance

Our top priority remains the health, safety and welfare of our residents, employees and wider stakeholders. We recognise that these are particularly challenging times for all students, and we remain committed to supporting and doing the right thing by each student on a case-by-case basis, whilst also protecting the long-term value of the Group

Empiric offers students places where they want to live. Our properties are some of the best in the market and our people get to know our students well, so we provide a more responsible and responsive service. This approach - combined with the smaller size and individual character of our buildings - helps to foster a strong sense of community, encouraging students to stay with us in future years. In short, we offer our students homes, not halls.

Beds contracted by region

Scotland 1,167	North East 261
North West 1,457	Yorkshire 1,041
West Midlands 1,866	Wales 519
South West 1,556	South East 1,529

Revenue Generating Assets 91 (2019 - 92)

Cities and Towns	29 ( 2019 - 29)
Assets Contracted	95 ( 2019 - 95)
Beds Contracted	9,396 ( 2019 - 9,401)

Group Key Stats

324 Employees

6 Years in operation

86% of portfolio by value considered prime real estate or better

Responding to COVID-19

Keeping our People, Customers and Communities Safe

- Reporting tool to monitor the safety of our people and customers

- Regular communication

- Updated HR policies

- Strong IT infrastructure which easily facilitated working-from-home

Maintaining Critical Services for our Customers

- PPE, safety infrastructure and new procedures introduced

- Refund programme launched

- Virtual tours

- New pledges, such as the "Book with confidence" scheme

Protecting and Driving Value for Shareholders

- Non-essential cost cutting

- Reducing capital commitments

- Liquidity improvements

- Maintaining close relationships with our banks

- Detailed scenario planning and modelling

COVID-19 Impact timeline 2020

February

- Audit Committee and Board discussed COVID-19 as a risk to the business and the adequacy of disclosures in the Annual Report.

March

- Announced various cost saving and capital preservation measures across the business.

- Revised procedures to ensure that social distancing is maintained.

- Announced our refund programme.

April

- Commencement of furlough for c100 colleagues; the Board took the decision to fund this directly and not take government support.

May

- We commenced virtual viewings, allowing prospective students to see our offering remotely.

June

- All furloughed colleagues returned to work in COVID-19 secure locations around the country.

July

- We raised an additional £20 million of debt on our RCF facility with Lloyds Bank to ensure we had sufficient working capital to weather even our worst case scenario planning.

August

- We achieved significant cost savings, due to the high number of vacant rooms allowing our in-house staff to clean and turn around rooms for the upcoming academic year rather than using external contractors.

September

- Check-ins for the new academic year began, students booked slots for paperless check ins, which were done so we limited the number of touch points.

October

- Due to the staggered return of students, our check-in period spread well into October.

November

- Launch of Hello Student® Live Festival, which was a series of live events and activities ranging from yoga to baking tutorials.

December

- We launched our student wellbeing helpline with our insurance provider.

The resilience in our in-house operational model

The pandemic has proved that the decision to turn Hello Student® into a responsible in-house operational model was the correct one. The agility which we had to be able to change processes, look after staff and increase safety would not have been possible had we still been using third-party operators to run our buildings. This resilience will continue to stand us in good stead as we go into a challenging 2021.

Differentiated customer proposition well suited to COVID-19 environment

The average size of our buildings is circa 100 beds, and in 83% of our rooms people can self-isolate effectively. This smaller size of building with self-contained studios means that our buildings are more aligned with a socially distanced world and there is much less footfall going through them compared to some other larger buildings.

Protecting and creating long term sustainable value

Throughout the pandemic there were a number of challenging decisions that had to be made. When making decisions the impact on our stakeholders was carefully considered in the short and long term at each juncture. We always seek to act in the best interests of our stakeholders.

"As we weather the challenges that have arisen as a result of COVID-19, we continue to trade profitably and remain very confident about our long-term future, to deliver enhanced sustainable value for all of our stakeholders."

Our Market

Attractive, stable and compelling

Growing Maturity

Despite being considered an alternative investment, PBSA is cementing itself as a mature real estate asset class, with the potential to generate significant income and be resilient even in periods of economic downturn. As reported by CBRE's 2020 Student Accommodation Index, PBSA was the best performing asset class in the year to September 2020. Looking forward, Savills's five-year forecast released in January 2021 had PBSA as the third best performing sector.

These strong returns are also associated with lower volatility, meaning the sector has produced risk-adjusted returns roughly three times as high as the mainstream market. Like all sectors, PBSA has been affected by the COVID -19 pandemic with capital values falling 0.4% in the year to September 2020, its only fall in the past decade. However, PBSA saw one of the smallest decline in capital values when compared with other sectors and still saw rental growth of 1.6% in the year to September 2020, the fifth consecutive year of outperformance against the mainstream market. Only Industrial saw higher rental growth in 2020 (at 2.0%) while both Office and Retail saw rental values fall (2.2% and 8.1% respectively).

CBRE's 2020 Index also highlighted an increasingly clear polarisation in the PBSA market with London and Super Prime Regional assets outperforming Prime Regional and Secondary assets. In the year to September 2020, assets in London and Super Prime Regional locations experienced positive capital growth, while assets in Secondary markets saw capital values fall 9.9%. This is also mirrored with rental growth where in the same period, Super Prime markets saw a 2.8% rise in net rental growth and Prime Regional saw a 1.7% rental growth, whereas Secondary markets saw net rents fall 2.3%. The Empiric portfolio is well aligned to the high-growth locations with 86% by value classified as either London, Super Prime Regional or Prime Regional.

Positive Student Demographics

In UCAS's End of Cycle Report 2020, positive demand statistics for the 2020 admissions cycle were reported. The data indicates that 728,780 students applied to higher education ("HE") providers in the UK in 2020, up by 22,345 students (+3.2%) on 2019. Applications from non-EU domiciled students rose 12.2% to 98,660, significantly offsetting the small fall in applications from EU domiciled students.

Overall student acceptances reflected stronger growth with 29,235 extra students (+5.4%) which included EU students increasing by 1.7% and non-EU domiciled students by 7,615 (+16.9%), highlighting the continued appeal of HE providers in the UK for overseas students, despite short-term restrictions on international mobility. Notably, UCAS report 24% and 35% year on year increases in applicants from China and India respectively with also significant demand from the USA.

The UK's International Education Strategy continues to secure the country's position in the global HE sector and support graduates with a generous post-study work visa system.

Student Demographics

Domicile	Applicants				Acceptances
Domicile	2019	2020	Change	Change	2019	2020	Change	Change
UK	565,480	577,260	11,780	2.1	464,335	485,400	21,065	4.5
EU	53,085	52,865	-220	-0.4	31,765	32,320	555	1.7
Non-EU	87,870	98,660	10,790	12.3	45,140	52,755	7,615	16.9
Total	706,435	728,785	22,350	3.2	541,240	570,475	29,235	5.4

UCAS End of Cycle Report 2020

Alongside positive international demand, domestic demand for HE continues to grow. In the coming decade, growth in the full time (FT) student population is forecast to be driven by a higher participation rate and the absolute growth of the 18-year- old cohort in the UK which has been in decline over the past 5 years. UCAS reports that the proportion of UK domiciled 18-year-olds accepted by UK providers increased from 34.1% in 2019 to 37% in 2020. The research also projects that the population of 18 -year-olds will rise from around 710,000 in 2020 to 850,000 in 2026.

In 2020, demand was also boosted by centre assessed grades, which resulted in a greater number of school leavers with the required grades needed for acceptance into higher ranked universities. Higher ranked universities have benefited the most, with applications rising 31% since the cap on student numbers was lifted in 2012. Conversely, applications to medium ranked providers only rose by 4% and lower ranked universities fell by 15% in an ongoing trend. In HESA's latest data release, 384,030 people were reported to have enrolled on a postgraduate course in AY 2019/20, up 10% on the previous year. This rise in postgraduate student numbers is expected to continue, repeating previous counter-cyclical behaviour in periods of economic downturn. Following the global financial crisis, full time postgraduates grew from 161,015 in 2007 to 207,595 in 2010.

Constrained Supply

The long-term fundamentals of PBSA including the demand supply imbalance remain compelling particularly when focusing on high-quality assets in desirable locations. According to research combining HESA 2018/19 data and PBSA supply for 2020/21, only 57% of demand for PBSA is currently being met, 65% including consented pipeline. In 2019, JLL reported that the pipeline had declined by 25% in the three previous years, a trend which appears to have been exacerbated by COVID-19 restrictions, which paused construction on many sites leading to delayed completions for the year to September 2020. StuRents report that in Q3 2020, developers applied for consents for fewer than 3,000 beds, with 3,395 being approved, showing falls of 73% and 44% respectively on Q3 2019. Comparatively, in 2016 planning applications peaked at 50,000 beds. This decline has been in part due to the rise of alternative living sectors such as PRS refocusing developer attention, the growing difficulty in gaining suitable PBSA consents in increasing restrictive planning environments, along with several Secondary markets becoming oversupplied.

The Flight to Quality

Whilst some property sectors experienced a virtual shutdown in transactions in 2020, largely due to the impacts of COVID-19 and Brexit-related uncertainty, PBSA remained comparatively resilient. The global investment appetite for UK PBSA was very strong at the start of 2020 with portfolio and M&A activity continuing to be a key feature of the market, following significant portfolio acquisitions in 2019. In Q1, the sector's attention focused on Blackstone's purchase of the iQ student portfolio for £4.66 billion, the largest ever private real estate transaction in the UK. With several well-funded prospective buyers willing to pay premium pricing for the 32,000-bed portfolio, this transaction affirmed that PBSA was more attractive than ever for investors in Q1 2020. Following a reduced level of activity during the first lockdown, the market has been gathering pace with a further £1 billion traded since March 2020. With the iQ transaction and the recovering activity in H2 2020, the year saw the highest transaction volume ever for UK PBSA at £6 billion.

To reflect the short-term income uncertainty caused by the pandemic and the long-term strength of the sector, rental guarantees from vendors for the 2020/21 academic year have been widely used to support transactions. These have facilitated the market by protecting the purchasers' short term income position. The flight to quality continued in 2020, with investors focusing on high-quality assets in markets with strong universities and compelling supply and demand characteristics, reflected by transactions in Super Prime and Prime Regional locations. Despite COVID-19, July 2020 saw KWAP acquire 700 operational beds in Leeds and Sheffield for £89 million. This purchase of Symons House (351 beds) and Crown House (335 beds) reflected £127,000 per bed and a yield of 5.50%. In August 2020, GSA & Harrison Street added further stock to a growing portfolio with the acquisition of Print Hall (267 beds) and Unity Street (217 beds) in Bristol, for £58.2 million, reflecting £120,247 per bed and yield of 4.90%.

The ever maturing and polarising nature of the PBSA market has been reflected in yield compression in the best -quality segments. CBRE report that between Q4 2019 and Q4 2020, best-in-class direct let Super Prime Regional and Central London yields compressed by 25 basis points and 10 basis points respectively, while Prime Regional yields stabilised and further softening in Secondary Regional locations was experienced.

In the post-COVID-19 landscape, investors are expected to be drawn to sectors such as PBSA, which exhibit stable income returns and counter-cyclical behaviour. Unlike other sectors facing structural challenges, the long-term demand for HE and the undersupply of high-quality PBSA beds will underpin investment demand in the coming years.

Increase in higher ranked university applications in 2020
+31%

Market Yields - Best in Class, Direct Let

	December 2020		December 2019
	Current	Trend	Current	Trend

Central London	3.90%	Stronger	4.00%	Stronger
Super Prime Regional	4.75%	Stronger	5.00%	Stronger
Prime Regional	5.25%	Stable	5.25%	Stronger
Secondary Regional	8.00%	Weaker	7.75%	Weaker

Source: CBRE Student Sector Investment Yields.

Business Model

Our business model combines an attractive portfolio of high-quality student homes with an efficient and responsible in-house operational platform. Together, our operations and assets enable us to create value for all our stakeholders. This allows us to generate attractive returns for our shareholders and build a strong platform for long-term growth.

Key Strengths

Buildings

We have a diversified and attractive portfolio of properties that offer high-quality and safe accommodation to our customers.

Our People

Our people are key to our customer journey.

Our passionate and committed colleagues allow us to deliver a high level of service to our customers while maintaining cost control.

Specialist Knowledge

We have the knowledge to develop, acquire and operate high quality, sustainable student accommodation assets.

Brand

The Hello Student® brand has continued to grow, becoming a leading brand and giving us a clear identity in the student property market.

Financing

We finance our business through a combination of shareholder equity and debt facilities. We have strong liquidity and good relationships with our lenders.

Technology

We continue to leverage technology to augment business processes that drive efficiencies operationally, financially and commercially whilst also improving our user and customer experiences.

How We Add Value

Our Culture

Our people and customers are our key focus and we are here to deliver excellent seamless service and financial returns through working together.

Select 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 are on average around 100 beds, which helps to foster a more homely, collegiate feeling to living.

Develop/Buy

Developing assets allows us to acquire them at a greater yield on cost than buying standing assets. Forward-funded projects are typically less complex than direct developments and have a lower risk profile, as the planning, construction and time 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, direct development delivers higher-yielding assets than forward funding. We have a strong proven track record in direct development.

We also buy standing assets when a specific opportunity arises which complements our portfolio.

Operate

Our assets are marketed through our Hello Student® platform. This platform gives us a clearly identifiable brand which helps to offer our customers a range of options. Encouraging our people to follow our values helps to increase ownership and pride in our homes. This ensures that customers have the best experience possible, helping to drive occupancy, rents and profit.

We have a student welfare programme in place to ensure that we provide the support that our customers need during their stay with us.

Reinvest

We intend to hold our buildings for the long term. However, we may sell an asset if we see an opportunity to create more value for shareholders by reinvesting the proceeds. We therefore continually review the portfolio to ensure our capital is effectively allocated.

Outputs for our Stakeholders

Customers

Our customers benefit from having a great home to live in during their studies, at a rent that represents value for money.

Customer Satisfaction
7.6 out of 10

Our People

Our people have the opportunity to develop their careers in an exciting and growing sector.

Colleague Engagement Score
83%

Shareholders

Shareholders benefit from total returns which are underpinned by income. The positive long term returns have been impacted by COVID-19.

Total Return for 2020
(3.6)%

Communities

The communities around our assets benefit from increased employment, reduced pressure on local housing stock, and from the improvements we fund to social infrastructure in the surrounding area.

Amount of Government Support Taken
£nil

Our Strategy

Making progress against our strategic objectives in spite of COVID-19.

Strategic area	Strategic objective	Progress in the year	Associated KPIs	Key aims for 2021	Associated risks
1. Customers	We want to achieve customer satisfaction by building welcoming communities in our homes and by giving our customers a sense of safety, wellbeing and belonging. We aim to deliver a friendly personalised service, and be present when our customers need us.	- We launched a 24-hour mental health welfare phone line with access to qualified counsellors available to all students. - Our customer satisfaction score was 7.6, despite all of the challenges we have faced through COVID-19. - 24 hours, 7 days a week, staff cover in all our cities as a result of our restructure. - We launched a range of measures as a result of COVID-19.	A, B, C, D, E	- Increase customer satisfaction score even further in 2021. - Review other ways which we can support our customers' welfare through our ESG Committee. In particular, building on the work we have already begun around mental health as well as safety and the environment.	E1, E2, E4, E6, I1, I2
2. Brand	We want to raise awareness of the Hello Student® brand among students, to support our premium accommodation and service offering. We want to become known as a responsible provider and manager of homes, not halls.	- We have launched our in-house revenue management platform for AY2021/22 bookings. We have already seen the benefits of being able to communicate with potential customers in a much more dynamic way. - We launched a programme of customer refunds as a result of COVID-19, and we believe these actions helped to protect our brand and enhance the long term value of the Group.	A, B, C, E, F	- Reviewing the design and layout of both the Hello Student® and Empiric corporate website. - Launch an ESG roadmap to develop and deliver our objectives and long-term strategy. This will further help us to confirm and disclose the actual and potential impacts of ESG-related risks and opportunities that are material to our business, strategy, and financial planning.	E1, E2, E4, E6, I1, I2
3. Our People and Operations	We have continued with our aim of developing a culture where our people are engaged and proud to continue to work for the business, making Empiric "a great place to work" and destination of choice for candidates wanting to work in the student accommodation sector. We will aim to continually and responsibly improve operational efficiency through enhancing our in-house functions and performance coaching our colleagues to help them provide the best and most efficient customer service experience.	- Increased involvement and engagement of Colleague Forum to contribute to developing business response to handling of COVID-19 impact. - Colleague engagement surveys completed twice in 2020; firstly in June with a Group engagement index of 83% representing +8% on the previous six months and then in December (73% response rate) with a Group engagement index of 81%, representing -2% compared to the summer. This shows we have maintained a good level of colleague engagement despite a challenging year and significant change programme delivered in Q4 2020. - We have completed restructuring of the operations team to deliver customer service and increased presence on sites across extended working hours, seven days a week.	A, B, C, D, E, F	- Embed the new operations structure, optimizing customer service delivery. - Increased focus on mandatory training, new HR KPI to track compliance levels and ensure standards are being achieved. - Development and delivery of social purpose programme under new ESG Committee. - We plan to roll out a sharesave scheme to all our people in 2021 subject to AGM approval. - Review and relaunch our Company values to ensure they reflect the values which are lived and embodied by our people and align with our stakeholders.	E1, E2, E4, E6, I1, I2
4. Buildings	We will maximise the value from the asset portfolio by managing the portfolio, recycling capital to improve returns and sustainability. This will be done by maintaining a portfolio of attractively high-yielding investments with rental growth.	- We completed a development and a refurbishment delivering a combined total of 284 operational beds. - We gained planning permission for a redevelopment of one of our buildings in London, which will provide 18 additional beds. - We delayed development on a number of projects due to capital preservation measures as a result of COVID-19.	A, B, C, D, E, J	- Complete the Bristol St Mary's development providing an additional 153 beds in the city. - Our Head of Property is conducting a full portfolio review, looking at disposal, refurbishment and acquisition targets.	E1, E2, E5, E6
5. Shareholders	We want to provide our shareholders with attractive sustainable returns. This is achieved through improving profitability and growing our portfolio.	- We completed two extensions and one refinance during the year, despite the challenges of COVID-19 to ensure that the Group's long-term future is secured. - Various capital preservation measures were implemented as a result of COVID-19. - The progress achieved in all of the above strategic areas contribute to shareholder returns.	A, B, C, D	- We will revisit and strengthen our ESG roadmap and reporting across the Group - Beyond COVID-19 we are positioned to return to full occupancy and optimise profitability enabling us to resume paying an attractive dividend. - We will continue to engage closely with all shareholders.	E1, E2, E3, E4, E5, E6, I1, I2, I3

KPI Links

A. Rebooker Rate

B. Customer Happiness

C. Revenue Occupancy

D. Safety - Number of Accidents

E. Colleague Engagement

F. Gross Margin

G. Adjusted Earnings per Share

H. Dividend Cover

I. Net Asset Value per Share

J. Total Return

Risks Links

External Risks

E1. Student Demand Risk

E2. Competition Risk

E3. Property Market Risk

E4. Regulatory Risk

E5. Funding Risk

E6. Revenue Risk

Internal Risks

I1. Health and Safety Risk

I2. Cyber Security Risk

I3. People Risk

Chief Executive Officer's Review

Ensuring our customers safety

"We have continued to progress with our strategy through investment in our people, customers and assets."

