PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DEC 2024

Empiric Student Property plc

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

PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2024

Another strong operational result with delivery of growth agenda our strategic focus

Empiric Student Property plc (ticker: ESP), the owner and operator of premium, studio-led student accommodation across the UK, is pleased to report its preliminary results for the year ended 31 December 2024.

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

"The business has delivered another year of great progress against its strategic objectives, most pleasingly in respect to our growth agenda. Having successfully concluded the Company's first equity raise since 2017, our focus remains squarely on its deployment and delivery.

2024 saw us add three fantastic new sites to the portfolio growing our existing clusters in Bristol, Glasgow and Manchester. We also unlocked value from existing sites with planning consent achieved at Victoria Point in Manchester, and have continued to make good progress on our programme of refurbishment, driving enhanced rental growth."

Financial highlights

1 Calculated on a like for like basis. Increasing to 4.2% when adjusted for the removal of Multiple Dwellings Relief.

Strong operational performance delivers 9.3% like for like rental growth in the year

• Like for like rental growth of 10.5% and 7.0% achieved for academic years 2023/24 and 2024/25, respectively

• Gross margin improved by 1% point to 70% (2023: 69%)

• EPRA EPS increased 5.0% to 4.2p (2023: 4.0p)

• Portfolio valuation of £1,135 million, up 1.6% like for like, inclusive of the removal of Multiple Dwellings Relief

• Net initial yield unchanged at 5.5%

• EPRA NTA per share of 119.6p, marginally down as a result of equity raise (2023: 120.7p)

• Dividends paid and payable for the year of 3.7p, 5.7% ahead of prior year and above target

Record re-booker rate and occupancy within target range

• Record re-booker rate of 23% for academic year 2024/25 (2023/24: 22%)

• 97% occupancy achieved for academic year 2024/25 (2023/24: 99%)

• 98% occupancy for financial year 2024 (2023: 99%)

Growing the portfolio and creating value

• Successful equity raise generated £56.1 million for deployment into accretive investment and postgraduate refurbishment opportunities, £19.8 million deployed before the year end, with a further £20.0 million on track for investment during 2025

• Three acquisitions completed in top-tier cities, growing existing prime clusters in Bristol, Glasgow and Manchester offering asset management opportunities to unlock further value

• Planning consent achieved for comprehensive redevelopment and expansion of Victoria Point, Manchester, increasing the current provision of beds by 310. On site works likely to begin in late 2026

• Full refurbishment of Brunswick Apartments, Southampton, delivered 173 newly refurbished rooms and amenities, securing strong rental growth for academic year 2024/25 and returns in excess of target

• Continued consolidation of operational presence with four further non-core city exits achieved

Robust balance sheet

• EPRA loan to value at 27.2% (2023: 30.6%)

• Refinancing extends weighted average debt term to 4.7 years, with refinancing risk removed until 2028

• Weighted average cost of debt at 4.5% (2023: 4.3%), with all drawn debt subject to interest rate protection

• Cash and undrawn committed facilities of £75.4 million

Delivering outstanding customer service

• Continued improvement in Global Student Living Index Net Promoter Score from 30.5 to 32, which compares favourably to PBSA average of 19

• Customer satisfaction rate remains high at 86%

• Hello Student awarded Best Student Wellbeing at Global Student Living Awards 2024

Responsible business

• Further £13.3 million invested in fire safety works in 2024, with 73% of the portfolio now EWS1 certified

• Investment in green initiatives delivers 3% saving in energy consumption per bed

• Over 60% of portfolio rated EPC B or better, exceeding interim targets established in Net Zero strategy

Outlook for academic year 2025/26 sales cycle

• Occupancy of 48% currently secured, with booking behaviour normalising

• Like-for-like rental growth of 5% anticipated

• Target occupancy remains >97%

Results presentation at 09.00 (GMT) today

To access the live webcast, please register here:

https://brrmedia.news/ESP_FY24 

For further information on the Company, please contact:

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 serving key UK universities. Investing in both operating and development assets in a multi building cluster operational model, 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 under the Equity Shares 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. The Company is classified as a commercial company listed under the UK Listing Rules and as such is not an alternative investment fund ("AIF") for the purposes of the Alternative Investment Fund Managers Directive ("AIFMD") and is not required to provide investors with a Key information Document ("KID") in accordance with the Packaged Retail and Insurance-based Investment Products ("PRIIPs") regulations.

Disclaimer

This release includes statements that are forward looking in nature. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Empiric Student Property plc to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Any information contained in this release on the price at which shares or other securities in Empiric Student Property plc have been bought or sold in the past, or on the yield on such shares or other securities, should not be relied upon as a guide to future performance.

Chief Executive Officer's Review

The business has delivered another strong financial and operational performance during 2024. In validation of our strategy, student demand for high-quality accommodation aligned to the UK's best universities has remained strong. Rental growth captured for the academic year 2024/25 lettings cycle exceeded our initial expectations and delivered growth of seven per cent on a like for like basis.

Reflecting the continued strong demand for our product, occupancy of 97 per cent was achieved across the portfolio for the 2024/25 academic year. Occupancy was slightly below the exceptional levels achieved in the previous two academic years of 99 per cent, but in line with our target.

