Picton Property Income Limited Annual Report 2023

Occupier focused,

Opportunity led.

Picton Property Income Limited Annual Report 2023

Adapting

Outperforming

Welcome

Strategic Report

01 Business Overview

02 Highlights

04 Purpose

05 Strategy

06 Business Model

08 Responding to Uncertainty

18 Chief Executive’s Review

22 Key Performance Indicators

26 Our Marketplace

28 Portfolio Review

38 Financial Review

42 Principal Risks

47 TCFD Statement

56 Being Responsible: Sustainability

Reporting

Governance

80 Chair’s Introduction

82 Board of Directors

84 Our Team

86 Leadership and Purpose

90 Section 172 Statement

94 Division of Responsibilities

96 Composition, Succession and Evaluation

100 Audit, Risk and Internal Control

106 Remuneration Report

123 Directors’ Report

Financial Statements

128 Independent Auditor’s Report

132 Consolidated Statement of



133 Consolidated Statement of Changes



134 Consolidated Balance Sheet

135 Consolidated Statement of Cash Flows

136 Notes to the Consolidated Financial

Statements

Additional Information

155 EPRA BPR and Supplementary

Disclosures

159 Property Portfolio

160 Five Year Financial Summary

161 Glossary

164 Financial Calendar

165 Shareholder Information

Chief Executive’s Review

Against a challenging economic

backdrop, we continue to explore

opportunities to maximise the earnings

potential from our portfolio. We have

continued to make good progress against

our strategic objectives and our key

sustainability priorities.

Portfolio Review



management activity, increasing passing

rent and estimated rental value (ERV).

Purpose

and Strategy

Our purpose is to be a responsible

owner of commercial real estate,

helping our occupiers succeed and

being valued by all our stakeholders.

Responding to uncertainty:

adapting and outperforming

We have continued to increase rental

income, outperforming the MSCI UK

Quarterly Property Index for ten

consecutive years.

Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance Financial Statements Additional Information

Business Overview

Performance summary

Despite the challenges of inﬂation

andhigher interest rates, we have

maintained both our EPRA earnings

and our long-term track record

ofoutperformance.

We are continuing to upgrade and

adapt our assets, ensuring they remain

relevant and attractive to our occupiers,

providing income sustainability.

As a business, we are in a resilient

position. We have a strong capital

structure with attractive long-term ﬁxed

rate debt. Our portfolio oers signiﬁcant

income upside, and we are already

starting to see stability in asset values.

Lena Wilson CBE

Chair

EPRA earnings

pershare

3.9p

Dividends paid

per share

3.5p

Dividend cover

112%

NAV per share

100p

Read more in our Chair’s

Introduction to the Governance

Report on pages 80–81

Picton Property Income Limited

Annual Report 2023

Highlights

2022/23

27%

Loan to value

95%

,

with 2031/2032 maturities

3.8%



£571m

EPRA Net Disposal Value

£23m higher than net assets



£38m



Defensive capital structure

£21m

Stable EPRA earnings

£766m

Portfolio valuation

£548m

Net asset value

£19m



4% higher than preceding year

112%



Financial performance

Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance Financial Statements Additional Information

Capturing rental growth through:

Lettings







Rent reviews



Net zero

carbon pathway

progress



24%





85%





9% like-for-like

increasein

estimated

rentalvalue

Outperforming

property portfolio

relative to MSCI

UK Quarterly

Property Index

Resilient operational performance

£6m



over 15 assets

£21m



100%



 minimum standards

76%

EPC ratings A-C



Increased investment with sustainability focus

Like-for-like

increasein

passingrent

of10%and

contractedrent

of3%

99%



91%











Picton Property Income Limited

Annual Report 2023

Purpose

Our purpose

Creating stakeholder value

Shareholders

£19m

Dividends paid

Occupiers

£6m

Invested into upgrading

properties

Communities

Charities supported

Our people

82%



The environment

76%



Our purpose is to be

a responsible owner

of commercial real estate,

helping our occupiers

succeed and being valued

by all our stakeholders.

Our values



on our stakeholders, see our

Section 172 statement

on pages 90–91

Principled

We are professional, diligent and strategic.

Demonstrated through our transparent reporting,







environmental initiatives.

Perceptive

We are insightful, thoughtful and intuitive.







Progressive

We are forward-thinking, enterprising,

and continually advancing.

Demonstrated through our culture, work ethic,

and proactive asset management.













Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance Financial Statements Additional Information

Strategy

Our strategic priorities

For details on the associated

risks see pages 42–46



see pages 22–25







Portfolio

Performance

Operational

Excellence

Acting

Responsibly

Creating and owning

aportfolio which

provides incomeand

capital growth

Growing occupancy

and income proﬁle

Enhancing asset

quality, providing

space that exceeds

occupier expectations

Outperforming the

MSCI UK Quarterly

Property Index

Maintaining an

ecient operating

platform, utilising

technology as

appropriate

Having an agile and

ﬂexible business

model, adaptable

to market trends

Delivering

earnings growth

Having an appropriate

capital structure for

the market cycle

Growing to deliver

economies of scale

Progressing our

environmental focus

and reducing our

emissions to become

carbon net zero

by2040

Working closely and

engaging with

ouroccupiers,

shareholders,

communities and

other stakeholders

Ensuring we maintain

our company values,

positive working

culture and alignment

of theteam

Having strong

governance and

transparent reporting

to ensure the long-

term success of the

business

For details on our strategic

progress see the



on pages 18–21

04 02

Picton Property Income Limited

Annual Report 2023

Business Model

Our business model

Our business model creates value through owning a portfolio that generates a

diversiﬁed and stable income stream. We have the ﬂexibility to adapt to changing

market conditions and so deliver value to our stakeholders through the property cycle.

How we create value

Knowledge,

expertise and

research led

decision making

Selling assets

to recycle

into better

opportunities

Creating value

through proactive

asset management

Stock selection

and acquisition

This is underpinned by:

Risk management





the property cycle. We adapt our capital structure



We maintain a covered dividend policy, to generate a



Responsible stewardship











Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance Financial Statements Additional Information

Read more on pages 10–11 Read more on pages 10–17

Read more on pages 32–37 Read more on pages 56–77

01/

Knowledge, expertise and

research led decision making













02/

Stock selection and acquisition –

buying intogrowth assets,

locations or sectors











03/

Creating value through

proactive assetmanagement







management and capturing market



opportunity led approach ensures

we create space that meets our

occupiers’ needs in order to





04/

Selling assets to recycle

into betteropportunities





are invested into new opportunities,

or used elsewhere within the Group.

What makes us different

Long-term outperformance

through a diversiﬁed approach







consecutive years. We own a diverse





conditions dictate and have delivered





launch in 2005.

Occupier focused, opportunity led



we engage with our occupiers to

create spaces to help them succeed.



helps to maintain high occupancy



Aligned and high performing

management team













to adapt to changing property cycles.

Sustainable thinking,

responsiblebusiness



with an increasing environmental



our stakeholders and understanding



helps us to manage risk and continue

to generate value.

Picton Property Income Limited

Annual Report 2023

Responding to Uncertainty

Adapting &

outperforming

As a diversiﬁed internally

managed UK REIT, we

acquire, create and manage

buildings for around 400

occupiers across a wide range

of businesses. By applying

insight, agility and a

personalised service, we

provide attractive, well-located

spaces to help our occupiers’

businesses succeed.

Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance Financial Statements Additional Information

Creating spaces

for our occupiers

to succeed

Picton Property Income Limited

Annual Report 2023

Responding to Uncertainty/Continued

Responding to

market uncertainty:

adapting and

outperforming

Portfolio at a glance

Industrial weighting 57%

 32%

Retail and Leisure weighting 11%

 400

Assets 49

Portfolio valuation £766m

Annual total property return %

Mar

2014

Mar

2015

Mar

2016

Mar

2017

Mar

2018

Mar

2019

Mar

2020

Mar

2021

Mar

2022

Mar

2023

19.0

14.3

9.9

13.0

7.5

5.3

7.3

24.3

(8.7)

13.5

17.1

11.3

4.6

10.1

4.6

(0.4)

1.2

19.5

(12.6)

Picton MSCI

14.0

Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance Financial Statements Additional Information

Our diversiﬁed portfolio

exposure has been

key to our sustained

outperformance against

the MSCI Index.

Michael Morris



OUR CONSISTENT

TRACK RECORD OF

OUTPERFORMANCE

We have outperformed against the

MSCI UK Quarterly Property Index















and asset management have









portfolios over the last ten years and



PROACTIVE ASSET

MANAGEMENT



resilient and over the year we





management and investing

in sustainable refurbishment



ADAPTING TO CHANGING

MARKET CONDITIONS















enable businesses to move straight in

and be up and running in no time.

CREATING SPACES FOR

A NET ZERO FUTURE













set targets for whole building energy











measures and renewable energy.

Read more on pages 14–15

Picton Property Income Limited

Annual Report 2023

Responding to Uncertainty/Continued

Proactive management:

increasing income from

our recent Gloucester

acquisitions

We have successfully

increased income

through proactive asset

management and

refurbishment.

Jay Cable

Head of Asset Management

Our combined ownership



























The two estates provide 670,000















redevelopment and refurbishment.















Increased

contracted

rent by 23%

In 2022/23

Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance Financial Statements Additional Information

Activity Number

Rent

per annum

(£m)

Ahead of March

2022 ERV

(%)

Ahead of previous

passing rent

(%)

Letting 8 0.3 79% 

Lease renewal 6 0.4 18% 64%

Rent review 4 0.4 23% 33%

UPGRADING THE

ESTATES

In line with our net zero carbon

commitment to reduce operational

emissions, we have recently

completed the installation of solar

on one unit. Across the estates we

are aiming to improve the energy



control the electricity supply at Mill

Place Trading Estate, meaning we

can ensure it is renewably sourced.

We have started our programme

of refurbishment upgrades across

the estates and have installed new

signage, LED lighting, repaired roads

and enhanced security though mobile

patrols, security barriers and CCTV.

We have met in person with all of our

occupiers and delivered welcome

packs, ensuring everyone has a

direct point of contact with us.

Key activity

 Letting of eight units and

compounds for a combined



ahead of the March 2022 ERV

 Secured a 29% rental uplift at a

review with our largest occupier



annum, 23% ahead of ERV

 Refurbished a 21,000 sq ft unit,

installing solar panels and

improving its EPC from a D rating

to an A rating

 Acquired an adjoining unit for





 Successfully relocated an existing

occupier to the newly acquired

unit, enabling us to secure a new

letting at a record rent

£1.4m

Invested into upgrading the estates

Businesses attracted

or retained

Summary of management and leasing activities over the year

Picton Property Income Limited

Annual Report 2023

Responding to Uncertainty/Continued

Sustainable

refurbishments:

investing in

our buildings

PARKBURY INDUSTRIAL

ESTATE, RADLETT

As part of the full refurbishment

works at Unit 16, we removed a













installed solar on the roof to provide











have improved the EPC rating



Occupiers are increasingly

prioritising energy



workspaces. We are

committed to enhancing

the environmental

performance of our







requirements.

In line with our sustainable













possible and we are also further

developing our plans for on-site solar







Improved



Removed



Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance Financial Statements Additional Information





BRACKNELL

COLCHESTER

BUSINESS PARK





addition of new LED lighting and the



system from the warehouse. We also



natural daylight. We installed solar on

the roof to improve the operational







points externally and refurbished the















refurbishment of an industrial unit





heating system from the warehouse,







improved the EPC from a C to a B









the EPCs, both a D rating, to a B and











installation of new LED lighting and











MANCHESTER

Installed



We are committed

toimproving the

environmental

credentials of

our buildings, to

future-proof these in

terms ofcertiﬁcation,

structure and services.

Andy Lynch

Head of Building Surveying

Picton Property Income Limited

Annual Report 2023

Responding to Uncertainty/Continued

We moved in with a small team

inthe early days of our business.

We’ve almost quadrupled in size

over the past 18 months.

Picton have always been helpful

and easy to work with sowe

decided to stay with them by

upsizing ourspace. They kept it

simple for us, managing the entire

ﬁt-out and moving process.

Daniel Ball

The Early Careers Group, Angel Gate, London

Our new leasing solution:

Flexible, Fitted, Inclusive

FLEXIBLE LEASING

PROGRESS





































options are intended to speed up













solution and has helped to grow



the year, we have to date signed



a quarter of our total lettings.













and Trident House, St Albans.

Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance Financial Statements Additional Information

Our suite has been ﬁnished

toahigh speciﬁcation and

ismodern, bright and airy –

perfect for our brand and

willgive a great impression

tovisitors and our team as

weexpand our new business.

Andy Tait



Picton Property Income Limited

Annual Report 2023

Chief Executive’s Review

Resilient business

performance

Growing occupancy is a priority

as there is signiﬁcant upside

income potential from our

current position.

Michael Morris



Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance Financial Statements Additional Information

Outperforming property portfolio



have outperformed the MSCI UK

Quarterly Property Index. We have

now delivered upper quartile returns







ten years.

At a portfolio level, we delivered a









growth and helped offset some of



Growing occupancy and income









through asset management and













there has also been a rise in property























residential, student and other uses















the previous year but up from a low















Driven in part by rising food and

































stabilised, and positive overall monthly













This has enabled us to grow rental



the portfolio.









million, marginally ahead of last year.

During the year, we paid dividends







Performance



































Against a challenging

economic backdrop,

we have been able to

grow income through

our proactive approach

to asset management

andhave successfully

continued our long-term

track record of

outperformance.

100p

Net asset value per share

3.9p

EPRA earnings per share

Picton Property Income Limited

Annual Report 2023

Chief Executive’s Review/Continued





arrangements in house and have





transitioning these arrangements











assets and have started to roll out





engagement.





Capital structure







Our weighted average interest rate is

















Enhancing asset quality



















to install renewable energy, primarily

in the form of solar panels on









they will generate a modest

supplementary revenue stream,



Operational excellence







and progress on our net zero pathway.

This year we have expanded the team



Building Surveying to oversee the











and improve our assets.

£21m



27%

Loan to value

One of the key

advantages of having a

diversiﬁed approach and

a team with a proven

track record of managing

assets across sectors

through the investment

cycle, is that we can draw

on this experience during

more challenging markets.

Michael Morris



Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance Financial Statements Additional Information

This year, we have made

signiﬁcant progress,

delivering rental growth

and exploring and

securing more valuable

alternative uses at

selected oce assets. We

have remained focused

on sustainability, with

further progress on our

net zero carbon pathway.

Michael Morris











We have improved the overall EPC















refurbishments and provide greater



issue, further embedding sustainability











Outlook







Equally, the interest rate environment,





stabilise and be more supportive,





As we have seen this year, whilst

















rental levels.





provide earnings stability during this







through growth.

Michael Morris





















value, it has not been possible to



Growth

Our internalised management model



















savings and earnings growth through













opportunities during the year and





to our shareholders.

At a portfolio level we made three



















Acting responsibly







our sustainability reporting within our







ensure our assets are relevant and







the business, ensuring that there is









Picton Property Income Limited

Annual Report 2023

Key Performance Indicators

Measuring

thesuccess

of the business

We have a range of key performance

indicators that we use to measure the

performance and success of the business.

Strategic pillars

Portfolio

Performance

Operational

Excellence

Acting

Responsibly

Financial KPIs

Why we use this indicator

The total return is the key measure of the

overall performance of the Group. It is the

change in the Group’s net asset value,

calculated in accordance with IFRS, over



The Group’s total return is used to assess





achieved, and is a measure used to determine



B C

Why we use this indicator

The total shareholder return measures









Our total shareholder return relative to a

comparator group is a performance metric



Total shareholder return (%)

Why we use this indicator

The total property return is the combined

income and capital return from our property

portfolio for the year, as calculated by MSCI.



success of the portfolio strategy without the

impact of gearing and corporate costs.

Our total property return relative to the MSCI



condition for both the annual bonus and the



Total property return (%)Total return (%)

Our performance in 2023

Although the EPRA earnings component of

total return was stable this year, the adverse

valuation movements in the year resulted in

a negative total return.

Our performance in 2023

In line with the property sector generally our

share price has declined over the year,



environment.

Our performance in 2023

We have outperformed the MSCI UK

Quarterly Property Index for the tenth

consecutive year, delivering a return of -8.7%

compared to the Index return of -12.6% for

the year. We have also delivered upper

quartile outperformance against MSCI over



6.6

28.3

–13.9

2023

2022

2021

0.0

18.7

–26.4

202

7.3

24.3

–8.7

202

Strategic Report

Governance Financial Statements Additional Information

Picton Property Income Limited

Annual Report 2023





alongside certain EPRA measures and others that are

relevant to us. In this regard, we consider that the EPRA









variable remuneration rewards for the Executive Directors

and the rest of the Picton team. The indicators used are

total return, total shareholder return, total property return

and EPRA earnings per share. This is set out more fully in

the Remuneration Report.

For more information on EPRA Best Practices

Recommendations see pages 155–158

Remuneration Link

D E F

Why we use this indicator

The property income return, as calculated



Income is an important component of total

return and our portfolio is biased towards



Property income return (%)

Why we use this indicator

The loan to value ratio is total Group

borrowings, net of cash, as a percentage of



measure of the Company’s level of borrowings



Supplementary Disclosures section for



Loan to value ratio (%)

Why we use this indicator

The cost ratio, recurring administration

expenses as a proportion of the average



business is being run, and the extent to



See the Supplementary Disclosures section



Cost ratio (%)

Our performance in 2023

The income return for the year of 4.4%







and since inception.

Our performance in 2023

Although there was only a marginal increase

in borrowings this year, the loan to value



movements in property valuations.

Our performance in 2023





the lower valuations over the year.

4.7

4.5

4.4

202

20.9

21.2

26.7

202

1.0

202

Picton Property Income Limited

Annual Report 2023

Key Performance Indicators/Continued

EPRA KPIs

Why we use this indicator



calculated in accordance with EPRA, measures

the value of shareholders’ equity in the



the business over time and regard this as the

most relevant net asset metric for the business.

Why we use this indicator

The vacancy rate measures the amount of





indication of the success of asset management

initiatives undertaken.

EPRA vacancy rate (%)

Why we use this indicator

The earnings per share, calculated in

accordance with EPRA, represents the

earnings from core operational activities and

excludes investment property revaluations,

gains/losses on asset disposals and any









The growth in EPRA earnings per share is also

a performance measure used for the annual



EPRA earnings per share

(pence)

EPRA NTA per share (pence)

Our performance in 2023

The EPRA NTA per share has declined this

year as a result of the adverse valuation

movements.

Our performance in 2023





holding some assets vacant as we progress

alternative use strategies.

Our performance in 2023

EPRA earnings per share has remained



income has been largely offset by increased

property costs.

3 3

120

100

2023

2022

2021

3.7

3.9

202

8.8

7.2

9.5

202

Strategic Report

Governance Financial Statements Additional Information

Picton Property Income Limited

Annual Report 2023



J LK

Why we use this indicator

This provides a measure of income at risk and

the retention of that income during the year.

This is achieved through lease extensions or

removal of break options.

Retention rate (%)

Why we use this indicator



performance against one of our strategic





Picton team. The indicator is based on the

employee survey carried out during the year.

Employee satisfaction (%)

Why we use this indicator













space that is F or G rated, unless an exemption





Government consulting in 2021 on proposals





consultation is awaited.

EPC rating A-C (%)

Our performance in 2023



our active asset management approach to

the portfolio.





with last year.

Our performance in 2023

Our employee satisfaction score remains at a

consistently high level.

Our performance in 2023

The proportion of EPC ratings between

A to C has increased against the prior



The remaining 24% is rated D or E.