2 020 has brought significant challenges to the business, but the Group has remained resilient and is well placed to benefit from opportunities when the market recovers.

Our top priority has been the safety and wellbeing of our colleagues, customers, communities and stakeholders, and we have devoted significant resources to ensure this is the case.

Despite these challenges, we have progressed our strategy through investment in our people, customers and assets.

Supporting our Customers

In December 2020, we launched a Student Assistance Programme in partnership with Endsleigh and Health Assured. This scheme provides a suite of wellbeing services for our customers, offering them support to deal with physical and mental health issues or financial difficulties. The provision of this scheme has also supported some universities that have faced challenges in providing sufficient wellbeing support to their students throughout 2020 and this will not just be in place during COVID-19 times but a permanent enhancement of our student wellbeing support.

Developing our People

In January 2020, we appointed a Training & Development Manager to design and deliver programmes to our people for their personal and professional growth.

We overhauled our e-learning platform and provided support for new learning opportunities to various roles within the business. This change in emphasis from classroom to online webinar delivery has been efficient, and we have continued to focus on key sessions such as sales and customer services to increase the knowledge and skills of our operational teams.

Our aims in 2021 include an increased focus on mandatory training with a new measure to track compliance levels and ensure high standards are being achieved. For example, we will deliver our plans to enhance the variety of skills of colleagues within our maintenance teams. This will allow for cost efficiencies as a broader range of repairs and maintenance works can be conducted in -house, and will also develop the network of our regional teams so they are able to support each other across the country.

We will also be optimising the new management structure across our operational teams so that local training support and coaching is integrated into our ways of working and culture.

During 2020, we recognised the contribution that our front-line operational teams have made to our customers and the business. From 1 January 2021, we will increase pay to align with the Real Living Wage for 2021 as our minimum, and we are committed to pay a fair wage for all core roles. We have recently gained accreditation from the Real Living Wage Foundation and have undertaken to uphold those standards for years to come.

In May, we undertook the Group's third colleague engagement survey which achieved a response rate of 72% and an overall colleague engagement score of 83% against the UK all-sector average of 68% and previous year's result of 69%. These results were delivered despite the current pandemic and help to give us a better understanding of what matters to our people and to ensure we deliver improvements.

Towards the end of 2020, we conducted a shorter 'pulse' colleague engagement survey which had a 73% response rate and 81% overall colleague engagement score. The Senior Leadership Team have worked with the Colleague Forum to devise an action plan in response to their feedback.

We have taken a number of actions as a result of the feedback we received from these surveys, for example launching the Student Assistance programme detailed above, pledging to review our values in 2021 and launching monthly townhalls to bring all of our people together.

Developments Delivered in 2020

Site	Development basis	Beds	Completed
140/142 New Walk, Leicester	Forward funded	52	June 2020
Emily Davies, Southampton	Major refurbishment/development	232	December 2020

Future Development Pipeline

Site	Development basis	Beds	Delivery year
St Marys, Bristol	Forward funded	153	2021
Southbridge, Edinburgh	Major refurbishment/development	61	TBC
FISC, Canterbury	Major refurbishment/development	134	TBC

"For the first time this year, our electricity portfolio is run off 100% renewable energy."

As part of an increasing focus on our ESG agenda, we have established an ESG Committee at board level which will work with the Senior Leadership Team to define the strategy, identify key topics, and implement initiatives and policies. We will be publishing the Terms of Reference for the ESG Committee on our website shortly.

Our Environmental Duty

As part of our ESG responsibility, we have launched a Sustainability working group which will work with the Board and Senior Leadership Team on projects that improve the sustainability of our operational business and ways in which we can be more environmentally supportive.

For the first time this year, our electricity portfolio is run off 100% renewable energy. This means the electricity we use is generated in renewable ways ranging from solar and wind turbines to biomass plants.

Our team is also working with our third-party energy provider, Amber Energy, to identify assets where energy usage is currently higher than our target and methods by which we can reduce this.

Our Brand

The Hello Student® brand has continued to evolve throughout 2020 as a result of a variety of activities, including the goodwill generated through our support for both our customers and universities during COVID-19.

Hello Student® has strong brand awareness and a positive reputation, but we have work to do in making it more prominent and visible and to reflect more closely the priorities of our wider stakeholders. Through our portfolio management programme, we will make the brand execution tighter, more consistent, and powered by researched customer insight. A programme of refining the Hello Student® brand proposition in depth, and particularly in specifying our service model, is underway and will help us to grow Hello Student® to a leadership position in our sector.

We continue to invest in our online and social media marketing platforms to reach both domestic and international customers efficiently. We have also used direct customer feedback and experiences to provide a more personal touch to our marketing strategies. The opportunity our new booking platform brings us, plus a refreshment of our website, will lead to a new digital experience for prospective customers.

Our aim is to build further on the strength of our brand within our properties and ensure the Hello Student® name becomes more prominent within the student accommodation sector.

Our Portfolio

As at 31 December 2020, we owned or were committed to owning 95 assets, representing 9,396 beds (31 December 2019: 95 assets, 9,401 beds). Of these, 91 were revenue-generating assets, with 8,887 beds (31 December 2019: 92 assets, with 8,830 beds).

We have undertaken a strategic review of our portfolio, with the aim of rationalising it to maximise the expertise, positive reputation, and commercial power of the Hello Student® brand. We plan to dispose of non core assets, and this gives us an opportunity for capital recycling, which we will undertake whilst focusing on the best interests of shareholders. This includes consideration of investment in refurbishments or reconfigurations, as we aim to bring the portfolio to a consistently high standard.

Portfolio Safety

Safety remains our top priority as a business and to that end we ensure that our buildings comply with not only all relevant regulations but also with best practice within the industry. We are in the process of updating our fire risk and mitigation strategies throughout our estate, and where that is appropriate it includes undertaking detailed External Wall Surveys. Such surveys will ensure any residual cladding or firebreak risks are clearly identified and are being undertaken by highly experienced professional teams and where necessary qualified fire experts. Should remedial actions be identified as necessary, these will be addressed.

Independent Valuation

Each property in our portfolio has been independently valued by CBRE, in accordance with the Royal Institution of Chartered Surveyors ("RICS") Valuation - Professional Standards January 2014 (the "Red Book"). At 31 December 2020, the portfolio was valued at £1,005 million, a decrease of 2% from prior year (31 December 2019: £1,029 million). See valuation bridge to the right.

Average valuation yield (before COVID-19 deductions)
5.61%

(31 December 2019: 5.55%)

Number of beds added through completion of developments
284

Across two development projects

Developments and Redevelopments

On 30 June 2020, we completed a forward-funded, 52-bed development in Leicester. In December we then completed the major refurbishment works of Emily Davies in Southampton, adding 232 beds. We also recommenced the direct development of St Mary's in Bristol which is expected to be completed in time to operate for the 2021/22 academic year.

Due to COVID-19 we have paused two projects, a development in Canterbury called Franciscans and a refurbishment in Edinburgh, called Southbridge. We are reviewing whether to proceed with these projects on a monthly basis, clearly predicated by our prudent approach to cash management during the pandemic.

In December 2020 we secured planning permission for the redevelopment of Francis Gardner Apartments in London. The new seven-storey development will provide 18 new bedrooms with a mix of two, three and four-bed flats with shared kitchens and living facilities.

Strategy in Action

Customers

Prioritising safety and welfare

We are committed to supporting and doing the right thing by each student on a case-by-case basis, whilst also protecting the long-term value of the Group.

We have strived to ensure that all of our customers have felt safe during these difficult times. These were focused on ensuring our customers were safe and their welfare was monitored. Our smaller, more flexible buildings have adapted well to many of the challenges posted by the pandemic.

During May and June 2020 our buildings remained at a level of around 55% occupancy.

Strategy in Action

People and Operations

Agile, effective and responsive

In-sourcing programme progress

We have found significant benefits from the in-sourcing programme completed to date, including having the organizational agility to respond quickly and effectively to the impact of COVID-19. We have found that our people acted amazingly well and were incredibly responsive to the challenges that we faced.

We have also restructured our operational staffing model. This will help to ensure that we remain agile and effective and even more resilient.

Back office revenue management system will deliver cost saving of £1.5million per year from Q4 2021.

Key Performance Indicators

Monitoring our performance

Non-Financial KPIs

	A Rebooker Rate (%) 23%	B Customer Happiness (Out of 10) 7.6
Performance	2020 23% 2019 21%	2020 7.6 2019 7.8
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.	Student satisfaction reflects the quality of service we provide and the attractiveness of our buildings.
Strategic Link	12345	12345

	C Revenue Occupancy (%) 65%	D Safety - Number of Accidents 0
Performance	2020/21 As at the end of February 65% 2019/20 As at the end of February 93.9%	2020 0 2019 3
Purpose	Occupancy is a key driver of our revenue and demonstrates the quality and location of our assets, the strength of our sales process and our ability to set appropriate rents.	The number of reportable accidents throughout the Group each year. This is a key reporting metric to the Health & Safety Executive as well as a measure of our health and safety strategy and procedures.
Strategic Link	12345	12345 Note - As facilities management was only insourced from April 2019 the above comparative was only for a nine-month period.

	E Colleague Engagement 83%
Performance	2020 83% 2019 75.0%
Purpose	Colleague engagement scores provide an insight into the happiness of our people across a range of topics regarding their working environment.
Strategic Link	12345

Our key performance indicators ("KPIs") are central to how we run our business and allow us to drive the performance of the business for our shareholders. Due to the impact of COVID-19 during the year, a number of our usual KPIs are showing anomalous figures during this reporting period. We expect this impact to carry forward into our 2021 KPI reporting.

Financial KPIs

	F Gross Margin (%) 61.9%	G Adjusted Earnings per Share (p) 2.30p
Performance	2020 61.9% 2019 67.1%	2020 2.30 2019 4.43
Purpose	The gross margin reflects our ability to drive occupancy and to rigorously control our operating costs.	Adjusted earnings per share is the earnings measure that best demonstrates our ability to reward shareholders through dividends.
Strategic Link	12345	12345

	H Dividend Cover (%) 183.8%	I Net Asset Value per Share (p) 105.00
Performance	2020 183.8% 2019 88.5%	2020 105.0 2019 110.21
Purpose	Dividend cover shows our ability to pay dividends out of current year earnings. - Note in the current year dividends were suspended.	Movement in the NAV per share reflects the quality of our assets and our ability to generate revenue from them.
Strategic Link	12345	12345

	J Total Return (%) (3.6)%
Performance	2020 (3.6)% 2019 8.6%
Purpose	The total return shows the aggregate value (lost) / gained for shareholders, through both capital (decline)/ growth of NAV and dividends.
Strategic Link	12345

DUNCAN GARROOD

Chief Executive Officer

16 March 2021

CFO and COO Statement

Driving efficiencies

"Cost saving of £1.5 million annually from Q4, with the first full year of savings in 2022 - there is a significant cost saving as we will no longer rely on an external third-party revenue management platform provider."

Despite the impact of COVID-19 our operational performance has been robust. We have continued to focus on revenue generation, reducing costs and increasing efficiency, as we complete and embed the changes made as part of the operational transformation and in-sourcing programme. In this respect we completed two key projects during the year, the first being a comprehensive review of the operational team structure and the second was the successful go-live of the revenue management system.

Operations Team Restructure

As part of the operational transformation programme, we have directly employed all staff working in our buildings since 2019, as we brought all activities in-house from several third-party managers. The organisational structure we inherited was inefficient and not aligned to optimal customer service delivery.

We therefore conducted a review during the year and moved to a more optimal structure, which has the following key benefits:

- Investment in more sales and customer service roles.

- Increasing the "out of hours" presence in our buildings, resulting in 24-hour/7 days a week coverage in our cities. This helps to make our buildings safer and allows us to provide a better welfare service to our students.

- Centralising tasks to the customer relations team (a centralised hub). This has made the support we provide to our site teams more efficient and has removed several administrative tasks from the site teams allowing them to focus on customer service.

- The above changes to the structure are cost neutral, but facilitate improved customer service delivery overall.

The proposed restructure was sponsored by the Senior Leadership Team and presented to the Board for approval.

As the restructure impacted more than 20 of our people, we had a statutory legal duty to consult collectively, and this consultation was conducted through our Colleague Forum.

Revenue Management System

In November 2020 we successfully launched our new revenue management system and have started to take bookings for the academic year 2021/22. This system has been in development for three years and I would like to thank the entire team involved for the successful delivery of this platform, which is a key milestone for the Group.

The revenue management platform will form the basis of our ability to generate revenue efficiently and effectively end to end moving forward. The immediate benefits that this new system delivers are:

- More timely pricing adjustments - we have already seen the benefit of being able to make more timely pricing adjustments, which facilitates maximising revenue streams.

- Improving the journey, communication andinteraction with the customer - we now have much greater access to and ability to communicate with our customers. We are now able to monitor in real time the progress of each customer as they move through the booking journey and to provide timely support as required.

- Ease of use by our people, as all activity ison one platform - this has significantly reduced inefficiency and cost.

- Revenue management platform andfinance system are one integrated platform - this has removed the need to transfer financial transaction data between systems. The result is real-time financial information and reduced cost.

- Cost saving of £1.5 million annually from Q4, with the first full year of savings in 2022 - there is a significant cost saving as we will no longer rely on an external third-party revenue management platform provider.

Health and Safety

Health and Safety is of paramount importance to the Group. We have a legal and moral responsibility to ensure that everyone who is living, working in or visiting our buildings are kept safe.

Our buildings are inspected on a regular basis by the site staff to ensure that we identify and eliminate hazards. To assess the buildings for significant issues on an ongoing basis, we engage with specialist consultants to undertake thorough assessments of general safety/hazards, fire risks/ prevention and water systems/treatment against legionella.

During 2020 we had planned to launch formal Health and Safety training by the Institute of Occupational Safety and Health ("IOSH"), and this was booked for H1 2020 but was cancelled due to the COVID-19 pandemic. However, through discussions with IOSH, we have established an IOSH-approved online training programme, with the first course delivered in December 2020 and to continue throughout 2021.

We have also prepared a series of Toolbox Talks which are in document and video format for 2021 launch, and this will enable all site teams to have continual access to informal training.

We have also designed and agreed upon the format of a Health & Safety Forum to be implemented during 2021. This will include representatives from site teams throughout the country, as well as members of the Senior Leadership team and the Board.

"Our "cloud first" strategy allowed us to apply business continuity with minimal disruption to productivity."

IT Infrastructure Improvements

During the year we also further strengthened our IT infrastructure. We gained Cyber Essentials Plus accreditation in April 2020 at the height of the pandemic, as well as implementing advanced cloud security tools to enhance our risk management strategy for the increased levels of remote and flexible working expected in the post COVID- 19 landscape. Our "cloud first" strategy allowed us to apply business continuity with minimal disruption to productivity and greater flexibility to address challenges as we are not dependent on traditional on-premise solutions.

Financial Performance

Over the last three years we have delivered a positive financial improvement across all metrics year on year, as a direct result of the operational transformation we have implemented.

At the start of 2020 this operational transformation was largely complete, we had started to see the benefits with our gross margin approaching 70% and we were close to achieving dividend cover of 100%.

However, then the COVID- 19 pandemic hit. Whilst we are encouraged by the underlying performance of the business, the impact of the pandemic is clear.

Revenue in 2020 was £59.4 million, down 16% from £70.9 million in 2019. The decrease was due to three key factors;

- £6.5 million of refunds were provided to students for the period from April to September 2020.This allowed us to release students who were in need from their obligations on a case-by-case basis and also helped to protect our brand.

- At the start of the 2020/21 academic year, we reported occupancy rates of 70%, compared to 94% in 2019/20. This meant that the final four months of the 2020 financial year had significantly reduced occupancy compared to 2019.

- Historically we have also sold around £700,000 of summer lets each year, clearly due to the COVID-19 pandemic we were not able to utilise this source of income in 2020.

However, the underlying performance of revenue was still robust, excluding the COVID- 19 refunds for academic year 2019/20 our like for like rental growth would have been 3.1%. At this point, for the current academic year 2020/21 like for like rental growth is 1.8%.

Property costs were £22.7 million, down 3% overall as we cut discretionary costs and delayed expenditure where appropriate and continued to make efficiency improvements while also continuing to see the benefit of the operational transformation.

Dividends

Quarter ending	Declared	Paid	Amount (p)
31 December 2019	17 February 2020	20 March 2020	1.25

Loan to Value
35.4%
(2019: 32.9%)

Refunds provided to students in need
£6.5m
For 2019/20 academic year

On a cost per bed basis our cost was down 3%. Due to the COVID-19 pandemic reducing our occupancy levels we have been required to pay council tax on these empty rooms which has reduced the cost savings we have made. If we exclude the impact of this increased council tax bill during the year, our average cost per bed fell by over 6%.

The impact on revenue and property costs above produced a gross margin for the year of 61.9% (2019: 67.1%).

Administration expenses were £9.8 million in 2020, lower than our initial guidance of £10 million (2019: £9.2 million). We made savings in a number of areas such as not paying any employee or Director bonuses for 2020.

The net loss from a change in the fair value of investment properties during the year was £37.6 million (2019: £29.2 million gain). This loss is made up of four key components which are explained below;

- £21 million of the decrease is due to CBRE making a capital deduction to reflect the perceived risk to occupancy for the remainder of the 2020/21 academic year.

- £9 million of the decrease is in the valuation of operational assets over the year for two reasons:

- There has been a polarisation of prime v secondary assets which has resulted in a softening of Net Initial Yield from 5.55% to 5.61%.

- a reduction in Net Operating Income projections on secondary assets.

- £6m of the decrease is on the value of our commercial portfolio, reflecting yields moving out on retail property.

- £2m of the decrease is on our development assets reflecting the increased timetables on some of our development assets which are currently on hold due to our cash preservation approach.

Net financing costs for the year were £13.3 million, net of money market investment income (2019: £12.7 million). This net financing cost was slightly more than 2019 due to a higher level of drawn down debt through the year, as well as slightly lower interest received.

The result of this is a Loss before tax of £24.0 million, (2019: profit £54.8 million). No corporation tax was charged, as the Group fulfilled all of its obligations as a UK Real Estate Investment Trust ("REIT"). Basic loss per share ("EPS") was therefore (3.97) pence and also (3.97) pence on a diluted basis (2019: earnings 9.08 pence and 9.07 pence (diluted).

Adjusted EPS is the most relevant measure of earnings when assessing dividend distributions. It decreased by 48% from 4.43 pence in 2019 to 2.30 pence in 2020. This shows that the underlying operating business is continuing to generate cash despite the impact of the pandemic.

The Net Asset Value ("NAV") per share as at 31 December 2020 was 105.00 pence, (31 December 2019: 110.21 pence, prior to adjusting for the interim dividend of 1.25 pence per share in respect of the quarter ended 31 December 2019). The NAV is shown net of all property acquisition costs and dividends paid during the year.