Leeds and Sheffield, where eight per cent of our beds are located, experienced a decline in occupancy this year. A trend witnessed across the wider purpose built student accommodation ("PBSA") market. In Leeds this was partly as a result of an increase in the number of new Buy to Let properties coming onto the market in the middle of the lettings cycle, which were widely reported as being let to students. We do not expect this to continue as the letting windows settles into a full year cycle and investors focus on longer stay occupants at higher rates. Furthermore, the prospective changes within the Renters Rights Bill could make letting to students considerably less attractive for non-PBSA operators, including HMOs. In Sheffield, the University of Sheffield experienced a fall in international student numbers this year, however universities have experienced success in taking a more active approach to international student recruitment and this should continue to drive student numbers toward the country's top-tier universities. Our expectation is that this disruption should not impact the longer-term attractiveness of these two cities given their Universities are both ranked in the 2025 Times Top 30 universities in the UK.

Despite widespread publicity about international student numbers, created in part by the previous government's amendment to student visa rules, strategic review of the graduate route and negative rhetoric around student immigration, our market share of international students has increased in the current sitting academic year. Demographically, international students now represent 69 per cent of all bookings (up from 51 per cent in academic year 2023/24), with Chinese students remaining our largest international market at 40 per cent, up from 32 per cent in the prior year.

The 2024/25 sales campaign delivered another record re-booker performance, with 23 per cent of our rooms sold to students who were already staying with us. Adjusting for those students who were not eligible to rebook, for example where their course concluded in academic year 2023/24, we achieved an eligible re-booker rate of 53 per cent. This is a great achievement and tangible endorsement of customer satisfaction and the value inherent in our service proposition.

Underpinned by strong rental growth and stable yields, our portfolio valuation grew a further 1.6 per cent like for like, 4.2 per cent when the abolition of Multiple Dwellings Relief is disregarded. The balance sheet remains in good shape with prudent gearing of 27.2 per cent which sits comfortably within our long term target, providing a degree of headroom. All near-term refinancing risk has been removed.

Our October 2024 equity raise was well received and I thank our long standing shareholders for their continued support and also welcome new shareholders to the register. We raised gross proceeds of £56.1 million at a four per discount to the closing share price the day prior to launch, which are being used to pursue an independent growth strategy of acquisition and refurbishment, negating the need for a prospective joint venture as was initially considered.

We have been pleased to grow our dividend again this year, delivering progression of six per cent year on year for shareholders.

Resilient market fundamentals

The PBSA market continues to demonstrate resilience in the face of wider macroeconomic headwinds, underpinned by sustained student demand for prestigious UK universities and modern accommodation. Investor appetite is fuelled by the undersupply of high-quality operational beds, long-term predicted growth in demand and constrained delivery of new supply with reducing supply of the traditional alterative HMO accommodation.

Overall the demand and supply imbalance in PBSA continues unabated, however this is highly nuanced in some markets, which have greater supply, demonstrating a level of price sensitivity. Participation rates in the UK's higher education sector remains historically high with over 2.4 million full-time students. The UK remains an attractive, high quality, and relatively affordable destination of choice for international students compared to other markets, with students of Chinese origin continuing to dominate the UK's international student market.

The growth in student numbers, which accelerated post pandemic has since normalised, aligning with longer term trends. The continued growth in domestic 18-year-olds and a forecast recovery in international students is expected to ensure this continues to remain robust. The recent three per cent increase in the tuition fee cap to £9,535 is not expected to impact application numbers from UK domestic students.

A clear flight to quality continues with higher tariff, typically the Russell Group's research-led, universities experiencing year on year growth in applications to the detriment of medium and lower tariff universities. This validates our strategy of focusing our portfolio on these cities, which deliver growth and investment.

It is anticipated that the sector will continue to have a significant shortfall in supply, with only 11,270 new beds delivered in 2024. Viability remains a key challenge for developers, with higher build costs, increased development periods, enhanced building safety requirements, sustainability demands, increased financing costs and a challenging planning environment continuing to discourage development.

Supply will therefore be increasingly focused on the best performing markets which are fuelled by continued favourable student demand where higher rents improve development viability. The shortage of housing options for students is also being compounded by the continued loss of HMOs, exacerbated by the recent Autumn Budget and proposals within the Renters Rights Bill which currently continues its way through Parliament.

Portfolio growth and active property management

It has been an active and successful year from a portfolio management perspective. Eight residual non-core properties were disposed of during 2024, generating £45.2 million and reducing the number of cities in which we operate by four. These sales represented 433 operational beds and have improved our portfolio's alignment to prime and super prime locations to 97 per cent.

Since March 2021, including the above, the Company has generated £146.4 million from the disposal of non-core assets, 0.2 per cent below book value in aggregate, which considering the challenging market conditions during this period, is a strong endorsement of our portfolio valuation.

In February 2024, we acquired a small development opportunity in Bristol for £5.6 million. This former office building is located adjacent to our existing College Green building. A planning application was submitted to facilitate a change in use to student accommodation and the delivery of over 50 new PBSA beds into this strong operational cluster. Preparatory works have also begun at two sites in Southampton and Bath which are earmarked for conversion to the Company's postgraduate product.

A planning application was submitted in May 2024 to facilitate an extension and full refurbishment of our existing operational site at Victoria Point in Manchester. In December, Manchester City Council granted detailed planning permission fully in line with our application, which once fully implemented will add 310 new beds into this acutely undersupplied city.

In July 2024, the Company acquired a 94-bed operational asset in the heart of Glasgow's west end for £9.7 million. The property is well located, near our Willowbank hub site in the city, and acquired almost entirely pre-let for the 2024/25 academic year, delivering an effective net initial yield of over 7.5 per cent. The property benefits from refurbishment potential, which together with the benefits of clustering is expected to unlock an enhanced rental tone and deliver improved operating margins for the city.

In December 2024, following our equity raise, we acquired a 136-bed all studio scheme in Manchester for £19.75 million. Again, the property is well located close to Manchester University and opposite our existing Victoria Point hub site in the city, delivering the same value enhancing opportunities that can be delivered in Glasgow. The operational asset is expected to deliver a 7.0 per cent net initial yield from September 2025.