202

Picton Property Income Limited

Annual Report 2023

Our Marketplace

Households have been impacted by

the cost of living crisis, soaring fuel

and energy bills, lower real incomes

and rising debt and mortgage costs.

Retail sales volumes did rise by 0.6%

in the three months to March 2023,



month increase since August 2021.



pandemic tourism will go some way

to compensate for weak domestic

consumer demand in 2023.









been below 10% since August 2022.



reduce, households are expected to

increase spending power, helping

to drive the economic recovery.





saw the longest period of decline since



experiencing six consecutive months

of contraction to January 2023. This

is due largely to the elevated cost

of materials and labour putting





plans. A sharp rebound began in

February, and the latest data for April

shows the Composite PMI was 54.9.

Although job vacancies have declined

from their recent peak, at 1.08 million,

they remain elevated. The strong

labour market has driven up average

pay; however, in real terms, wages



Economic backdrop

After a tumultuous year, there are

signs that the economic backdrop

is beginning to stabilise.

Geopolitical tension, the war in







budget caused unprecedented

volatility, high levels of market

stress and economic headwinds.

Following the end of the pandemic



energy and commodity prices and



a peak of 11.1% in October 2022.

As a shock reaction to the



Government bond yields increased

by approximately 200 basis points

in a month to reach 4.5% in late

September and the value of sterling



England’s response was a series of

interest rate hikes, with the base



2022 to 4.5% in May 2023.





free rate have been multifaceted,

from the impact on pensions,

investment markets and property

yields, to house prices, retail sales and



Signs of

economic

stability

At 3.9%, unemployment is very

low by historic standards, having



low of 3.5% in August 2022.

The economic backdrop is now

showing positive signs of stabilisation

and even recovery. GDP growth has

surprised on the upside, with the





to have increased 0.1% in the

three months to March 2023.



than expected, owing largely to

persistent growth in food prices.

There have been improvements in





chain issues faced by businesses have

started to ease, leading to a fall in the

price of imported goods. In addition,

higher interest rates and the fall in

households’ disposable incomes have





Interest rate expectations have

moderated compared to what was

predicted in late 2022. Reduced



have allowed bond yields to



bonds now at around 4%.

0.1%



months to March 2023

MSCI UK Quarterly Property Index – Annual Capital Growth (%)

All Retail  Industrial

Mar

2007

Mar

2008

Mar

2009

Mar

2010

Mar

2011

Mar

2012

Mar

2013

Mar

2014

Mar

2015

Mar

2016

Mar

2017

Mar

2018

Mar

2019

Mar

2020

Mar

2021

Mar

2022

Mar

2023

-10

-20

-30

MSCI UK Quarterly Property Index – Annual Capital Growth

Mar

2007

Mar

2008

Mar

2009

Mar

2010

Mar

2011

Mar

2012

Mar

2013

Mar

2014

Mar

2015

Mar

2016

Mar

2017

Mar

2018

Mar

2019

Mar

2020

Mar

2021

Mar

2022

Mar

2023

-5

-10

-15

All Retail  Industrial

Strategic Report

Governance Financial Statements Additional Information

Picton Property Income Limited

Annual Report 2023

Following a prolonged phase of

repricing, the retail sector suffered

less of an impact from the recent

correction than others. The MSCI All

Retail total return for the year to March





of 5.4%. Capital growth ranged from



The wave of retailer liquidations and

CVAs seems to have abated, and

arguably retailers that survived the

pandemic years should be better

placed to weather the storm of

weaker consumer demand owing to

the cost of living crisis. Following four

years of decline, All Retail ERV growth

turned positive at 0.4%, ranging from



According to analysis from Property

Data, the total investment volume

for the year to March 2023 was £50.6

billion, a 31% decrease on the year

to March 2022. The slowdown in

investment activity is only evident

during the six months to March

2023, which is 58% down on the

same period for the previous year.

UK property market







equivalent yield moved out by 85



December 2022. MSCI reported capital



fastest quarterly correction since

December 2008 at the height of the

Global Financial Crisis. The situation

appears to now be stabilising and the

three months to March 2023 saw







Index reported an All Property total



capital growth and 4.1% income

return. This is in sharp contrast to the

previous year; the total return for the

12 months to March 2022 was 19.5%.

Despite the tribulations of the

investment market, the occupier

market saw a more encouraging

performance, and All Property ERV

growth for the year to March 2023

was 3.5%. This compares to 3.1% ERV

growth for the year to March 2022.

Following an extraordinarily strong

year of capital growth to March 2022,

the low yielding industrial sector

was disproportionately affected

by the recent market correction.

The MSCI All Industrial total return

for the year to March 2023 was









On a more positive note, due to

ongoing supply constraints and

healthy occupier demand, the

industrial sector achieved strong

rental growth for the year to March

2023 of 8.6%, ranging from 10.0%



In addition to the recent rise in yields



sector is still undergoing a structural





related costs. There is a growing trend

of polarisation between prime, energy



stock and locations. MSCI reported an





capital growth and 3.6% income

return. Capital growth ranged from



ERV growth was 1.6%, ranging from



Investors have been waiting for greater

stability in the macroenvironment,

which has more recently been

affected by concerns within the



rate currently stands at around 4%,

placing the cost of debt just below



The chart above shows the annual

capital growth for All Property and

the three main sectors. It illustrates

the increased polarisation of sectors

in more recent years, until the year

to March 2023 which saw a return to

a narrower range of capital growth.

The chart below shows the

strength of industrial rental growth

in comparison to other sectors,

particularly in the last two years,



declines endured by the retail sector,

particularly during the pandemic.

More recent data from the MSCI



that property values have begun

to stabilise with continued positive

capital growth in the industrial

and retail sectors in April.

MSCI UK Quarterly Property Index – Annual Estimated Rental Value Growth (%)

40 42

4647

Picton Property Income Limited

Annual Report 2023

Portfolio Review

Our property portfolio consists of 49 assets. Our diverse exposure

provides ﬂexibility to adapt as market conditions dictate.

Parkbury Industrial Estate

Radlett



River Way Industrial Estate

Harlow



Shipton Way

Rushden



Datapoint





Lyon Business Park





Sundon Business Park





Trent Road

Grantham



The Business Centre





Nonsuch Industrial Estate

Epsom



Madleaze Trading Estate

Gloucester



Vigo 250





Mill Place Trading Estate

Gloucester



Swiftbox

Rugby



Easter Court





1 & 2 Kettlestring Lane

York



Downmill Road





Abbey Business Park





Magnet Trade Centre

Reading



Angel Gate





Stanford Building





Tower Wharf





50 Farringdon Road





30 & 50 Pembroke Court

Chatham



Colchester Business Park

Colchester



Metro

Manchester



180 West George Street

Glasgow



Charlotte Terrace





401 Grafton Gate





Queen's House

Glasgow



Longcross

Cardiff



Trident House

St Albans



109-117 High Street

Cheltenham



Atlas House

Marlow



Sentinel House

Fleet



Waterside House





53-57 Broadmead





78-80 Briggate





17-19 Fishergate

Preston



72-78 Murraygate

Dundee



7-9 Warren Street

Stockport



6-12 Parliament Row

Hanley



Queens Road





Parc Tawe North Retail Park

Swansea



Gloucester Retail Park

Gloucester



Angouleme Retail Park





Regency Wharf





Thistle Express





Scots Corner





Crown & Mitre Building

Carlisle



Industrial Oce Retail and Leisure

57% 32% 11%

40 42

Picton Property Income Limited

Annual Report 2023



Strategic Report

Governance Financial Statements Additional Information



£766m

Value

4.8m sq ft

Area



& the South East

Picton Property Income Limited

Annual Report 2023

Portfolio Review/Continued

Top ten

assets

3 5

Parkbury

Industrial Estate,

Radlett

Property type

Industrial



343,700



>100

No. of occupiers



EPC rating

A–D

River Way Industrial

Estate, Harlow

Property type

Industrial



454,800



5075

No. of occupiers



100

EPC rating

A–D

Stanford Building,

London WC2

Property type





20,100



30–50

No. of occupiers



100

EPC rating

B–D

Shipton Way,

Rushden

Property type

Industrial



312,900



30–50

No. of occupiers



100

EPC rating

Angel Gate,

City Road,

London EC1

Property type





64,600



30–50

No. of occupiers



EPC rating

B–E

Strategic Report

Governance Financial Statements Additional Information

31 Picton Property Income Limited

Annual Report 2023

Lyon Business Park,

Barking

Property type

Industrial



99,400



20–30

No. of occupiers



EPC rating

B–E

Datapoint, Cody Road,

London E16

Property type

Industrial



55,100



20–30

No. of occupiers



100

EPC rating

B–C

Tower Wharf,

Cheese Lane,

Bristol

Property type





70,600



20–30

No. of occupiers



EPC rating

B–D

Sundon Business

Park, Dencora Way,

Luton

Property type

Industrial



127,800



20–30

No. of occupiers



EPC rating

B–D

50 Farringdon Road,

London EC1

Property type





31,300



20–30

No. of occupiers



100

EPC rating

Picton Property Income Limited

Annual Report 2023

Portfolio Review/Continued

Continued proactive

management of

ourportfolio

Our occupier focused approach and

philosophy of working in collaboration

with our occupiers are signiﬁcant

contributors to our long-term track

recordof outperformance.

Jay Cable

Head of Asset Management

Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance Financial Statements Additional Information



sector is still going through a period







patterns and operating on a more







the medium-term.













































































management transactions.









Occupational demand remains

resilient in the industrial sector and







The year has been

characterised by

signiﬁcant active

management activity,

setagainst headwinds of

repricing and occupier

caution driven byarising

interest rate environment.

Industrial

weighting

57%

 41%

Rest of UK 16%

Oce

weighting

32%

 13%

Rest of UK 10%

 9%

Retail and

Leisure

11%

 7%

High Street Rest of UK 2%

 2%

Top ten occupiers





Occupier

Contracted

rent (£m) %

  

  

  

  

  

  

  

  

  

  

Total  

10%





Picton Property Income Limited

Annual Report 2023

Portfolio Review/Continued

Portfolio overview

Performance















































Industrial

The recent economic turmoil has





























































Retail and Leisure









































locations off rebased rents.









The retail and leisure portfolio has





renting of the high street retail assets.

91%



£766m



























refurbishment.







to

Oce



















































We believe the portfolio

remains well placed in

respect of our sector

allocations.

Jay Cable

Head of Asset Management

Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance Financial Statements Additional Information

Longevity of income

As at 31 March 2023, expressed as









0 to 1 year 

1 to 2 years 

2 to 3 years 

3 to 4 years 

4 to 5 years 

5 to 10 years 

10 to 15 years 

15 years or more 

Total 

Proactive management

It has been a very active year in respect

of asset management transactions.



 39 lettings or agreements to lease,

25% ahead of ERV and securing a

new contracted rent of £2.3 million

 

ahead of ERV, securing an uplift in



 

securing an uplift in passing rent



 Three lease variations to remove

occupier break options, securing

£0.4 million of income

 11 lease surrenders to facilitate

active management

Leasing and occupancy

Occupancy has decreased during the

year from 93% to 91% with a total void

ERV of £5.3 million, which compares to



of 92% as at 31 March 2023.

Our industrial portfolio is 95% leased

with demand remaining high across



industrial units, four of which are

being refurbished.



Our occupancy has reduced primarily



we are working through potential

changes of use to residential and

student accommodation. Excluding



occupancy rate would increase to 91%.

During the year our SwiftSpace offering

has helped to grow occupancy in

smaller units, with nearly a quarter of

lettings by number being SwiftSpace

lettings across four properties.

In terms of retail and leisure, occupancy

is 94%. The retail warehouse portfolio is

fully leased, and we have one vacant

high street shop, which is under offer.





Our largest voids are at:

 

for 18% of the total portfolio void.



change of use at the property to

residential in respect of vacant units.

Portfolio activity

 

accounting for 12% of the total



property and have submitted a

planning application for change

of use of part of the space to

residential.

 



working through options for

alternative uses.

Retention

Over the year, total ERV at risk due



totalled £5.5 million, in line with the

year to March 2022.





ERV that was not retained, a further



occupiers during the year.

In addition, a further £3.4 million



removing future breaks or extending

future lease expiries ahead of the

lease event.

Picton Property Income Limited

Annual Report 2023

Portfolio Review/Continued

Portfolio investment

Refurbishment upgrades

Over the year we have invested









These have all been aimed at

enhancing space to attract occupiers,

improve sustainability credentials and

grow income. All works undertaken

are in line with our refurbishment

guidelines, outlining best industry

practice, which includes where

appropriate, the removal of natural



panels and insulation upgrades in line

with our net zero carbon pathway.





perspective, which has resulted in an

improvement in our EPC ratings with



now rated C and above.

Read more on pages 14–15

Investment activity



during the year, as well as the

acquisition of a further unit at an

existing holding.

109-117 High Street, Cheltenham–

£5.3 million









Cheltenham’s pedestrianised town



Comprehensively refurbished in 2020,

the property has good environmental





and no natural gas.

On purchase it was leased to four

occupiers, with an average lease length











The current contracted rent is £0.4

million, equating to £21 per sq ft, with



uplifts that will increase income to

£0.5 million per annum by 2026.









replacement cost.

Charlotte Terrace, Hammersmith

Road, W14 –£13.7 million











behind the façade in 1990 and is

Grade II listed, meaning there are no

business rates payable on void units.

The property is located close to



a £1 billion redevelopment to deliver



theatre, entertainment venue, hotel,



will enhance the surrounding area.

Since purchase we have leased a retail





to secure vacant possession of one







has been submitted.



yield of 3.3%, rising to over 8% once





its estimated replacement cost.

Residential values in the area are



Unit 7V Madleaze Trading Estate,

Gloucester – £0.4 million





possession, and leased the space to



helps to consolidate our ownership.

Read more on pages 12–13

In addition, we acquired the freehold

of our Rushden distribution asset for

nil consideration, having previously

owned a long leasehold interest.

We have invested into

ourportfolio to enhance

space for our occupiers

and improve the

sustainability credentials

of our buildings.

Jay Cable

Head of Asset Management

£6.1m

Invested into the portfolio

76%



Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance Financial Statements Additional Information

Looking ahead

Outlook









opportunities in some sectors.





in respect of refurbishments and





future-proof properties to ensure that



































Demand for our industrial properties















































The retail and leisure sector has















opportunities in the sector for







and enhance income through our















Jay Cable

Head of Asset Management

Picton Property Income Limited

Annual Report 2023

Financial Review

A year marked by

resilient income,

despite valuation

movements

Rental income has

increased by 7%

compared to 2022.

Andrew Dewhirst

Finance Director

£570m

EPRA NDV

2022: £650m

2021: £507m

£548m

EPRA NTA

2022: £657m

2021: £528m

100p

Net assets

per share

2022: 120p

2021: 97p

3.5p

Dividends

per share

2022: 3.4p



112%

Dividend

cover

2022: 115%



3.9p

EPRA earnings

per share

2022: 3.9p



27%

Loan to value

2022: 21%



£21m

EPRA earnings

2022: £21m



Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance Financial Statements Additional Information

The following table reconciles the net asset value calculated in accordance with

International Financial Reporting Standards (IFRS) with that of the European

Public Real Estate Association (EPRA).

2023

£m

2022

£m

2021

£m

Net assets – IFRS and EPRA net tangible asset value   

Fair value of debt   

EPRA net disposal value    

Net asset value per share (pence)   

EPRA net tangible asset value per share (pence)   

EPRA net disposal value per share (pence)   





This year we have drawn down further

under our revolving credit facility to



relatively small element of our total

borrowings, the interest rate on our

revolving credit facility has increased

from 2.3% in March 2022 to its current

rate of 5.8%.

The negative capital movement on

the portfolio was £111.3 million for

the year, including the movement

on owner-occupied property. The

industrial sector saw the largest

movement, especially where yields

were lowest.



the UK economy continue to grow,

and at 30 June 2022 our net asset

value reached £670 million. However,

the September mini-budget caused a



rising interest rates and bond yields

impacting commercial property

pricing. The negative capital growth





movement recorded by MSCI.

Our overall loss for the year was



valuation movement of £111.3 million

and EPRA earnings of £21.3 million.

This year, we have seen the reversal





Our EPRA earnings, comprising the

operating results and net interest







rental income rose by 7.1% compared

to 2022; however, this increase was

largely offset by higher property

operating and void costs.

Commercial property values fell in



and bond yields rose rapidly. Although

we have seen valuation movements



further interest rate rises may still have

an adverse impact this year.

Based on these results our total return

for the year was -13.9%, compared to

28.3% for the year to 31 March 2022.

Net asset value

The net assets of the Group at 31 March

2023 were £547.6 million, or 100 pence

per share, which was a fall of 16.7% over

the year. The chart below shows the

components of this decrease.

£m

March 2022 net asset value 

EPRA earnings 

Valuation movement 

Share-based awards 

Purchase of shares 

Dividends paid 

March 2023 net asset value 

Income statement

The result for the year is dominated

by the adverse valuation movement

at the end of 2022 as property yields

moved out. However, EPRA earnings

were stable, with increased rental

income largely offset by increased

property costs.

Total revenue from the property

portfolio for the year was £51.8

million, up from £46.5 million last year.

Rental income has increased by 7.1%

compared to 2022, as a result of the



full year, as well as rental growth.

Property operating and void costs



year, from £4.9 million to £7.1 million.

This is partly the result of the higher

vacancy rate, but also demonstrates



costs over the past year. Administrative



by a small amount, £0.2 million, or

3.5%, to a little under £6.0 million.

Staff costs were broadly in line with

the previous year, while some one-

off costs incurred this year increased





have increased from £8.5 million to

£9.0 million. This is partly due to the

additional interest on the increased

Canada Life facility, which completed

in March 2022. This transaction also



the interest rate to 3.25% and enabled

us to repay most of the revolving

credit facility.

Picton Property Income Limited

Annual Report 2023

Financial Review/Continued

Borrowings

Total borrowings are now £224.5

million at 31 March 2023, with the



weighted average interest rate on



average loan duration is now 8.4 years.

Our loan facility with Aviva reduced by

the regular amortisation, £1.4 million



The Group remained fully compliant

with its loan covenants throughout

the year. At 31 March 2023, we had

£11.9 million drawn under the revolving

credit facility, which matures in 2025.

This year we drew down £7.0 million

under this facility, largely to fund the



asset, as well as for ongoing capital



The fair value of our drawn borrowings

at 31 March 2023 was £201.7 million,



£22.8 million. As a result, our EPRA

NDV asset value was £570.4 million



reported net assets under IFRS. Both

lending margins and gilt yields are

currently higher relative to the rates

set on our facilities.

A summary of our borrowings is set

out in the table above.

Cash ﬂow and liquidity





operating activities this year is £23.0

million, some 15% higher than the

previous year. We invested £26.8

million during the year; £20.6 million

being the consideration paid for two





borrowings increased by £5.6 million.

Dividends paid increased to £19.1



year-end stood at £20.1 million.

Share capital

No new ordinary shares were issued

during the year.





shares, at a cost of £1.1 million, or 90

pence per share, during the year. This

was to satisfy the future vesting of

awards made under the Long-term

Incentive Plan and Deferred Bonus

Plan, and now holds a total of

2,388,694 shares. As the Trust is

consolidated into the Group’s results,

these shares are effectively held in

treasury and therefore have been



earnings per share calculations, from

the date of purchase.

Andrew Dewhirst

Finance Director

24 May 2023

Dividends

This year we have maintained our





of 3.5 pence per share. Total dividends

paid out were £19.1 million, an increase

of 3.6% compared to 2022. Dividend

cover for the year remained healthy



Investment properties

The appraised value of our investment

property portfolio was £766.2 million

at 31 March 2023, lower than the

£849.3 million reported a year ago.