Dividends

The dividends declared in respect of the 2020 financial year are shown in the table on the previous page.

Of the total dividends, 0.85 pence per share was declared as property income distributions and 0.40 pence per share was declared as ordinary UK dividends (2019: 2.75 pence per share and 2.25 pence per share, respectively).  

The reduced dividend in the period has given dividend cover of 184% (2019: 88.5%).

On 31 March 2020, due to uncertainty created by COVID -19, the Group announced a number of actions to strengthen further its cash position. This included the Board's decision, whilst remaining mindful of its REIT tax obligations, to suspend all future dividend distributions until market conditions stabilised. The Board is mindful of the importance of the dividend to shareholders and will seek to resume dividends at an appropriate level as soon as there is sufficient clarity of outlook. For this, we would need to see more commitment in the approach of universities to face-to-face teaching and a significant improvement in occupation and rental income.

Debt

In January 2020 we raised £22.5 million of development debt with NatWest bank to complete the existing pipeline.

In March 2020 we re- financed an expiring uncharged facility with FCB and at the same time increased the facility from £10 to £20 million.

In April 2020 we re-financed early an expiring £32.8 million facility with AIB on more favourable terms.

Throughout the year we have conducted extensive scenario planning and in July 2020 we took the prudent step of increasing our £70 million RCF with Lloyds Bank to £90 million.

At the year end, before deduction of loan arrangement fees, the group had committed investment debt facilities of £420 million, of which £390 million were drawn down (2019: £355 million drawn down).

Of our drawn investment debt £277 million of this debt is fixed and £113 million is floating. The aggregate cost of our investment debt was 2.9%, with a weighted average term of 5.9 years.

The Loan to Value for the group was 35.4% (2019: 32.9%), broadly in line with our long-term LTV target of 35%.

We have also agreed waivers or an easing of covenant requirements on all our debt to ensure that we remain covenant compliant throughout the pandemic. We would like to thank all of our lenders for the support which they have provided through this period.

We currently have around £52 million of unencumbered assets and as at the year end we had £63.9 million of undrawn investment facilities and cash.

As we have no re-financing requirements until November 2022 and have taken protective measures to preserve liquidity, we are well placed to trade through until the market recovers.

Responsible Business

Progressive, responsible

Progression on our ESG journey is a priority at Board level.

Our ESG Journey and Commitment to Stakeholders

As a business we are committed to creating and operating a responsible and sustainable business which has a positive impact on all of our stakeholders while maintaining a profitable and sustainable business.

Our ESG journey is aligned to our culture and will be reflected in our relaunched values in 2021. ESG is important to all of our key stakeholders, who all receive benefits. ESG and our approach also becomes part of our approach to risk management.

Due to the impact of COVID -19 we have not been able to push on as far as we had expected with our ESG roadmap. However, we have still been able to make some very valuable key steps forward. We have also set out our plan for progressing our ESG agenda in 2021, through the Board, Senior Leadership Team and new committees' guidance. The Board has placed ESG as one of its key priorities.

This section provides more information on the various stakeholder engagement activities and our future plans.

ESG Management Framework

The Board

The Board has overall responsibility for…

the Group's ESG strategy and the direction which the Group will take.

ESG Committee

The Committee will oversee…

the creation of overall ESG strategy from the Group, ensuring that there is Board level discussion and input.

Sustainability working group

The group will oversee…

the delivery of environmental sustainability initiatives and commitments throughout the business.

People & Community working group

The group will oversee…

the delivery of initiatives impacting our people and the communities we operate in.

Governance working group

The group will oversee…

the levels of governance and oversight across the business continue to be upheld to a high standard.

Senior Leadership Team

Senior management are responsible for…

ensuring this ESG strategy is embedded throughout the business and provide key support to the communities above.

Our People

The successful delivery of an ESG strategy across our business will require the collaboration and support of all our people.

Priorities and targets for 2021

Priorities	Targets
Develop our ESG strategy and messaging	We have appointed an external consultant to help the Group review and formalise our ESG strategy. This will allow the Group to illustrate its long-term ESG strategy more formally and develop ambitious and achievable targets in the short and long-term by which we can be measured against. We expect to announce more details of exactly what these commitments mean, including targets, timescales and plans in our 2021 Annual Report.
Embedding and developing the work of the ESG Committee	We have set up and agreed terms of reference for the ESG Committee and it will meet on a quarterly basis with the first formal meeting held in January 2021. The strategy and actions the Committee set will have a large impact in shaping the ESG roadmap of the business and ensuring the strategy set out by the Board is achieved.
Review our Group Values	With a new CEO, an updated staffing structure and a renewed focus on ESG through the business means that 2021 will be a perfect time to revisit the Group's values which we will present in the 2021 Annual Report. This reflects the evolution of the business over the last couple of years.

Our Key Stakeholders

Customers

The needs of our customers inspire our brand and provide insightful feedback on how we can improve our service offering to them and better fulfil our purpose. We have a responsibility to provide our customers with a safe place to live and to care for their wellbeing, which is critical to the Board's strategic decision-making and our review of any operational changes.

Communities

Our communities help us to fulfil our purpose of enhancing the university experience for our customers. The Board aims to understand the local markets in which we operate and the key issues we face which assists its decision-making around new opportunities through which we can contribute to our local communities.

Environment

Our environment is fundamental to our future. We have a duty to operate our business in an efficient way, giving specific regard to the impact of our operations on the environment and utilising methods throughout our properties (both development and operational sites) that mitigate the risk of environmental damage.

People

Our people are vital to the successful delivery of our business performance. We have a responsibility to provide our people with a safe place to work and to care for their wellbeing.

The tone and culture of our organisation comes alive through the actions of our people.

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.

Stakeholder Engagement

Priorities

Why We Engage

How We Engage

Their Material Issue

Actions Taken in 2020

(Detail in next section)

Customers

Our customers are at the core of our purpose and provide useful insights into how we can build on our customer service to improve their experience at university. We have a responsibility to provide our customers with a safe home to live in and to support them through their journey at university.

On a day-to-day basis within our buildings.

Through biannual customer surveys.

Through our social media presence.

- Safety in their homes

- Customer service

- Value for money

- Implementation of enhanced health and safety measures in our buildings

- Offering refunds to students impacted by COVID-19 pandemic

- Launching a student assistance programme

People

Our people have been key to our operational transformation, working hard to deliver the brand experience for our customers. We have a responsibility to provide our people with a safe working environment and to support them in both their career and personal development.

On a day-to-day basis we use Workplace as an internal communication tool.

Weekly updates are provided to all by members of the SLT.

Monthly townhalls are held where our people can raise questions and contribute.

Through the Colleague Forum.

- Safety at work

- Pay and reward

- Communication

- Implementation of enhanced health and safety measures in our buildings

- Revamping our internal communications to offer weekly communications and monthly townhalls

- Becoming a Real Living wage employer from January 2021

- Restructuring our operational staffing model

Communities

Our purpose to enhance the university experience for our customers also serves to support the local communities we operate in through the creation of jobs and assisting to reduce tensions in the local housing markets. We have a responsibility to give back to our local communities and support them in their local initiatives that help others.

Through on-site communication with members of the public and local communities.

We have membership with the British Property Federation where we can interact with communities and government on a wider basis.

We also have interaction with communities through the property licensing disclosures we have to undertake.

- Job creation

- Housing stock

- Supporting local charities

- Provided 284 new beds during the year to free up local housing stock

- Supported a number of local charities and donated items to British Heart Foundation

Shareholders

Our shareholders are key to our long-term sustainable performance.

We have a responsibility to manage the business in an ethical manner, ensuring that we value the interests of all our key stakeholder groups in order to enhance the value of the Group for the shareholders.

Through face-to-face meetings with investors.

Through our Annual and Interim Report.

At our Annual General Meeting.

- ESG reporting and disclosure

- Sustainable business

- Financial results

- Launching the ESG Committee

- Developing our ESG strategy

- Protecting the business and ensuring its long-term sustainability and going concern

Environment

The environment in which we live in is a valuable and precious asset which we need to ensure our business helps to protect and conserve.

Environmental issues such as climate change could develop into a business risk for our business.

On an annual basis there is detailed ESG reporting without our Annual Report.

In 2021 we are looking to increase the level of reporting and policies available on our website.

- Reduction in greenhouse gas emissions

- Sustainable business

- Moving all our electricity to renewable energy sources

- Identifying energy reduction initiatives requiring some capital expenditure to implement in 2021

Customers

Customer Pledge

Our pledge to our customer is that we will always strive to fulfil our purpose (see inside front cover) which involves providing our students a safe place in which to live. Due to the impact of COVID- 19 we implemented a wide-ranging number of initiatives to keep our customers safe and improve their wellbeing, from monitoring of students self isolating to implementing protective measures within our buildings.

Refund Programme

In April 2020 we launched a refund programme to help our customers who had been impacted by the COVID-19 pandemic, and we launched this programme because we felt that ethically it was the right thing to do. The Board's considerations are set out within the s.172 statement.

Wellbeing

In 2020 we launched in partnership with Endsleigh, a student assistance programme. This programme provides our customers with unlimited access to a 24/7 mental health and confidential counselling (BACP accredited) through a telephone helpline. Calls are answered by an experienced counsellor or therapist who will offer support for a variety of issues. Our customers may also have up to six sessions of structured telephone counselling including CBT counselling per issue each year. We believe supporting our customer's wellbeing is paramount.

Our People

Prioritising Health and Wellbeing During COVID-19

Ensuring our people were safe during the pandemic was of paramount importance to the Group. We implemented a wide-ranging number of initiatives to keep our people safe, from monitoring of any staff showing symptoms or self isolating to implementing protective measures within our buildings and adapting our sickness and leave policies. More detail of all of our responses to COVID-19 are detailed on page 6.

Reward and Recognition

Due to the effects that COVID- 19 has had on the Group, the decision was taken to suspend the Group's formal bonus scheme. A pay freeze among all managerial roles and above was also implemented to protect our business.

As part of the Group reorganisation discussed in more detail on page 30, we rebased the pay of our frontline staff looking at the latest benchmarking and also with a view to being a Real Living Wage employer. From January 2021 the Group will pay all staff at least the Real Living Wage and has an ambition to ensure they remain at this level in the future.

Internal Communications

In a time where people felt more isolated than ever during the pandemic, ensuring internal communications were kept current and frequent was a key priority. During the year we revamped our internal communications to offer weekly communications and monthly townhalls.

We held two townhalls during 2020 and will move to a monthly basis in 2021. They have already heralded strong feedback and favourable support from our people.

Equality, Diversity and Inclusion

Group employees are committed to promoting an inclusive, positive and collaborative culture. We treat everyone equally irrespective of age, sex, sexual orientation, race, colour, nationality, ethnic origin, religion, religious or other philosophical belief, disability, gender identity, gender reassignment, marital or civil partner status, or pregnancy or maternity.

We continued to review our approach to diversity, equality and inclusion, including the use of targets during 2020. We recognise this as a key building block of our social strategy and it will form part of the Governance working group's 2021 agenda. Our workforce and customers are from a diverse range of people so we need to ensure that our workplace remains inclusive and allows our people and our customers a place where they can thrive.

Case study

Workforce Representation

Listening to our people

The Colleague Forum

The Colleague Forum is a formal workforce advisory panel set-up in May 2019, consisting of 12 employee representatives across the Group. Its main purpose is to give the wider workforce a platform through which they can share their ideas on enhancing business performance and improving efficiencies, as well as their experience with the business.

The Colleague Forum is supported by Alice Avis (Non-Executive Board member) who attends at least one Colleague Forum meeting every year and is available as a direct Board contact for the forum.

During 2020 the Colleague Forum consulted with the Senior Leadership Team and HR team on key decisions including the Group's response to COVID-19 and the restructure of our operational teams. It was a good platform for the wider workforce to communicate their key questions and priorities during a year of change, allowing the business to respond effectively and understand best what support our people and customers needed.

Social - our people

Communities

Supporting local communities during COVID-19

During the year we continued to support our local communities in any ways we could during this difficult time. The way we helped and supported local communities varied from organising fundraisers to buy PPE for local hospitals and care homes to donating unwanted goods left behind by students to the British Heart Foundation. In 2021 as part of our ESG roadmap we hope to pull together all the support we give back to our local communities.

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 in our supply chain, particularly in connection with the sourcing by suppliers of construction material, certain goods and the provision of manual labour in property development and management services.

While nearly all our direct suppliers are based in the UK, some of these suppliers source some materials from around the world.

As part of our broader initiative to identify and mitigate risk in our supply chain, we have updated our consideration of factors such as:

- reviewing our current contractors and suppliers, particularly in relation to supply chain, with a view to developing preferred supplier list arrangements based on robust selection;

- centralising more contracts as a core part of our supplier management strategy;

- strengthening our compliance review processes within procurement practices;

- developing strong relationships with UK- based suppliers and contractors that align to our business code of conduct expectations; and

- ensuring systems are in place to encourage the reporting of concerns and the protection of whistleblowers in our supply chain.

We believe there is minimal risk of slavery and human trafficking in our colleague base. We continue to review this risk assessment and monitor our activity as part of our broader approach to ensuring we are a responsible and sustainable business.

For our full statement please refer to www.hellostudent.co.uk.

Shareholders

ESG Reporting

Shareholders are becoming even more conscious and question the ESG credentials of the businesses in which they want to be involved with. We have received feedback from our investors that they wish to gain a greater understanding of the ESG credentials of the Group. The shareholders are the ultimate beneficiary of all of the actions taken throughout this section and will further benefit from the actions and targets we have set out for.

Ethical Business

We are committed to carrying out business fairly, honestly and openly. Our anti-bribery policy mandates a zero-tolerance approach, which all our people must read and consent to, both during their induction and when any updates are made to the policy. We require employees to take regular compliance training and to certify each year that they have complied with our policies.

Our people are important to our business maintaining the highest standards of honesty, openness and accountability. Our whistleblowing policy explains how our people can report a whistleblowing concern and reassures them that any such disclosure is made in full confidence. The Board monitors and reviews the policy on at least an annual basis to ensure it complies with UK legislation. There were no incidents of whistleblowing during the year.

OUR VALUES

Our core values ensure that everyone understands and is aligned behind what we are and how we want to operate.

Honest

We act with integrity and have courage to do the right things.

Open

We are transparent in what we do. We engage, involve and share.

Creative

We do things differently, delighting our customers, colleagues and shareholders.

Strive

We are always looking for better ways to do things for our customers, colleagues and shareholders.

Environment

Energy Usage

Our total direct and indirect greenhouse gas emissions like-for-like have decreased by 8% since 2019. Our electricity consumption has reduced by 11% on a like for like basis compared to 2019.

We believe that while some of the energy savings have been due to initiatives we have implemented, COVID- 19 has also had an impact in the reduction of GHG and electricity consumption in 2020.

Water Usage

Our total water usage has decreased by 7% since 2019. we believe that there would have been a greater reduction in 2020, however, we increased our flushing activities to ensure the sites were well sanitised before the return of students, increasing consumption in 2020.

Methodology

We have used the EPRA Best Practices Recommendations on Sustainability Reporting (3rd Edition) and GHG Protocol Standard (revised edition), using a financial control organisational boundary 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.

Green Energy

The electricity we use in our buildings is 100% renewable. This is backed by UK-based renewable generation certificates administered by Ofgem. This means the electricity we use is generated in renewable ways ranging from solar and wind turbines to anaerobic digestion and biomass plants.

We have also planned a workshop in 2021 with our energy consultant to identify new opportunities for green energy that can be implemented at our existing sites and how this will impact our energy consumption and costs.

Waste Management

All sites currently have recycling facilities that are used by our customers and people. We aim to review our overall waste management arrangement to identify more efficient ways to manage our recycling throughout the whole Group. The Sustainability working group will review our waste strategy in 2021.

The tables below contain our EPRA performance data for each relevant impact area.

Greenhouse Gas	EPRA Code	2020	2019
Like-for-like:
Total direct GHG emissions (tCO ₂ e)	GHG-Dir-LfL	3,786	4,377
Total indirect GHG emissions (tCO ₂ e)	GHG-Indir-LfL	4,617	4,742
Absolute :
Total direct GHG emissions (tCO ₂ e)	GHG-Dir-Abs	3,787	4,337
Total indirect GHG emissions (tCO ₂ e)	GHG-Indir-Abs	4,622	4,742
Normalised:
GHG intensity from building energy consumption
(tCO ₂ e per operating bed)	GHG-Int	0.97	1.04

2020 - % of total assets included: LfL - 100% / Abs - 100%
2020 - % of data estimated: LfL - 0.5% / Abs - 0.5%

Energy	EPRA Code	2020	2019
Like-for-like:
Total fuel consumption (kWh)	Fuels-LfL	20,592,043	23,803,443
Total district heating & cooling consumption (kWh)	DH&C-Abs	-	-
Total electricity consumption (kWh)	Elec-LfL	18,063,751	20,337,862
Absolute:
Total fuel consumption (kWh)	Fuels-Abs	20,597,942	23,803,443
Total district heating & cooling consumption (kWh)	DH&C-Abs	-	-
Total electricity consumption (kWh)	Elec-Abs	18,083,045	20,337,862
Normalised:
Building energy intensity (kWh per operating bed)	Energy-Int	4,439.46	5,025.19

2020 - % of total assets included: LfL - 100% / Abs - 100%
2020 - % of data estimated: LfL - 0.5% / Abs - 0.5%

Water	EPRA Code	2020	2019
Like-for-like:
Total water consumption (m³)	Water-LfL	422,730	455,578
Absolute:
Total water consumption (m³)	Water-Abs	422,730	455,578
Normalised:
Building water intensity (m³ per operating bed)	Water-Int	48.52	51.86

2020 - % of total assets included: LfL - 100% / Abs - 100%
2020 - % of data estimated: LfL - 49% / Abs - 49%

Section 172

Section 172(1) Companies Act 2006 'Duty to promote the success of the company'

A director of a company must act in the way he/she considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to:

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 Senior Leadership Team who provide regular updates to the Board. This allows the Board to monitor the performance of the Company and that the Company is progressing in line with the long-term strategy.

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 (Non-Executive Director) to liaise with the Colleague Forum. This allows a direct conduit between the Board and our people. This gives the Board insight into the views and concerns of our people and allows them to ensure their decisions are aligned with the interests of the Company's employees.

The need to foster the Company's business relationships with suppliers, customers and others

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 customer's preferences and wishes. As part of the CEO's Board reporting, our customers sit as a standing agenda item. The Board believes that fostering a close relationship and a deep understanding of our customers is key to the Company's success.

The impact of the Company's operations on the community and the environment

The community and environment in which the Company operates in is a key priority for the Board. The Board identified that the Company's ESG strategy was not strong enough and so set about reviewing this in 2020 for launch in 2021. 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 "right" decision 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 is reviewing alongside the Senior Leadership Team and our people, the Company values in 2021 to ensure they continue to remain fit for purpose.

The Board also encourages the Company to go above and beyond in certain areas and one particular example is mental health welfare, where the Board pushed for support for both our people and our customers to be set up.

The need to act fairly as between shareholders 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 and reviews 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.