A second acquisition, linked to the equity raise deployment plan, is under offer with advanced negotiations anticipated to conclude shortly. We will provide a further update once concluded.

One of our larger properties, Brunswick Apartments, Southampton, which had been closed for the duration of the 2023/24 academic year, reopened to students in September 2024. This 173 bed property received a full room and amenity refurbishment, alongside fire safety and Net Zero related works and has delivered strong rental growth, double digit IRR performance and received excellent customer feedback.

Delivering high-quality, consistent customer service

Our key performance indicator for the delivery of this strategic priority is Global Student Living's Net Promoter Score ("NPS").

In both surveys conducted during 2024, our operating brand, Hello Student, achieved an improved NPS relative to 2023. We end the year with an NPS score of +32 (2023: +30.5), significantly outperforming the benchmark All Private Halls score of +19.

Of all respondents, 86 per cent rated their level of satisfaction as either good or very good with 78 per cent of our customers responding that their accommodation had a positive impact on their overall well-being. This important aspect of our service proposition was recognised at this year's Global Student Living awards, when Hello Student was awarded the accolade for Best Student Wellbeing.

The delivery of superior service requires a high performing and engaged team and we therefore monitor employee engagement as a key non-financial performance indicator. In 2024, the Company celebrated its tenth anniversary since establishment and to mark the occasion, the executive team hosted a series of team engagement days around the country celebrating this milestone but also setting out its vision for the future and providing all employees with the opportunity to engage with the executives on a one-to-one basis. Our engagement scores benchmark well amongst some of the top performing UK companies.

We have invested in a new end to end ERP system and launched a new customer facing website during 2024, which has improved the booking experience, making it even easier for customers to secure their room with us.

Safety

We are responsible for ensuring that everyone who is living, working in or visiting our buildings is kept safe. We ensure that our buildings comply with not only all relevant regulations but strive to align to best practice within the industry.

Having allocated £46 million toward a five year programme of initiatives which began in 2021, we have continued to progress works on a risk-based basis. In 2024 we invested a further £13.2 million towards attainment of the latest EWS1 certification standard, an investment which is fully reflected in property valuations. By 31 December 2024, 73 per cent of the portfolio had achieved this certification standard.

Our buildings continue to be inspected on a regular basis to ensure that we identify and eliminate hazards. To assess the buildings, we have engaged with specialist consultants to undertake thorough assessments of general safety, hazards, prevention of fire risks and water systems.

The business conducted its first externally supported crisis management test in 2024, simulating a serious wellbeing concern alongside a fire in a vacant building. Good feedback was received from our primary authority fire service on our partnership and approach to incident management.

Creating a sustainable business

The business remains committed to achieving Net Zero by 2033. As part of this journey, our plan, including interim targets for the next two years, was put to an advisory shareholder vote at the 2024 Annual General Meeting, helping foster transparency and engagement with shareholders on this important topic. Although the resolution was passed, the result was somewhat disappointing, with 25 per cent of responding shareholders voting against. In order to better understand the result, and inform future decision making, we sought engagement with shareholders. From those shareholders that provided feedback, it appeared in part that they required a clearer articulation between the cost and return that could be expected for each of target. This will be addressed when next put to shareholders in 2026.

The key performance indicators we monitor are EPC risk management and energy consumption per bed. Great progress has been made in the management of EPC risk this year, with 64 per cent of our sites rated EPC B or better, a target achieved more than a year earlier as envisaged in our Net Zero strategic plan. Our like for like energy consumption per bed has fallen by three per cent to 4,351 kwh per bed, reflective of our investment in energy efficiency initiatives.

Strategy & outlook

As we look forward into 2025, we remain encouraged by the outlook for student numbers for the 2025/26 academic year and beyond, from both a domestic and international perspective. Growth in the number of UK 18 year olds is set to continue through to 2030, and internationally, we have seen a considerably more welcoming rhetoric from the new education minister and greater focus by universities on international student recruitment.

We are therefore confident of achieving another successful year from an occupancy perspective and believe our strategy of refurbishment and our focus on continually improving levels of customer satisfaction will deliver like for like rental growth in excess of inflation.

Our strategic focus will remain on driving operational efficiencies through growth. First and foremost, the continued deployment of proceeds from our October 2024 equity raise, the continued roll out of our Postgrad by Hello Student brand, completing our undergraduate refurbishment programme, but also as opportunities arise, selectively recycling capital to further strengthen our alignment to top-tier universities.

The year ahead will, however, not be without its challenges. The sustained rebasing of energy costs looks set to continue for the foreseeable future and this will be coupled with the impact of the autumn budget and annual review of the national Real Living Wage, both of which are set to drive compensation related costs significantly higher from April. This has precipitated a review of our operating model and will likely result in some amount of restructuring. Our decision not to pursue a joint venture also enables us to reduce resources pre-recruited in its anticipation.

Despite the challenges faced this past year, we are delighted to be in a position to declare a dividend in excess of our initial 3.5 pence target for 2024. Today we have announced our final quarterly dividend for 2024 of 1.075 pence per share taking the total dividend paid and payable in respect of 2024 to 3.7 pence per share, an increase of six per cent on 2023. With the Board remaining committed to a progressive dividend policy, we will therefore initially target a minimum dividend of 3.7 pence per share for the 2025 financial year.

Duncan Garrood

Chief Executive Officer

12 March 2025

Operating review

The business has continued to demonstrate a degree of resilience in the face of increasingly challenging wider market conditions, achieving good rates of occupancy whilst delivering strong like for like rental growth, comfortably above the rate of inflation.