£20.6 million, including costs. These



detail in the Portfolio Review section.

Also this year, we have invested £6.1



portfolio upgrading a number of

assets, including Madleaze Trading

Estate, Gloucester, Colchester





In line with last year, the value of the





from the value of Investment

Properties and included separately



Any capital movements arising from

the revaluation of this element of





At 31 March 2023 the portfolio

comprised 49 assets, with an



A further analysis of capital



Best Practices Recommendations, is

set out in the EPRA BPR and

Supplementary Disclosures section.

2023 2022 2021

   

Drawn revolving facility (£m)   –

Total borrowings (£m)   

Borrowings net of cash (£m)   

Undrawn facilities (£m)   

Loan to value ratio (%)   

Weighted average interest rate (%)   

Average duration (years)   

Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance Financial Statements Additional Information

EPRA Best Practices Recommendations (BPR)



set out here, with more detail provided in the EPRA

BPR and Supplementary Disclosures section which

starts on page 155. This year we have also included the

EPRA loan to value measure (EPRA LTV).

Alternative performance measures (APMs)

We use a number of alternative performance

measures (APMs) when reporting on the performance



always have a standard meaning and may not be

comparable to those used by other entities. However,

we use industry standard measures and terminology

where possible.

In common with many other listed property

companies we report the EPRA performance

measures. We have reported these for a number of

years in order to provide a consistent comparison



section of this report we provide more detailed

information and reconciliations to IFRS where

appropriate.





property return, property income return, total

shareholder return, loan to value ratio, cost ratio,

occupier retention rate, employee satisfaction and





Performance Indicators section.

EPRA’s mission

The European Public Real Estate Association’s (EPRA)

mission is to promote, develop and represent the

European public real estate sector. As an EPRA

member, we fully support the EPRA Best Practices



performance indicator measures, as detailed here.



Key Performance Indicators section of this report with

further disclosures and supporting calculations on

pages 155 to 158.

EPRA measures

1 Including direct vacancy costs



100p

EPRA NTA

per share

2022: 120p

2021: 97p

105p

EPRA NDV

per share

2022: 119p

2021: 93p

110p

EPRA NRV

per share

2022: 131p

2021: 105p

£21.3m

EPRA

earnings

2022: £21.2m

2021: £20.1m

3.9p

EPRA earnings

per share

2022: 3.9p

2021: 3.7p

9.5%

EPRA

vacancy rate

2022: 7.2%

2021: 8.8%

5.5%

EPRA ‘topped-up’



2022: 4.8%

2021: 5.5%

5.0%

EPRA net

initial yield

2022: 4.1%

2021: 4.8%

29.9%

EPRA cost ratio

2022: 26.0%

2021: 26.9%

21.3%

EPRA cost ratio

2022: 19.9%

2021: 20.8%

27.0%

EPR A LT V

2022: 21.3%

2021: 21.0%

Picton Property Income Limited

Annual Report 2023

Principal Risks

Managing risks

Risk management provides a

structured approach to the

decision-making process such that



and the uncertainty surrounding





a Risk Management Policy which it



and Risk Committee carries out







the risk management and internal

control processes. The Executive



implementing strategy within the





risk in day-to-day operational

matters. The Management

Committees support the Executive

Committee in these matters.









risk appetite will vary over time and



cycle. The principal risks – those

with potential to have a material





with mitigating controls.









principal and emerging risks and













assessment. The statement is set



The Board recognises that there are

risksanduncertainties that could have a

materialimpact on the Group’s results.

Principal risks

and trends

Increasing





Political and economic

Market cycle

Regulatory and tax

Climate change resilience



Investment

Asset management

Valuation

People

Finance strategy

Capital structure

Corporate Strategy Propert

Financial Operational

Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance Financial Statements Additional Information

Climate-related risks

Last year the Board carried out an

assessment of the physical and





of its procedures for identifying



recommendations arising from the

review have been implemented

this year. The mitigating actions

that have been carried out in





Climate-related Financial Disclosures

section of the report, together with





Read more on pages 47–55

Emerging risks

During the year the Board has







behavioural changes, political or

regulatory changes, advances in

technology, environmental factors,

economic conditions or demographic











 

economy, causing further interest

rate rises and an adverse impact

on asset values;

 further political uncertainty in the

lead-up to a general election in



 the increasing importance of

sustainability issues to



 changing demand for commercial

space, as businesses reassess their





technology and employee

wellbeing;

 changes in regulations are

increasing environmental

standards and property owners





 cyber security, with an increased



and greater vulnerability of systems



Risk management framework

Board

– 

– Determines business model

– 

Executive Committee

– Implements strategy



– 



– Carries out



Audit and Risk

Committee

– 

management policy

– Reviews internal controls

– Reviews detailed



– Considers principal



Management Committees

– 

– Consider forthcoming legislation

– 

Read more on pages 44–46

Principal risk likelihood

High

Medium Low

Estimated risk

of occurrence within



0% to 10%

10% to 33%

Greater than 33%





Picton Property Income Limited

Annual Report 2023

Principal Risks/Continued

Corporate Strategy

Political and economic

Risk

Uncertainty in the UK economy,

whether arising from political events or

otherwise, brings risks to the property

market and to occupiers’ businesses.

This can result in lower shareholder

returns, lower asset liquidity



Mitigation

The Board considers economic







investment decisions.

Commentary

Economic uncertainty has risen over the

year, although is less than in the immediate

aftermath of the September mini-budget.







disputes, particularly in the public sector,

are causing further disruption. The UK

economy is not forecast to grow by any





global politics and economics.

Risk trend

Market cycle

Risk

The property market is cyclical and

returns can be volatile. There is an

ongoing risk that the Company fails to

react appropriately to changing market

conditions, resulting in an adverse

impact on shareholder returns.

Mitigation

The Board reviews the Group’s strategy



and considers whether any change is





Commentary

Economic factors have caused more



Interest rates and bond yields have risen,



property yields and valuations, particularly

towards the end of 2022.

Risk trend

Regulatory and tax

Risk

The Group could fail to comply with



regulatory matters which could lead



or loss of REIT status.

Mitigation

The Board and senior management

receive regular updates on relevant laws

and regulations from the Group’s

professional advisers.

The Group has a Health and Safety

Committee which monitors all health

and safety issues including oversight of

the Property Manager.

The Group is a member of the BPF





Commentary



to the regulatory environment in which



Risk trend

Climate change resilience

Risk

Failure to react to climate change could

lead to reputational damage, loss of

income and value and being unable to

attract occupiers. Rising materials and

energy costs as a result of climate

change could give rise to asset

obsolescence.

Mitigation

Sustainability is embedded within the



We have published our pathway to net

zero carbon and have reported on our

progress this year.







Commentary



issue for property owners. The increasing

cost of energy has raised the importance



renewables, such as solar panels, are

increasingly being included in



Risk trend

Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance Financial Statements Additional Information

Property

Portfolio strategy

Risk

The Group has an inappropriate

portfolio strategy, as a result of poor

sector or geographical allocations,





Mitigation







Commentary



from strong investment demand leading

to lower yields, saw a greater valuation

movement in 2022. Demand for the



businesses continue to reassess their



some improvement, but from a low base.

Risk trend

Investment

Risk



a result of incorrect assumptions, poor

research or incomplete due diligence,



Mitigation



investment transactions over a threshold



Board approval.

A formal appraisal and due diligence

process is carried out for all potential

purchases including environmental

assessments.





Commentary



increased over the year. There is more



decisions due to increasing costs,



pressures.

Risk trend

Asset management

Risk

Failure to properly execute asset

business plans or poor asset

management could lead to longer void

periods, higher occupier defaults, higher

arrears and low occupier retention, all

having an adverse impact on earnings



Mitigation



each asset which are reviewed regularly.



investment transactions over a threshold



Board approval.

Management maintain close contact





Management regularly assess the

performance of the Group’s Property

Manager.

Commentary

Rent collection has remained high

throughout the year, with limited

occupier defaults.

Risk trend

Valuation

Risk

A fall in the valuation of the Group’s

property assets could lead to lower

investment returns and a breach of



Mitigation

The Group’s property assets are valued



oversight by the Property Valuation



provided regularly by the independent

valuer.



the Group on a regular basis, including





Commentary

Following the mini-budget in September



interest rates and bond yields, causing

commercial property valuations to







rate rises may cause some further

pressure on valuations.

There remains good headroom against

the Group’s lending covenants.

Risk trend

Picton Property Income Limited

Annual Report 2023

Operational

People

Risk

The Group relies on a small team to

implement the strategy and run the

day-to-day operations. Failure to retain



blend of skills and experience may

result in poor decision making and

underperformance.

Mitigation

The Board has a remuneration policy in

place which incentivises performance and

is aligned with shareholders’ interests.

All employees receive an annual

performance appraisal including training

and development needs.



responsible for employee engagement who



Commentary

The team has remained stable

throughout the year with no leavers.







been maintained.

Risk trend

Finance strategy

Risk

The Group has a number of loan











Mitigation



the Group on a regular basis, including



The Group’s property assets are valued



oversight by the Property Valuation



provided regularly by the independent

valuer.



the going concern status of the Group

biannually.

Commentary



long-term borrowings in place. Covenants

are monitored regularly and there is good

headroom against these. The revolving



further year until 2025.

Risk trend

Capital structure

Risk

The Group operates a geared capital





negative. An inappropriate level of

gearing relative to the property cycle

could lead to lower investment returns.

Mitigation

The Board regularly reviews its gearing







The Group has a revolving credit facility





Commentary



valuation movements this year, resulting

in lower returns. However, the Group’s

loan to value ratio remains low.

Risk trend

Financial

Principal Risks/Continued

Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance Financial Statements Additional Information

TCFD Statement

Managing and

reporting climate-

related risks

We are committed to proactively managing our climate-



information publicly and transparently for our stakeholders.

Here we disclose the climate-related risks and opportunities



overarching risk management approach in accordance with

the Task Force on Climate-related Financial Disclosures’

(TCFD) recommendations. Complying with the LSE Listing

Rules published by the Financial Conduct Authority in

2022, all disclosures in this report comply with all 11 TCFD

recommendations and recommended disclosures.

Recommendation Commentary

Governance

The Board’s oversight of

climate-related risks and

opportunities

The Board has ultimate responsibility for climate-related risk oversight and management, including





they are directly overseen by the Board and actively monitored across all levels of the business.

Our governance structure (see page 94) facilitates continuous oversight by the Board as its members also

chair our Board and Management Committees, which have formalised climate-related responsibilities.

The Audit and Risk Committee is responsible for updating the Board on the current and planned actions

being taken to mitigate material climate-related risks to the Group.

In adopting the Risk Management Policy, the Audit and Risk Committee is also formally responsible for

identifying, managing and overseeing climate-related risks and wider sustainability issues facing the

Group, using qualitative and quantitative metrics as appropriate, and for reviewing the Risk Management

Policy at least annually, revising it as necessary to support our agile risk management approach. The

Committee normally meets three times each year and the Chair, Mark Batten, is responsible for







Management’s role in

assessing and managing

climate-related risks and

opportunities

A detailed overview

of our Governance

structure can be

found on page 94

The Responsibility Committee, chaired by Andrew Dewhirst, meets regularly to consider all aspects of

sustainability and is formally responsible for identifying and reporting any emerging climate-related risks

and opportunities. The Committee ensures compliance with all relevant ESG standards and legislation

and provides regular updates to the Executive Committee. The Committee is also responsible for

overseeing the Climate Action Working Group and our progress against the net zero carbon pathway.

The Executive Committee, chaired by Michael Morris, is formally responsible for the day-to-day

operational application of the Risk Management Policy, including identifying, managing and

monitoring all climate-related risks. The Committee ensures that physical and transition climate-

related risks are evaluated and recorded in the risk matrix and risk radar on a regular basis, and as

appropriate, it escalates risks to the Audit and Risk Committee and Board.







In response to recommendations provided through a detailed climate risk governance gap analysis

assessment, conducted in collaboration with third-party sustainability consultants, we updated and

formalised climate-related issues into our governance structures and risk management procedures at



related issues is robust, enhancing our ability to respond and adapt to climate change challenges.

We have also established a Climate Action Working Group in response to the increasing environmental

focus within our business. The two key areas of focus for the Climate Action Working Group are

mitigating the impact of climate change on our portfolio and delivering against our commitment to

net zero carbon.

All members of the Responsibility Committee sit on the Climate Action Working Group, alongside

other members of the team from across the business. The Responsibility Committee maintains

oversight of the Climate Action Working Group and is responsible for progressing all of our sustainability

priorities. The Climate Action Working Group meets at least bimonthly to discuss and agree actions

and associated progress.

Picton Property Income Limited

Annual Report 2023

Recommendation Commentary

Strategy

Climate-related risks and







Many climate-related risks will materialise over the medium to long-term and the assets we acquire

and hold will still be here far into the future. Therefore, without appropriate risk management, these



occupying them. We believe it is vitally important to consider climate risk from multiple angles and

timeframes. Therefore, we conducted a rigorous climate risk assessment across the two climate

scenarios RCP 4.5 (Representative Concentration Pathways) and RCP 8.5 by the Intergovernmental

Panel on Climate Change (IPCC) to identify the top climate-related risks and opportunities to our

business in the short term (2020–2029), medium-term (2030–2039) and long term (>2040) as well as

to assess their implications and the necessary actions to manage them. Our in-depth understanding

of our material climate risks has enabled informed decision making, allowing us to employ robust risk

management processes to address our material climate risks.

Scenario analysis

The comprehensive climate risk assessment process covered all relevant climate-related risks,

selected as appropriate to the geography of our assets and the asset types in scope, across

the decades 2020–2029, 2030–2039 and 2040–2049 under scenarios RCP 4.5 and RCP 8.5. By

conducting both qualitative and quantitative climate risk assessments at the business and portfolio



strengthening our ability to make sound strategic decisions on where to focus mitigation actions and

harness opportunities.

The portfolio modelling, in collaboration with a leading modelling provider, assessed our assets’



extreme weather events and transition risks, such as market risks and technology, in quantitative



The business level assessment qualitatively determined the likelihood and impact of a range of







mitigation of the risk, ranging from minimal or no impact (1) to catastrophic impact that threatens

the business’ future (5). Likelihood was based on the probability, frequency, duration of impact and

speed at which the risks materialise, ranging from risks with a short duration that materialise







Time horizons

We have selected time horizons aligning with climate policy and available data. We have assessed

our time horizons and current business strategy against climate risks over the short, medium and

long-term.

TCFD Statement/Continued

Short-term 2020–2029

To mitigate the largest impacts

in the current decade, plans and

resilience measures must be

implemented in the immediate

term. We are investing in our

resilience now and setting short-

term targets.

Medium-term 2030–2039

We aim to achieve net zero

carbon by 2040, ahead of the

UK Government’s 2050 target.

Aligning this time horizon to our

decarbonisation target supports



and asset planning, as net zero



measures can be executed

in parallel.

Long-term 2040–2049

We recognise that long-term

climate risks present near-term

challenges, such as reputational

damage or reduced asset values.

Identifying these risks has guided

our investment decision to embed

climate resilience across our

business and portfolio.

Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance Financial Statements Additional Information

Recommendation Commentary

Strategy continued



Time

horizon

Risk Risk

description

Risk

impacts

Risk

mitigations



term:

2020–

2029



market and

occupier

expectations

and demand

As markets shift to meet growing demand

for low or zero carbon alternatives, climate

resilient assets could achieve ‘green

premiums’ by outperforming unsustainable

assets. Failure to adapt could create

competitive risk and occupier default risk,

while demand also may shift away from

certain geographies or sectors.

 

assets, creating lower rental and

asset values

 Stranded asset risk in high-risk

geographies

 Occupier default risk for occupiers

with carbon intensive operations

 Regularly review

market and occupier

demand

 Regularly review

regulation and

building standards

legislation

 Monitor the

macroeconomic and



on an ongoing basis

 Implement a



improvement

 Implement our net

zero carbon pathway

 Implement

refurbishment

guidelines that

incorporate transition

risk mitigation

measures

 Conduct renewable

energy feasibility

studies across our

portfolio

Increased



standards

requirements

Policy mandates buildings and

developments to adhere to higher



operational practice, and to embed climate

resilience on-site. Non-compliant assets

could experience reputational risk and

reduced occupier demand.

 Capital expenditure cost to meet

new standards

 Stranded asset risk and increased

void period for non-compliance

Financial

market impacts

Macroeconomic instability could transpire



carbon solutions and climate resilience, or

due to sustained damage from climate-

related physical impacts, potentially affecting



acquisition activities and asset values.

 Rise in interest rates and a decrease

in economic growth leading to



 Economic downturn reducing rental

income and asset value and

increasing occupancy risk

Medium-

term:

2030–

2039

Decarbonisation

and increased



cost

Increasing the share of renewable energy

sources and decarbonising energy-intensive

industries could intensify other transition

risks associated with reputation damage,



 Rise in energy prices due to support

for low carbon generation and

taxation

 Increased operational costs, fuelled

by price increases and rising

demand for cooling

 Increase in material and

procurement costs due to supply

chain disruptions and carbon tax





Increased duration and intensity of

precipitation, snow melt and rising sea levels









 Repair costs and loss of access



 Capital expenditure to install

mitigation measures

 Reduced regional investment



 Decline in asset value or stranded

asset risk

 Annual asset business

plans consider all

material physical

climate risks

 Assess asset resilience

to material climate

risks

 Implement resilience

measures, prioritising

our most at-risk assets

 Implement our net

zero carbon pathway,

including installing

on-site renewables and

introducing software

to track embodied

carbon from ‘in use’

standing assets

 Implement our

refurbishment

guidelines that

incorporate physical

risk mitigation

measures

Heat stress

Rising mean temperature and extreme

temperature highs put pressure on both







associated costs.

 Degradation of plant and

equipment leading to capex

associated with replacement

 Increased operational costs

 Reduced occupier demand for





Extreme



events

Extreme weather events, including storms,

heavy winds, heavy precipitation, drought

and snow could become more frequent

and severe, exacerbated by shifting sea

temperatures and seasonal patterns.

 Repair costs and loss of access to

asset

 Capital expenditure to install

mitigation measures

 Decline in asset value or stranded

asset risk



term:

(>2040)



water stress

Water becomes increasingly scarce, with

supply unable to meet demand. As

temperatures rise, average drought lengths

could increase, with implications on water

costs, supply chains and public health.

 Increased operational costs

 Decline in asset value for water



 Capital expenditure to improve



Transition risk Physical risk

Picton Property Income Limited

Annual Report 2023

TCFD Statement/Continued

Recommendation Commentary

Strategy continued









Climate-related risk matrix:

Short-term 2020–2029

 





 



 

Medium-term 2030–2039

 



 

 

 

Long-term 2040–2049

 

2 3 4 5

Likelihood



Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance Financial Statements Additional Information

Recommendation Commentary

Strategy continued

Impact of climate-related

risks and opportunities on







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

































Picton Property Income Limited

Annual Report 2023

Recommendation Commentary

Strategy continued

Resilience of the





different climate-related



or lower scenario







































TCFD Statement/Continued

RCP 4.5

Low emissions scenario

Transition















Environmental









1.7–3.2°C

by 2100

RCP 8.5

High emissions scenario

Transition













Environmental









3.2–5.4°C

by 2100

Our scenarios

Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance Financial Statements Additional Information

Recommendation Commentary

Risk management







related risks











































Picton Property Income Limited

Annual Report 2023

Recommendation Commentary

Risk management continued





climate-related risks

































































Describe how the





climate-related risks



















TCFD Statement/Continued

Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance Financial Statements Additional Information

Recommendation Commentary



Disclose the metrics used



assess climate-related risks

and opportunities in line











 

 

 



 



 









 

 

 

 





 





 



 









Disclose Scope 1, Scope 2

and if appropriate, Scope 3



emissions, and the related

risks

















risks and opportunities



































Picton Property Income Limited

Annual Report 2023

Being Responsible

Sustainability Overview

58 Our Approach

60 Performance Highlights

Environmental Focus

62 Net Zero Carbon

 

68 Sustainable Buildings

71 Biodiversity

71 Water Consumption

71 Materials and Waste

Stakeholder Engagement

72 Occupier Wellbeing and Satisfaction

72 Health and Safety

73 Employees and Skills

74 Community and Social Value

75 Supplier and Contractor Responsibility

Governance and Advocacy

76 Leadership Reporting

77 Policies and Data

Sustainable

thinking,

Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance Financial Statements Additional Information

We are committed to

integrating sustainability

within all our business

activities and in a way that

makes a positive contribution

to society, whilst minimising

any negative impact on

people, local communities

and the environment.

responsible

business

Our Sustainability Data Performance

Report is available on our website

Picton Property Income Limited

Annual Report 2023

Sustainability Overview

This year we have made



sustainability priorities.