Principal Decision 1 - March 2020 - COVID-19 response decision

When the impacts of the COVID-19 pandemic began to become visible in March 2020, the Board took several different actions such as:

- Offering refunds to students who met specific criteria

- Suspension of dividends

- Deferring development spend

Long-term success considerations

The actions which the Board undertook were focused on protecting the long-term success of the Company.

The decision to offer refunds was taken after considering the PBSA market and the reputation of the Hello Student® brand.

The Board sought to protect and strengthen the Hello Student® brand by offering these refunds.

The Board reflected that the refunds decision would generate some positive brand goodwill and help our brand stand out amongst others in the market who did not take the same approach.

The decision to suspend dividends and defer development spend were taken by the Board after considering the long-term viability of the Company. Taking these actions ensured that the Company would conserve capital to weather the crisis.

Stakeholder impact considerations

Customers - The Board considered that offering refunds clearly was a positive decision for our customers. Many students benefited from this decision during what was a very stressful time.

People - The Board considered how these decisions would impact people, protecting our capital by suspending dividends and that deferring development spend would help to ensure our long-term viability and ensure our people's jobs were protected.

Shareholders - The Board considered that our shareholders would benefit from these decisions, as they would help to protect the long-term viability of the Company.

Community/Environment - The Board considered whether there were any adverse impacts on either the community or environment and concluded that the above decision would have no adverse impact.

Outcomes

The actions taken by the Board to preserve capital has ensured that the Company is in a healthy state as we progress through this pandemic and has allowed the Company to still be considered a going concern.

The Company and the Hello Student ® brand received large amounts of positive feedback from students receiving refunds.

The Board's belief is that this principal decision taken was a positive decision for all stakeholders.

Principal Decision 2 - September 2020 - Staff restructuring decision In September 2020 the Senior Leadership Team presented to the Board a staff restructuring paper which looked at overhauling the current staffing structure. Due to the size of this transition and change the Board reviewed this proposal.

Long-term success considerations	When making this decision the Board considered the long-term success of the business. The existing structure was not fit for purpose and as such left the Company at a disadvantage to other competitors in the industry. As such implementing this change would ensure that the Company had a solid footing for success in the future.
Stakeholder impact considerations	Customers - The Board considered that moving to a 24 hours a day 7 days a week staffing structure was only going to benefit our customers. It would allow us the ability to be there for our customers at all times of the day whenever our customers need us most. People - The Board considered how these decisions would impact people. Clearly, under the restructure some of our people would be made redundant which would have a negative impact. However, the rationale behind the fact that we are making our staffing model fit for purpose, the creation of alternative roles for staff to apply for and ensuring the structure is viable for the long-term all outweigh the negative impact. Overall the Board believed that the staffing restructure would have a positive impact on our people.	Shareholders - The Board considered that our shareholders would benefit from these decisions; the new staffing structure is budgeted to be cost neutral and will also reduce the need for third-party security contractors. As stated above, it will also ensure the business has a platform for long-term growth which will benefit the shareholders. Community/Environment - The Board considered what impact the new staffing structure would have in our buildings. Having staff in our buildings 24 hours a day will allow them to focus further on energy efficiency measures and recycling which take place around the clock. The Board reviewed other impacts and concluded that the above decision would have no adverse impact.
Outcomes	The outcome was that the Board approved the staff restructuring with the restructure complete by December. As we move into 2021 more evidence will become available to support the Board's considerations above. The Board's belief is that this principal decision taken was a positive decision for all stakeholders.

LYNNE FENNAH

Chief Financial and Operating Officer

16 March 2021

Principal Risks and Uncertainties

2 020 has been a year of change with the COVID -19 pandemic having a significant impact on our principal risks and uncertainties. The Board has maintained constant review of the Group's risk environment, ensuring operational platforms are flexible in adapting to risks whilst remaining in line with our strategic objectives. With the key challenges faced this year, the Group has maintained its strong culture of mitigating significant risks and responding to changes efficiently.

The Board regularly assesses the risk appetite of the Group, with the Audit Committee formally reviewing the effectiveness of our risk management process and internal control systems biannually. During the year, the Audit Committee has not identified or been advised of any material failings or weaknesses.

Changes to Principal Risks

COVID-19 has revealed a number of factors that will be impacted either directly by the ongoing pandemic, or life in a post COVID-19 world as the 'new normal' is defined.

As a result, the Board has introduced a new risk - "Revenue Risk" - which highlights the risk of reduced revenue from changes to university operations (for example, university teaching moving to an online platform or universities facing financial difficulties due to reduced student demand for higher education) and travel restrictions (for example, reduced domestic and international travel or issues with international student visas).

Now all assets are operating under the Hello Student® platform, cost control has become part of our culture and the business has better processes in place to operate efficiently. As such, we have removed the Cost Control Risk from our principal risks. With less developments in the pipeline, we have removed the Development Risk.

The health and safety of our people, customers and visitors to our sites is paramount, and the Board puts health and safety and the associated risks on every meeting agenda. With increasing focus on fire safety and greater regulations in place, we believe our Regulatory Risk and Health & Safety Risk has increased.

The Audit Committee has reviewed and approved the above changes to our principal risks and risk appetite

Brexit

The UK has now formally left the European Union after a transition period. To date we have not seen any impact from this event. The Board takes comfort that this government is committed to growing international student numbers - from the current level of almost 450,000 to 600,000 by 2030. The Treasury has also recognised the value of higher education exports by making visa applications and postgraduate employment limitations less onerous. As a result no principal risk has been added due to Brexit.

Risk Responsibilities

The Board

The Board has overall responsibility for…

the determination of the Group's risk appetite, the setting of objectives and policies, and has ultimate responsibility for managing risk.

Audit Committee

The Audit Committee formally reviews…

the effectiveness of our risk management processes and internal control systems biannually.

Senior Leadership Team

Senior management are responsible for…

reviewing and monitoring the Group's key risks, and overseeing the implementation and operation of the risk management and internal control systems.

Our People

Everyone at Empiric has a role to play…

in identifying key risks facing the Group, and in the day-to-day management of risk through applying the appropriate controls, policies and processes.

Adapting risk management in a changing environment

External Risks		Internal Risks
E1	Student Demand Risk	I1	Health & Safety Risk
E2	Competition Risk	I2	Cyber Security Risk
E3	Property Market Risk	I3	People Risk
E4	Regulatory Risk
E5	Funding Risk
E6	Revenue Risk

The COVID-19 pandemic has created global economic uncertainty, and in particular an uncertainty around income for the 2020/21 and 2021/22 academic years. Accordingly, the Group has conducted a detailed going concern review and considered its liquidity position and banking covenant compliance strength.

On 31 March 2020 the Group announced the difficult decision to suspend dividend distributions and guidance. The Group also took decisive action to focus on liquidity. All development spend was paused and other discretionary costs were reviewed with reductions identified and implemented. The Group also announced it would look favorably upon requests on a case-by-case basis from its customers who were either no longer in occupation or, due to university closures, plan not to return to their accommodation, to be released from their rent and lease obligations from 25 April 2020 onwards. The worst-case estimate for this was a £21 million cash impact, however the final actual impact of releasing students their rent obligations for the academic year 2020/21 was much less at £6.5m.

As at 31 December 2020 the Group had £34 million in cash and £30 million of undrawn investment debt facilities. The Group is well funded and has no refinancing requirements until November 2022.

The Group's debt facilities include covenants in respect of LTV and interest cover, both projected and historic, and all debt facilities are ring fenced with each specific lender. The Group maintains regular dialogue with all of its lenders as part of the ordinary course of business, however during the pandemic we have increased the frequency of this dialogue. As part of these discussions with our lenders we have had conversations specifically around the interest cover covenants to ensure we either temporarily restructure these or gain the relevant waivers from the banks to ensure that no issues arise. To date all of our banks have been supportive during this period and have expressed commitment to the long-term relationship they wish to build with Empiric.

Management has evaluated a number of scenarios in its going concern model. The critical assumption is the revenue occupancy for the 2021/22 academic year. Upside, central and downside cases have been constructed showing 2021/22 academic year occupancy of between 80% and 95%. A downside stress scenario has also been considered which has set 2021/22 revenue occupancy at similar levels to the 2020/21 academic year.

In Scenario 1, 2 & 3 above the Group continues to maintain covenant compliance for all its interest cover covenants. It maintains adequate levels of liquidity and does not need to utilise the additional £20 million RCF facility negotiated with Lloyds Bank plc throughout the same assessment period. In addition, no assumption is made as to the level of additional cost cutting measures or mitigating actions which could potentially be undertaken.

For one lender, under scenario 4, we would not meet a specific 80% occupancy covenant requirement by October 2021. Under this scenario we would be dependent on the further support of this lender, and we would expect this support to be forthcoming.

To support the Directors' going concern assessment, the management also evaluated the occupancy level at which all ICR covenant tests were breached and, additionally, the impact of a 'Reverse Stress Test' which was performed to determine the level of revenue occupancy for the 2021/22 academic year at which the Group would need to seek alternative sources of funding. For this modeling we kept revenue occupancy for the 2020/21 academic year at 65%.

The Director's noted that if occupancy falls below 44% then the Group would be in breach of all ICR covenants, and at 18% revenue occupancy for the 2021/22 academic year (47% lower revenue occupancy than our Downside Stress Scenario) the Group would need to seek alternative sources of funding.

Having reviewed and considered three modelled scenarios, a Downside Stress Scenario, the 2021/22 academic year occupancy level at which ICR covenants would be breached and the level at which alternative sources of funding would be required, the Directors consider that the Group has adequate resources in place for at least 12 months from the date of these results and have therefore adopted the going concern basis of accounting in preparing the annual financial statements.

Going concern - Viability Statement

Scenario	Revenue occupancy for 2020/21 academic year	Revenue occupancy for 2021/22 academic year
Scenario 1 - Upside Scenario	65%	95%
Scenario 2 - Central Scenario	65%	85%
Scenario 3 - Downside Scenario	65%	80%
Scenario 4 - Downside Stress Scenario	65%	65%

The Group continues to maintain covenant compliance for its LTV thresholds throughout the going concern assessment period. Property values would have to fall by more than 15% from December 2020 valuations before LTV covenants are breached.

External Risks Table

Risk and brief description

Potential impact

Mitigation in place

Trend

Student Demand Risk

There is a risk that the level of student demand will decrease.

Link to Strategy
1 2 3 4 5

- Loss of revenue

- Erosion of asset values

- High void costs

- Potential breach in bank covenants

- Senior Leadership Team and the Board closely monitor government policy, student numbers and other micro and macro-economic factors.

- Through a detailed selection process, we ensure our assets are well located serving established leading universities.

- Where possible, we ensure our buildings are fit for alternative use, such as private residential, subject to planning.

- High-quality management information is provided across the business.

- All properties are now managed in-house under the Hello Student® brand.

Competition Risk

The risk of an increased level of competition and supply in the student sector.

Link to Strategy
1 2 3 4 5

- Oversupply of student accommodation

- Reduction of student rental growth

- Inflated asset and land prices

- UK student numbers are due to increase from 2021.

- We ensure our assets are well located serving established leading universities.

- Assets in prime locations, in varying formats and at different price points.

- High-quality management information is provided across the business.

- All properties are now managed in-house under the Hello Student® brand helping to provide a unique identity.

Property Market Risk

The potential for a downturn in the property market.

Link to Strategy
1 2 3 4 5

- Erosion of asset values

- Potential breach in bank covenants

- Lower Total Return for shareholders

- Assets in multiple prime locations, diversifying the risk.

- We maintain prudent levels of gearing, with a LTV limit of 40% and a long-term target of 35%.

- The higher education sector is made up of a wide range of students from the UK, EU and non-EU countries. This range helps to insulate the student accommodation market.

Regulatory Risk

Large levels of regulation being applied to the student accommodation market.

Link to Strategy
1 2 3 4 5

- Potential impact on our Total Return

- Reputational damage and penalties

- Higher compliance costs

- Hello Student® is ANUK accredited, and Lynne Fennah sits on the Student Accommodation Committee of the British Property Federation.

- Involvement with these bodies means that we are well informed of any potential upcoming regulatory change. It also provides a basis for industry lobbying if required.

- Our operational teams try to build close working relationships with local authorities to keep abreast of any changes.

- Regular review of fire safety regulations and checks to ensure our buildings, at a minimum, remain compliant with standards.

Funding Risk

The availability of debt or equity and ability to raise it on acceptable terms.

Link to Strategy
1 2 3 4 5

- Stifling of future growth potential

- Forced sale of assets to repay debt

- Reduction of profit

- Our average maturity of debt is 5.9 years with £30 million undrawn as at 31 December 2020.

- We maintain prudent levels of gearing, with a LTV limit of 40% and a long-term target of 35%.

- Experienced finance team with a strong track record in delivering both debt and equity.

Revenue Risk

The risk of reduced revenue from various changes to university operations and travel restrictions.

Link to Strategy

12345

- Reduce profitability

- Stifling of future growth potential

- Potential breach in bank covenants

- Erosion of assets values

- Regular communication with universities to review changes in their operations and future teaching plans.

- Monitoring changes in domestic and international travel restrictions and adapting out sales approach accordingly.

- Where possible, we ensure our buildings are fit for alternative use, such as private residential, subject to planning.

- High-quality management information Is provided across the business.

Internal Risks Table

	Risk and brief description	Potential impact	Mitigation in place	Trend
I1	Health and Safety Risk The occurrence of a major health and safety incident including a fire or infectious breakout. Link to Strategy 1 2 3 4 5	- Injury and impact on customers, contractors, staff and visitors - Compensation costs incurred - Reputational impact - Loss of life in a worst-case scenario	- Health and safety metrics are reported monthly. - Policies, procedures and training for all staff. - Ultimate Board responsibility involving regular Board reporting from the Head of FM. - Live compliance dashboard which is monitored daily. - Regular review of fire safety regulations and checks to ensure our buildings remain compliant with standards going over and beyond fire safety requirements.	˄
I2	Cyber Security Risk The Group suffering from a cyber security breach. Link to Strategy 1 2 3 4 5	- Reputational damage - Deteriorated customer experience - Higher costs and reduced profitability	- Developed a business continuity plan to enable Group operations to continue in the event of a breach. - Centralised our IT network across the Group and recruited an in-house IT team. - Deployed an updated training programme across all staff. - Implemented a data monitoring system to protect our platforms across the IT estate.	˂
I3	People Risk Inability to retain and attract top levels of staff. Link to Strategy 1 2 3 4 5	- Loss of key business knowledge - Higher costs - Impact on customer service	- Exit interviews are used to identify any areas for improvement within the business. - Ongoing training and development programme designed to upskill staff regularly and progress forward with their career within the business.	˂

Emerging Risks

The Audit committee also considers emerging risks. These are new or unforeseen risks that we are conscious of however their potential impact is not fully known. The Committee reviews these biannually alongside the Principal Risks and Uncertainties. The Audit Committee has detailed below the risks it believes are emerging and the potential impact it may have on our Principal Risks.

Emerging Risks

Impact on Principal Risk Probabilities

Mitigating factors

Geo-political Crisis

A geopolitical dispute between China or India and the UK could result in foreign governments placing embargos on their students coming to study in the UK.

- Increase - E1 - Student Demand Risk

- Increase - E3 - Property Market Risk

- Increase - E5 - Funding Risk

- Increase - E6 - Revenue Risk

- Involvement with the BPF Student Accommodation Committee which lobbies the government on issues impacting the sector.

- The UK Government has expressed their support for international students and the positive impact that they have on our economy.

Increasing use of Online University Courses

The COVID-19 pandemic has forced universities and students into the use of online teaching methods. The fact that the pandemic has shown that this style of teaching can be effective to some degree could result into a long term move towards online courses which would not require purpose-built student accommodation.

- Increase - E1 - Student Demand Risk

- Increase - E3 - Property Market Risk

- Increase - E6 - Revenue Risk

- Studies have revealed that a significant majority of students want to return to a campus based experiences as soon as possible.

- University experiences is seen as more of a life experience rather than just an educational stepping stone.

Climate Change

Climate changes has the potential to impact every business in the world. Climate change could impact planning legislation restricting supply of PBSA, cause flooding, increase government legislation across a wide range of areas and many other impacts.

The increased awareness around this issue is going to bring these issues and risks to the foreground.

- Increase - E1 - Student Demand Risk

- Increase - E3 - Property Market Risk

- Increase - E5 - Funding Risk

- Increase - E6 - Revenue Risk

- Increase - I1 - Health and Safety Risk

- There will be a move to more responsible landlords who can prove that their buildings are efficiently and ethically run which will be monitored by our ESG Committee.

University Funding

The level of funding, and how universities receive this has changed significantly over the last twenty years. A number of universities are facing significant financial stress as a result of COVID-19 and there is a risk that a number of universities fall into administration.

This would cause significant declines in student populations in the cities of the affected institution.

- Increase - E1 - Student Demand Risk

- Increase - E3 - Property Market Risk

- Increase - E5 - Funding Risk

- Increase - E6 - Revenue Risk

- Reviewing our portfolio to ensure that we are aligned to cities with more than one university which have strong financial backing.

Introduction of regulation of the student accommodation industry

The COVID-19 pandemic has drawn attention to the vast range of level of service and corporate responsibility of providers within the student accommodation industry.

The industry is one which varies from HMO owners operating a handful of beds up to providers who operate tens of thousands of beds.

The support which providers and landlords provided to students in this pandemic has caused a lot of media attention so there is a risk that regulation may be applied to the industry.

- Increase - E1 - Student Demand Risk

- Increase - E3 - Property Market Risk

- Increase - E4 - Regulatory Risk

- Increase - E6 - Revenue Risk

- We act as a responsible owner of student accommodation who does the right thing. Further legislation within the market may have a positive impact to the Group as less scrupulous suppliers are forced out of the market.

Pandemic

The COVID-19 pandemic is constantly evolving and there is a continued potential threat that new strains of the virus become more damaging.

This could impact many areas such as travel, both international and domestic or future lockdowns.

There is also the potential risk of future pandemics from viruses which are as yet unknown.

- Increase - E1 - Student Demand Risk

- Increase - E3 - Property Market Risk

- Increase - E4 - Regulatory Risk

- Increase - E5 - Funding Risk

- Increase - E6 - Revenue Risk

- Increase - I1- Health and Safety Risk

- Reviewing our marketing strategy and offering so that we appeal to UK nationals alongside international students.

- The COVID-19 pandemic has shown that the robust and detailed protocols we have in place within our business to manage any impact.

Directors' Responsibilities

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare the Group and Company financial statements for each financial year. Under that law the Directors are required to prepare the Group financial statements and have elected to prepare the Company financial statements in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss for the Group for that year.

In preparing these financial statements, the Directors are required to:

- select suitable accounting policies and then apply them consistently;

- make judgements and accounting estimates that are reasonable and prudent;

- state whether they have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies to the European Union, subject to any material departures disclosed and explained in the financial statements;

- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Company will continue in business; and

- prepare a Directors' Report, a Strategic Report and Directors' Remuneration Report which comply with the requirements of the Companies Act 2006.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and the Company and enable them to ensure that the financial statements comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. 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:

- the Group financial statements have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies to the European Union and Article 4 of the IAS Regulation and give a true and fair view of the assets, liabilities, financial position and profit and loss of the Group and the undertakings included in the consolidation as a whole;

- the Annual Report includes a fair review of the development and performance of the business and the financial position of the Group and the Parent Company, together with a description of the principal risks and uncertainties that they face; and

- the Annual Report and Accounts, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Group's performance, business model and strategy.