Demand continues to exceed supply in most of the key cities in which we operate. New supply of high quality, well located accommodation remains limited and continues to be outpaced by increasing demand, exacerbated by the continued decline in private landlords particularly HMO operators and Buy-to-Let investors while the cohort of UK 18 year olds continues to increase. The prospective changes within the Renters Rights Bill have the potential to amplify this issue, making letting to students considerably less attractive for non-PBSA operators.

Another strong re-booker performance was achieved for the current sitting 2024/25 academic year, with 23 per cent of our rooms sold to students who were already living with us, providing a tangible endorsement of our product and of the service we provide.

Portfolio overview

A summary of the Group's portfolio is set out below, segmented in line with our valuer's view of quality. Almost 97 per cent of the portfolio is now invested in Prime or Super Prime locations. 

Since 31 December 2023, the portfolio has grown in value by 1.6 per cent, like-for-like. This includes the impact of the removal of Multiple Dwellings Relief in March, which had it remained in place, would have resulted in like for like growth of 4.2 per cent. With the portfolio's net initial yield unchanged at 5.5 per cent, this is the result of income growth achieved for the 2024/25 academic year. The reversionary yield was also held at 5.7 per cent, providing confidence that as the letting cycle advances for the new 2025/26 academic year, a further valuation rise could be expected if investment yields remain as stable as we have seen over the past 18 months.

Deployment of proceeds following equity raise

In October 2024, the Company raised £54.3 million, net of costs, in order to pursue an independent growth strategy of acquisition and refurbishment, negating the need for a prospective joint venture as had been initially considered.

Proceeds were earmarked for deployment into two well aligned acquisition opportunities in top-tier university cities and to accelerate the roll out of the Group's Postgraduate exclusive product.

In December 2024, the first of two acquisitions, Tatton House in Manchester, was acquired for £19.75 million. This 136 bed, all-studio scheme is well located, being less than ten minutes' walk to the Manchester University campus and directly opposite our existing Victoria Point Hub. This location allows us to instantly unlock operational efficiencies and during the letting cycle for academic year 2025/26, by offering the full amenity provision of our wider cluster to prospective residents of Tatton House, which currently has no on-site amenity. This operational PBSA asset is expected to deliver a seven per cent net initial yield from September 2025.

A second acquisition is under offer and currently expected to conclude in early April 2025, in line with our deployment assumptions.

Preparatory works have begun at three existing sites earmarked for conversion to the Group's Postgraduate product, with over £10 million on track for investment during 2025. Furthermore, our academic year 2025/26 sales programme has been amended with planning and design underway to facilitate the refurbishment of a further four Postgraduate exclusive sites during 2026. We continue to expect these Postgraduate refurbishments to deliver unlevered IRRs in excess of 12 per cent.

Portfolio management

With overall investment market activity up 13 per cent on 2023, there has been greater opportunity to progress the tail of our non-core disposals, with eight relatively small properties sold during the year for £45.2 million representing 433 beds. Importantly, the sales represented four further non-core city exits, improving the portfolio's alignment to both Prime and Super Prime locations and top-tier universities, complimenting the improvement in the portfolio's overall gross margin to 70 per cent.

Three acquisitions were completed during the year. All three were well aligned, located in top-tier cities which cluster well with our existing sites. All three acquisitions present further opportunities to add value through future development or refurbishment.

In February 2024, we acquired College House in Bristol. Adjacent to our College Green site, this former office building was acquired for £5.6 million. The property is arranged over five floors with a small retail parade at street level, occupied by tenants who are complementary to our customer base having re-let or regeared all three units. The property will be transformed into a new 57-bed student accommodation scheme, which will cater to post-grad students. This all studio scheme will incorporate a library and co-working space in the basement while offering access to other amenities including gyms and private dining rooms within our Bristol cluster. The property is expected to open to students in early 2026. Once complete, we anticipate this development will comfortably exceed our target five year IRR of 12 per cent.

A second acquisition, Claremont House in Glasgow was acquired in July for £9.7 million. Located in the heart of Glasgow's supply constrained West End, and in close proximity to the university and our existing hub site of Willowbank. The property which clusters extremely well with our other sites in the city, was acquired fully let for the current sitting academic year and has delivered a net initial yield of over 7.5 per cent since September. The property benefits from an ability to unlock further rental growth from future refurbishment.

In December 2024 we acquired Tatton House in Manchester for £19.75 million, in line with the deployment plan outlined in the Company's October 2024 equity raise, outlined above. This operational asset delivers many of the same value enhancing opportunities that can be delivered at Claremont House and is expected to deliver a 7.0 per cent net initial yield from September 2025.

A planning application was submitted in May 2024 to facilitate an extension and full refurbishment of our existing operational site at Victoria Point in Manchester. In December, Manchester City Council granted detailed planning permission, which once implemented will add 310 new beds while allowing a masterplan refurbishment of all existing rooms including reconfiguration to create more studio units. The city continues to suffer an acute under supply of PBSA beds and has consistently performed well for us from an occupancy and rental growth perspective given the site's location and open green space. An implementation and funding plan will now be established with a view to starting work on site in late 2026.

Refurbishment & development

Our annual refurbishment programme continues to target the delivery of 200 to 300 beds annually, with an IRR return hurdle of between 9-11 per cent.

The 2024 refurbishment programme was focused on one of our larger properties, Brunswick Apartments in Southampton.

This 173 bed scheme was closed for the duration of the 2023/24 academic year to facilitate fire safety works which allowed for a full building refurbishment and reconfiguration. The works involved refurbishment of all rooms and the creation of a new amenity provision. Although total bed count was unchanged, a greater studio focus was achieved, including adding some new large one bed apartments alongside full building decarbonisation work.