We have incorporated our

sustainability reporting into this



our integrated approach. We will

be publishing a Sustainability Data

Performance Report, which will

be made available on our website,

including disclosures which are

third party assured. We report our

emissions data by calendar year.

Our focus has been to build on our net

zero carbon pathway and climate risk

assessment work undertaken last year.

We have established a Climate Action

Working Group, involving members



business. Our priorities have been





good progress has been made on

these aspects.

I am pleased to report that we have

reduced our Scope 1 and 2 emissions

by 24% in absolute terms compared





from Scope 3 emissions, I am pleased

to note that we have further improved

the level of occupier data collection

over the year. Continued engagement

and collaboration with our occupiers

on both data collection and reducing

emissions will be a key area of focus

looking forward.

Engagement with stakeholders





and occupiers alike.

We have continued to develop

team training on sustainability

issues and additionally recruited

a Head of Building Surveying who

will coordinate the building fabric

related improvements that are

required to improve our assets.

Acting responsibly is a key strategic

priority and an integral part of our

approach to business. While we

are only at the start of our net zero



are moving in the right direction.

Michael Morris

Chief Executive

Sustainable thinking:

our responsible approach

to business

Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance Financial Statements Additional Information

Global trends driving sustainability

Society is becoming increasingly

aware that the prosperity of

humanity and the planet are

intrinsically interlinked, and not

everything should be measured

in terms of economic success.

For businesses, the need to look

beyond economic success is gaining



to the long-term detriment of the

planet’s natural systems and wider

society is no longer an acceptable

or a viable business model. A more

holistic approach is required, which

incorporates stakeholder wellbeing,

circular economy principles and

nature-based solutions, whilst

accounting for natural capital and

carbon emissions, and recognising

alternative drivers of value like energy



In 2023 the World Economic Forum

(WEF) released its eighteenth Global

Risks Report, stating that eight out

of the top ten most severe risks on a

global scale over the next ten years,

as perceived by world leaders, are

environmental and social risks, with

the top three being climate action

failure, failure of climate change

adaptation and natural disasters

and extreme weather events.

The Intergovernmental Panel

on Climate Change’s (IPCC) sixth



global average temperatures are

already 1.1°C higher than pre-industrial

levels. To keep irreversible tipping

points from being reached, warming

must be limited to 1.5°C, which means

that greenhouse gas emissions must

be halved by 2030. At COP28 in 2023,

we are expecting the results of the

Paris Agreement’s global stocktake,

which will assess the current position

and global progress made towards

the 1.5°C maximum target.

There are undoubtedly challenges

to overcome and costs to incur,

but also vast opportunities, cost

savings and advantages to be

gained. Those who do not engage

and collaborate to drive change risk

much higher costs in the future.

Our approach

A responsible and ethical approach to business is

essential for the beneﬁt of all our stakeholders and

understanding the long-term impact of our decisions

will help us to manage risk and continue to

generate value.

Sustainable thinking is integrated

within all our business activities. We



contribution to society, whilst

minimising any negative impact





Our sustainability policy guides our

long-term sustainability priorities.

We have in place a sustainability

framework based on our key material

issues and continue to review these

key priorities annually.

Energy

eciency

Materials

& waste

Sustainable

buildings

Water

consumption

Net zero

carbon

Biodiversity

Health

& Safety

Employees

& skills

Occupier

satisfaction &

wellbeing

Supplier &

contractor

responsibility

Community

& social value

Leadership

Data

Transparency

& reporting

Policies

Sustainable thinking,

responsible business

Picton Property Income Limited

Annual Report 2023

Sustainability Overview

Key highlights

from this year

Governance

Environmental

focus

Stakeholder

engagement

Governance and

advocacy

76%

Improved portfolio EPCs rated A-C

Green leases completed

Climate Action Working

Group established to

oversee progress on net zero

Completed assessment

ofclimate-related risks

tothe business

Reported in line with Task

Force on Climate-related

Financial Disclosures

Maintained EPRA Gold

awards for both Annual

Report and Sustainability

Report

Improved GRESB rating to

three green star status

Third party assurance of

GRESB submission data

Implemented new

sustainability data

management system

£27,000

charitable donations,

supporting 23 charities

Carried out occupier

surveys at oce and

industrial properties

Hosted sustainability

webinars for investors

and occupiers

Continued roll out of

new supplier clauses

addressing modern slavery

Helped develop new Better

Buildings Partnership

training modules

Carried out annual employee

engagement survey

Provided further

sustainability training

forthe team

24% reduction in absolute

Scope 1 and 2 emissions

compared to 2019 baseline

22% reduction in Scope 3

energy intensity compared

to 2019 baseline

Commenced

decarbonisation of assets

Commenced on-site

renewable installation

85%

Improved overall

energy data coverage

Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance Financial Statements Additional Information

Environmental

focus

Stakeholder

engagement

Governance and

advocacy

Key priorities

for next year

Continue net zero carbon

pathway progress and focus

on priority assets

Progress priorities identiﬁed

within energy audits

Progress collaboration

withoccupiers to increase

data collection coverage

andreduce emissions

Continue to progress

decarbonisation strategy

across portfolio

Continue to progress solar

installation across priority

assets

Continue third party data

assurance on sustainability

reporting

Maintain high standards of

sustainability governance

and management

Maintain clear and

transparent reporting

standards

Continue to improve

GRESB rating

Develop our occupier

engagement strategy

Progress roll out of occupier

apps across multi-let oces

Continue to improve the way

in which we communicate

with our occupiers on

sustainability progress

Maintain our high level

ofhealth and safety

compliance

Maintain our positive

working culture and values

Picton Property Income Limited

Annual Report 2023

Environmental Focus

Sustainable thinking,

practical solutions:

our progress

on net zero

carbon

Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance Financial Statements Additional Information

Environmental focus

Sustainable thinking,

practicalsolutions

Climate change is one of the most



globally and requires urgent action.

It is recognised that commercial

buildings are a key source of

emissions and that as a responsible

landlord we must seek to reduce

the environmental impact of our

buildings. We continually assess the

environmental performance of our

portfolio and seek to implement

improvements where we can.

Net zero carbon pathway

Our 2040 commitment

To ensure credibility and transparency

in our approach, we have developed

our net zero carbon pathway so that



Partnership Net Zero Carbon Pathway

Framework and The UK Green

Building Council’s (UKGBC) net zero

carbon hierarchy.

We have committed to be net zero

carbon for our operational and

embodied emissions by 2040.







and renewable energy, with any

residual emissions offset.

From 2040 onwards, all completed



reduced their embodied and

operational carbon as much as

possible, with any residual emissions

offset upon practical completion.



baseline carbon footprint, using 2019





required to meet our 2040 target. As

with similar property companies, the



energy consumption of our occupiers.

Net zero governance

This year we have established a

Climate Action Working Group, with

members of the team across the

business, to ensure we are progressing

key actions and priorities on our

pathway to net zero commitment, and

reviewing and setting interim targets.

We have also embedded net zero

carbon criteria into our acquisition



Reduce

embodied

carbon

Optimise

energy eciency

Maximise

on-site renewable

energy

Purchase high-quality

carbon osets for

residual emissions

Maximise

high-quality o-site

renewable energy

procurement

Picton Property Income Limited

Annual Report 2023

Environmental Focus/Continued

Our net zero carbon progress

Measuring and reducing

embodiedcarbon



embodied carbon intensity is

300kgCO





of our development activity comprises





benchmarks thus far. In due course,

we will begin to conduct whole life



refurbishments (above £1.5 million)





refurbishments.

To achieve the maximum embodied

carbon savings, our sustainable







This year, our refurbishment activity

across the portfolio has been carried

out to improve and enhance the

buildings’ sustainability credentials

through making alterations to

structure, mechanical and electrical

maintenance or landscaping.

As the contract value of each

refurbishment has been under £1.5

million, in line with our refurbishment

guidelines we did not carry out



assessments, but we endeavoured to

repurpose, recycle and reuse materials

where possible, minimising site waste.

Read more on our GHG

emissions on pages 66–67

Net zero carbon progress

Aims Progress Metrics

Embodied

carbon

Minimise the embodied carbon





No whole life carbon assessments were

required during the year, as individual asset

refurbishment activity did not exceed



Target embodied performance of

less than 300kgCO





renovations

Operational

carbon

Ensure operational carbon



the portfolio is improved

We have worked on improving our data



energy audits across a representative sample

of asset types

24% reduction in operational

carbon emissions for Scope 1 and 2,

relative to our 2019 baseline

40% reduction in energy intensity

of all Scopes, relative to our 2019

baseline

On-site

generation

Maximise amount of on-site

renewable generation

We have commenced solar panel installation

on industrial asset refurbishments and have

commissioned feasibility studies across key



Five operational PV systems

totalling 0.176 MWp with a further

three schemes under construction

totalling 0.238 MWp. Considering a

further six schemes which would

provide a capacity of 7.625 MWp.

Renewables

procurement

Procure high quality renewable

energy

No existing energy contracts were due for

renewal during the period

100% of our purchased electricity is

from REGO backed renewable

sources

Offsetting Acquire high quality offsets to

neutralise residual emissions

While not yet under consideration, we will

develop our strategy for high quality offsets

post net zero carbon target year of 2040

Third party



Maintain credibility and transparency

of our net zero carbon pathway

Annual independent third party assurance of

energy data



waste data by third-party assurance

Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance Financial Statements Additional Information

Reducing operational carbon

Over the year we have been



measures across the portfolio to

help measure and reduce occupier

energy consumption, including:

 Developing an occupier

engagement plan to ensure

actions take place in a timely

manner and effective cost-sharing

mechanisms are introduced

 Continuing to include green lease

clauses within our leases, with 64

completed this year

 Increasing data collection coverage

to 85% and implementing a new

data management system

 Carrying out a complete audit







functioning properly and recording

consumption accurately. We plan

to replace a small number of

meters in 2023, which are



Maximising renewable opportunities

To reduce the carbon footprint of our

operational emissions, we are focusing

on increasing our on-site renewable

energy opportunities across our assets.

This year we have installed three

schemes and undertaken six

renewable energy feasibility studies



across the portfolio.

Maximising o-site renewable

procurement

Within our portfolio currently 100%



REGO backed (Renewable Energy

Guarantees of Origin).

When our electricity contracts expire,

we will seek to procure high-quality

renewables in line with the UKGBC

guidance on renewable energy

procurement.

We seek to follow three main criteria

on renewable energy procurement.



fuel energy sources; create additional

capacity in the grid; and have exclusive

ownership and claims of the energy

attributes.

2022

Underway

Future initiatives

2023 2024 2025 2040+...

Embodied

Carbon

Operational

Carbon

Occupier

Engagement

Net Zero

Governance

Apply refurbishment

guidelines to all new

developments, refurbishments



Implement onsite

renewables, prioritising

most cost-effective sites

Conduct whole life carbon assessments



Liaise with key occupiers to understand

their energy reduction plans and to investigate



Integrate energy and carbon clauses into new and

renewed leases, including access to energy data where

energy procured directly by occupiers

Undertake net zero audits

across the portfolio and



carbon reduction plans

Install sub-metering

for all energy recharging

to understand occupier

usage

Develop a data and

target monitoring

process

Identify a cost-effective solution

for monitoring the energy

consumption of occupiers

Embed net zero criteria into

pre-acquisition due diligence

process



net zero audits into

longer term asset plans

Create a detailed

occupier

engagement plan

Develop a carbon

offsetting strategy

Consider internal

carbon price and

transition fund

Offset residual carbon

resulting from all operations

Annually assess progress towards net zero

commitment, including exploring additional



Identify high-quality

renewable energy

procurement options

Begin to quantify emissions

related to procurement of

goods and services to inform

targets and related actions

Identify

priority

assets

Conduct renewable feasibility studies

for assets to estimate renewable power

generation potential

Implement software to track embodied

carbon from ‘in use’ standing assets

Picton Property Income Limited

Annual Report 2023

Environmental Focus/Continued

Energy usage

As part of our net zero carbon

strategy, our focus on minimising

landlord controlled gas heating in



3% absolute reduction in Scope 1

emissions over the period. This is

despite increased building occupancy

levels post-pandemic and property

acquisitions over the period. On a

like-for-like basis the reduction was

4% compared to the previous year.

As we continue to transition away from

gas supplies, there is a corresponding

increase in electricity consumption,

which is up 7% on a like-for-like basis,

but also impacted by increased

occupancy post-pandemic.



absolute terms, electricity consumption

has increased by 25% over the year.

Greenhouse gas emissions

Scope 1

Overall, we have seen an absolute

reduction in our Scope 1 emissions of

3% over the year to 989 tCO

e (-4%



the ongoing strategy to replace gas

with electricity across our portfolio. For

example, during the year we replaced

the gas based air conditioning system

at 50 Farringdon Road, London and

we have also removed gas from a

number of our industrial units in line

with our refurbishment guidelines.

From our baseline year of 2019 we have

reduced Scope 1 emissions by 15%.

Our Scope 1 energy intensity has

reduced by 12% over the year as we

have acquired new assets with lower

energy intensity levels. On a like-for-

like basis the energy intensity has



activity and use post-pandemic at

our multi-let assets. Since our 2019

baseline, our Scope 1 intensity has

reduced by 29% to 0.017 tCO



Scope 2

On an absolute basis, our Scope 2

emissions have increased over the

year by 14% to 1,657 tCO

e as we have

acquired new assets and replaced gas

with electrical systems. However, on a

like-for-like basis our Scope 2 emissions





and grid decarbonisation. From

our 2019 baseline we have reduced

absolute Scope 2 emissions by 28%.

Scope 3

Around 80% of our total GHG

emissions are Scope 3 emissions from

our occupiers, therefore accurately

recording this data is key to our net

zero carbon strategy. This year we

have increased our Scope 3 data

coverage to 67% of the portfolio.

We have achieved this with direct

meter readings as well as ongoing

dialogue with our occupiers.

On an absolute basis, our Scope 3

emissions are 9,775 tCO

e. We have

restated our 2021 Scope 3 emissions as

we collected more data subsequent

to the publication of last year’s Annual

Report, making comparisons more

meaningful. Our Scope 3 energy

intensity has reduced by 19% over the

year to 0.026 tCO



. This is a 22%

reduction from our 2019 baseline.

Methodology

We collect all of our landlord controlled

energy data via automatic meter

readings, and following improvements

in occupier data collection, we have

increased our overall data coverage

across the portfolio to 85% (from 75%

in 2021). The aim to is reach 100%

coverage of our portfolio and we

continue to work with our occupiers

and data providers to achieve this.

All our large supplies work from

automatic meter reads, with any void

unit meter data being aggregated to

an asset level. This means that 100% of

landlord controlled data is meter read

and not estimated. We are working

towards rolling out automatic meter

reads across the whole portfolio to

increase coverage and reliability of

our data and reporting accuracy.

We have reported on all the

emission sources required under

the core requirements of EPRA Best

Practices Recommendations and

have voluntarily disclosed business

Emission source

2022 2021 2020

GHG

Scope

Absolute

GHG

emissions

(tCO

GHG

intensity

(tCO

e/m

)

Absolute

GHG

emissions

(tCO

GHG

intensity

(tCO



)

Absolute

GHG

emissions

(tCO

GHG

intensity

(tCO



)

Combustion of fuel and operation of facilities

      

Electricity, heat, steam and cooling purchased for

own use       



      

Total Scope 1 and 2      

Business travel

  N/A    

Occupier data

      

Landlord water and treatment

      

Landlord waste       

Total Scope 3      

Total all Scopes      

Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance Financial Statements Additional Information

travel, occupier, and own premises

consumption emissions. An operational

control approach has been adopted

and all our properties are included.

Figures presented are absolute for

utility and waste consumption and

relate only to landlord-obtained

utilities and waste removal. Occupier-

obtained consumption is included

where possible. We have calculated

and reported our emissions in line

with the GHG Protocol Corporate

Accounting and Reporting Standard

(revised edition) and used emission

factors from UK Government’s GHG

Conversion Factors for Company

Reporting 2022. We continue to

report on a calendar year basis to



collect occupier consumption data.

We have calculated our intensity

measurements based on the area

served by each meter, for example





have been excluded from the intensity

calculations. So that an accurate

comparison can be made between

reporting years, this approach has



We have continued to voluntarily report

on Scope 3 vehicle emissions. Vehicle

emissions were calculated using our

vehicle expenses reports and the

vehicle emission factors from the UK

Government GHG Conversion Factors

for Company Reporting 2022. Year-

on-year, we will continue to update



to remove estimates and ensure actual

data is captured and reported. We



under management and as such, have

apportioned out our consumption



reported as a separate line item.

Head oce

We started collecting and reporting



it is only a small part of our overall

footprint, we believe it is important to

provide a holistic view where possible.



within Stanford Building, London,

which is one of our own assets. This is

a recently refurbished space, providing

the latest technology and energy



allowed us to obtain more reliable









pandemic.

Business travel

We have seen a small increase in

business travel emissions as our

team have begun travelling more

regularly to our assets. We continue to

encourage sustainable forms of travel

and virtual meetings where feasible.

Smart buildings

During the year we have seen a





the installation of Asset IQ. The



consumption and is currently installed

at 401 Grafton Gate, Milton Keynes,

Pembroke Court, Chatham, 180 West

George Street, Glasgow and 50

Farringdon Road, London.

The tool connects to the building

management systems, providing live

updates from each piece of plant

equipment throughout the building





period. The tool highlights any key



 Identify issues with the operation

of the equipment

 Pinpoint the reasons for anomalies

 Suggest the most suitable

technical solutions

 Identify the improvement of the

overall energy strategy

This information provides quarterly

action plans and enables discussions

with occupiers on how the building



performance and help reduce



We aim to increase the use of Asset



where feasible.

24%

Reduction in Scope 1 and

2 emissions since 2019

67%

Scope 3 occupier energy

data collection

Over the year we are pleased

tohave increased Scope 3

datacollection, achieving this

inpart via improved automated

data collection.

Tim Hamlin

Director of Asset Management

Picton Property Income Limited

Annual Report 2023

Environmental Focus/Continued

Collaborating with our

occupiers to understand

their own sustainability

strategies is key to

delivering improved

environmental initiatives

across our buildings.

Mark Alder

Head of Occupier Services

SOLAR

Electric car charging points

Over the last 12 months we have

gradually increased the number of

charging points at our properties.

There are currently 41 car charging

points across our portfolio, of which







During 2022, we supported our

occupiers with their own installations

at Parkbury Industrial Estate, Radlett,

Sundon Business Park, Luton and Atlas

House, Marlow.



electric vehicle charging infrastructure

operators, we have developed a plan

to install a further 38 rapid and fast



including our retail warehouse

locations.



solar array systems totalling 0.176

MWp and we have seen a 42%

increase in energy generation over

the year.