Mark Pain

Chairman | 16 March 2021

Group Statement of Comprehensive Income

		Year ended	Year ended
		31 December	31 December
		2020	2019
	Note	£'000	£'000
Continuing operations
Revenue	2	59,444	70,908
Property expenses	3	(22,651)	(23,351)
Net rental income		36,793	47,557
Administrative expenses	4	(9,841)	(9,222)
Change in fair value of investment property	13	(37,603)	29,176
Operating (loss) / profit		(10,651)	67,511
Finance cost		(13,341)	(13,148)
Finance income		22	409
Net finance costs	5	(13,319)	(12,739)
(Loss) / profit before income tax		(23,970)	54,772
Corporation tax	7	-	-
(Loss) / profit for the year		(23,970)	54,772
Other comprehensive income
Items that will be reclassified to Statement of Comprehensive Income
Fair value gain on cash flow hedge		-	80
Total comprehensive (loss) / income for the year		(23,970)	54,852
(Loss) / earnings per share expressed in pence per share	8
Basic		(3.97)	9.08
Diluted		(3.97)	9.07
Gross Margin		61.9%	67.1%

Group Statement of Financial Position

		At	At
		31 December	31 December
		2020	2019
	Note	£'000	£'000
ASSETS
Non-current assets
Property, plant and equipment	11	135	352
Intangible assets	12	1,054	1,619
Investment property - Operational Assets	13	981,369	999,380
Investment property - Development Assets	13	23,751	29,700
Total non-current assets		1,006,309	1,031,051
Current assets
Trade and other receivables	14	14,510	10,538
Cash and cash equivalents	15	33,927	16,517
Total current assets		48,437	27,055
Total assets		1,054,746	1,058,106
LIABILITIES
Current liabilities
Trade and other payables	16	15,527	14,372
Borrowings	17	-	42,675
Deferred income	16	20,676	29,204
Total current liabilities		36,203	86,251
Non-current liabilities
Borrowings	17	385,266	307,097
Total non-current liabilities		385,266	307,097
Total liabilities		421,469	393,348
Total net assets		633,277	664,758
Equity
Called up share capital	19	6,032	6,032
Share premium	20	257	257
Capital reduction reserve	21	475,038	482,578
Retained earnings		151,950	175,891
Total equity		633,277	664,758
Total equity and liabilities		1,054,746	1,058,106
Net Asset Value per share basic (pence)	9	105.00	110.21
Net Asset Value per share diluted (pence)	9	104.60	109.99
EPRA NTA per share (pence)	9	105.00	110.21

These financial statements were approved by the Board of Directors on 16 March 2021 and signed on its behalf by:

Lynne Fennah

Chief Financial Officer

Company Statement of Financial Position

		At	At
		31 December	31 December
		2020	2019
	Note	£'000	£'000
ASSETS
Fixed Assets
Property, plant and equipment	11	56	288
Intangible assets	12	968	1,080
Investments in subsidiaries	30	187,598	81,686
Total fixed assets		188,622	83,054
Current Assets
Trade and other receivables	14	353	304
Amounts due from Group undertakings	14	350,578	420,006
Cash and cash equivalents	15	24,775	12,407
Total current Assets		375,706	432,717
Total assets		564,328	515,771
Creditors
Current creditors
Trade and other payables	16	2,918	2,841
Amounts due to Group undertakings	16	9,548	9,721
Borrowings		-	9,995
Total current creditors		12,466	22,557
Non-current creditors
Borrowings		19,961	-
Total non-current creditors		19,961	-
Total creditors		32,427	22,557
Total net assets		531,901	493,214
Capital and Reserves
Called up share capital	19	6,032	6,032
Share premium	20	257	257
Capital reduction reserve	21	475,038	482,578
Retained earnings		50,574	4,347
Total capital and reserves		531,901	493,214

The Company made a profit for the year of £46,198,000 (2019: £8,179,000 loss).

These financial statements were approved by the Board of Directors on 16 March 2021 and signed on its behalf by:

Lynne Fennah

Director

Group Statement of Changes in Equity

			Capital
	Called up	Share	reduction	Retained	Cash flow	Total
	share capital	premium	reserve	earnings	hedge reserve	equity
Year ended 31 December 2020	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 January 2020	6,032	257	482,578	175,891	-	664,758
Changes in equity
Profit for the year	-	-	-	(23,970)	-	(23,970)
Total comprehensive income for the year	-	-	-	(23,970)	-	(23,970)
Share-based payments	-	-	-	29	-	29
Dividends	-	-	(7,540)	-	-	(7,540)
Total contributions and distribution recognised directly in equity	-	-	(7,540)	29	-	(7,511)
Balance at 31 December 2020	6,032	257	475,038	151,950	-	632,277
Year ended 31 December 2019
Balance at 1 January 2019	6,029	467,268	45,458	121,215	(80)	639,890
Changes in equity
Profit for the year	-	-	-	54,772	-	54,772
Fair value gain on cash flow hedge	-	-	-	-	80	80
Total comprehensive income for the year	-	-	-	54,772	80	54,852
Share-based payments	-	-	-	164	-	164
Share premium cancellation	-	(467,268)	467,268	-	-	-
Share options exercised	3	257	-	(260)	-	-
Dividends	-	-	(30,148)	-	-	(30,148)
Total contributions and distribution recognised directly in equity	3	(467,011)	437,120	(96)	-	(29,984)
Balance at 31 December 2019	6,032	257	482,578	175,891	-	664,758

Company Statement of Changes in Equity

			Capital
	Called up	Share	reduction	Retained	Total
Year ended 31 December 2020	share capital	premium	reserve	earnings	equity
Year ended 31 December 2020	£'000	£'000	£'000	£'000	£'000
Balance at 1 January 2020	6,032	257	482,578	4,347	493,214
Changes in equity
Profit for the year	-	-	-	46,198	46,198
Total comprehensive loss for the year	-	-	-	46,198	46,198
Share-based payments	-	-	-	29	29
Dividends	-	-	(7,540)	-	(7,540)
Total contributions and distribution recognised directly in equity	-	-	(7,540)	29	(7,511)
Balance at 31 December 2020	6,032	257	475,038	50,574	531,901
Year ended 31 December 2019
Balance at 1 January 2019	6,029	467,268	45,458	12,622	531,377
Changes in equity
Loss for the year	-	-	-	(8,179)	(8,179)
Total comprehensive loss for the year	-	-	-	(8,179)	(8,179)
Share-based payments	-	-	-	164	164
Share premium cancellation	-	(467,268)	467,268	-	-
Share options exercised	3	257	-	(260)	-
Dividends	-	-	(30,148)	-	(30,148)
Total contributions and distribution recognised directly in equity	3	(467,011)	437,120	(96)	(29,984)
Balance at 31 December 2019	6,032	257	482,578	4,347	493,214

Group Statement of Cash Flows

	Year ended	Year ended
	31 December	31 December
	2020	2019
	£'000	£'000
Cash flows from operating activities
(Loss) / profit before income tax	(23,970)	54,772
Share-based payments	29	164
Depreciation and amortisation	326	283
Finance income	(22)	(409)
Finance costs	13,341	13,148
Intangible asset impairment	898	-
Change in fair value of investment property	37,603	(29,176)
	28,205	38,782
Decrease in trade and other receivables	(3,971)	958
(Decrease)/increase in trade and other payables	1,653	(1,269)
Increase in deferred rental income	(8,528)	2,236
	(10,846)	1,925
Net cash flows generated from operations	17,359	40,707
Cash flows from investing activities
Purchases of tangible fixed assets	(72)	(85)
Purchases of intangible assets	(370)	(552)
Purchase of investment property	(14,258)	(39,620)
Interest received	22	409
Fixed term deposit	-	10,000
Net cash flows from investing activities	(14,678)	(29,848)
Cash flows from financing activities
Dividends paid	(7,540)	(30,148)
Bank borrowings drawn	77,800	115,500
Bank borrowings repaid	(42,800)	(90,500)
Loan arrangement fee paid	(1,009)	(1,064)
Finance cost (excluding fair value loss on derivatives)	(11,722)	(11,603)
Net cash flows from financing activities	14,729	(17,815)
Increase / (decrease) in cash and cash equivalents	17,410	(6,956)
Cash and cash equivalents at beginning of year	16,517	23,473
Cash and cash equivalents at end of year	33,927	16,517

Notes to the Financial Statements

1. ACCOUNTING POLICIES

1.1 Period of Account

The consolidated financial statements of the Group are in respect of the reporting period from 1 January 2020 to 31 December 2020.

The consolidated financial statements of the Group for the year ended 31 December 2020 comprise the results of Empiric Student Property plc (the "Company") and its subsidiaries and were approved by the Board for issue on 16 March 2021. The Company is a public limited company incorporated and domiciled in England and Wales. The Company's ordinary shares are admitted to the official list of the UK Listing Authority, a division of the Financial Conduct Authority, and traded on the London Stock Exchange. The registered address of the Company is disclosed in the Company information.

1.2 Basis of Preparation

The consolidated financial statements of the Group for the year to 31 December 2020 comprise the results of Empiric Student Property plc (the "Company") and its subsidiaries (together, the "Group"). These financial statements have been prepared on a going concern basis and in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies to the European Union. The Parent Company financial statements have been prepared in accordance with FRS 101, Financial Reporting Standards Reduced Disclosure Framework.

The "requirements of the Companies Act 2006" here means accounts being prepared in accordance with "international accounting standards" as defined in section 474(1) of that Act, as it applied immediately before the Implementation Period (IP) completion day (end of transition period), including where the company also makes use of standards which have been adopted for use within the United Kingdom in accordance with regulation 1(5) of the International Accounting Standards and European Public Limited Liability Company (Amendment etc.) (EU Exit) Regulations 2019".

The Group's financial statements have been prepared on a historical cost basis, except for investment property and derivative financial instruments which have been measured at fair value. The consolidated financial statements are presented in Sterling which is also the Company and the Group's functional currency.

The Company has applied the exemption allowed under section 408(1b) of the Companies Act 2006 and has therefore not presented its own Statement of Comprehensive Income in these financial statements. The Group loss for the year includes a profit after taxation of £46,198,000: (2019 loss of £8,179,000) for the Company, which is reflected in the financial statements of the Company.

The financial information does not constitute the Group's statutory accounts for the year ended 31 December 2020 or the year ended 31 December 2019 but is derived from those accounts. The Group's statutory accounts for the year ended 31 December 2019 have been delivered to the Registrar of Companies. The Group's statutory accounts for the year ended 31 December 2020 will be delivered to the Registrar of Companies in due course. The Auditor has reported on both the December 2020 and December 2019 accounts; the reports were unqualified, did not include a reference to any matters to which the Auditor drew attention by way of emphasis without qualifying their report and did not contain any statement under Section 498 of the Companies Act 2006.

1.3 Disclosure Exemptions Adopted

In preparing the financial statements of the Parent Company, advantage has been taken of all disclosure exemptions conferred by FRS 101. The Parent Company financial statements do not include:

● certain comparative information as otherwise required by international accounting standards;

● a statement of cash flows;

● the effect of future accounting standards not yet adopted; and

● disclosure of related party transactions with other wholly owned members of the Group headed by Empiric Student Property plc.

In addition, and in accordance with FRS 101, further disclosure exemptions have been adopted because equivalent disclosures are included in the consolidated financial statements of Empiric Student Property Plc. The Parent Company Financial Statements do not include certain disclosures in respect of:

● Financial Instruments (other than certain disclosures required as a result of recording financial instruments at fair value); and

● Fair value measurement (other than certain disclosures required as a result of recording financial instruments at fair value).

The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and does not present its own profit and loss account in these financial statements.

1.4 Going Concern

On 31 March 2020 the Group announced the difficult decision to suspend dividend distributions and guidance. The Group also took decisive action to focus on liquidity. All development spend was paused and other discretionary costs were reviewed with reductions identified and implemented. The Group also announced it would look favorably upon requests on a case -by -case basis from its customers who were either no longer in occupation or, due to university closures, plan not to return to their accommodation, to be released from their rent and lease obligations from 25 April 2020 onwards. The worst-case estimate for this was a £21 million cash impact, however the final actual impact of releasing students their rent obligations for the academic year 2020/21 was much less at £6.5m.

As at 31 December 2020 the Group had £34 million in cash and £30 million of undrawn investment debt facilities. The Group is well funded and has no refinancing requirements until November 2022.

	Revenue occupancy for	Revenue occupancy for
Scenario	2020/21 academic year	2021/22 academic year
Scenario 1 - Upside Scenario	65%	95%
Scenario 2 - Central Scenario	65%	85%
Scenario 3 - Downside Scenario	65%	80%
Scenario 4 - Downside Stress Scenario	65%	65%

In Scenario 4, under our Downside Stress Scenario, we would not meet interest cover covenants at the 30 June 2021 measurement date for two lenders. However, the Group has cure rights under the lending agreements and sufficient cash headroom to cure any ICR breaches if required. For one lender, under scenario 4, we would not meet a specific 80% occupancy covenant requirement by October 2021. Under this scenario we would be dependent on the further support of this lender, and we would expect this support to be forthcoming.

1.5 Significant Accounting Judgements, Estimates and Assumptions

The preparation of the Group's financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

Estimates

In the process of applying the Group's accounting policies, management has made the following estimates, which have the most significant effect on the amounts recognised in the consolidated financial statements:

(a) Fair Valuation of Investment Property

The market value of investment property is determined, by an independent external real estate valuation expert, to be the estimated amount for which a property should exchange on the date of the valuation in an arm's length transaction. Properties have been valued on an individual basis. The valuation experts use recognised valuation techniques and the principles of IFRS 13.

The valuations have been prepared in accordance with the RICS Valuation - Professional Standards January 2014 (the "Red Book"). Factors reflected include current market conditions, annual rentals, lease lengths and location. The significant methods and assumptions used by valuers in estimating the fair value of investment property are set out in Note 13.

For properties under development the fair value is calculated by estimating the fair value of the completed property using the income capitalisation technique less estimated costs to completion and an appropriate developer's margin.

Judgements

In the process of applying the Group's accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the consolidated financial statements:

(b) Operating Lease Contracts - the Group as Lessor

The Group has investment properties which have various categories of leases in place with tenants. The judgements by lease type are detailed below:

Student leases: As these leases are all have a term of less than one year, the Group retains all the significant risks and rewards of ownership of these properties and so accounts for the leases as operating leases.

Nominations and Commercial leases: The Group has determined, based on an evaluation of the terms and conditions of the arrangements, particularly the lease terms, insurance requirements and minimum lease payments, that it retains all the significant risks and rewards of ownership of these properties and so accounts for the leases as operating leases.

Summary of Significant Accounting Policies

Basis of Consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at 31 December 2020. Subsidiaries are those investee entities where control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

Specifically, the Group controls an investee if, and only if, it has:

(a) power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);

(b) exposure, or rights, to variable returns from its involvement with the investee; and

When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

(a) the contractual arrangement with the other vote holders of the investee;

(b) rights arising from other contractual arrangements; and

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary.

The financial statements of the subsidiaries are prepared for the same reporting period as the Parent Company, using consistent accounting policies. All intra-Group balances, transactions and unrealised gains and losses resulting from intra-Group transactions are eliminated in full.

Financial Assets

The Group classifies its financial assets into one of the categories discussed below, depending on the purpose for which the asset was acquired. Other than financial assets in a qualifying hedging relationship, the Group's accounting policy for each category is as follows:

Fair Value Through Profit or Loss

This category comprises only in-the-money derivatives (see "Financial liabilities" section of out-of- money derivatives) . They are carried in the Statement of Financial Position at fair value with changes in fair value recognised in the Statement of Comprehensive Income in the finance income or expense line. Other than derivative financial instruments which are not designated as hedging instruments, the Group does not have any assets held for trading nor does it voluntarily classify any financial assets as being at fair value through profit or loss.

Amortised Cost

These assets are primarily from the provision of goods and services to customers (e.g. trade receivables), but also incorporate other types of financial assets where the objective is to hold these assets in order to collect contractual cash flows and the contractual cash flows are solely payments of principal and interest. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.

Impairment provisions for trade receivables are recognised based on the simplified approach within IFRS 9 using the lifetime expected credit losses. During this process the probability of the non-payment of the trade receivable is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. For trade receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being recognised within cost of sales in the Statement of Comprehensive Income. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

Impairment provisions for intercompany receivables are recognised based on a forward-looking expected credit loss model. The methodology used to determine the amount of the provision is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset. For those where the credit risk has not increased significantly since initial recognition of the financial asset, 12-month expected credit losses against gross interest income are recognised. For those where the credit risk has increased significantly, lifetime expected credit losses along with the gross interest income are recognised. For those that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are recognised.

From time to time, the Group elects to renegotiate the terms of trade receivables due from customers with which it has previously had a good trading history. Such renegotiations will lead to changes in the timing of payments rather than changes to the amounts owed and, in consequence, the new expected cash flows are discounted at the original effective interest rate and any resulting difference to the carrying value is recognised in the Statement of Comprehensive Income (operating profit).

The Group's financial assets measured at amortised cost comprise trade and other receivables and cash and cash equivalents in the Statement of Financial Position.

Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and - for the purpose of the Statement of Cash Flows - bank overdrafts. Bank overdrafts are shown within loans and borrowings in current liabilities on the Statement of Financial Position.

Financial Liabilities

The Group classifies its financial liabilities into one of two categories, depending on the purpose for which the liability was acquired.

Other than financial liabilities in a qualifying hedging relationship (see below), the Group's accounting policy for each category is as follows:

Fair Value Through Profit or Loss

This category comprises only out-of-the-money derivatives (see "Financial assets" for in-the-money derivatives). They are carried in the Statement of Financial Position at fair value with changes in fair value recognised in the Statement of Comprehensive Income. The Group does not hold or issue derivative financial instruments for speculative purposes, but for hedging purposes. Other than these derivative financial instruments, the Group does not have any liabilities held for trading nor has it designated any financial liabilities as being at fair value through profit or loss.

Other Financial Liabilities

Other financial liabilities include the following items:

- Bank borrowing is initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument. Such interest-bearing liabilities are subsequently measured at amortised cost using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the Consolidated Statement of Financial Position. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.

- Trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method.

Hedge Accounting

Hedge accounting is applied to financial assets and financial liabilities only where all of the following criteria are met:

- at the inception of the hedge there is formal designation and documentation of the hedging relationship and the Group's risk management objective and strategy for undertaking the hedge; and

- the hedge relationship meets all of the hedge effectiveness requirements, including that an economic relationship exists between the hedged item and the hedging instrument, the credit risk effect does not dominate the value changes, and the hedge ratio is designated based on actual quantities of the hedged item and hedging instrument.

Cash Flow Hedges

The effective part of forward contracts designated as a hedge of the variability in cash flows of interest rate risk arising from firm commitments, and highly probable forecast transactions, are measured at fair value with changes in fair value recognised in Other Comprehensive Income and accumulated in the cash flow hedge reserve. The Group uses such contracts to fix the cost interest payments.