The Company's decision to close the property was made following consideration of the impact on our customers and site teams of a more staggered multi-year works programme. It was concluded that closure would allow all works to be carried out concurrently, thereby accelerating the programme of fire safety and decarbonisation work alongside the refurbishment programme, ultimately delivering the property's potential considerably earlier and improving longer term customer satisfaction.

Upon reopening in September 2024, the scheme delivered an increase in average weekly rents of over 50 per cent when compared to its pre-refurbishment year of operation. Notwithstanding an element of market rental growth which is now captured, this performance has surpassed expectations delivering a yield on cost above 6.5 per cent and an IRR in excess of 12 per cent, inclusive of the impact of the removal of Multiple Dwelling Relief during 2024.

The 2025 refurbishment plan is expected to deliver approximately 200 refurbishment rooms for the start of the 2025/26 academic year. Three of the four sites undergoing refurbishment will reopen as postgraduate exclusive accommodation from September 2025.

Commercial portfolio

The commercial estate continues to grow in quality, now comprising 34 units across a diverse mix of uses, including retailers, restaurants, bars, and telecoms infrastructure. A series of new agreements have strengthened the portfolio, including a 25-year lease in central Nottingham to a large UK-based hospitality group which opened its premium Manhattan bar concept. Additionally, a reversionary lease agreement was made with a national Japanese inspired restaurant operator in Selly Oak, Birmingham. Terms included a new 10-year lease and significant rental uplift, securing a popular offering and breakout space for our customers.

We have also progressed strategic asset management initiatives to unlock further value. One example is the replacement of a non-strategic tenant in Nottingham with a national restaurant operator, which has agreed to take the space on a 15-year term-certain lease while maintaining similar rent terms of the former tenant. Another initiative involves a national supermarket chain, where we are set to re-gear several of their convenience store leases to increase length of tenure, enhancing long-term income stability whilst being complementary to our student customers and the wider community.

Looking ahead, the focus within the commercial estate will be on re-gearing leases with strong tenants, filling all vacant units, and exploring opportunities to repurpose underutilised spaces to generate additional revenue.

Capital expenditure programme

Progress against our five year programme of refurbishment, fire safety works and green initiatives is set out below.

In respect to our programme of fire safety works, all properties have been surveyed with 73 per cent of the portfolio now EWS1 certified. In arriving at the portfolio's market value, the valuer applies a pound for pound deduction for the forecasted cost of the remaining works as well as, if applicable, a revenue disruption cost. Like many other real estate investors, we have submitted compensation claims against companies involved in the assets' construction. Given the size and repurposed nature of a large number of our properties, the likelihood of success is less certain, but a modest contribution has been assumed against the costs of remediation.

In addition to the above, ongoing capital life cycling works continue to require around £4.0 million per annum. 

2025 is the final year of the original Capital Expenditure works programme. Although the quantum of future capital expenditure is anticipated to be significantly lower than that set out in this original programme, there will be a need to revisit the forecasted spend for 2026 and beyond. Certain newly acquired properties have been purchased with the benefit of refurbishment potential which, given the attractive rental growth anticipated, refurbishment remains firmly within the Group's strategic plan of capital works.

Financial Review

In October 2024, the Group successfully completed its first equity raise since 2017, raising £56.1 million, (£54.3 million net of costs) following the placement of 60.4 million new ordinary shares representing ten per cent of the Company's issued share capital prior to the placing announcement. Proceeds are earmarked to accelerate growth through deployment into two new acquisition opportunities and to fund refurbishment works required to roll out the Group's Postgraduate product across 16 identified assets. The latter had previously been the subject of a potential joint venture, the plans for which were terminated given market conditions at the time provided the Company with the opportunity to take an independent path. Abortive costs were £0.5 million.

A £124.9 million seven year refinancing was completed during the first half of 2024, consolidating four smaller facilities which were scheduled to mature in 2024 and 2025 and removing refinancing risk for the near term. The weighted average cost of debt now stands at 4.5 per cent, an increase of 20 bps from 31 December 2023 and in line with guidance provided. Following the equity placement, EPRA LTV has fallen to 27.2 per cent.

Blending like for like rental growth across the 2023/24 and 2024/25 academic years of 10.5 per cent and 7.0 per cent respectively, the financial year of 2024 has delivered growth of 9.3 per cent. Occupancy remained strong throughout with 99 per cent for 2023/24 and 97 per cent for 2024/25.

Growth in revenue coupled with the exit of four further non-core cities has increased the Group's overall gross margin to 70 per cent from 69 per cent in the prior year, despite ongoing cost challenges, in particular with respect to utility costs. Following the 2024 expiry of an historic fixed cost arrangement, we have once again largely fixed utility costs for 2025 to mitigate future volatility.

Administrative expenses were £15.4 million, including a £0.5 million charge relating to abortive joint venture arrangement costs. Once removed, underlying costs of £14.9 million were in line with expectation, increasing 6.4 per cent on the prior year.

Notwithstanding the abolition of Multiple Dwellings Relief, the portfolio valuation increased by £15.4 million, 1.6 per cent on a like-for-like basis. This is primarily income led, with no overall change in the portfolio's yield of 5.5 per cent. The valuer has taken a more cautious approach to future income growth this year, providing the potential to outperform the current reversionary potential of 5.7 per cent.

Eight non-core assets were disposed of during 2024, generating £45.2 million at an overall loss of £4.2 million. Funds are earmarked for redeployment into the Group's core capital expenditure programme. Since launching the Company's programme of non-core asset disposals, £146.4 million has been generated at an overall discount of 0.2 per cent to book values.