We have a further three schemes

currently under construction

totalling 0.238 MWp.

In addition we are establishing the

feasibility of a further six schemes

which would have a maximum

output of 7.625 MWp.

We are also investigating a ‘sleeving’

arrangement which would enable

us to export any excess electricity

generated to other buildings in our

portfolio. This would enable them



on-site renewable energy.

Following our sustainability

workshop engagement programme

with key occupiers, we are currently

engaged in a number of feasibility

studies to identify the optimum

delivery strategy to support them



Charging points installed

across seven of our sites

Sustainable buildings

We are committed to monitoring

and enhancing the environmental

performance of our buildings

and ensuring they are resilient

to changes in both climate and

the regulatory environment.

It is important that we ensure our

buildings meet changes in occupier

requirements, and our approach to

our portfolio management adheres

to best practice with respect to

data collection, communication

and implementation.

In line with our net zero carbon

commitment, we aim to remove fossil

fuel supplies where practical, introduce

on-site renewable energy, increase



and support our occupiers with

their own sustainability strategies.

Over the course of this year we have:

 Developed our strategy for on-site

solar power generation

 Started to implement our strategy

for the roll out of electric vehicle

charging

 Improved the percentage of A-C

rated EPCs in our portfolio from

71% to 76%

 Continued to implement green

lease clauses

 

across the portfolio

Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance Financial Statements Additional Information

SUSTAINABILITY

ACTION PLANS

Over the year we have implemented

sustainability action plans at our

multi-let properties.

These plans identify areas for

improvement, including biodiversity



well as the introduction of energy





introduced include new LED lighting

at Colchester Business Park,



Street, Glasgow, Gloucester Retail

Park, Parkbury Industrial Estate,

Radlett and Sundon Business Park,

Luton. We have also installed motion



Albans and Parkbury Industrial

Estate, Radlett.

We have also undertaken a metering

survey across our service charge sites

to ensure effective metering and

improve energy reporting.

The use of the Asset IQ building

management system to monitor





Pembroke Court, Chatham, 180

West George, Glasgow and 50

Farringdon Road, London has



reduction in electricity usage

across those assets.

Our sustainability action plans are

reviewed annually and we plan to

action further initiatives over the

course of next year.

Sustainable refurbishments

Our sustainable refurbishment

guidelines, introduced in 2021, form



execution stages of refurbishment and



allow for discussion with consultants,

designers and other stakeholders, and

provide clarity in a changing market.

The guidelines are under constant

review to ensure we evolve with

markets, technology, and expertise





Updates to our sustainable

refurbishment guidelines will include:

 Ensuring clarity of metering and

transparency of energy usage

 Incorporation of on-site renewable

energy

 

schemes, suitable for the different

types of refurbishment

 Updated procurement, supply

chain and waste policies

 Provision of building records

 Ensuring the end product meets

all current and expected future

legislative requirements

Building certiﬁcations

Whilst our net zero carbon pathway



emissions, we also recognise the



provide third party validation.



buildings in our portfolio, at Metro,

Manchester and Tower Wharf,

Bristol which were both awarded

BREEAM ‘Excellent’ when they were

refurbished, and Angel Gate, London,



In line with our refurbishment

guidelines and recognising the

composition of the portfolio we are





and on-site strategies.

 

 29%

Retail, High Street 0%

Retail, Warehouse 0%

Industrial, Business Parks 0%

Industrial, Distribution

Warehouse 0%

Hotel 0%

Our refurbishment

guidelines aim

toimprove the

sustainability

credentials of our

properties.

Andy Lynch

Head of Building Surveying

Picton Property Income Limited

Annual Report 2023

Environmental Focus/Continued

Our bespoke set of green

lease clauses continue

tobe successfully

incorporated in new

lettings and renewals.

Jay Cable

Head of Asset Management

Net zero carbon building audits

During the year we undertook net



representative assets across our

portfolio. These took place at our



Chatham and 401 Grafton Gate,

Milton Keynes, our retail warehouse

asset in Bury and our industrial

estates at Luton and Radlett.



the reports assessed the energy

performance of the assets using the

UKGBC targets for reduction in Energy

Use Intensity (EUI) required to meet

the 1.5°C global warming target for



interventions required to achieve

these reductions. In respect of the

retail and industrial assets the reports

used the Carbon Real Estate Risk

Monitor (CRREM) targets for the same

years and same climate target.

In each case, the reports indicated

the interventions required to deliver

the reduction in EUI. These were

principally to the internal building

systems (for example, replacing

gas based systems with electric

systems), external fabric (for example,

PV systems and improved solar

shielding) as well as changes to

the operation of the buildings (for

example implementing smart

building management systems).

Whilst the characteristics of every

building differ, the output from the

reports has been valuable in helping



management regimes and begin

the process of setting individual

asset net zero carbon strategies.

Green lease clauses

Green leasing continues to be an

important tool to enable us and our

occupiers to improve the performance

of a building.

The ideal green lease will help

enhance the environmental

performance of a building, mitigate

any environmental legislative and

market risk and foster improvements

in data collection.

Our bespoke set of green lease clauses

represent best practice and continue

to be successfully incorporated in



continue to review and amend these

clauses accordingly where appropriate.

Over the year, we completed 64 green

leases. We will continue to use lease

events and letting of vacant units to

drive further take up.

Minimum Energy Eciency

Standards (MEES)

We continue to improve the EPC



the percentage of EPC ratings by

estimated rental value (ERV) of our

portfolio, 76% have an EPC rating

of A-C and 24% are D or E. For the

year to March 2022, 71% of the

portfolio was rated A-C by ERV.

We continue to proactively manage

our compliance with MEES, which,

as of April 2023, prohibits leasing

space that is F or G rated, unless



We have one small non-compliant

industrial unit, for which we are in the

process of applying for an exemption

due to its very basic construction.

Over the year we reassessed 38 EPCs.

Using the same reporting basis as

above, 79% have been reassessed

to an A-C rating, 21% a D rating,

and none were E, F or G rated. We

continue to use lease events, common

area works and EPC renewals to

implement improvement works

with the overall aim of continually

improving our EPC score and

ensuring compliance with MEES.

The minimum EPC rating is likely

to be raised further, with the UK

Government having consulted in 2021

on proposals to require a minimum

rating of a C by 1 April 2027, and

a B by 1 April 2030. The outcome

of this consultation is awaited.

Notwithstanding the legislative

position, we see alignment with

MEES regulations as integral to

our net zero carbon pathway,

occupier engagement strategy,

and environmental focus. We will

continue to proactively manage

the portfolio on this basis.

76%

EPC ratings A-C

Green leases completed

Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance Financial Statements Additional Information

Biodiversity

We are committed to broadening

the scope of biodiversity across

our portfolio by introducing more







We take a collaborative approach to

biodiversity, working with biodiversity

advisers, our managing agents,

landscapers and our occupiers to

ensure we take on board ideas and

suggestions.

In line with the Better Buildings

Partnership’s biodiversity checklist,



 Set biodiversity targets at selected

properties

 Plan the implementation of

biodiversity improvements

measures, alongside expert advice

 Ensure adequate funding is

available to maintain these

measures

 Monitor progress and adapt if

necessary

During the year, we have installed

additional beehives, bug hotels, bird

and bat boxes as well as compost

bins across several of our multi-let



place biodiversity plans to guide our

approach to landscaping to promote

wild vegetation at some of our larger

locations — for example, at Colchester

Business Park.

We have also introduced biodiversity

measures successfully at appropriate

industrial estates including in Epsom

and Radlett.

Our plans for 2023 are to continue

to use the Better Buildings

Partnership’s biodiversity checklist,

and carefully manage the funding

required to introduce and maintain

our biodiversity measures as well

as improve the way in which we

communicate locally about the

importance of biodiversity.

Water consumption



data via actual manual meter reads

(90% from actual reads). Due to the

location of some water meters,

achieving accurate and regular

consumption measurements is not

practical, therefore we rely on

estimated data from the suppliers.



post-pandemic and portfolio

acquisitions, over the year we have

seen an overall increase across the

portfolio of 228% for absolute landlord



like-for-like increase of 60%. The large

increase is due to the increased



buildings, property acquisitions and

improved data capture.

We have begun works to install



devices across the portfolio. These





improve our data collection.

Over the past year the largest increase

in consumption in absolute terms



from 12,028m

to 29,003m

(a 241%

increase). On a like-for-like basis, the

increase was 169%.

Due to the nature of our retail portfolio

and distribution warehouse portfolio

(which have very few communal





at a portfolio level (comprising less

than 0.1% of the total landlord

controlled consumption).

Going forward, we will continue to

follow our refurbishment guidelines



as we undertake refurbishment and



portfolio.

Materials and waste

We recognise the importance of

sustainable waste disposal and

therefore remain committed to



across the landlord controlled

portfolio. This year we have again

successfully diverted 100% of



management activities, using

either recycling or heat recovery.

Following increased occupancy across

the portfolio post-pandemic, this

has led to an increase in absolute

waste generation over the year of

102%. Of this, 83% was recycled

and 17% recovered. On a like-for-like

basis, the increase was 100% with

84% recycled and 16% recovered.

We continue to engage with our

waste providers and occupiers with

the aim of improving the sorting and





downstream sorting, recycling and



100%



property management activities

Picton Property Income Limited

Annual Report 2023

Sustainable thinking,

collaborativeaction

We have in place a framework for

conducting business in a way that

makes a positive contribution to

society while minimising the impact

on people and the environment. We

are committed to engaging with our

occupiers, shareholders, suppliers and

the wider community and the Board

acts to promote the long-term success



our stakeholders.

Occupier engagement,

wellbeingandsatisfaction

Working with our occupiers is at the

heart of what we do. Understanding

their current and future requirements

and working collaboratively to reduce

our environmental impact is key for us.

We continue to look for ways to

improve our occupiers’ experience. Our

Picton Promise was created to bring



to our occupiers: Action, Community,

Technology, Support and Sustainability.

These are at the core of our

engagement strategy.

Building on the success of the launch

of our apps at Angel Gate, London and

Colchester Business Park in 2022, we

have begun to roll out more of these



buildings and by the Summer we

expect to have a total of ten new apps

in place. We see this as an important

part of our engagement strategy to

communicate effectively with our

occupiers and their staff.

During the year, we undertook an

occupier survey across all our multi-let



The results of the survey indicated that:

 85% of respondents would

recommend us as a landlord to

others

 80% of respondents were happy

with our communication

 70% of respondents were happy

with our responsiveness

 80% of respondents were happy

with the level of services we

provided

Stakeholder Engagement

 75% of respondents were

interested in increasing their

awareness of sustainability

Where occupiers highlighted building



have taken quick action to handle

these and communicated with the

occupiers concerned.

We will be using the valuable

feedback we obtained from



engagement strategy over the



In 2023, we will also broaden our

collaboration with occupiers on

sustainability matters either through

direct dialogue with them or within

the regular occupier meetings held



on working together to reduce



consumption data as well as ways to

improve the effectiveness of waste

removal.

Occupier health and safety

We are fully committed to making



environment for our occupiers



contractors, and the public. We

therefore ensure that they comply

with the relevant health and safety

legislation and guidelines.

Health and safety is embedded within

our management culture of our

organisation.

Our Health and Safety Committee

meets every other month and reviews

all aspects of health and safety across



The Committee reports directly to the

Responsibility Committee and health

and safety is a standing item on the

Board’s agenda.

Our health and safety record

continued to be strong with no

reportable accidents, near misses or

other health and safety incidents

during the year. We were 99%

compliant in all critical and secondary

health and safety documentation.

During the year, our team improved

their health and safety knowledge by

attending training courses in areas

including the Building Safety Act,



As part of our property management

retender, we improved our managing

agent’s health and safety KPIs

covering reporting and delivery times.

In 2023, we plan to undertake security

and lighting improvements at some of

our industrial and retail warehouse

properties, as well as providing further

training to our employees for example

in asbestos management.

85%

Of occupiers surveyed

would recommend us

Stakeholder engagement

Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance Financial Statements Additional Information

Employee engagement

We have a strong and open company

culture with shared values co-created

by our employees. We value the

contributions made by the whole

team and aim to nurture a positive

working environment.

We have once more this year carried

out an employee engagement survey

across the whole team, excluding



very positive, with over half of the

questions receiving Agree or Strongly

Agree responses.

The overall satisfaction score was 82%.

Issues that were raised by the team

included:

 The increasing demands to meet

net zero carbon commitments

 

against time and resource

constraints

 Plans for growing the business in

terms of assets and resources

This year we held a team off-site in

Gloucester. We discussed many issues

and challenges facing the business

and what actions and improvements



visit the recent acquisitions made in

that area.

Diversity and inclusion

We value the contributions made by

all of our employees and believe that a

diverse workforce is key to maximising

business effectiveness. We aim to

select, recruit, develop and promote

the very best people and are

committed to creating a workplace

where everyone is treated with dignity

and respect, and where individual

difference is valued.



and the value this brings to the Group.

We aim to maintain the right blend



within the Group.

The numbers of men and women

employed by the Group are:

Men Women

Picton Board  

Rest of team  

Total  

Wellbeing and beneﬁts

We believe that having a happy





commitment to providing a safe





 Adhering to the appropriate



 Providing a working environment

that enables employees to work

effectively and free from

unnecessary anxiety, stress and fear

 Ensuring employees can report

inappropriate behaviour or

concerns through the

whistleblowing policy

 Having appropriate family





employees, and they also all

participate in the Deferred Bonus and

Long-term Incentive Plans, providing

alignment with shareholders.

The absentee rate for the year was

0.5%. There were no fatalities or



The turnover of employees during the

year was:

Number

% of average

number during

year

Joiners  

Leavers  



Lynch, our new Head of Building

Surveying. Subsequent to the year-



Company Secretary.

82%

Employee satisfaction score

Training and development

We want to encourage our employees

to realise their full potential by giving

them access to development and

training opportunities.

Employee development is based on

the following key principles.

 Development should be

continuous; employees should

always be actively seeking to

improve performance

 Regular investment of time in

learning is seen as an essential



 Development needs are met by



internal and external training



experience and through interaction

with professional colleagues

All our employees have a formal

performance appraisal on an annual

basis, together with a mid-year review



at the start of the year.

This year the amount of training

carried out by the team was 1.1%,

based on the number of hours spent

on training as a percentage of the

total working hours of all employees.

This year members of the team

attended the new elective modules

of the Better Buildings Partnership’s

ESG Training Course for Real Estate

Professionals. Additionally, further

training was carried out in respect

of health and safety, sustainability

and market regulations.

Next year we intend to implement



training programme for the



Picton Property Income Limited

Annual Report 2023

Community and social value

As an owner of commercial property,

we recognise our role in providing

places which improve quality of life,

enhance wellbeing and generate

a positive social outcome, whilst

minimising any negative impacts

our buildings have on society and

the environment. We are committed

to understanding and supporting

the needs of local communities

where we own buildings.

Community engagement programme

Site type

Building

coverage

(assets)

 

Retail, High Street 

Retail, Warehouse 

Industrial, Business Parks 

Industrial, Distribution

Warehouse 

Hotel 

Stakeholder Engagement/Continued

Under the four key themes of

employment, economic growth,

health and wellbeing and promoting

social innovation we have:

 Supported local economies

through creating employment

opportunities in our buildings and

local communities

 Contributed to safer communities

through investment in security and

surveillance technology on our sites

 Procured goods and services

locally where possible, through

transparent, ethical and

sustainable supply chains, and

ensured that our suppliers adhere

to our Supplier Code of Conduct

 Promoted health and wellness

initiatives across our team and to

our occupiers through occupier

apps and various on-site events

 Provided training opportunities

and career progression for our

employees, remaining committed

to evolving talent in our employees

to help all reach their full potential

and career goals

 Supported both national and local

charities within our communities

as set out in our charitable giving

policy

 Conducted a series of investor and



share knowledge and drive change

Charitable giving and partnerships

This year we supported 23 charities

and donated a total of £27,000.

Our aim through our charitable

giving and charity partnerships is

to invest in our communities at

grassroots level, seeking to make

a positive difference to the local

areas in which we hold property.

We seek to support charities which;

 Drive positive social change

 

 Create a positive community

impact

 Are committed to improving local

areas

We have established partnerships

with a number of nationwide charities

and charities working in the local

areas in which we operate. We have

long-standing relationships with

The Funding Network and Coram

and this year were delighted to

forge two new partnerships with

The Fostering Network and Future

Youth Zone, based near our industrial

estate in Barking. We also regularly

support LandAid each year.

In addition, this year we responded to

the humanitarian crisis in Turkey and

Syria through donating to the Disasters

Emergency Committee appeal.

£27,000

Charitable donations

Charities supported

Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance Financial Statements Additional Information

This year we were delighted to begin

working with Coram and its Young

Citizens programme for young

people from migrant and refugee

backgrounds, by offering work

experience and career advice to those

wishing to explore different career

options within the real estate sector.

Working with The Fostering

Network, we are currently in the



Friendly employers’ scheme,

which includes initiatives such as

additional annual leave for foster

carers to accommodate appropriate

training, social worker visits and

other fostering-related activities.

We continue to offer our occupier

led charitable matched giving

initiative, which supports occupiers

within our portfolio in their local

community-based fundraising

efforts. Occupiers are invited to

apply for a matched giving donation

programme of up to £100 per

year for a registered UK charity.

Supplier and contractor

responsibility

We are committed to conducting

our business in a fair and honest

manner and ensuring our suppliers

operate in an ethical way and share

our business principles in observing

relevant laws and regulations.

We seek to maintain productive

and long-term relationships

with our business partners.

We have in place a Supplier Code of

Conduct. This is designed to promote

safe and fair working conditions and

the responsible management of social,

ethical and environmental issues in

our supply chain.

This year we have developed our

approach to supplier responsibility

and particularly the issue of modern

slavery within our supply chain.

We have assessed the level of risk in

our supplier base of exposure to





suppliers are based in the UK.

We value our long-standing

partnership with Coram and

supporting its Young Citizen

programme is an integral part of

our community, social value and

charitable giving commitment.

Coram’s work to support young

trainers such as Aymen with their

future progression is important in

providing opportunities for all

and empowering young people,

particularly those from migrant

or refugee backgrounds.

Mark Alder

Head of Occupier Services

However, we recognise that there are

certain activities within the real estate

sector that are more susceptible to

modern slavery risks, including

construction and maintenance.

New supplier terms now incorporate



perceived level of risk. We are also

using our supplier due diligence

questionnaire for new suppliers.

Picton Property Income Limited

Annual Report 2023

Sustainable thinking,

positive change

We aim to have in place high

standards of sustainability governance

and management and will undertake

initiatives to promote greater

environmental responsibility. This also

includes a focus on business practices,

which are activities relating to the way

the business is run, including business

ethics, compliance and tax principles.

Leadership

The Board has responsibility for the

long-term success of the business,

providing leadership and direction

with due regard and consideration

to all of our stakeholders. The Board

comprises the Chair, two Executive

Directors and three independent

Non-Executive Directors. They have

a range of skills and experience that

are complementary and relevant

to the business. The tables below

set out the Board’s composition,

tenure and diversity characteristics.

Function Number %

Non-Executive Chair  

Executive Directors  

Independent

Non-Executive

Directors  

Diversity Number %

Male  

Female  

Tenure Number %

0 to 3 years  

3 to 6 years  

6 to 9 years  

Age Number %

50 to 54 years  

55 to 59 years  

60 to 64 years  

65 to 69 years  

Governance and Advocacy

The Board has full responsibility

for the direction and control of the

business, and sets and implements

strategy within a framework of internal

controls and risk management.