Intangible Assets

Intangible assets are initially recognised at cost and then subsequently carried at cost less accumulated amortisation and impairment losses.

Amortisation has been charged to the Consolidated Statement of Comprehensive Income on a straight-line basis over ten years.

Investment Property

Investment property comprises property that is held to earn rentals or for capital appreciation, or both, and property under development rather than for sale in the ordinary course of business or for use in production or administrative functions.

Investment property is measured initially at cost including transaction costs and is included in the financial statements on unconditional exchange. Transaction costs include transfer taxes, professional fees and initial leasing commissions to bring the property to the condition necessary for it to be capable of operating.

Once purchased, investment property is stated at fair value. Gains or losses arising from changes in the fair values are included in the Consolidated Statement of Comprehensive Income in the period in which they arise.

Investment property is derecognised when it has been disposed of, or permanently withdrawn from use, and no future economic benefit is expected from its disposal. The investment property is derecognised upon unconditional exchange. The difference between the net disposal proceeds and the carrying amount of the asset would result in either gains or losses at the retirement or disposal of investment property. Any gains or losses are recognised in the Consolidated Statement of Comprehensive Income in the period of retirement or disposal.

Property, Plant and Equipment

All property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure which is directly attributable to the acquisition of the asset.

Depreciation has been charged to the Consolidated Statement of Comprehensive Income on the following basis:

-	Fixtures and fittings:	15% per annum on a reducing balance basis; and
-	Computer equipment:	straight-line basis over three years.

Rental Income

The Group is the lessor in respect of operating leases. Rental income arising from operating leases on investment property is accounted for on a straight-line basis over the lease term and is included in gross rental income in the Consolidated Statement of Comprehensive Income due to its operating nature.

Tenant lease incentives are recognised as a reduction of rental revenue on a straight-line basis over the term of the lease. The lease term is the non ‑ cancellable period of the lease together with any further term for which the tenant has the option to continue the lease, where, at the inception of the lease, the Directors are reasonably certain that the tenant will exercise that option.

Amounts received from tenants to terminate leases or to compensate for dilapidations are recognised in the Consolidated Statement of Comprehensive Income when the right to receive them arises.

Where a student requested a rent refund and they met the criteria set out, including leaving the property, the Group recognise no further income in relation to that let, reduce cash with the cash amount refunded, wrote off any deferred income in relation to the refund and any difference between cash and deferred income was debited or credited to revenue in the Statement of Comprehensive Income.

Segmental Information

The Directors are of the opinion that the Group is engaged in a single segment business, being the investment in student and commercial lettings, within the United Kingdom.

Share-Based Payments

Where share options are awarded to employees, the fair value of the options at the date of grant is charged to the Consolidated Statement of Comprehensive Income over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Non-vesting conditions and market vesting conditions are factored into the fair value of the options granted. So long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied.

Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the Consolidated Statement of Comprehensive Income over the remaining vesting period. National Insurance obligations with respect to equity-settled share-based payments awards are accrued over the vesting period.

Share Capital

Ordinary shares are classified as equity. External costs directly attributable to the issuance of shares are recognised as a deduction from equity.

Taxation

As the Group is a UK REIT, profits arising in respect of the property rental business are not subject to UK corporation tax.

Taxation in respect of profits and losses outside of the property rental business comprises current and deferred taxes. Taxation is recognised in the Consolidated Statement of Comprehensive Income except to the extent that it relates to items recognised as direct movement in equity, in which case it is also recognised as a direct movement in equity.

Current tax is the total of the expected corporation tax payable in respect of any non-REIT taxable income for the year and any adjustment in respect of previous periods, based on tax rates applicable to the periods.

Deferred tax is calculated in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases, based on tax rates enacted or substantively enacted at the balance sheet date.

Deferred tax liabilities are recognised in full (except to the extent that they relate to the initial recognition of assets and liabilities not acquired in a business combination). Deferred tax assets are only recognised to the extent that it is considered probable that the Group will obtain a tax benefit when the underlying temporary differences unwind.

1.6 Impact of New Accounting Standards and Changes in Accounting Policies

At the date of authorisation of these financial statements, the following accounting standards had been issued which are not yet applicable to the Group:

- IAS 1/8 definition of materiality amendment

- IFRS 3 definition of a business

- IBOR reform phase 1

- IFRS 16 amendment for rent concessions

The above standards or interpretations not yet effective are expected to have a material impact on these condensed consolidated financial statements of the Group.

2. REVENUE

	Group
	Year ended	Year ended
	31 December	31 December
	2020	2019
	£'000	£'000
Student rental income	64,218	69,209
Student rental refunds	(6,539)	-
Commercial rental income	1,765	1,699
Total revenue	59,444	70,908

3. PROPERTY EXPENSES

	Group
	Year ended	Year ended
	31 December	31 December
	2020	2019
	£'000	£'000
Direct site costs	7,575	7,128
Technology services	671	936
Site office and utilities	9,371	9,832
Cleaning and service contracts	2,922	2,729
Repairs and maintenance	2,112	2,726
Total property expenses	22,651	23,351

4. ADMINISTRATIVE EXPENSES

	Group
	Year ended	Year ended
	31 December	31 December
	2020	2019
	£'000	£'000
Salaries and Directors' remuneration	4,655	5,024
Legal and professional fees	1,976	1,776
Other administrative costs	2,453	1,604
IT expenses	326	333
	9,410	8,737
Auditor's fees
Fees payable for the audit of the Group's annual accounts	210	210
Fees payable for the review of the Group's interim accounts	40	40
Fees payable for the audit of the Group's subsidiaries	136	136
Total auditor's fees	386	386
Abortive acquisition costs	45	99
Total administrative expenses	9,841	9,222

5. NET FINANCE COST

	Group
	Year ended	Year ended
	31 December	31 December
	2020	2019
	£'000	£'000
Finance costs
Interest expense on bank borrowings	11,838	11,947
Amortisation of loan transaction costs	1,503	1,201
	13,341	13,148
Finance income
Fair value gain on interest rate swap	-	181
Interest received on bank deposits	22	228
	22	409
Net finance cost	13,319	12,739

6. EMPLOYEES AND DIRECTORS

	Group
	Year ended	Year ended
	31 December	31 December
	2020	2019
	£'000	£'000
Wages and salaries	8,021	6,994
Pension costs	295	327
Cash bonus	-	878
Share-based payments	29	164
National insurance	725	750
	9,070	9,113
Less: Hello Student amounts included in property expenses	(4,415)	(4,089)
Amounts included in administrative expenses	4,655	5,024
The average monthly number of employees of the Group during the year was as follows:
Management	5	5
Administration - ESP	44	27
Operations - Hello Student®	316	335
	365	367

	Group
	Year ended	Year ended
	31 December	31 December
	2020	2019
Directors' remuneration	£'000	£'000
Salaries and fees	928	1,007
Pension costs	86	107
Cash bonus	-	212
Payment in lieu of notice	351	-
Share-based payments	29	164
	1,394	1,490

A summary of the Directors' emoluments, including the disclosures required by the Companies Act 2006 is set out in the Directors' Remuneration Report.

7. CORPORATION TAX

The Group became a REIT on 1 July 2014 and as a result does not pay UK corporation tax on its profits and gains from its qualifying property rental business in the UK provided it meets certain conditions. Non-qualifying profits and gains of the Group continue to be subject to corporation tax as normal.

In order to achieve and retain REIT status, several conditions have to be met on entry to the regime and on an ongoing basis, including:

- at the start of each accounting period, the assets of the property rental business (plus any cash and certain readily realisable investments) must be at least 75% of the total value of the Group's assets;

- at least 75% of the Group's total profits must arise from the tax-exempt property rental business; and

- at least 90% of the tax exempt profit of the property rental business (excluding gains) of the accounting period must be distributed.

In addition, the full UK corporation tax exemption in respect of the profits of the property rental business will not be available if the profit: financing cost ratio in respect of the property rental business is less than 1.25.

The Group met all of the relevant REIT conditions for the year ended 31 December 2020.

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
	2020	2019
	£'000	£'000
Current tax
Income tax charge/(credit) for the year	-	-
Adjustment in respect of prior year	-	-
Total current income tax charge/(credit) in the income statement	-	-
Deferred tax
Total deferred income tax charge/(credit) in the income statement	-	-
Total current income tax charge/(credit) 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	(23,970)	54,772
Profit before tax multiplied by the rate of corporation tax in the UK of 19% (2019: 19%)	(4,554)	10,407
Exempt property rental profits in the year	(2,042)	(4,194)
Exempt property revaluations in the year	7,144	(5,543)
Effects of:
Non-allowable expenses	70	47
Capital allowances	(1,006)	(1,143)
Unutilised current year tax losses	388	426
Total current income tax charge/(credit) in the income statement	-	-

A deferred tax asset in respect of the tax losses generated by the residual (non-tax exempt) business of the Group £388,000 (31 December 2019: £426,000) will be recognised to the extent that their utilisation is probable. On the basis that the residual business is not expected to be income generating in future periods, a deferred tax asset of £3,027,000 (2019: £3,818,000) has not been recognised in respect of such losses.

8. EARNINGS PER SHARE

The ordinary number of shares is based on the time-weighted average number of shares throughout the year.

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings per share is calculated using the weighted average number of shares adjusted to assume the conversion of all dilutive potential ordinary shares.

EPRA EPS, reported on the basis recommended for real estate companies by EPRA, is a key measure of the Group's operating results.

Adjusted earnings is a performance measure used by the Board to assess the Group's dividend payments. Licence fees, development rebates and rental guarantees are added to EPRA earnings on the basis noted below as the Board sees these cash flows as supportive of dividend payments.

- The adjustment for licence fee receivable is calculated by reference to the fraction of the total period of completed construction during the period, multiplied by the total licence fee receivable on a given forward-funded asset.

- The development rebate is due from developers in relation to late completion on forward-funded agreements as stipulated in development agreements.

- The discounts on acquisition are in respect of the vendor guaranteeing a rental shortfall for the first year of operation as stipulated in the sale and purchase agreement.

Reconciliations are set out below:

			Calculation of	Calculation
	Calculation of	Calculation of	EPRA	of EPRA	Calculation of
	basic EPS	diluted EPS	basic EPS	diluted EPS	adjusted EPS
	£'000	£'000	£'000	£'000	£'000
Year to 31 December 2020
Earnings	(23,970)	(23,970)	(23,970)	(23,970)	(23,970)
Adjustment to include discounts on acquisition due to rental guarantees in the year	-	-	-	-	221
Adjustments to remove:
Changes in fair value of investment properties (Note 13)	-	-	37,603	37,603	37,603
Earnings/Adjusted Earnings	(23,970)	(23,970)	13,633	13,633	13,854
Weighted average number of shares ('000)	603,161	603,161	603,161	603,161	603,161
Adjustment for employee share options ('000)	-	-¹	-	551	-
Total number shares ('000)	603,161	603,161	603,161	603,712	603,161
Per-share amount (pence)	(3.97)	(3.97)	2.26	2.26	2.30
Year to 31 December 2019
Earnings	54,772	54,772	54,772	54,772	54,772
Adjustment to include licence fee receivable on forward-funded developments in the year	-	-	-	-	1,038
Adjustment to include discounts on acquisition due to rental guarantees in the year	-	-	-	-	229
Adjustments to remove:
Changes in fair value of investment properties (Note 13)	-	-	(29,176)	(29,176)	(29,176)
Changes in fair value of interest rate derivatives (Note 18)	-	-	(181)	(181)	(181)
Earnings/Adjusted Earnings	54,772	54,772	25,415	25,415	26,682
Weighted average number of shares ('000)	602,929	602,929	602,929	602,929	602,929
Adjustment for employee share options ('000)	-	1,215	-	1,215	-
Total number shares ('000)	602,929	604,144	602,929	604,144	602,929
Per-share amount (pence)	9.08	9.07	4.22	4.21	4.43

1 Due to the Group making a loss in the year, under IAS 33 the share options become antidilutive and thus are excluded from the above calculation.

9. NET ASSET VALUE PER SHARE

In October 2019, EPRA published new best practice recommendations for financial disclosures by public real estate companies. Three new measures of Net Asset Value were introduced namely: EPRA Net Tangible Assets (NTA), EPRA Net Reinvestment Value (NRV) and EPRA Net Disposal Value (NDV). These recommendations are effective for accounting periods starting on 1 January 2020 and have been adopted by the Group.

The principles of the three new measures per EPRA are below:

EPRA Net Reinstatement Value: Assumes that entities never sell assets and aims to represent the value required to rebuild the entity.

EPRA Net Tangible Assets: Assumes that entities buy and sell assets, thereby crystallising certain levels of unavoidable deferred tax.

EPRA Net Disposal Value: Represents the shareholders' value under a disposal scenario, where deferred tax, financial instruments and certain other adjustments are calculated to the full extent of their liability, net of any resulting tax. As the Group is a REIT, no adjustment is made for deferred tax.

The Group consider NAV to be the most relevant measure of the NAV measures and we expect this to be our primary NAV measure going forward.

A reconciliation of the three new EPRA NAV metrics from IFRS NAV is shown in the table below. The previously reported EPRA NAV has also been included for comparative purposes.

		New EPRA NAV measures			Previously
					reported
	NAV				measure
		EPRA	EPRA	EPRA	EPRA
	IFRS	NRV	NTA	NDV	NAV
Year ended 31 December 2020	£'000	£'000	£'000	£'000	£'000
Net assets per Statement of Financial Position	633,278	633,278	633,278	633,278	633,278
Adjustments
Intangibles	-	-	-	-	-
Purchaser's costs ¹	-	32,830	-	-	-
Net assets used in per share calculation	633,278	666,108	633,278	633,278	633,278
Number of shares in issue
Issued share capital ('000)	603,161	603,161	603,161	603,161	603,161
Issued share capital plus employee options ('000)	605,475	605,475	605,475	605,475	605,475
Net asset value per share	£	£	£	£	£
Basic net asset value per share	1.050	1.104	1.050	1.050	1.050
Diluted net asset value per share	1.046	1.101	1.046	1.046	1.046
		New EPRA NAV measures			Previously
					reported
	NAV				measure
		EPRA	EPRA	EPRA	EPRA
	IFRS	NRV	NTA	NDV	NAV
Year ended 31 December 2019	£'000	£'000	£'000	£'000	£'000
Net assets per Statement of Financial Position	664,758	664,758	664,758	664,758	664,758
Adjustments
Intangibles	-	-	-	-	-
Purchaser's costs ¹	-	36,593	-	-	-
Net assets used in per share calculation	664,758	701,351	664,758	664,758	664,758
Number of shares in issue
Issued share capital ('000)	603,161	603,161	603,161	603,161	603,161
Issued share capital plus employee options ('000)	604,376	604,376	604,376	604,376	604,376
Net asset value per share	£	£	£	£	£
Basic net asset value per share	1.102	1.162	1.102	1.102	1.102
Diluted net asset value per share	1.100	1.160	1.100	1.100	1.100

1 EPRA NTA and EPRA NDV reflect IFRS values which are net of purchaser's costs. Any purchaser's costs deducted from the market value, are added back when calculating EPRA NRV

10. DIVIDENDS PAID

	Group and Company
	Year ended	Year ended
	31 December	31 December
	2020	2019
	£'000	£'000
Interim dividend of 1.25 pence per ordinary share in respect of the quarter ended 31 December 2018	-	7,536
Interim dividend of 1.25 pence per ordinary share in respect of the quarter ended 31 March 2019	-	7,536
Interim dividend of 1.25 pence per ordinary share in respect of the quarter ended 30 June 2019	-	7,536
Interim dividend of 1.25 pence per ordinary share in respect of the quarter ended 30 September 2019	-	7,540
Interim dividend of 1.25 pence per ordinary share in respect of the quarter ended 31 December 2019	7,540	-
	7,540	30,148

No dividends have been declared since the year end.

11. FIXED ASSETS

		Group			Company
	Fixtures and	Computer		Fixtures and	Computer
	fittings	equipment	Total	fittings	equipment	Total
Year ended 31 December 2020	£'000	£'000	£'000	£'000	£'000	£'000
Costs
As at 1 January 2020	490	266	756	490	193	683
Additions	-	72	72	-	26	26
As at 31 December 2020	490	338	828	490	219	709
Depreciation
As at 1 January 2020	223	181	404	214	181	395
Charge for the year	49	41	90	49	10	59
Impairment	199	-	199	199	-	199
As at 31 December 2020	471	222	693	462	191	653
Net book value
As at 31 December 2020	19	116	135	28	28	56
		Group			Company
	Fixtures and	Computer		Fixtures and	Computer
	fittings	equipment	Total	fittings	equipment	Total
Year ended 31 December 2019	£'000	£'000	£'000	£'000	£'000	£'000
Costs
As at 1 January 2019	490	181	671	490	181	671
Additions	-	85	85	-	12	12
As at 31 December 2019	490	266	756	490	193	683
Depreciation
As at 1 January 2019	165	140	305	165	140	305
Charge for the year	58	41	99	49	41	90
As at 31 December 2019	223	181	404	214	181	395
Net book value
As at 31 December 2019	267	85	352	276	12	288

12. INTANGIBLE ASSETS

	Group			Company
	Hello Student®
	website	NAVision¹		NAVision¹
	development	development	Total	development	Total
Year ended 31 December 2020	£'000	£'000	£'000	£'000	£'000
Costs
As at 1 January 2020	878	1,271	2,149	1,271	1,271
Additions	-	370	370	370	370
As at 31 December 2020	878	1,641	2,519	1,641	1,641
Amortisation
As at 1 January 2020	339	191	530	191	191
Charge for the year	87	149	236	149	149
Impairment	366	333	699	333	333
As at 31 December 2020	792	673	1,465	673	673
Net book value
As at 31 December 2020	86	968	1,054	968	968

	Group				Company
	Hello Student®	Hello Student®
	application	website	NAVision¹		NAVision¹
	development	development	development	Total	development	Total
Year ended 31 December 2019	£'000	£'000	£'000	£'000	£'000	£'000
Costs
As at 1 January 2019	311	878	719	1,597	719	719
Additions	-	-	552	552	552	552
As at 31 December 2019	311	878	1,271	2,149	1,271	1,271
Amortisation
As at 1 January 2019	311	252	92	344	92	92
Charge for the year	-	87	99	186	99	99
As at 31 December 2019	-	339	191	530	191	191
Net book value
As at 31 December 2019	-	539	1,080	1,619	1,080	1,080

1. Relates to the development of our accounting system which enables us to bring our revenue management system inhouse see page 29 for detail.

Impairment

Hello Student® website development

During the year we conducted a review of our intangible asset relating to the Hello Student website. As can be seen on pages 21, we have identified that overhauling our website will be a priority for 2021. As such there was an impairment during the year writing of £366,000 of costs relating to the old website which have been deemed to be obsolete.

NAVision development

During the year we launched our new revenue management system, see page 29 for detail. This new system has provided us with a number of benefits. As a result of the launch of this new release we conducted a review of our intangible asset relating to the NAVision development. It was found that there were a number of costs identified which were for parts of the system no longer in use under the new revenue management system. As such there was an impairment during the year writing of £333,000 of costs relating to the items within the NAVision system which were replaced by the new system.