Net finance costs of £18.6 million include a charge of £0.9 million related to accelerated debt issue cost amortisation following refinancing activity completed in the first half of the year. On an underlying basis, net finance costs of £17.7 million were 2.9 per cent higher than the prior year, reflecting the higher weighted average cost of debt. All drawn debt is currently either fixed or subject to interest rate protection.

EPRA earnings per share has increased by five per cent to 4.2 pence per share, comfortably covering dividends paid and proposed for 2024 of 3.7 pence per share.

EPRA net tangible assets per share has reduced by 0.9 per cent to 119.6 pence. The reduction in NTA per share is primarily due to the dilutive impact of the placement of 60.4 million new ordinary shares at a 93 pence per share. Although initially dilutive, it is anticipated that the deployment of placing proceeds will result in NTA per share accretion beyond 2025.

1 Net of capital expenditure and headlease amortisation

On a like for like basis the portfolio increased in value by 1.6 per cent during the year. This includes the impact of the abolition of Multiple Dwellings Relief which has materially increased purchaser cost assumptions inherent in the valuations of our English and Welsh properties. For comparability, the like for like valuation gain would have been 4.2 per cent had Multiple Dwellings Relief continued to be in place at 31 December 2024.

Cities with particularly strong demand such as Bristol, Edinburgh, Glasgow and Manchester performed well. The latter includes our site at Victoria Point on which planning permission has been granted to add 310 new beds to the scheme. The weakest performance was from those cities experiencing lower demand, such as Sheffield and Leeds which have tempered the overall like for like valuation increase.

Three acquisitions were concluded during the year in Bristol, Glasgow and Manchester. The latter being the first of two acquisitions funded from the proceeds of the October 2024 equity raise. Acquisitions have favoured operational assets in top-tier university cities where the Group has an existing operational presence and can therefore benefit from the efficiencies realised through clustering.

Eight assets were disposed of during the year, achieving an exit from four non-core cities; Stoke, Reading, Oxford and London. The latter two being non-core by virtue of scale.

Our Brunswick Apartments scheme in Southampton underwent a significant refurbishment during 2024 and was closed to students for the duration of the 2023/24 academic year. A net valuation uplift of £3.0 million has been recorded post refurbishment. Given the quantum invested and associated disruption to income, this property is classified in the table above as 'other non-like for like'.

Debt

In March 2024, we refinanced four small near term debt facilities into one consolidated seven year £124.9 million facility. Following refinancing, the Group's weighted term to maturity has been extended to 4.7 years from 3.9 years at December 2023. The weighted average cost of debt is currently 4.5 per cent, with all drawn debt subject to interest rate protection. The next debt maturity is not now scheduled until April 2028.

Compliance with all covenants was maintained throughout the year. With a weighted average LTV covenant of 63 per cent and a weighted average ICR covenant of 1.9 times, good headroom continues to remain.

The disposal of eight small non-core assets during 2024 generated proceeds net of disposal costs of £44.0 million. Proceeds have largely been reinvested in the Group's core capital expenditure programme of undergraduate refurbishments and ongoing fire safety works. Capital expenditure, together with the acquisition of three new properties during 2024 has resulted in the deployment of £73.1 million.

The Group's October 2024 equity raise generated £54.3 million, net of costs. These proceeds were earmarked for acquisitions and to fund refurbishment related capital expenditure, facilitating the transformation of 16 properties to the Group's postgraduate specification, with associated cash deployment to fall during 2025. Proceeds earmarked for acquisition related activity were partly deployed toward the December 2024 acquisition of Tatton House in Manchester, which was acquired for £19.75 million, before costs.

Cash applied toward dividend payments in the year totalled £22.5 million, including £0.5 million of withholding tax due on the final dividend payment in 2023, settled in January 2024.

Cash applied to the settlement of finance costs has increased compared to 2023. The Group held higher overall drawn debt at a marginally higher cost, with the weighted cost of debt increasing from 4.3 per cent at 31 December 2023 to 4.5 per cent this year, increasing finance costs by approximately £2.5 million. Finance cost payments also include £3.9 million paid toward arrangement fees and hedging costs associated with the Group's £124.9 million refinancing which was completed earlier in the year.

Going concern

The Board places particular focus on the appropriateness of adopting the going concern assumption when preparing the Company's and the Group's financial statements.

In light of the Group's liquidity position, its modest level of capital commitment of £2.8 million, weighted average unexpired debt term and overall level of gearing, the Directors have concluded that, in reasonably possible adverse scenarios, there remains adequate resources and mitigants available to continue to operate until at least 31 December 2026, being a period of not less than 12 months from the date of approval of these financial statements. The Directors therefore concluded that it remains appropriate to adopt the going concern basis of preparation when compiling the Annual Report and Accounts for the year ended 31 December 2024.

Attention is drawn to Note 1.4 to the financial statements for further details surrounding the conclusion reached.

Dividends

A final interim dividend of 1.075 pence per share has been declared for the final quarter of 2024, bringing total dividends paid and payable in respect of 2024 to 3.7 pence. This represents a six per cent increase on the total dividend paid in respect of 2023 and a 88 per cent pay-out on EPRA EPS.

With all recent dividends having been paid entirely as Property Income Distributions, there is sufficient headroom to pay this final dividend of the year as an ordinary company dividend. Payment will be made on 11 April 2025 to shareholders on the register at 28 March 2025.

Donald Grant

Chief Financial & Sustainability Officer

12 March 2025

EPRA and other alternative performance measures

Our performance in line with industry standard measures

The following is a summary of the EPRA performance measures included in the Group's results. As defined by the EPRA Best Practice Recommendations, these are a set of standard disclosures for the property industry designed to drive consistency in reporting.