The Board has established four

Committees, comprising entirely

Non-Executive Directors, to carry



behalf. In addition, there are three

Management Committees with

responsibility for certain operational

matters, chaired by one of the

Executive Directors and including

other members of the Picton

team. One of these Management

Committees is the Responsibility

Committee, which oversees all

sustainability-related matters.

As a company listed on the London

Stock Exchange, we apply the

principles of the UK Corporate

Governance Code and report

against the Code each year.

More detail on the role and





is set out in the Governance section.

Read more in the Governance

section on pages 78–125

Transparency and reporting

We recognise that it is important

to be transparent on sustainability

issues, so that our stakeholders can

make informed decisions. Also we

aim to ensure our data collection

and management is in line with best

practice to assist with our GRESB

and EPRA reporting requirements.

We have been reporting to GRESB

since 2017. Our score for 2022 increased



to three. We improved our score in

many areas, including improved data

coverage and assurance, and were

ranked second in our peer group.





We have maintained our GRESB

Public Disclosure score at 91, which

is at the highest possible A grade

rating. We were ranked second

in our peer group for disclosure

methods, disclosure of sustainability

implementation and disclosure of

stakeholder engagement practices.

We have continued to report in line

with the EPRA Sustainability Best

Practices Recommendations and

received a Gold award for our 2022

Sustainability Report.

Our Sustainability Data

Performance Report is

available on our website

Governance

Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance Financial Statements Additional Information

Better Buildings Partnership

The Better Buildings Partnership (BBP)

is a collaboration of the UK’s leading

commercial property owners. We



signatory to the BBP Climate

Commitment.

This year we have continued to

participate in the working group for

the ESG Training Course for Real

Estate Professionals, developing



This year we have also reported our

portfolio’s energy data in the BBP Real

Estate Environmental Benchmark for



Policies

We have in place an overriding

sustainability policy. This sets out



and how they are embedded into



responsible and ethical approach to







 Meet the highest standards of

corporate governance

 Tackle environmental challenges

 Provide safe and sustainable

buildings for our occupiers

 Focus on our employees

 Engage with all our stakeholders

Our Responsibility Committee guides,



priorities. Our sustainability policy is



strategies and initiatives including:

 Net zero carbon pathway

 Community and Social Value Policy

 Charitable Giving Policy

 Modern Slavery Statement

 Supplier Code of Conduct

 Sustainable Refurbishment

Guidelines

All our ESG Policies are set out

on our website

Data management

We are committed to the responsible

and secure handling of data and our

data management practices adhere



We strive to provide timely and

accurate data to our stakeholders, in



We continuously evaluate and enhance

our data reporting processes to meet

the evolving needs of our stakeholders.

Recognising how important being

able to use accurate energy data is to



we have taken steps during the year to

broaden our understanding of energy

use at our buildings.



management and monitoring





understanding of their sustainability

performance and achieve their



For Scope 3 data, we have increased

our dialogue with our occupiers



management and have improved the

level of energy data sharing as part of

this, either through obtaining data

directly from occupiers or by installing

a link to their meters to receive energy

data automatically.

Picton Property Income Limited

Annual Report 2023

Governance

The UK Corporate

Governance Code 2018

(the Code) has been applied

for the ﬁnancial year ended

31 March 2023. Our

Statement of Compliance

isset out in the Directors’

Report on page 123.

Asummary of the system of

governance adopted by the

Company and how we have

applied the principles of the

Code are set out in this

section of the Annual Report.

Welcome

to Governance

Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance

Financial Statements Additional Information

Chair’s Introduction

80 An overview of our governance

activities over the year

Board and Team

82 Board of Directors

84 Our Team

Leadership and Purpose

86 The Company’s purpose and

values

87 Board and Committee attendance

 

88 The Board’s activities during the

year

90 Section 172 Statement

92 How the Board has engaged with

its stakeholders this year

Division of Responsibilities

94 The role of the Board and its

Committees

95 The roles of each Director

Composition, Succession and Evaluation

96 Board composition and diversity

97 Nomination Committee Report

98 Board evaluation

Audit, Risk and Internal Control

100 Overview of controls and risk

management

101 Audit and Risk Committee Report

104 Property Valuation Committee

Report

Remuneration Report

106 Introduction from the Chair of the

Remuneration Committee

110 Remuneration at a glance

112 Directors’ Remuneration Policy

115 Annual Report on Remuneration

Directors’ Report

123 Directors’ Report

Picton Property Income Limited

Annual Report 2023

Chair’s Introduction

Introduction to the Corporate

Governance Report

On behalf of the Board, I am pleased

to introduce our 2023 Corporate

Governance Report.

Dear Shareholder

This year we have returned to more



maintained our schedule of Board and

Committee meetings throughout the year





interact more regularly with the whole



The external Board evaluation was



interesting perspectives to how we





Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance

Financial Statements Additional Information

The return to in-person

meetings has helped to

build a stronger working

relationship across the

whole Picton team.

Lena Wilson CBE

Chair

working relationship across the whole







three days each week, and at home









Building Surveying, Andy Lynch,



overseeing capital projects across







Board, I would like to welcome



The results of this year’s employee

engagement survey were discussed













Our stakeholders

Our occupier focused approach is



carried out two occupier surveys this





the results showed that there was

a high level of satisfaction among





good interest from occupiers in making

environmental improvements at their





Reporting

I am pleased to report that last year’s







our activities and results clearly





activities within this report, which is

more consistent with our integrated



progress that we have made against









data in a separate report online,



Lena Wilson CBE

Chair



pleased to report that we have fully







Committees and how these interact

with the provisions of the Corporate



Board evaluation

Last year we carried out a Board

evaluation internally, which gave







and this is set out in more detail in



This year an external review has











provided helpful improvements to

operating practices and we will

address these over the course



One key action was to review our

company secretarial and governance



this and decided that the company







Thompson has recently joined the

Picton team and she will shortly



following an orderly transition from



very much like to express my thanks







Annual General Meeting















like to thank shareholders for their







Our people and culture







opportunity to meet with the whole





Board activities

Under the Leadership and Purpose

section of this report we have set









looked at opportunities to increase the













Board composition and diversity





The Board is aware of the recent

changes to the Listing Rules around



page 96 we currently meet one of







and support the move for greater

gender and ethnicity representation



2018 we have moved to 33% female

representation, in line with the









opportunities to increase diversity are

limited; however, we fully intend to

comply with the new Listing Rules



UK Corporate Governance Code

Our Statement of Compliance with





Picton Property Income Limited

Annual Report 2023

Board of Directors

We have the relevant

skills and experience

for future growth.

Lena Wilson CBE

Chair

Chair of the Nomination Committee

Appointed to the Board

January 2021





direction and strategy, including reviewing



Key strengths and skills

– 

Independent Director and Chair experience





– 



– 



Principal external commitments

– Chair, Chiene + Tait LLP

– 

Performance and Remuneration Committee



– 

Previous experience and appointments

– 

– 

– 

– 



– 



Mark Batten

Chair of the Audit and

RiskCommittee

Senior Independent Director

Appointed to the Board





accounting policies, audit strategy and the

evaluation of internal controls and risk



Key strengths and skills

– Chartered Accountant and

restructuring specialist

– 



– Broad real estate knowledge, covering



Principal external commitments

– 

– 

and Risk Committee, Reliance National



– 

Previous experience and appointments

– Partner, PricewaterhouseCoopers LLP





– 

– 

– 





Maria Bentley

Chair of the Remuneration

Committee

Appointed to the Board





recommendation of remuneration policies

and levels, for effective succession planning



Key strengths and skills

– Business head leading change across



– 

– 

Principal external commitments

– 

Remuneration Committee, BlueBay Asset



– 

Remuneration Committee, Daiwa Capital



– 

Remuneration Committee, Peel Hunt Limited

Previous experience and appointments

– 





– 

of HR, UBS Investment Bank

– 



Sachs International

Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance

Financial Statements Additional Information

The Board is responsible for the long-term success of the

business, providing leadership and direction with due regard

andconsideration toall stakeholders in the business.

Richard Jones

Chair of the Property Valuation

Committee

Appointed to the Board









Key strengths and skills

– 

– Broad experience of property asset

management

– 

Principal external commitments

– Investment Committee, Henley Secure Income

Property Unit Trust

– Investment Committee, Henley Secure Income

Property Unit Trust II

– 

Previous experience and appointments

– 



– 

Unit Trust

– 



– Transport for London’s Commercial Property



Michael Morris

Chief Executive

Appointed to the Board







Key strengths and skills

– Successful track record of driving

investment strategy and delivering results

for shareholders

– Proven leadership skills

– 



Principal external commitments

None

Previous experience and appointments

– 

estate market experience

– 



Andrew Dewhirst

Finance Director

Appointed to the Board







Key strengths and skills

– Chartered accountant with extensive



– 

capital markets and real estate funds

– 

Principal external commitments

None

Previous experience and appointments

– 



– Director, Hermes Administration Services

Picton Property Income Limited

Annual Report 2023

Our Team

With extensive experience across

realestate management and ﬁnancial

services, our team have an in-depth

knowledge and understanding of the

UKcommercial property market.

James Forman

Director of Accounting





launch in 2005 and has over 20 years











Louisa McAleenan

Research Analyst

Louisa has over 15 years of experience



for all aspects of research and analysis,







Mark Alder

Head of Occupier Services



Surveyor with over 30 years of property





property management and

strengthening our relationship with







Michael Morris

Chief Executive







direction and effective execution of the







Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance

Financial Statements Additional Information

Tim Hamlin

Director of Asset Management

Tim is a Chartered Surveyor with







plans in line with the portfolio’s





Lucy Stearman

Assistant Accountant

Lucy has over ten years of experience







Andy Lynch

Head of Building Surveying

Andy is a Chartered Surveyor with











across the portfolio, with a particular



Jay Cable

Senior Director and Head

of Asset Management

A Chartered Surveyor with over 20 years

of real estate experience, Jay has





proactive asset management of the

portfolio and overseeing its strategic









Andrew Dewhirst

Finance Director





has over 30 years of experience within







Melissa Ricardo

Oce Manager













Kathy Thompson

Company Secretary







is a Chartered Secretary with over ten





Picton Property Income Limited

Annual Report 2023

Leadership and Purpose

Purpose

Our purpose is to be a

responsible owner of

commercial real estate,

helping our occupiers

succeed and being

valued by all our

stakeholders.

The role of the Board

The Board is responsible for the

long-term success of the business.







The Board operates in an open and





occupiers and local communities.

The Board has full responsibility for the











the Group.

The Board has a schedule of



This includes all acquisitions and





gearing and major expenditure.









These are set out in the



Directors on pages 82 and 83.

Our culture and values

Principled



strategic.

Demonstrated through our













Perceptive





Demonstrated through our long-term





engagement with our occupiers.

Progressive









management.

Board meetings

The Board has a regular schedule of

meetings throughout the year. There

are normally two scheduled Board



with regular operational matters such





second to consider more strategic

matters and thematic discussions.

Meetings are also scheduled for the



results. Board education sessions are







meetings on a regular basis. Meetings





Leadership and purpose

Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance

Financial Statements Additional Information

Attendance at Board and Committee meetings

Board members Date appointed Board Audit and Risk Remuneration

Property

Valuation Nomination

Lena Wilson 01.01.2021 10/10 – 5/5 4/4 2/2

Michael Morris 01.10.2015 10/10 – – – –

Andrew Dewhirst 01.10.2018 10/10 – – – –

 01.10.2017 10/10 5/5 5/5 4/4 2/2

Maria Bentley 01.10.2018 10/10 5/5 5/5 4/4 2/2

Richard Jones 01.09.2020 10/10 5/5 5/5 4/4 2/2

Total number of meetings 10 5 5 4 2





Board Committees

The Board has established four





Property Valuation and Nomination.

These are comprised entirely of







Directors are required to notify the











recorded during the year.

The terms of reference





Picton Property Income Limited

Annual Report 2023

Leadership and Purpose/Continued











The following

recurring matters

were considered

and discussed at

these meetings

– 

accounts

– 

– 



– 



– Report from the



– 

management accounts

– 

– 

across the portfolio

– 



– 



– Report from the



– 

management accounts

– 

– 

across the portfolio

– 

– 

sustainability priorities

– 



– 



– 



– 

management accounts

– 

– 



– 



– Report from the



The Board

considered and

approved the

following matters

– 

January to March 2022 period





– Acceptance of the

recommendation from the







– The Annual Report for the year

ended 31 March 2022 and the



of the results

– The net zero carbon pathway

– The salary and bonus awards for

the year ended 31 March 2022

– Deferred Bonus and LTIP



– The acquisition of 109–117



– 



at the rate of 0.875 pence



– Acceptance of the

recommendation from the



in respect of the 30 June 2022



– 



2022/23

– 





– 



– 

– 



– 



period at the rate of 0.875 pence

per share

– Acceptance of the

recommendation from the







– 





of the results

– 

October to December 2022

period at the rate of 0.875 pence

per share

– Acceptance of the

recommendation from the



respect of the 31 December 2022



– 



The Board discussed

the following one-o

items of business

– 

proposals for the team

– 





employees and Directors

– 

on corporate opportunity

– Options for renewable energy

within the Picton portfolio

– Planning of the forthcoming

Annual General Meeting

– 



– Actions arising from the



– Debrief from the recent Annual

General Meeting

– 



results

– 



– 

corporate opportunities

– 

corporate opportunities

– 

corporate opportunities

– 

the latest employee



considered actions arising

– 

from the external Board



– 

– 

and inclusion measures

2022

SeptemberApril/May June/July

Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance

Financial Statements Additional Information

The following

recurring matters

were considered

and discussed at

these meetings

– 

accounts

– 

– 



– 



– Report from the



– 

management accounts

– 

– 

across the portfolio

– 



– 



– Report from the



– 

management accounts

– 

– 

across the portfolio

– 

– 

sustainability priorities

– 



– 



– 



– 

management accounts

– 

– 



– 



– Report from the



The Board

considered and

approved the

following matters

– 

January to March 2022 period





– Acceptance of the

recommendation from the







– The Annual Report for the year

ended 31 March 2022 and the



of the results

– The net zero carbon pathway

– The salary and bonus awards for

the year ended 31 March 2022

– Deferred Bonus and LTIP



– The acquisition of 109–117



– 



at the rate of 0.875 pence



– Acceptance of the

recommendation from the



in respect of the 30 June 2022



– 



2022/23

– 





– 



– 

– 



– 



period at the rate of 0.875 pence

per share

– Acceptance of the

recommendation from the







– 





of the results

– 

October to December 2022

period at the rate of 0.875 pence

per share

– Acceptance of the

recommendation from the



respect of the 31 December 2022



– 



The Board discussed

the following one-o

items of business

– 

proposals for the team

– 





employees and Directors

– 

on corporate opportunity

– Options for renewable energy

within the Picton portfolio

– Planning of the forthcoming

Annual General Meeting

– 



– Actions arising from the



– Debrief from the recent Annual

General Meeting

– 



results

– 



– 

corporate opportunities

– 

corporate opportunities

– 

corporate opportunities

– 

the latest employee



considered actions arising

– 

from the external Board



– 

– 

and inclusion measures

2023

JanuaryOctober MarchNovember/December

Picton Property Income Limited

Annual Report 2023

Section 172

Statement

As the Company is registered in Guernsey, the

UKCompanies Act 2006 has no legal eect.

However, in accordance with the UK Corporate

Governance Code 2018 and as a matter of good

governance, theDirectors, individually and

collectively as the Board, act as they consider most

likely to promote the success of the Company for

thebeneﬁt of shareholders as awhole.













within one of our three strategic pillars set out within our

business model and strategy. The primary ways in which

the Board engages directly or delegates responsibility for

engagement to management are set out below.

Board engagement with stakeholders

Our shareholders

As the owners of the business we rely on the support



















attend the Annual General Meeting to meet with



Our occupiers



that we can understand their needs and aim to meet their

current and future requirements. The Board has delegated

responsibility for engaging with occupiers to the asset









The Directors have regard to:



Read more on pages 

Leadership and Purpose/Continued

Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance

Financial Statements Additional Information

Actions

Evaluation of growth

opportunities







form of career progression.

Review of dividend







conditions.

Occupier engagement







Company Secretary







Our people













actions arising. The Board has also been able to meet with

the whole team informally when in-person Board meetings



Local communities and environment



















Suppliers











implementation to the management team.

Considering stakeholders in key Board decision-making



during the year. These are decisions that are material to the







fairly between shareholders and to maintain high

standards of business conduct.

Picton Property Income Limited

Annual Report 2023

Leadership and Purpose/Continued

Engagement with stakeholders







understand what is important to them. The following table



with them.









Stakeholders and what is important to them How we engage What we have done this year

Our people

 Fair and equal treatment

 

 Fair pay and conditions

 

 







their line manager twice a year. The Board discusses





of this are discussed by the Board. The Board also meets

with the whole team informally when in-person Board















 Local employment opportunities

 

 













engagement programme.















 

 Fair lease terms

 

sustainable buildings

 Good relationships









regular contact with occupiers and discuss with them any

issues regarding the buildings and any future plans we



occupier engagement programme and attends occupier





















 

 

 Financial performance

 



management hold regular meetings to update







with up-to-date information about the Group. This year



and we also held a webinar for shareholders at the

same time for those unable to attend in person.





important to the strategic direction and growth of the



sought consultation from our shareholders regarding



Annual General Meeting and will consult further ahead



Suppliers

 Prompt payment

 Fair terms of business

 Long-term relationships





















Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance

Financial Statements Additional Information

Stakeholders and what is important to them How we engage What we have done this year

Our people

 Fair and equal treatment

 

 Fair pay and conditions

 

 







their line manager twice a year. The Board discusses





of this are discussed by the Board. The Board also meets

with the whole team informally when in-person Board















 Local employment opportunities

 

 













engagement programme.















 

 Fair lease terms

 

sustainable buildings

 Good relationships









regular contact with occupiers and discuss with them any

issues regarding the buildings and any future plans we



occupier engagement programme and attends occupier





















 

 

 Financial performance

 



management hold regular meetings to update







with up-to-date information about the Group. This year



and we also held a webinar for shareholders at the

same time for those unable to attend in person.





important to the strategic direction and growth of the



sought consultation from our shareholders regarding



Annual General Meeting and will consult further ahead



Suppliers

 Prompt payment

 Fair terms of business

 Long-term relationships





















Picton Property Income Limited

Annual Report 2023

Division of Responsibilities

Board Committees

Management Committees

The role of the Board and its Committees

Transaction and Finance

Chair: Michael Morris

Comprises: 

Responsibilities:

– 

– Monitors portfolio costs

– 

Responsibility

Chair: Andrew Dewhirst

Comprises: 

Responsibilities:

– Determines sustainability policy and strategy

– 

– 



– 

– 

The Board

Chair: 

Comprises: 

Responsibilities:

– Direction and control of the business

– 

– 

– 

– 

Audit and Risk

Chair:



Comprises:



Responsibilities:

– 

reporting

– 

management

– 

internal controls

– Agrees internal audit plan



– 

Remuneration

Chair:

Maria Bentley

Comprises:



Responsibilities:

– Determines

remuneration policy

– 



– 



– 

awards

Property Valuation

Chair:

Richard Jones

Comprises:



Responsibilities:

– 



process

– Recommends the

appointment and

remuneration of the



– 

applicable standards

Nomination

Chair:



Comprises:



Responsibilities:

– Recommends Board

appointments

– 

planning

– 

– Board composition and



Executive Committee

Chair: Michael Morris

Comprises: 

Responsibilities:

– Implementation of strategy

– Manages operations

– Day-to-day management of the business

– 

Picton Property Income Limited

Annual Report 2023

Strategic Report

Governance

Financial Statements Additional Information





Role Responsibilities

Chair



 Leads the Board

 

 

 

 



 Promotes open debate at meetings

 

 

Chief Executive

Michael Morris

 

 Responsible for the implementation of strategy set by the Board

 Manages the business on a day-to-day basis

 

represented to the Board

Senior Independent Director



 

 

appropriate

Non-Executive Directors



Maria Bentley

Richard Jones

 Bring independent judgement and scrutiny to the decisions of the Board

 

 Monitor business progress against agreed strategy

 

 

targets in line with strategy

Executive Director

Andrew Dewhirst

 

 

 

 

and the Board

Picton Property Income Limited

Annual Report 2023

Composition, Succession and Evaluation

Board composition

and diversity

These charts set out the Board’s

composition, tenure and diversity

characteristics.