13. INVESTMENT PROPERTY

	Group
		Investment
	Investment	properties	Total	Properties	Total
	properties	long	operational	under	investment
	freehold	leasehold	assets	development	property
Year ended 31 December 2020	£'000	£'000	£'000	£'000	£'000
As at 1 January 2020	861,639	137,741	999,380	29,700	1,029,080
Property additions	3,915	352	4,267	9,376	13,643
Transfer to / from developments	13,082	-	13,082	(13,082)	-
Change in fair value during the year	(29,416)	(5,944)	(35,360)	(2,243)	(37,603)
As at 31 December 2020	849,220	132,149	981,369	23,751	1,005,120

	Group
		Investment
	Investment	properties	Total	Properties	Total
	properties	long	operational	under	investment
	freehold	leasehold	assets	development	property
Year ended 31 December 2019	£'000	£'000	£'000	£'000	£'000
As at 1 January 2019	796,640	132,731	929,371	41,670	971,041
Property additions	4,206	410	4,616	24,247	28,863
Transfer to / from developments	34,441	-	34,441	(34,441)	-
Change in fair value during the year	26,352	4,600	30,952	(1,776)	29,176
As at 31 December 2019	861,639	137,741	999,380	29,700	1,029,080

During the year £4,267,000 (31 December 2019: £5,418,000) of additions related to expenditure were recognised in the carrying value of standing assets.

In accordance with IAS 40, the carrying value of investment property is their fair value as determined by independent external valuers. This valuation has been conducted by CBRE Limited, as external valuer, and has been prepared as at 31 December 2020, in accordance with the Appraisal & Valuation Standards of the RICS, on the basis of market value. Properties have been valued on an individual basis. This value has been incorporated into the financial statements.

The valuation of all property assets uses market evidence and includes assumptions regarding income expectations and yields that investors would expect to achieve on those assets over time. Many external economic and market factors, such as interest rate expectations, bond yields, the availability and cost of finance and the relative attraction of property against other asset classes, could lead to a reappraisal of the assumptions used to arrive at current valuations. In adverse conditions, this reappraisal can lead to a reduction in property values and a loss in Net Asset Value.

The table below reconciles between the fair value of the investment property per the Consolidated Group Statement of Financial Position and investment property per the independent valuation performed in respect of each year end.

	Group
	As at	As at
	31 December	31 December
	2020	2019
	£'000	£'000
Value per independent valuation report	1,004,651	1,028,610
Add:	1,004,651	1,028,610
Head lease	469	470
Fair value per Group Statement of Financial Position	1,005,120	1,029,080

Fair Value Hierarchy

The following table provides the fair value measurement hierarchy for investment property:

		Quoted prices	Significant	Significant
		in active	observable	unobservable
		markets	inputs	inputs
	Total	(Level 1)	(Level 2)	(Level 3)
Date of valuation 31 December 2020	£'000	£'000	£'000	£'000
Assets measured at fair value:
Student properties	986,899	-	-	986,899
Commercial properties	18,221	-	-	18,221
As at 31 December 2020	1,005,120	-	-	1,005,120

		Quoted prices	Significant	Significant
		in active	observable	unobservable
		markets	inputs	inputs
	Total	(Level 1)	(Level 2)	(Level 3)
Date of valuation 31 December 2019	£'000	£'000	£'000	£'000
Assets measured at fair value:
Student properties	1,004,450	-	-	1,004,450
Commercial properties	24,160	-	-	24,160
As at 31 December 2019	1,028,610	-	-	1,028,610

There have been no transfers between Level 1 and Level 2 during the year, nor have there been any transfers between Level 2 and Level 3 during the year.

The valuations have been prepared on the basis of market value which is defined in the RICS Valuation Standards, as:

"The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm's-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion."

Market value as defined in the RICS Valuation Standards is the equivalent of fair value under IFRS.

The following descriptions and definitions relate to valuation techniques and key unobservable inputs made in determining fair values. The valuation techniques for student properties uses a discounted cash flow with the following inputs:

(a) Unobservable input: Rental income

The rent at which space could be let in the market conditions prevailing at the date of valuation. Range £95 per week-£357 per week (31 December 2019: £97-£347 per week).

(b) Unobservable input: Rental growth

The estimated average increase in rent based on both market estimations and contractual arrangements. Assumed growth of 1.48% used in valuations (31 December 2019: 3.55%).

The net initial yield is defined as the initial gross income as a percentage of the market value (or purchase price as appropriate) plus standard costs of purchase.

Range: 4.45%-8.50% (31 December 2019: 4.50%-7.25%).

(d) Unobservable input: COVID rent deduction

The valuation as of 31 December 2020 includes a £21,439,000 capital deduction to the valuation to reflect the impact of COVID-19 on the valuations. This deduction is made up of two parts.

1 - A 75% deduction (to reflect the period from 1 January to September) of the difference between expected gross income (if unaffected by COVID-19) and actual predicted income for AY2020/21.

2 - A 10% reduction to actual income from AY2020/21 to reflect any potential future refunds.

This is based on CBRE's view that AY2021/22 is going to be an unaffected year and therefore requires no capital deduction relating to COVID-19.

(e) Unobservable input: Physical condition of the property

(f) Unobservable input: Planning consent

No planning enquiries undertaken for any of the development properties.

(g) Sensitivities of measurement of significant unobservable inputs

As set out in the significant accounting estimates and judgements, the Group's portfolio valuation is open to judgements and is inherently subjective by nature.

As a result, the following sensitivity analysis has been prepared by the valuer:

	-3% change	+3% change	-0.25%	+0.25%
	in rental	in rental	change	change
	income	income	in yield	in yield
As at 31 December 2020	£'000	£'000	£'000	£'000
(Decrease)/increase in the fair value of the investment properties	(40,020)	40,060	46,340	(42,230)


	-3% change	+3% change	-0.25%	+0.25%
	in rental	in rental	change	change
	income	income	in yield	in yield
As at 31 December 2019	£'000	£'000	£'000	£'000
(Decrease)/increase in the fair value of the investment properties	(39,190)	39,270	46,520	(42,350)

(h) The key assumptions for the commercial properties are net initial yield, current rent and rental growth. A movement of 3% in passing rent and 0.25% in the net initial yield will not have a material impact on the financial statements.

14. TRADE AND OTHER RECEIVABLES

	Group		Company
	31 December	31 December	31 December	31 December
	2020	2019	2020	2019
	£'000	£'000	£'000	£'000
Trade receivables	2,539	314	-	-
Other receivables	1,063	470	5	20
Amounts owed by property managers	6,505	5,144	-	-
Prepayments	4,157	4,355	341	277
VAT recoverable	246	255	7	7
	14,510	10,538	353	304
Amounts due from Group undertakings	-	-	350,578	420,006
	14,510	10,538	350,931	420,310

Movements on the Group provision for impairment of trade receivable were as follows:

	Group
	31 December	31 December
	2020	2019
	£'000	£'000
At 1 January	(594)	(593)
(Increase) in provision for receivables impairment	(855)	(1)
At 31 December	(1,439)	(594)

Provisions for impaired receivables have been included in property expenses in the income statement. Amounts charged to the impairment provision are generally written off, when there is no expectation of recovering additional cash.

The maximum exposure to credit risk at the reporting date is the book value of each class of receivable mentioned above and its cash and cash equivalents. The Group does not hold any collateral as security, though in some instances students provide guarantors.

Management believes that the concentration of credit risk with respect to trade receivables is limited due to the Group's customer base being large, unrelated and are living with us. As such we have a high level of communication with them.

At 31 December 2020, there were no material trade receivables overdue at the year end, and no aged analysis of trade receivables has been included. The carrying value of trade and other receivables classified at amortised cost approximates fair value.

The Company performed a review of the expected credit loss on the amounts due from Group undertakings, there was no provision made during the year (2019: £nil).

15. CASH AND CASH EQUIVALENTS

	Group		Company
	31 December	31 December	31 December	31 December
	2020	2019	2020	2019
	£'000	£'000	£'000	£'000
Cash and cash equivalents	33,927	16,517	24,775	12,407

16. TRADE AND OTHER PAYABLES

	Group		Company
	31 December	31 December	31 December	31 December
	2020	2019	2020	2019
	£'000	£'000	£'000	£'000
Trade payables	3,406	3,294	848	533
Other payables	1,800	1,287	251	325
Accrued expenses	9,574	8,821	1,072	1,013
Directors' bonus accrual	747	970	747	970
	15,527	14,372	2,918	2,841
Amounts owed to Group undertakings	-	-	9,548	9,721
	15,527	14,372	12,466	12,562

At 31 December 2020, there was deferred rental income of £20,676,000 (31 December 2019: £29,204,000) which was rental income that had been booked that relates to future periods.

The Directors consider that the carrying value of trade and other payables approximates to their fair value.

Amounts owed to Group undertakings are interest free and repayable on demand.

17. BANK BORROWINGS

A summary of the drawn and undrawn bank borrowings in the year is shown below:

	Group
	Bank	Bank		Bank	Bank
	borrowings	borrowings		borrowings	borrowings
	drawn	undrawn	Total	drawn	undrawn	Total
	31 December	31 December	31 December	31 December	31 December	31 December
	2020	2020	2020	2019	2019	2019
	£'000	£'000	£'000	£'000	£'000	£'000
At 1 January	355,000	35,000	390,000	330,000	60,000	390,000
Bank borrowings from new facilities in the year	52,800	42,500	95,300	55,500	-	55,500
Bank borrowings drawn in the year	25,000	(25,000)	-	60,000	(25,000)	35,000
Bank borrowings repaid during the year	(42,800)	-	(42,800)	(90,500)	-	(90,500)
At 31 December	390,000	52,500	442,500	355,000	35,000	390,000

The Group has refinanced two facilities, one with AIB for £32.8m and the second with FCB for £10 million which we also extended to £ 20 million. In July 2020 we extended our RCF with Lloyds bank from £70 million to £90 million. (2019 a total of £115,500,000 of additional debt was drawn and a total of £90,500,000 was repaid during the year. There is an undrawn RCF debt facility available of £30,000,000 at 31 December 2020 (31 December 2019: £35,000,000). The Group also entered into a development facility with NatWest for £ 22.5 million during the year. At 31 December 2020 no balance has been drawn down. The weighted average term to maturity of the Group's debt as at the year end is 5.9 years (31 December 2019: 6.6 years).

Bank borrowings are secured by charges over individual investment properties held by certain asset-holding subsidiaries. These assets have a fair value of £952,441,000 at 31 December 2020 (31 December 2019: £879,910,000). In some cases, the lenders also hold charges over the shares of the subsidiaries and the intermediary holding companies of those subsidiaries.

The Company has a £20 million unsecured facility with FCB - see above (2019: £10 million) repayable in more than one year, fully drawn. The balance net of loan arrangement fees carried as at 31 December 2020 was £19,961,000 (31 December 2019: £9,995,000).

Any associated fees in arranging the bank borrowings unamortised as at the year end are offset against amounts drawn on the facilities as shown in the table below:

	Group
	31 December	31 December
	2020	2019
Non-current	£'000	£'000
Balance bought forward	312,200	274,500
Total bank borrowings in the year	77,800	115,500
Bank borrowings becoming non-current in the year	-	55,500
Less: Bank borrowings becoming current in the year	-	(42,800)
Less: Bank borrowings repaid during the year	-	(90,500)
Bank borrowings drawn: due in more than one year	390,000	312,200
Less: Unamortised costs	(4,734)	(5,103)
Bank borrowings due in more than one year	385,266	307,097

	Group
	31 December	31 December
	2020	2019
Current	£'000	£'000
Balance bought forward	42,800	55,500
Total bank borrowings in the year	-	-
Less: Bank borrowings repaid during the year	(42,800)	(55,500)
Bank borrowings becoming current in the year	-	42,800
Bank borrowings drawn: due in less than one year	-	42,800
Less: Unamortised costs	-	(125)
Bank borrowings due in less than one year	-	42,675

Maturity of Bank Borrowings

	Group
	31 December	31 December
	2020	2019
	£'000	£'000
Repayable between one and two years	-	35,000
Repayable between two and five years	132,800	-
Repayable in over five years	257,200	277,200
Bank borrowings due in more than one year	390,000	312,200

Each of the Group's facilities has an interest charge which is payable quarterly. Four of the facilities have an interest charge that is based on a margin above LIBOR whilst the other five facility interest charges are fixed at 3.97%, 3.52%, 3.24%, 3.64% and 3.20%. The weighted average rate payable by the Group on its investment debt portfolio as at the year end was 2.90% (31 December 2019: 3.20%).

19. SHARE CAPITAL

	Group and Company		Group and Company
	31 December	31 December	31 December	31 December
	2020	2020	2019	2019
	Number	£'000	Number	£'000
Balance brought forward	603,160,940	6,032	602,887,740	6,029
Share options exercised	-	-	273,200	3
Balance carried forward	603,160,940	6,032	603,160,940	6,032

There were no share issues in the year relating to vesting share options. See Note 27 for further details. In the prior year there were two issues, on 2 October 2019 for 120,833 ordinary shares and the other on 26 November 2019 for 152,385 ordinary shares.

20. SHARE PREMIUM

The share premium relates to amounts subscribed for share capital in excess of nominal value:

	Group and Company
	31 December	31 December
	2020	2019
	£'000	£'000
Balance brought forward	257	467,268
Share premium cancellation	-	(467,268)
Share premium on share options exercised	-	257
Balance carried forward	257	257

Cancellation

At the AGM on 2 May 2019, shareholders approved a resolution to cancel the Company's share premium account, which stood at £467 million. The court order to confirm the cancellation was received on 4 June 2019, following which the share premium account was cancelled. Cancellation results in this capital being treated as realised profit, giving us the flexibility to declare dividends or make other distributions to shareholders, although there is no current intention to do so.

21. CAPITAL REDUCTION RESERVE

	Group and Company
	31 December	31 December
	2020	2019
	£'000	£'000
Balance brought forward	482,578	45,458
Less interim dividends declared and paid per Note 10	(7,540)	(30,148)
Share premium cancellation	-	467,268
Balance carried forward	475,038	482,578

The capital reduction reserve account is a distributable reserve.

Refer to Note 10 for details of the declaration of dividends to shareholders.

22. LEASING AGREEMENTS

Future total minimum lease receivables under non-cancellable operating leases on investment properties are as follows:

	Group
	31 December	31 December
	2020	2019
	£'000	£'000
Less than one year	39,625	49,278
Between one and two years	1,169	3,271
Between two and three years	1,123	1,407
Between three and four years	1,102	1,361
Between four and five years	1,042	1,338
More than five years	6,269	9,851
Total	50,330	66,506

The above relates to commercial leases and nomination agreements with UK universities in place as at 31 December 2020. The impact of student leases for the forthcoming academic year signed by 31 December 2020 have not been included as the certainty of income does not arise until the tenant takes occupation of the accommodation. As at 31 December 2020 £17,689,000 (31 December 2019: £29,204,000) of the future minimum lease receivables have been received as cash.

23. CONTINGENT LIABILITIES

There were no contingent liabilities at 31 December 2020 (31 December 2019: £nil).

24. CAPITAL COMMITMENTS

The Group had capital commitments relating to developments totalling £11,331,000 at 31 December 2020 31 (December 2019: £31,542,000).

25. RELATED PARTY DISCLOSURES

Key Management Personnel

Key management personnel are considered to comprise the Board of Directors. Please refer to Note 6 for details of the remuneration for the key management.

Share Capital

There were no share transactions with related parties during the year ended 31 December 2020.

Share-based Payments

On 8 April 2020, the Company granted nil-cost options over a total of 152,512 (Tim Attlee 80,116 and Lynne Fennah 72,396) ordinary shares pursuant to the deferred shares element of the annual bonus awards for the financial period ended 31 December 2019 (the "Annual Bonus Awards").

Further, and also on 8 April 2020, Lynne Fennah was granted nil-cost options over 511,892 ordinary shares pursuant to the Empiric 2014 Long Term Incentive Plan (the "2017-2020 LTIP Awards") for the 2020 financial year.

On 11 November 2020, Duncan Garrood was granted nil-cost options over 400,000 ordinary shares pursuant to the Empiric 2014 Long Term Incentive Plan (the "2017-2020 LTIP Awards") for the 2020 financial year.

Details of the shares granted and exercised are outlined in Note 27.

26. SUBSEQUENT EVENTS

On 15 March 2021 the Group sold 3 properties in Portsmouth for a total of £7.4m. The sale price was at a premium to the market value as at 31 December 2020.

27. SHARE-BASED PAYMENTS

The Company operates three equity-settled share-based remuneration schemes for Executive Directors under the deferred annual bonus and LTIP. The details of the schemes are included in the Remuneration Committee Report.

Issued

Of the nil-cost options, 206,889 are currently exercisable. The weighted average remaining contractual life of these options was 1.7 years (2019: 1.7 years).

During the year to 31 December 2020 the amount recognised relating to the options was £29,000 (2019:£164,000).

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.

	31/12/2020	31/12/2019	31/12/2018	31/12/2017	31/12/2016
Outstanding number brought forward	1,250,045	1,051,708	1,477,817	3,913,420	2,880,391
Granted during the period	1,064,494	604,134	439,022	207,198	1,033,029
Vested and exercised during the period	-	(129,253)	(139,325)	(691,237)	-
Lapsed during the period	-	(276,544)	(725,806)	(1,951,564)	-
Outstanding number carried forward	2,314,539	1,250,045	1,051,708	1,477,817	3,913,420

The fair value on date of grant for the nil-cost options under the 2018-21 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 these nil-cost options in the year:

		Annual Bonus Award
(a)	Weighted average share price at grant date of	£0.68
(b)	Exercise price of	£nil
(c)	Contractual life of	3 years
(d)	Expected volatility of	34.12%
(e)	Expected dividend yield of	0.00%
(f)	Risk-free rate of	0.55%
(g)	The volatility assumption is based on a statistical analysis of daily share prices of comparator companies over the last three years
(h)	The TSR performance conditions have been considered when assessing the fair value of the options

28. FINANCIAL RISK MANAGEMENT

Financial Instruments

The Group's principal financial assets and liabilities are those which arise directly from its operations: trade and other receivables, trade and other payables and cash and cash equivalents. Set out below is a comparison by class of the carrying amounts and fair value of the Group's financial instruments that are shown in the financial statements:

Risk Management

The Company and Group is exposed to market risk (including interest rate risk), credit risk and liquidity risk.

The Board of Directors oversees the management of these risks.

The Board of Directors reviews and agrees policies for managing each of these risks which are summarised below.

(a) Market Risk

Market risk is the risk that the fair values of financial instruments will fluctuate because of changes in market prices. The financial instruments held by the Company and Group that are affected by market risk are principally the Company and Group bank balances along with the interest rate derivatives (swap and cap) entered into to mitigate interest rate risk.

(b) Credit Risk

Credit risk is the risk of financial loss to the Company and Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Company and Group is exposed to credit risks from both its leasing activities and financing activities, including deposits with banks and financial institutions.