Other alternative performance measures

An alternative performance measure ("APM") is a financial measure of historical or future financial performance, financial position or cash flows of an entity which is not a financial measure defined or specified in International Financial Reporting Standards ("IFRS").

APMs are presented to provide useful information to readers and have been, or are still, consistent with industry standards. The table below sets out the additional non-EPRA derived APMs included within the Annual Report and Accounts.

EPRA capital expenditure analysis

EPRA vacancy rate

Statement of Directors' responsibilities

The statement of Directors' responsibilities has been prepared in relation to the Group's Annual Report 2024. Certain parts of the Annual Report are not included in this announcement.

We confirm to the best of our knowledge:

• the Group financial statements, which have been prepared in accordance with IFRS, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and

• the strategic report includes a fair review of the development and performance of the business and the position of the Group.

Signed on behalf of the Board on 12 March 2025 by:

Donald Grant

Director

Consolidated Statement of Comprehensive Income

Consolidated Statement of Financial Position

These financial statements were approved by the Board of Directors on 12 March 2024 and signed on its behalf by:

Donald Grant

Director

Company Statement of Financial Position

The Company made a profit for the year of £77.5 million (2023: loss of £13.1 million).

These financial statements were approved by the Board of Directors on 12 March 2024 and signed on its behalf by:

Donald Grant

Director

Consolidated Statement of Changes in Equity

Company Statement of Changes in Equity

Consolidated Statement of Cash Flows

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 2024 to 31 December 2024.

The consolidated financial statements comprise the results of Empiric Student Property plc (the "Company") and its subsidiaries and were approved by the Board for issue on 12 March 2025. 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 2024 comprise the results of Empiric Student Property plc (the "Company") and its subsidiaries (together, the "Group"). The Group and Parent Company financial statements have been prepared on a going concern basis. The Group financial statements have been prepared in accordance with UK adopted international accounting standards. The Parent Company financial statements have been prepared in accordance with FRS 101, Financial Reporting Standards Reduced Disclosure Framework.

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

The Company has applied the exemption allowed under section 408(1b) of the Companies Act 2006 and has therefore not presented its own Statement of Comprehensive Income in these financial statements. The Group profit for the year includes a profit after taxation of £77.5 million (2023: loss of £13.1 million) for the Company, which is reflected in the financial statements of the Company.

The financial information contained within this release does not constitute the Group's statutory accounts for the year ended 31 December 2024 or the year ended 31 December 2023 but is derived from those accounts. The Group's statutory accounts for the year ended 31 December 2023 have been delivered to the Registrar of Companies. The Group's statutory accounts for the year ended 31 December 2024 will be delivered to the Registrar of Companies in due course. The Auditor has reported on both the December 2024 and December 2023 accounts; the reports were unqualified, did not include a reference to any matters to which the Auditor drew attention by way of emphasis without qualifying their report and did not contain any statement under Section 498 of the Companies Act 2006.

1.3 Disclosure Exemptions Adopted

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

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

• a statement of cash flows;

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

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

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

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

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

1.4 Going Concern

At 31 December 2024, the Group's cash position was £75.4 million and its capital commitments were £2.8 million.

Occupancy is a key driver of profitability and cash flows, and at 12 March 2025 occupancy, based on forward reservations for the upcoming 2025/26 academic year, was 48 per cent compared to 61 per cent for the 2024/25 academic year at 13 March 2024.

As part of the Group's going concern and viability modelling, certain scenarios are considered to model the impact on liquidity. All of the Group's covenants are currently compliant and we envisage compliance to continue to be achieved in a reasonably severe downside scenarios. The Group's portfolio could currently withstand a 16 per cent decline in property valuations before a breach in any loan to value covenant is triggered. The Group's average interest cover ratio across all facilities is 1.9 times, whereas gross profit is currently in excess of 3.0 times total finance costs, providing a good degree of comfort. Following refinancing completed during 2024, exposure to interest rate volatility has been significantly mitigated.

Bank borrowings would be renegotiated in advance of any potential covenant breaches, insofar as factors are within the control of the Group. Facility agreements typically contain cure provisions providing for prepayment, cash deposits or security enhancement as may be required to mitigate any potential breach. The Group's borrowings are spread across a range of lenders and maturities so as to minimise any potential concentration of risk.

The Directors have considered the Group's principal risks and severe but plausible downside scenarios in assessing the Group's and Company's going concern for the period to 31 December 2026. The Directors have considered, in particular:

• a material reduction in revenue, both in terms of occupancy and growth rate;

• inflation rates of 5 per cent, significantly above the Bank of England target rate of 2 per cent;

• utilities costs increase by 1.5 times that of current market expectation (where price fixing arrangements are not in place);

• floating interest rates increase by 1.0 per cent over current forecasts;

• an immediate valuation shock of minus 10 per cent in property valuations;

• individually, the level at which banking covenants would come under pressure;

In addition, the Directors have considered potential mitigants to the downside scenario which include, but are not limited to, utilising existing liquidity reserves, further asset disposals, pledging as security ungeared properties, suspending non committed capital expenditure and temporary suspension of the dividend.

Having made enquiries, the Directors have reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the period to 31 December 2026. In addition, having reassessed the Group and Company's principal risks, the Directors considered it appropriate to adopt the going concern basis of accounting in preparing these financial statements.

1.5 Significant Accounting Estimates and Judgements

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

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:

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

The valuations have been prepared in accordance with the RICS Valuation - Global Standards (incorporating the International Valuation Standards) and the UK national supplement (the "Red Book"). Factors reflected include current market conditions, net underlying operational income, periodic rentals, lease lengths and location, as well as estimated costs to be incurred as part of the Group's EWS programme. The significant methods and assumptions used by valuers in estimating the fair value of investment property are set out in Note 11.