The Board currently comprises the Chair, two Executive

Directors and three independent Non-Executive

Directors. The Non-Executive Directors bring a variety

of skills and business experience to the Board. Their

role is to bring independent judgement and scrutiny

to the recommendations of the Executive Directors.

Each of the Non-Executive Directors is considered

to be independent in character and judgement.

As at 31 March 2023 the Board comprised 50%

independent Non-Executive Directors.

The biographies of the Directors can be found on pages

82 and 83, which set out their skills and experience, and

their membership of each of the Committees.

Non-Executive Chair – 1 (17%)

Executive Directors – 2 (33%)

Independent Non-Executive

Directors – 3 (50%)

Male – 4 (67%)

Female – 2 (33%)

0 to 3 years – 2 (33%)

3 to 6 years – 3 (50%)

6 to 9 years – 1 (17%)

50 to 54 years – 1 (17%)

55 to 59 years – 1 (17%)

60 to 64 years – 3 (50%)

65 to 69 years – 1 (16%)

Diversity

Tenure

Age

Function

Sex/gender representation

Number

of Board

members

Percentage

of the

Board

Number

of senior

Board

positions

Number in

executive

management

Percentage of

executive

management

Men 4 67% 3 3 100%

Women 2 33% 1 0 0%

Ethnic representation

Number

of Board

members

Percentage

of the

Board

Number

of senior

Board

positions

Number in

executive

management

Percentage of

executive

management

White

British

6 100% 4 3 100%

Strategic Report

Governance

Financial Statements Additional Information

Picton Property Income Limited

Annual Report 2023

Nomination

Committee

The Nomination Committee is chaired

by Lena Wilson. The other members

ofthe Committee are Mark Batten,

Maria Bentley and Richard Jones.

The role of the Committee is to consider the

size, structure and composition of the Board

to ensure that it has the right balance of

skills, knowledge, experience and diversity

to carry out its duties and provide effective

leadership. In making any new appointment

the Committee will consider many factors,

including the skills and experience that





members. The Committee will also seek







It is also the Committee’s role to consider

succession planning for the Board and for

the Executive team, and to lead on the

appointment process, ensuring that this



The Committee makes recommendations

to the Board regarding the composition



Nomination and Property Valuation

Committees, taking into account

individuals’ time commitments



Picton Property Income Limited

Annual Report 2023

Composition, Succession and Evaluation/Continued

Terms of reference

The Committee’s terms of reference

include consideration of the following

issues:

 Review and make

recommendations regarding the

size and composition of the Board;

 Consider and make

recommendations regarding

succession planning for the Board

and senior management;

 Identify and nominate candidates



 Review the results of the Board

evaluation relating to composition;

 Review the time requirements for

Directors; and

 Recommend the membership of

Board Committees.

Visit our website picton.co.uk

Activity

The Committee met twice during

the year ended 31 March 2023 and

considered the following matters:

 The performance and constitution

of the Committee;

 The time commitment required

from Non-Executive Directors;

 The changes to the Listing Rules



 The external Board evaluation



recommendations arising



 Succession planning for the

Executive Directors.

Board evaluation

In accordance with the requirements

of the Code, the Board undertakes





Committees every year. An external

review is normally carried out every

three years, with internal reviews in



In 2022 the Board carried out an

internal review of its effectiveness.





review together with the progress

made since the review.

Action Progress

Establish an ongoing

programme of shareholder

engagement with clarity on roles

Discussions on shareholder engagement have taken place

at all Board meetings during the year and a programme

of engagement has been put in place principally for the

Chair, the Chief Executive and the Chair of the

Remuneration Committee.

Incorporate relevant external

perspectives to Board meetings

and strategy sessions

A series of external advisers and other third parties have

provided input to both Board and strategy days on key



Review strategy statements to



Relevant external communications have been reviewed

and updated to include appropriate wording.

Highlight relevant governance

updates in Board packs

Governance and company secretarial updates are

included in Board packs.

Establish external annual review

of governance and director

training

Governance was further considered in this year’s external

Board evaluation and the resulting recommendations are

being actioned. Director training has taken place through

external speakers at Board meetings and attendance at

relevant seminars and/or webinars.

Prepare annual governance

calendar

A corporate calendar covering the Board and its

Committees has been implemented.

Ensure proactive approach to

governance topics

The Chair regularly discusses governance topics, changes

and updates with the Company Secretary and the Board

is advised accordingly.

Focus on key items in Board

materials and discussions

Board agendas clearly state key decision items allowing

these to be prioritised for discussion.

Reduce business as usual topics Items for the Board to note are highlighted as such and

dealt with after key decision items.

Implement thematic calendar

for meetings

This has been implemented as part of the corporate

calendar.

Develop focused risk reporting

for Board

A new risk radar document has been implemented which

summarises principal and emerging risks together with

an assessment of impact and likelihood. This is reviewed

by the Audit and Risk Committee on a regular basis.

Undertake in-depth reviews of



This year we have appointed BDO as internal auditor to

the Group. They have carried out three in-depth reviews



and debt covenants. The results of these reviews are

discussed in the Audit and Risk Committee report. The

internal audit plan for 2023/24 has been agreed with the

Audit and Risk Committee, and will cover property and

lease management, and valuations.

Ensure annual review of Board

composition

The composition of the Board and succession planning

are discussed at the Nomination Committee meetings.

Establish programme of

engagement with team

In addition to the annual employee engagement survey,

we have established regular informal meetings between

the Board and the rest of the team following each

in-person Board meeting.

Strategic Report

Governance

Financial Statements Additional Information

Picton Property Income Limited

Annual Report 2023

This year the Board conducted



Boardroom Review Limited. This

comprised a series of interviews with

each of the Directors individually,



by a workshop where the interview

feedback was discussed and

summarised, and subsequent



The review concluded that the Board,

its Committees and the individual

Directors continue to operate very

effectively.

The key themes and actions arising

from the review were:

 Ensure opportunities for growth

and increasing scale are fully

considered

 Establish clear parameters on risk

appetite

 Maintain occupier focus, especially



technology

 Encourage more external

perspectives, particularly ESG and

technology

 Consider expertise and resource

within the team

 Improve diversity at Board level

and within the team

 Review existing company

secretarial arrangements

 Consider future Board composition

 Review cyber security and data

As noted in the Introduction to

Governance, we have reviewed our

company secretarial arrangements

and decided the function should be

brought in-house. The Committee



actions arising from the evaluation



The external review

concluded that the Board,

its Committees and the

individual Directors

continue to operate very

eectively.

Lena Wilson CBE

Chair of the Nomination Committee

Boardroom Review Limited has no

connection to Picton or with any of



Diversity and inclusion

The Company values the



team and is committed to treating all

employees equally and considers all

aspects of diversity, including gender,

when considering recruitment at any

level of the business. We recognise

the need for diversity and support

the move for greater gender and

ethnicity representation on Boards. As

a small team we do not have regular

appointments and opportunities

to increase diversity are limited,

however it is our strong intention

to do so whenever possible. All

candidates are considered on merit

but having regard to the right blend

of skills, experience and knowledge

at Board and Executive level, and

amongst our employees generally.

Tenure and re-election

The tenure of Non-Executive



limited to nine years in accordance

with the Corporate Governance Code.

The provisions of the Corporate

Governance Code recommend

that all Directors be subject to

annual re-election at the Annual

General Meeting. The Board will

follow this recommendation at this

year’s Annual General Meeting.

Lena Wilson CBE

Chair of the Nomination Committee

24 May 2023

Picton Property Income Limited

Annual Report 2023

100

Audit, Risk and Internal Control

Such review procedures have

been in place throughout the full





statements, and the Board is



This process involves a review by the

Board of the control environment

within the Group’s service providers to

ensure that the Group’s requirements

are met.

The Board has appointed BDO LLP

(‘BDO’) to provide internal audit and

assurance services to the Group, in

place of additional control testing

procedures carried out by the external

auditor. The Board considers that this

will provide it with a greater level of

assurance that the Group’s internal

controls are robust and are operating

effectively. The annual programme of

testing carried out by BDO is agreed

in advance by the Audit and Risk

Committee. Details of the reviews

carried out by BDO are set out in the

Audit and Risk Committee report.

These systems are designed to ensure



internal control and compliance with

laws and regulations. In establishing

the systems of internal control,

regard is paid to the materiality

of relevant risks, the likelihood of

costs being incurred and costs of

control. It follows, therefore, that

the systems of internal control can

only provide reasonable, but not

absolute, assurance against the risk

of material misstatement or loss.

The Board and the Audit and

Risk Committee are responsible

for ensuring that the Group has

an effective internal control and

risk management system and

that the Annual Report provides



activities during the year following

its review of the methodology.

The Property Valuation Committee

has oversight of the independent

valuers and the valuation process.

It recommends the adoption of

the quarterly valuations by the

Board, following its review of the

methodology and assumptions

used by CBRE Limited, the

Group’s external valuers.

Internal control and risk

management

The Board is responsible for

establishing and maintaining

the Group’s system of internal

controls and reviewing its

effectiveness. Internal control

systems are designed to manage

the achievement of business

objectives, rather than eliminate

the failure to achieve them and

can only provide reasonable, and

not absolute, assurance against

material misstatement or loss.

They have therefore established an

ongoing process designed to meet

the particular needs of the Group

in managing the risks to which it is

exposed, consistent with the FRC’s

Guidance on Risk Management,

Internal Control and Related

Financial and Business Reporting.

Audit, risk and

internal control

The Board has established procedures to

manage risk, oversee the framework of internal

controls and determine its risk appetite to

achieve its long-term strategic objectives.

The effectiveness of the internal

control systems is reviewed

annually by the Audit and Risk

Committee and the Board. The

Audit and Risk Committee has a

discussion annually with the external

auditor to ensure that there are

no issues of concern in relation to



statements and representatives

of senior management are

excluded from that discussion.

Strategic Report

Governance

Financial Statements Additional Information

Picton Property Income Limited

Annual Report 2023

101

Audit and Risk

Committee

The Committee was satisﬁed that

the 2023 Annual Report isfair,

balanced and understandable.

Mark Batten

Chair of the Audit and Risk Committee

The Audit and Risk Committee is chaired

by Mark Batten. The other members of

the Committee are Maria Bentley and

Richard Jones.

Meetings of the Audit and Risk Committee

are attended by the Group’s Finance



team, the internal auditor and the external

auditor. The external auditor is given the

opportunity to discuss matters without

management presence.

Picton Property Income Limited

Annual Report 2023

102

Audit, Risk and Internal Control/Continued

The Audit and Risk Committee

reviewed the report from the Chair



including the assumptions applied



appropriateness, as well as considering

current market trends and conditions,

and valuation movements compared

to previous quarters. The Committee

considered the valuation and agreed

that this was appropriate for the





2023 Annual Report is fair, balanced

and understandable and included







Risk Management Policy

The Committee has considered and

developed a comprehensive Risk

Management Policy which has been

adopted by the Group.

The purpose of the Risk Management

Policy is to strengthen the proper

management of risks through



measurement, management,

mitigation and reporting in respect

of all activities undertaken by the

Group. The Risk Management

Policy is intended to:

 Ensure that major risks are

reported to the Board for review;

 Result in the management of



affect the pursuit of the stated

strategic goals and objectives;

 Embed a culture of risk awareness

and evaluation and identify risks at

multiple levels within the Group;

and

 Meet legal and regulatory

requirements.

Internal control and internal audit

The Board is responsible for the

Company’s internal control system

and for reviewing its effectiveness. It

has therefore established a process

designed to meet the particular needs

of the Company in managing the risks

to which it is exposed.

Financial reporting and

signiﬁcant reporting matters

The Committee considers all





statements and considers accounting

policies adopted by the Group,

presentation and disclosure of the



judgements made by management



The Directors are responsible for

preparing the Annual Report.

At the request of the Board, the

Committee considered whether

the 2023 Annual Report was fair,

balanced and understandable and

whether it provided the necessary

information for shareholders to

assess the Group’s strategy, business

model and performance.

The key area of judgement that

the Committee considered in



was the valuation of the Group’s

investment properties.

The valuation is conducted on a

quarterly basis by external valuers

and is subject to oversight by the

Property Valuation Committee. It is

a key component of the annual and



is inherently subjective, requiring



the Property Valuation Committee,

together with members of the

Picton team, meet with the external

valuer on a quarterly basis to review

the valuations and underlying

assumptions, including the year-

end valuation process. The Chair of

the Property Valuation Committee

reported to the Audit and Risk

Committee at its meeting on 2 May



matters had been considered in

discussions with the external valuers:

 Property market conditions;

 Yields on properties within the

portfolio;

 Letting activity and vacant

properties;

 Covenant strength and lease

lengths;

 Estimated rental values; and

 Comparable market evidence.

Terms of reference

The Committee’s terms of reference

include consideration of the

following issues:

 Financial reporting, including



and accounting policies;

 Development of a comprehensive

Risk Management Policy for the

adoption by the Group;

 Evaluation of the Group’s risk



whether these are aligned with its

investment objectives;

 Ensuring that key risks, including

climate-related risks, are being



managed, mitigated and reported;

 Internal controls, controls testing

and risk management systems;

 The Group’s relationship with the

external auditor, including

effectiveness and independence;

 Internal audit and assurance

services, including review of any

report and assessment of control

weaknesses; and

 Reporting responsibilities.

Visit our website picton.co.uk

Activity

The Audit and Risk Committee met



31 March 2023 and considered the

following matters:

 External audit strategy and plan;

 Audit and accounting issues of



 The Annual and Interim Reports



 Reports from the external auditor;

 The effectiveness of the audit

process and the independence of

KPMG Channel Islands Limited;

 Review of the Group’s Risk

Management Policy and appetite;

 Review of the risk matrix and

mitigating controls;

 Internal audit reports and

programme; and

 Stock Exchange announcements.

Strategic Report

Governance

Financial Statements Additional Information

Picton Property Income Limited

Annual Report 2023

103

As part of the review of auditor

independence and effectiveness,

KPMG Channel Islands Limited have



 They have internal procedures in

place to identify any aspects of

non-audit work which could

compromise their role as auditor

and to ensure the objectivity of

their work and audit report;

 The total fees paid by the Group

during the year do not represent



income; and

 They consider that they have

maintained their independence

throughout the year.

In evaluating KPMG Channel Islands

Limited, the Committee completed











and independence are not in any



audit services which they provide to

the Group.

KPMG Channel Islands Limited have

been auditor to the Group since the

year ended 31 December 2009. They

were reappointed as the Group’s

auditor following a tender process





Stormonth, has now completed his



The Committee recommends that

KPMG Channel Islands Limited are

recommended for reappointment



Mark Batten

Chair of the Audit and Risk Committee

24 May 2023

Independence of auditor

It is the policy of the Group that non-

audit work will not be awarded to the

external auditor if there is a risk their

independence may be compromised.

The Committee monitors the level of

fees incurred for non-audit services

to ensure that this is not material,



appropriate, that separate personnel

are involved in any non-audit

services provided to the Group. The

Committee must approve in advance

all non-audit assignments to be

carried out by the external auditor.

The fees payable to the Group’s



follows:

2023

£000

2022

£000

Audit fees

 

Interim review fees

 

Non-audit fees – 

 

Annual auditor assessment

On an annual basis, the Committee



and independence of the Group’s

external auditor, as well as the

effectiveness of the audit process.

It does this through discussion and

enquiry with senior management,

review of a detailed assessment



the external auditor. The Committee

also considers the external audit plan,

setting out the auditor’s assessment of

the key audit risk areas and reporting

received from the external auditor

in respect of both the half-year and

year-end reports and accounts.

As part of this process, a risk matrix



the Company’s key functions and

the individual activities undertaken

within those functions. From



Company’s principal risks and the

controls employed to manage

those risks. These are reviewed at

each Audit and Risk Committee

meeting. The Board monitors the

performance of the Company

against its strategy and receives

regular reports from management

covering all business activities.

The Committee has received

and reviewed a copy of CBRE

Limited’s Real Estate Accounting

Services – Service Organisation

Control Report as at 31 December

2022, prepared in accordance

with International Standard on

Assurance Engagements 3402, in

respect of property management

accounting services provided to

Picton Property Income Limited.

During the year the Board appointed

BDO LLP to undertake internal audit

and assurance services, replacing the

previous arrangement of additional

controls testing by the external auditor.

The Committee agreed a programme

of reviews for 2022/23, which covered



and debt covenants. The Committee

has considered the review reports

and the recommendations arising,

which had been discussed with

management. The Committee

also considered and agreed the

review plan for 2023/24 which will

cover property management, lease

management and asset management.

Picton Property Income Limited

Annual Report 2023

104

The Property Valuation Committee is

chaired by Richard Jones. The other

members of the Committee are Mark

Batten, Maria Bentley and Lena Wilson.

Property Valuation

Committee

Audit, Risks and Internal Controls/Continued

Strategic Report

Governance

Financial Statements Additional Information

Picton Property Income Limited

Annual Report 2023

105

Terms of reference

The Committee shall review the

quarterly valuation reports produced

by the external valuers before their

submission to the Board, looking in

particular at:

 

previous quarters;

 Individual property valuations;

 Commentary from management;

 

raised with management;

 Material and unexplained

movements in the Company’s



 Compliance with applicable

standards and guidelines;

 

recommendations of the valuers;

and

 The appointment, remuneration

and removal of the Company’s

valuers, making such

recommendations to the Board



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Activity

The Committee met four times

during the year ended 31 March



Valuation Committee, together

with management, met with

the external valuer each quarter

to review the valuations and

considered the following matters:

 



 Movements compared to



 Yields on properties within



 Letting activity and vacant

properties;

 Covenant strength and lease

lengths;

 Estimated rental values; and

 

Over the course of the

year there have been

signiﬁcant market

movements in the

valuation.

Richard Jones



Committee

Over the course of the year there



movements in the valuation which

have been carefully considered











External valuer

CBRE Limited are appointed as the

external valuer of the Group and they

carry out a valuation of the Group’s

property assets each quarter, the

results of which are incorporated







are done in accordance with the Royal

Institution of Chartered Surveyors Red



The Committee reviewed the

performance of the valuer and

recommended that the appointment



The Committee awaits the outcome

of the consultation process following

the RICS Review of Real Estate

Investment Valuations and the



Richard Jones



Committee

24 May 2023

Picton Property Income Limited

Annual Report 2023

106

The Remuneration Committee is chaired

by Maria Bentley. The other members of

the Committee are Mark Batten, Richard

Jones and Lena Wilson.

Remuneration

Committee

Other attendees at Committee meetings

during the year were Michael Morris and





Our remuneration packages are

designed to attract and retain the

right talent and to fairly reward

delivery of strategic priorities and

enhanced shareholder value.