The Group has established a credit policy under which each new tenant is assessed based on an extensive credit rating scorecard at the time of entering into a lease agreement.

The Group's review includes external rating, when available, and in some cases bank references. The Group determines concentrations of credit risk by monthly monitoring the creditworthiness rating of existing customers and through a monthly review of the trade receivables' ageing analysis.

Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. For banks and financial institutions, only independently rated parties with minimum rating "B" are accepted.

Further disclosures regarding trade and other receivables, which are neither past due nor impaired, are provided in Note 14.

(i) Tenant Receivables

Tenant receivables, primarily tenant rentals, are presented in the Group Statement of Financial Position net of allowances for doubtful receivables and are monitored on a case-by-case basis. Credit risk is primarily managed by requiring tenants to pay rentals in advance and performing tests around strength of covenant prior to acquisition. There are no trade receivables past due as at the year end.

(ii) Credit Risk Related to Financial Instruments and Cash Deposits

One of the principal credit risks of the Company and Group arises with the banks and financial institutions. The Board of Directors believes that the credit risk on short-term deposits and current account cash balances are limited because the counterparties are banks, which are committed lenders to the Company and Group, with high credit ratings assigned by international credit rating agencies.

Credit ratings (Moody's)	Long-term	Outlook
AIB Group	Baa2	Stable
Canada Life	Aa3	Stable
Mass Mutual	Aa3	Negative
Scottish Widows	A2	Positive
Lloyds Bank Plc	A3	Stable

Liquidity risk arises from the Company and Group management of working capital and going forward, the finance charges and principal repayments on any borrowings, of which currently there are none. It is the risk that the Company and Group will encounter difficulty in meeting their financial obligations as they fall due as the majority of the Company and Group assets are property investments and are therefore not readily realisable. The Company and Group objective is to ensure they have sufficient available funds for their operations and to fund their capital expenditure. This is achieved by continuous monitoring of forecast and actual cash flows by management.

The following table sets out the contractual obligations (representing undiscounted contractual cash flows) of financial liabilities:

	Group
		Less than 3	3 to 12	1 to 5
	On demand	months	months	years	> 5 years	Total
	£'000	£'000	£'000	£'000	£'000	£'000
At 31 December 2020
Bank borrowings and interest	-	3,021	9,063	199,749	283,925	495,758
Trade and other payables	-	15,527	-	-	-	15,527
	-	18,548	9,063	199,749	283,925	511,285

	Group
		Less than 3	3 to 12	1 to 5
	On demand	months	months	years	> 5 years	Total
	£'000	£'000	£'000	£'000	£'000	£'000
At 31 December 2019
Bank borrowings and interest	-	13,101	41,801	149,450	317,287	521,639
Trade and other payables	-	14,372	-	-	-	14,372
	-	27,473	41,801	149,450	317,287	536,011

	Company
		Less than 3	3 to 12	1 to 5
	On demand	months	months	years	> 5 years	Total
	£'000	£'000	£'000	£'000	£'000	£'000
At 31 December 2020
Bank borrowings and interest	-	96	289	20,447	-	20,832
Trade and other payables	-	2,918	-	-	-	2,918
	-	3,014	289	20,447	-	23,750

	Company
		Less than 3	3 to 12	1 to 5
	On demand	months	months	years	> 5 years	Total
	£'000	£'000	£'000	£'000	£'000	£'000
At 31 December 2019
Bank borrowings and interest	-	10,045	-	-	-	10,045
Trade and other payables	-	2,841	-	-	-	2,841
	-	12,886	-	-	-	12,886

29. CAPITAL MANAGEMENT

The primary objectives of the Group's capital management are to ensure that it remains a going concern and continues to qualify for UK REIT status.

The Board of Directors monitors and reviews the Group's capital so as to promote the long-term success of the business, facilitate expansion and to maintain sustainable returns for shareholders.

Capital consists of ordinary shares, other capital reserves and retained earnings.

30. SUBSIDIARIES

Those subsidiaries listed below are considered to be all subsidiaries of the Company at 31 December 2020, with the shares issued being ordinary shares. All subsidiaries are registered in London at the following address: 6th Floor, Swan House, 17-19 Stratford Place, London, England, W1C 1BQ.

In each case the country of incorporation is England and Wales.

	Company
	31 December	31 December
	2020	2019
	£'000	£'000
As at 1 January	81,686	8,623
Additions in the year	106,215	73,063
Disposals	(303)	-
Balance at 31 December	187,598	81,686

During the current year and prior year there were a number of subsidiaries which moved around the Group, due to reorganisations relating to debt; these were all non ‑ cash movements whereby plc forgave intercompany debt owned by subsidiaries in return for the issue of further shares.

Company	Status	Ownership	Principal activity
Brunswick Contracting Limited	Active	100%	Property Contracting
Empiric (Alwyn Court) Limited	Active	100%	Property Investment
Empiric (Baptists Chapel) Limited	Active	100%	Property Investment
Empiric (Bath Canalside) Limited	Active	100%	Property Investment
Empiric (Bath James House) Limited	Active	100%	Property Investment
Empiric (Bath JSW) Limited	Active	100%	Property Investment
Empiric (Bath Oolite Road) Limited	Active	100%	Property Investment
Empiric (Bath Piccadilly Place) Limited	Active	100%	Property Investment
Empiric (Birmingham Emporium) Limited	Active	100%	Property Investment
Empiric (Birmingham) Limited	Active	100%	Property Investment
Empiric (Bristol St Mary's) Limited	Active	100%	Property Investment
Empiric (Bristol St Mary's) Leasing Limited	Dormant	100%	Property Leasing
Empiric (Bristol) Leasing Limited	Dormant	100%	Property Leasing
Empiric (Bristol) Limited	Active	100%	Property Investment
Empiric (Buccleuch Street) Limited	Active	100%	Property Investment
Empiric (Canterbury Franciscans) Limited	Active	100%	Property Investment
Empiric (Canterbury Pavilion Court) Limited	Active	100%	Property Investment
Empiric (Cardiff Wndsr House) Leasing Limited	Dormant	100%	Property Leasing
Empiric (Cardiff Wndsr House) Limited	Active	100%	Property Investment
Empiric (Centro Court) Limited	Active	100%	Property Investment
Empiric (Claremont Newcastle) Limited	Active	100%	Property Investment
Empiric (College Green) Limited	Active	100%	Property Investment
Empiric (Developments) Limited	Active	100%	Development Management
Empiric (Durham St Margarets) Limited	Active	100%	Property Investment
Empiric (Edge Apartments) Limited	Active	100%	Property Investment
Empiric (Edinburgh KSR) Limited	Active	100%	Property Investment
Empiric (Edinburgh KSR) Leasing Limited	Active	100%	Property Leasing
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	Active	100%	Property Investment
Empiric (Exeter DCL) Limited	Active	100%	Property Investment
Empiric (Exeter Isca Lofts) Limited	Active	100%	Property Investment
Empiric (Exeter LL) Limited	Active	100%	Property Investment
Empiric (Falmouth Maritime Studios) Limited	Active	100%	Property Investment
Empiric (Falmouth Ocean Bowl) Limited	Active	100%	Property Investment
Empiric (Falmouth Ocean Bowl) Leasing Limited	Active	100%	Property Leasing
Empiric (Glasgow Ballet School) Limited	Active	100%	Property Investment
Empiric (Glasgow Bath St) Limited	Active	100%	Property Investment
Empiric (Glasgow George Square) Leasing Limited	Dormant	100%	Property Leasing
Empiric (Glasgow George Square) Limited	Active	100%	Property Investment
Empiric (Glasgow George St) Leasing Limited	Active	100%	Property Leasing
Empiric (Glasgow George St) Limited	Active	100%	Property Investment
Empiric (Glasgow) Leasing Limited	Active	100%	Property Leasing
Empiric (Glasgow) Limited	Active	100%	Property Investment
Empiric (Hatfield CP) Limited	Active	100%	Property Investment
Empiric (Huddersfield Oldgate House) Leasing Limited	Dormant	100%	Property Leasing
Empiric (Huddersfield Oldgate House) Limited	Active	100%	Property Investment
Empiric (Huddersfield Snow Island) Leasing Limited	Active	100%	Property Leasing
Empiric (Lancaster Penny Street 1) Limited	Active	100%	Property Investment
Empiric (Lancaster Penny Street 2) Limited	Active	100%	Property Investment
Empiric (Lancaster Penny Street 3) Limited	Active	100%	Property Investment
Empiric (Leeds Algernon) Limited	Active	100%	Property Investment
Empiric (Leeds Mary Morris) Limited	Active	100%	Property Investment
Empiric (Leeds Pennine House) Limited	Active	100%	Property Investment
Empiric (Leeds St Marks) Limited	Active	100%	Property Investment
Empiric (Leicester 134 New Walk) Limited	Active	100%	Property Investment
Empiric (Leicester 136-138 New Walk) Limited	Active	100%	Property Investment
Empiric (Leicester 140-142 New Walk) Limited	Active	100%	Property Investment
Empiric (Leicester 160 Upper New Walk) Limited	Active	100%	Property Investment
Empiric (Leicester Bede Park) Limited	Active	100%	Property Investment
Empiric (Leicester De Montfort Square) Limited	Active	100%	Property Investment
Empiric (Leicester Hosiery Factory) Limited	Active	100%	Property Investment
Empiric (Leicester Peacock Lane) Limited	Active	100%	Property Investment
Empiric (Leicester Shoe & Boot Factory) Limited	Active	100%	Property Investment
Empiric (Leicester West Walk) Limited	Dormant	100%	Property Investment
Empiric (Liverpool Art School/Maple House) Limited	Active	100%	Property Investment
Empiric (Liverpool Chatham Lodge) Limited	Active	100%	Property Investment
Empiric (Liverpool Grove Street) Limited	Active	100%	Property Investment
Empiric (Liverpool Hahnemann Building) Limited	Active	100%	Property Investment
Empiric (Liverpool Octagon/Hayward) Limited	Active	100%	Property Investment
Empiric (London Camberwell) Limited	Active	100%	Property Investment
Empiric (London Francis Gardner) Limited	Active	100%	Property Investment
Empiric (London Road) Limited	Active	100%	Property Investment
Empiric (Manchester Ladybarn) Limited	Active	100%	Property Investment
Empiric (Manchester Victoria Point) Limited	Active	100%	Property Investment
Empiric (Newcastle Metrovick) Limited	Active	100%	Property Investment
Empiric (Northgate House) Limited	Active	100%	Property Investment
Empiric (Nottingham 95 Talbot) Limited	Active	100%	Property Investment
Empiric (Nottingham Frontage) Leasing Limited	Dormant	100%	Property Leasing
Empiric (Nottingham Frontage) Limited	Active	100%	Property Investment
Empiric (Oxford Stonemason) Limited	Active	100%	Property Investment
Empiric (Picturehouse Apartments) Limited	Active	100%	Property Investment
Empiric (Portobello House) Limited	Active	100%	Property Investment
Empiric (Portsmouth Elm Grove Library) Limited	Active	100%	Property Investment
Empiric (Portsmouth Europa House) Leasing Limited	Active	100%	Property Leasing
Empiric (Portsmouth Europa House) Limited	Active	100%	Property Investment
Empiric (Portsmouth Kingsway House) Limited	Active	100%	Property Investment
Empiric (Portsmouth Registry) Limited	Active	100%	Property Investment
Empiric (Provincial House) Leasing Limited	Active	100%	Property Leasing
Empiric (Provincial House) Limited	Active	100%	Property Investment
Empiric (Reading Saxon Court) Leasing Limited	Active	100%	Property Leasing
Empiric (Reading Saxon Court) Limited	Active	100%	Property Investment
Empiric (Snow Island) Limited	Active	100%	Property Investment
Empiric (Southampton) Leasing Limited	Active	100%	Property Leasing
Empiric (Southampton) Limited	Active	100%	Property Investment
Empiric (Southampton Emily Davies) Limited	Active	100%	Property Investment
Empiric (St Andrews Ayton House) Leasing Limited	Active	100%	Property Leasing
Empiric (St Andrews Ayton House) Limited	Active	100%	Property Investment
Empiric (St Peter Street) Limited	Active	100%	Property Investment
Empiric (Stirling Forthside) Leasing Limited	Dormant	100%	Property Leasing
Empiric (Stirling Forthside) Limited	Active	100%	Property Investment
Empiric (Stoke Caledonia Mill) Limited	Active	100%	Property Investment
Empiric (Summit House) Limited	Active	100%	Property Investment
Empiric (Talbot Studios) Limited	Active	100%	Property Investment
Empiric (Trippet Lane) Limited	Active	100%	Property Investment
Empiric (Twickenham Grosvenor Hall) Limited	Active	100%	Property Investment
Empiric (York Foss Studios 1) Limited	Active	100%	Property Investment
Empiric (York Lawrence Street) Limited	Active	100%	Property Investment
Empiric (York Percy's Lane) Limited	Active	100%	Property Investment
Empiric Acquisitions Limited	Active	100%	Immediate Holding Company
Empiric Investment Holdings (Five) Limited	Active	100%	Holding Company
Empiric Investment Holdings (Four) Limited	Active	100%	Holding Company
Empiric Investment Holdings (Six) Limited	Active	100%	Holding Company
Empiric Investment Holdings (Three) Limited	Active	100%	Holding Company
Empiric Investment Holdings (Two) Limited	Active	100%	Holding Company
Empiric Investments (Five) Limited	Active	100%	Immediate Holding Company
Empiric Investments (Four) Limited	Active	100%	Immediate Holding Company
Empiric Investments (One) Limited	Active	100%	Immediate Holding Company
Empiric Investments (Six) Limited	Active	100%	Immediate Holding Company
Empiric Investments (Three) Limited	Active	100%	Immediate Holding Company
Empiric Investments (Two) Limited	Active	100%	Immediate Holding Company
Empiric Investments (Seven) Limited	Dormant	100%	Immediate Holding Company
Empiric Investment Holdings (Seven) Limited	Dormant	100%	Holding Company
Empiric Student Property Trustees Limited	Active	100%	Trustee of EBT
Empiric (Edinburgh South Bridge) Limited	Active	100%	Property Investment
Hello Student® Management Limited	Active	100%	Property Management

Definitions

Adjusted EPS - Adjusted earnings per share is a performance measure used by the Board to assess the Group's dividend payments. Licence fees, development rebates, rental guarantees and cumulative gains made on disposals of assets are added to EPRA earnings on the basis noted below as the Board sees these cash flows as supportive of dividend payments. This is then divided by the weighted average number of ordinary shares outstanding during the period (refer to Note 8).

ANUK - Accreditation Network UK is a central resource for tenants, landlords and scheme operators interested in accreditation of private rented housing.

Average Interest Cost - The weighted interest cost of our drawn debt portfolio at the balance sheet date.

Average term of debt - The weighted average term of our debt facilities at the balance sheet date.

Basic EPS - The earnings attributed to ordinary shareholders divided by the weighted average number of ordinary shares outstanding during the period (refer to Note 8).

Colleague Engagement - KPI - Non IFRS measure - Calculated as per the results of our biannual colleague engagement surveys

Company - Empiric Student Property plc

Customer Happiness - KPI - Non IFRS measure - Calculated per the results of our biannual customer surveys

Dividend Cover - Adjusted earnings divided by dividend paid during the year.

EPRA - European Public Real Estate Association

EPRA EPS - Reported on the basis recommended for real estate companies by EPRA (refer to Note 8).

EPRA NAV - EPRA NAV is calculated as net assets per the Consolidated Statement of Financial Position excluding fair value adjustments for debt-related derivatives (refer to Note 9).

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.

EPRA Net Reinvestment Value ("NRV") - Assumes that entities never sell assets and aims to represent the value required to rebuild the entity.

EPRA Net Tangible Assets ("NTA") - Assumes that entities buy and sell assets, thereby crystallising certain levels of unavoidable deferred tax.

EU - European Union

Executive Team - The Executive Directors made up of the CEO and CFO/COO.

GHG - Greenhouse gas

Gross Asset Value or GAV - The total value of the Group's wholly owned property portfolio (refer to Note 13).

Gross Rent - The total rents achievable if the portfolio was 100% occupied for an academic year.

Gross margin - Gross profit expressed as a percentage of rental income.

Group - Empiric Student Property plc and its subsidiaries.

Hello Student® platform - Our customer-facing brand and operating system which we operate all of our buildings under.

HE - Higher education

HMO - Homes of multiple occupants

IASB - International Accounting Standards Board

IFRS - International Financial Reporting Standards

IPO - The Group's Initial Public Offering in June 2014.

LIBOR - London interbank offered rate

Loan-to-value or LTV - A measure of borrowings used by property investment companies calculated as total drawn borrowings, net of cash and fixed term deposits, as a percentage of Gross Asset Value (refer to Notes 13 and 17).

Net Asset Value or NAV - Net Asset Value is the net assets in the Statement of Financial Position attributable to ordinary equity holders.

Non-PID - Non ‑ property income distribution

PBSA - Purpose Built Student Accommodation

PID - Property income distribution

RCF - Revolving credit facility

Rebooker Rate - KPI - Non IFRS measure - Calculated as the percentage of students staying with us in the previous year who chose to stay living with us for another academic year

REIT - Real estate investment trust

Revenue Occupancy - KPI - Non IFRS measure - Calculated as the percentage of our Gross Annualised Revenue we have achieved for an academic year

RICS - Royal Institution of Chartered Surveyors

Safety - Number of accidents - KPI - Non IFRS measure - Calculated as the number of RIDDOR accidents reported to the Health and Safety Executive

Senior Leadership Team - The senior management team which sits beneath the Executive Team and is made up of the six department heads.

Total Return ("TR" or "TAR")

Total Shareholder return - Share price growth with dividends deemed to be reinvested on the dividend payment date.

The Code - UK Code of Corporate Governance, as published in 2018.

UKLA - United Kingdom Listing Authority

Company Information and Corporate Advisers

Company Registration Number: 08886906

Incorporated in the UK

(Registered in England)

Empiric Student Property plc is a public company limited by shares

Registered Office

6th Floor Swan House 17-19 Stratford Place

London W1C 1BQ

DIRECTORS AND ADVISERS

Directors

Mark Pain (Chairman)

Duncan Garrood (Chief Executive Officer)

Lynne Fennah (Chief Financial and Operating Officer)

Jim Prower (Non-Executive Director)

Stuart Beevor (Non-Executive Director)

Alice Avis (Non-Executive Director)

Broker and Joint Financial Adviser

Jefferies International Ltd

Vintners Place

68 Upper Thames Street

London EC4V 3BJ

Broker and Joint Financial Adviser

RBC Europe Limited

Riverbank House

2 Swan Lane

London EC4R 3BF

Legal Adviser to the Company

Gowling WLG (UK) LLP

4 More London Riverside

London SE1 2AU

Company Secretary

FIM Capital Limited

7 Cavendish Square London W1G 0PE

Registrar

Computershare Investor Services PLC

The Pavilions

Bridgwater Road

Bristol BS99 6ZZ

Auditor

BDO LLP

55 Baker Street

London W1U 7EU

Communications Adviser

Maitland/AMO

3 Pancras Square

London N1C 4AG

Valuer

CBRE Limited

Henrietta House

Henrietta Place

London W1G 0NB

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