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

Impairment provisions for trade receivables are recognised based on the simplified approach within IFRS 9 using the lifetime expected credit losses. During this process the probability of the non-payment of the trade receivable is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. For trade receivables, which are reported net of impairment provisions, such provisions are recorded in a separate provision account with the loss being recognised within cost of sales in the Statement of Comprehensive Income.

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:

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

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

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

1.6 Summary of Material Accounting Policies

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at 31 December 2024. Subsidiaries are those investee entities where control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

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

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

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

(c) the ability to use its power over the investee to affect its returns.

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

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

The Group classifies its financial assets into one of the categories discussed below, depending on the purpose for which the asset was acquired.

These are carried in the Statement of Financial Position at fair value with changes in fair value recognised in the Statement of Comprehensive Income. This includes the Group's derivative financial instruments.

These assets are primarily from the provision of goods and services to customers (e.g. trade receivables). They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.

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

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

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

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

Cash and cash equivalents include cash on hand, short-term deposits and other short-term highly liquid investments with maturities of three months or less.

The Group classifies all of its financial liabilities as other financial liabilities which include the following items:

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

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

An intangible asset is recognised when it can be separately identified, will provide future economic benefits, and its cost can be reliably measured. Further consideration is given to each intangible asset as to whether it is internally generated or externally acquired.

Intangible assets are initially recognised at cost and then subsequently recognised at cost less accumulated depreciation and impairment losses. Amortisation is charged to the Consolidated Statement of Comprehensive Income within administrative expenses on a straight-line basis over a period of ten years. Intangible assets that are undergoing development are not amortised until such a time that they are ready for use.

Investment property comprises property that is held to generate rental income or for capital appreciation. This includes property under development rather than for sale in the ordinary course of business.

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

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

A property ceases to be recognised as investment property and is transferred at its fair value to property held for sale when it meets the criteria of IFRS 5. Under IFRS 5 the asset must be available for immediate sale in its present condition subject only to the terms that are usual and customary for sales of such assets and its sale must be highly probable.

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

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 within administrative expenses on the following basis:

• Fixtures and fittings: straight-line basis over seven years; and

• Computer equipment: straight-line basis over three years.

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

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

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

Where a student requests a rent refund and they meet the necessary criteria, including leaving the property, the Group recognise no further income in relation to that tenancy.

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

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

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

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

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

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

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

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

1.7 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 but are not yet effective:

• IFRS 9 and IFRS 7 Classification and Measurement of Financial Instruments

• IFRS 18 Presentation and Disclosure in Financial Statements

• IFRS 19 Subsidiaries without Public Accountability: Disclosures

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

2. REVENUE

3. PROPERTY EXPENSES

4. ADMINISTRATIVE EXPENSES

1 Audit and related fees for the year ended 31 December 2023 includes £0.1 million arising in respect of the audit for the year ended 31 December 2022. In both years, external audit services were carried out by BDO and internal audit services were carried out by Grant Thornton.

5. NET FINANCE COSTS

6. EMPLOYEES AND DIRECTORS

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

7. CORPORATION TAX

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

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

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

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

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

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

The Directors intend that the Group should continue as a REIT for the foreseeable future, with the result that deferred tax is not required to be recognised in respect of temporary differences relating to the property rental business.

No deferred tax asset has been recognised in respect of gross tax losses of £60.6 million (2023: £48.8 million), accelerated capital allowances of £4.2 million (2023: £3.8 million) and share based payments of £2.5 million (2023: £2.1 million) on the basis that the business is not expected to generate taxable profits in future periods against which these amounts can be applied. Therefore, a deferred tax asset of £16.2 million (2023: £13.1 million) has not been recognised in respect of such timing differences.

8. EARNINGS PER SHARE

The number of shares used in the calculation of basic earnings per share is based on the time weighted average number of shares throughout the year.

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

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

EPRA EPS, reported on the basis recommended for real estate companies by EPRA, is a key measure of the Group's operating results, and used by the Board to assess the Group's dividend payments.

The Group has early adopted EPRA's Best Practice Recommendations issued in September 2024 for accounting periods beginning on or after 01 October 2024. The impact of adoption has led to a refinement of the EPRA Earnings Per Share (EPS) metric, introduced to ensure EPRA's earnings metric remains robust, accurate and aligned to both its original definition and applied consistently across the sector.

The primary amendment made allows Companies to make adjustments for items considered to be non-operating, unusual or exceptional within the calculation of EPRA EPS, thereby reducing the need for Company adjusted earnings metrics.

During the year two exceptional non-recurring charges totalling £1.4 million were made, which have been adjusted for in arriving at EPRA Earnings and EPRA EPS, as set out below. There were no equivalent charges in the comparative period and therefore no change to EPRA Earnings or EPRA EPS as a result of adoption.

The calculation of each earnings measure is set out below:

9. NET ASSET VALUE PER SHARE

The principles of the three EPRA measures are set out below:

EPRA Net Reinstatement Value ("NRV"): Assumes that entities never sell assets and aims to represent the value required to reinstate entity assets.

EPRA Net Tangible Assets ("NTA"): Assumes that entities buy and sell assets, which crystalises unavoidable deferred tax.

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

The Group considers EPRA NTA to be the most relevant measure and this is used as the Group's primary NAV measure.

A reconciliation of the three EPRA NAV metrics from IFRS NAV is shown in the table below.

1 Restated to reflect full application of the equity method.

2 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