Maria Bentley

Chair of the

Remuneration Committee

Remuneration Report

Strategic Report

Governance

Financial Statements Additional Information

Picton Property Income Limited

Annual Report 2023

107

Terms of reference

The principal functions of the

Committee as set out in the terms



matters:

 Review the ongoing

appropriateness and relevance of



 Determine the remuneration of the

Chair, Executive Directors and such

members of the executive

management as it is designated



 Review the design of all share

incentive plans for approval by the

Board; and

 Appoint and set the terms of

reference for any remuneration



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Advisers



provided independent advice

in relation to market data, share

valuations, share plan administration

and content of the Remuneration



£18,780 (calculated on a time spent



member of the Remuneration

Consultants Group and, as such,

voluntarily operates under the code

of conduct in relation to executive



In addition, Deloitte also provided

taxation services and advice to



The Committee has reviewed the

nature of this additional advice



compromise the independence



The remuneration

arrangements provide

alignment with

shareholders through the

use of ﬁnancial metrics

and corporate objectives.

Maria Bentley

Chair of the

Remuneration Committee

Annual statement

Dear Shareholders

Introduction

On behalf of the Board, I am pleased

to introduce the Remuneration

Committee report for the year ended



This report comprises three sections:

 This annual statement;

 A Summary of the Directors’



 The Annual Report on

Remuneration for the year ended





the year and set out below is a



Implementation of the

Remuneration Policy in 2023/24



straightforward remuneration

packages for our Executive Directors,

fair and reasonable for all stakeholders,

which are designed so as to attract

and retain the right talent and to fairly

reward delivery of strategic priorities



In 2021 we set out our new





Executive Directors’ remuneration

packages to more fairly represent







shareholders that year (97% in favour)





of the 2022 Annual General Meeting,



about the second stage of the

transition plan and I am delighted

that shareholders approved the

resulting Remuneration Report for

the year ended 31 March 2022 by



The Committee has carefully



of the transition plan should be

implemented for 2023/24, taking

into account the performance of

the Company and of the Executive



Picton Property Income Limited

Annual Report 2023

108

Remuneration Report/Continued

The Committee considered the

formulaic bonus outcome in the

context of the Group’s overall



highlights of performance for the year



The Committee concluded that it









Long-term Incentive Plan awards

(performance period to 31 March

2023)





and the remuneration of the whole







performance conditions measured







three performance conditions have



The three equally weighted

performance conditions were total

shareholder return, total property





these conditions are set out in the

Annual Remuneration Report and give





above, the Committee concluded that





performance over the performance



reduced by 30% at grant to avoid the

potential for windfall gains on vesting,





Measure Comparator Annual bonus





Total return

Relative to comparator group

(30% weighting)

Total property

return

Relative to MSCI UK



(30% weighting) (33% weighting)

Total shareholder

return

Relative to comparator group

(33% weighting)

EPRA EPS

Absolute target range

(33% weighting)

Annual bonus awards for 2022/23

The Executive Directors were set a

number of challenging targets for











actual outcomes are set out in the

Annual Remuneration Report, but the

overall result was that the Directors

earned an estimated 49% of the

maximum award available under









targets relating to sustainability,

including progress against the net

zero carbon pathway, portfolio

environmental measures and the





considered the extent to which the

Executive Directors had met the



progress had been made against

many, but the fall in occupancy

and increased costs also had to be



considered that an outcome of 74% of

the maximum award for each of the

two Executive Directors were merited



In aggregate, annual bonus awards for

the two Executive Directors are 59% of

the maximum award (2021/22: 64%



The Committee considered the overall

bonus awards against the reported



the proportion of the bonus deferred

be increased to 60% from 50% for the

Executive Directors, and therefore the

cash element is reduced from 50%



The key performance highlights

noted by the Committee included:

 The total property return was ahead





term record of outperformance







 

compared to 2022/23, despite

lower occupancy and higher costs;

 The portfolio ERV increased by 9%

over the year;

 

compared to the previous year;

 Good progress has been made

against the net zero carbon



renewable energy installation;

 

management recommendations

have been implemented;

 The proportion of the portfolio’s



to 76% from 71% last year; and

 Scope 1 and 2 greenhouse gas

emissions are 24% below the



In light of this performance

assessment, the Committee is







salaries of the Chief Executive and

Finance Director will be increased

by 15% to £380,219 and £258,549

respectively from 1 April 2023 and

their annual bonus opportunity

for 2023/24 will be reduced to



Group performance and alignment

We have set out on pages 22 to 25,



that we currently use to monitor



to appropriately align executive

remuneration with business





For both 2022/23 and 2023/24,



determine variable remuneration



The remaining 40% of the annual

bonus is determined by corporate



Strategic Report

Governance

Financial Statements Additional Information

Picton Property Income Limited

Annual Report 2023

109

Employee remuneration and

engagement

As in prior years, the Committee

received an independent

benchmarking report covering each

of the roles, which detailed market





the team as a whole (excluding the

Executive Directors), there would



in base salaries with effect from



bonus (excluding the Executive



our continued outperformance but





I have met informally with the team

on a number of occasions this year,

and we have also carried out our

annual employee engagement



detail elsewhere, but the results





UK Corporate Governance Code

We have considered the provisions of

the Code in respect of remuneration

and believe that our approach remains



consistent level of pension provision



only released to Executive Directors



and clawback provisions apply to all



in the rules of our remuneration





accelerated vesting of awards







The remuneration arrangements

provide alignment with shareholders





of the team participate in the annual





and its components are clearly set out

in this report and the rules of the

variable remuneration schemes are



standard performance metrics, which

are also key performance indicators for



There are clear target and maximum



The Committee believes that the

variable remuneration schemes in

place are fair and proportionate

and align the remuneration of the





remuneration structure does not



The Committee does retain discretion

over formulaic outcomes if it considers





Implementation of Policy

Our remuneration structure will be in





The bonus deferral policy for Executive

Directors will continue, with a

minimum of 50% of any annual bonus



shares for a period of two years before



potential for 2023/24 will fall to 145%

from 155% of base salary for the



As in previous years the annual bonus









being total return, relative to a

comparator group, and total property











price and discount to net asset value,

and to avoid any windfall gains arising







three performance measures used

previously, being:

 Total shareholder return, compared



 Total property return, compared to



Index

 



share, we intend to use an absolute

range of targets based on forecasts







annual bonus combined with the



plus shareholding guidelines ensures

that Executive Directors are aligned

with and focused on delivering



Following a review of market



responsibilities, fee levels for the Chair







As a Committee, we are committed



shareholders and welcome any

feedback regarding our remuneration

practices either ahead of the Annual

General Meeting or in the year ahead,

as we undertake our regular triennial





support at the forthcoming Annual



Maria Bentley

Chair of the Remuneration Committee

24 May 2023

30%

33% 33%

33%

Picton Property Income Limited

Annual Report 2023

110

Remuneration Report/Continued

Remuneration at a glance

The components of remuneration for 2022/23 are:



Fixed pay

The LTIP is based on three ﬁnancial metrics, each

measured over three years:

Personal and



Improve income



Make progress against



Improve portfolio

environmental factors

Improve level of net

property income and

operational expenses

Implementation of TCFD

recommendations

 

engagement

Identify and evaluate

growth opportunities

Financial conditions

Total return

Total property return

 



Total shareholder return

Variable pay

The annual bonus for 2022/23 is determined by:



Base salary

on pages 115–121

Base salary

Annual

(and deferred)

bonus

Up to 60% of the

annual bonus is deferred

into shares which will vest

in two years’ time







301

137

384

438

331

822

205

225

262

287

549

276

281



Annual bonus

LTIP 

100%

55% 34% 11%

33% 41%

26%

29% 36% 23% 12%

£440K

£805K

£1,347K

£1,525K

100%

55% 35% 10%

34% 42%

24%

30% 38% 21% 11%

£300K

£540K

£888K

£995K

Strategic Report

Governance

Financial Statements Additional Information

Picton Property Income Limited

Annual Report 2023

111



Chief Executive Finance Director Non-Executive Directors



The following charts show the composition





 Fixed pay – base salary from 1 April 2023,





 On target 



opportunity for illustrative purposes) and threshold



 Maximum

both the annual bonus (145% of base salary) and



(Finance Director) of base salary)

 Maximum with share price growth – maximum

scenario incorporating assumption of 50% share



Other than where stated, the charts do not

incorporate share price growth or dividend



Salary   Annual bonus 



 Total variable

Chief Executive Finance Director

Picton Property Income Limited

Annual Report 2023

112

Remuneration Report/Continued

Summary of Directors’

Remuneration Policy

Principles





The Group aims to provide a remuneration package which will retain Directors who possess the skills and experience









Executive Directors’ Remuneration Policy Table

Base salary

Purpose



Operation



salaries the Committee will consider relevant market data, as well as the scope of the role and the







Any annual increase in salaries is set at the discretion of the Remuneration Committee taking into

account the factors stated in this table and the following principles:

– Salaries would typically be increased at a rate consistent with the average employee salary



– Larger increases may be considered appropriate in certain circumstances (including, but not

limited to, a change in an individual’s responsibilities or in the scale of their role or in the size and



– Larger increases may also be considered appropriate if a Director has been initially appointed to



Performance measures



Clawback



Pension

Purpose



Operation









A consistent rate of pension provision (15% of base salary) applies to all employees including



Performance measures



Clawback



Strategic Report

Governance

Financial Statements Additional Information

Picton Property Income Limited

Annual Report 2023

113



Purpose



Operation

This principally comprises:

– 

– Life assurance

– 







Performance measures



Clawback



Annual bonus

Purpose





Operation

The Committee may determine that up to 50% of the annual bonus will be paid in the Company’s













Performance measures





be determined annually to ensure alignment with the Company’s strategic priorities although at







Clawback

Malus and clawback provisions may be applied in the event (within two years of bonus

determination/grant of the deferred bonus shares) of a material misstatement of the audited



information or assumptions on which the award was granted or is released, a material failure of



Long-term Incentive Plan

Purpose





Operation







The Remuneration Committee may award dividend equivalents (in the form of shares or cash) on









Performance measures













Clawback





applicable to the award or in the information or assumptions on which the award was granted or

is released, a material failure of risk management, material misconduct on the part of the award



Picton Property Income Limited

Annual Report 2023

114

Remuneration Report/Continued

Shareholding guidelines

Purpose



Operation

Whilst in employment, Executive Directors are expected to build up and thereafter maintain



The Committee will review progress towards the guideline on an annual basis and has the



Executive Directors will also be expected to remain compliant with the above guideline for







Performance measures



Clawback



Non-Executive Directors’ Policy Table

Fees

Purpose



Operation



Additional fees for those Directors with additional responsibilities such as chairing a Board





















Performance measures



Clawback





 













 





 

 





 





when the relevant individual was not a Director of the Company and, in the opinion of the Committee, the payment was not in consideration for the individual becoming a





 



Policy for other employees









Committee is kept informed of general management decisions made in relation to employee pay and is conscious of the



Strategic Report

Governance

Financial Statements Additional Information

Picton Property Income Limited

Annual Report 2023

115

Annual Report

on Remuneration





Salary/

fees

£000



£000



supplement

£000

Total





Annual

bonus

£000

Deferred

bonus

£000



Incentive



£000

Total

variable



Total



Executive

Michael Morris 2023

  50      

2022   43      

Andrew Dewhirst 2023

  34      

2022   29      

Non-Executive

Lena Wilson 2023

  –  – – – – 

2022   –  – – – – 

Mark Batten 2023

 – –  – – – – 

2022  – –  – – – – 

Maria Bentley 2023

 – –  – – – – 

2022  – –  – – – – 

Richard Jones 2023

 – –  – – – – 

2022  – –  – – – – 



2023

  84      

2022   72      























Picton Property Income Limited

Annual Report 2023

116

Remuneration Report/Continued

Annual bonus for 2022/23





The targets set for the year ended 31 March 2023 and the assessment of actual performance achieved are set out in the







At the date of this report not all of the companies in the total return comparator group had announced their results









 Basis of calculation Range Actual

Awarded (% of

maximum)

Awarded (% of

salary)

Total return versus

comparator group

Bonus weighting: 30%

Less than median – 0%

Equal to median – 50%

Equal to upper quartile – 100%

  0%

(estimate)

Total property return

versus MSCI Index

Bonus weighting: 30%

Less than median – 0%

Equal to median – 50%

Equal to upper quartile – 100%





  







 Assessment

Awarded

(% of maximum)

Awarded

(% of salary)

Improve occupancy and



Bonus weighting: 8%

The Committee considered that income metrics, including passing rent,

estimated rental value and net property income under IFRS, had all improved





50% 

Make progress against net











90% 

Improve portfolio

environmental factors



The Committee assessed performance against a series of key environmental



as well as other environmental initiatives that had been implemented during





85% 

Improve level of net property

income and operational

expenses

Bonus weighting: 6%







40% 

Implementation of TCFD

recommendations



The progress made against TCFD recommendations is set out in detail in the



85% 



engagement

Bonus weighting: 6%

Occupier surveys were carried out in the year, with 80% of respondents







90% 

Identify and evaluate growth

opportunities

Bonus weighting: 8%







90% 

Strategic Report

Governance

Financial Statements Additional Information

Picton Property Income Limited

Annual Report 2023

117

As discussed in the Committee Chair’s statement on pages 106 to 109, the Committee considered the formulaic bonus









Directors is, therefore, as follows:

Financial metrics

(out of

maximum 60%)

Corporate



maximum 40%)

Overall

bonus % of

maximum

Bonus %

of salary

Total bonus

Michael Morris     

Andrew Dewhirst     

This year the Committee has determined that the proportion of the bonus deferred be increased to 60% of the annual





Long-term Incentive Plan





 Basis of calculation Range Actual

Weighting

(% of award)

Awarded

(% of

maximum)

Total shareholder return

versus comparator group

Less than median – 0%

Equal to median – 25%

Equal to upper quartile – 100%





  0%

Total property return versus

MSCI Index

Less than median – 0%

Equal to median – 25%

Equal to upper quartile – 100%







(above upper

quartile)

 100%

 

the year ended 31 March 2023 – 0%



year ended 31 March 2023 – 25%



share for the year ended 31 March

2023 – 100%

  











31 March 2023, are:

Director

Maximum number

of shares at grant



vesting



Estimated

value

1,2

Michael Morris    

Andrew Dewhirst     

 



 





Basis

(% of salary)

Face value

per share

(£)

Award

face value

(£) 

Threshold

vesting

Michael Morris 437,473 125%  413,281 1 April 2022 to 31 March 2025 25%

Andrew Dewhirst 261,784 110%  247,308 1 April 2022 to 31 March 2025 25%

Picton Property Income Limited

Annual Report 2023

118

Remuneration Report/Continued

The face value is based on a weighted average price per share, being the average of the closing share prices over the



and the achievement of three equally weighted performance conditions (relative total shareholder return, relative total















Date of grant 

Market value

on date of

grant

At 1 April

2022

Granted in

year

Exercised in

year Lapsed in year

As at





 19 June 2019 1 April 2019 to

31 March 2022

  –  

–

 29 June 2020 1 April 2020 to

31 March 2023

  – – –



 22 June 2021 1 April 2021 to

31 March 2024

  – – –



 17 June 2022 1 April 2022 to

31 March 2025

 –  – –



 29 June 2020 1 April 2019 to

31 March 2020

  –  –

–

 22 June 2021 1 April 2020 to

31 March 2021

  – –



 17 June 2022 1 April 2021 to

31 March 2022

 –  – –



    



 19 June 2019 1 April 2019 to

31 March 2022

  –  

–

 29 June 2020 1 April 2020 to

31 March 2023

  – – –



 22 June 2021 1 April 2021 to

31 March 2024

  – – –



 17 June 2022 1 April 2022 to

31 March 2025

 –  – –



 29 June 2020 1 April 2019 to

31 March 2020

  –  –

–

 22 June 2021 1 April 2020 to

31 March 2021

  – – –



 17 June 2022 1 April 2021 to

31 March 2022

 –  – –



    





Strategic Report

Governance

Financial Statements Additional Information

Picton Property Income Limited

Annual Report 2023

119

Comparator group

The Committee has agreed that the following companies will be used as a comparator group for the total shareholder





Company

Total shareholder

return Total return



AEW UK REIT plc





Custodian REIT plc





Regional REIT Limited

Schroder Real Estate Investment Trust Limited





Urban Logistics REIT plc

Warehouse REIT plc



The above group was also used for previous awards with the following amendments:

 Supermarket Income REIT and Warehouse REIT were added to the group for awards made from 2019 onwards;

 

 

including 2019; and

 



Statement of Directors’ shareholdings

Directors and employees are encouraged to maintain a shareholding in the Company’s shares to provide alignment









2023



2022



% of salary

Outstanding





awards

Michael Morris     

Andrew Dewhirst     

Lena Wilson  

Mark Batten – –

Maria Bentley  

Richard Jones  

The percentage holding for the Executive Directors is based on base salaries as at 31 March 2023 and a share price of



Executive Directors are required to maintain a shareholding of 200% of base salary and both Directors are currently in the







Payments to past Directors or payments for loss of oce



Picton Property Income Limited

Annual Report 2023

120

Remuneration Report/Continued

Historical total shareholder return performance

The graph below shows the Company’s total shareholder return (TSR) since 31 March 2013 as represented by share price





TSR chart

Picton FTSE EPRA NAREIT UK FTSE All-Share

100

150

200

250

300

350

400

Mar 2013

Sep 2013

Mar 2014

Sep 2014

Mar 2015

Sep 2015

Mar 2016

Sep 2016

Mar 2017

Sep 2017

Mar 2018

Sep 2018

Mar 2019

Sep 2019

Mar 2020

Sep 2020

Mar 2021

Sep 2021

Mar 2022

Sep 2022

Mar 2023

Key:







Total

remuneration

(£000)

Annual bonus

(% of maximum)



(% of maximum

award)

2023   

2022   

2021   

2020   

2019   

Relative importance of spend on pay







31 March 2022

£000

change

Employee costs

  

Dividends

  

   

Strategic Report

Governance

Financial Statements Additional Information

Picton Property Income Limited

Annual Report 2023

121

Implementation of Remuneration Policy in 2023/24

Change from prior year



Base salaries Michael Morris (Chief Executive) – £380,219

Andrew Dewhirst (Finance Director) – £258,549

As outlined in the 2021 Remuneration Report

base salaries for the Executive Directors are





The average increase for the rest of the







15% salary supplement in lieu of pension plus standard other





pension contributions at the rate of 15% of base

salary or 15% salary supplement in lieu of



Annual bonus* Maximum bonus of 145% of salary with 50% of any bonus deferred

in shares for two years



relative total return and relative total property return (using the

same performance target ranges as in 2022/23) with the remaining

40% determined by corporate and personal measures

As outlined in the 2021 Remuneration Report

the maximum bonus potential for Executive

Directors will decrease from 155% of salary to



  Award of shares worth:

 

 























Awards to the Executive Directors have been

reduced by 25% this year to avoid the potential





Fees Chair – £122,000

Director – £47,000

Supplementary fee for Committee Chairs – £8,000

The fees payable from 1 April 2023 have



 





Picton Property Income Limited

Annual Report 2023

122

Remuneration Report/Continued

Percentage change in remuneration

The table below shows the percentage change in total remuneration for each of the Directors compared to the average



Change from 31/3/22 to 31/3/23 Change from 31/3/21 to 31/3/22 Change from 31/3/20 to 31/3/21

Salary/fees  Bonus Salary/fees  Bonus Salary/fees  Bonus

Michael Morris         

Andrew Dewhirst         

Lena Wilson  – –  – – n/a n/a n/a

Mark Batten  – –  – –  – –

Maria Bentley  – –  – –  – –

Richard Jones

 – –  – – n/a n/a n/a

Average of all other employees         

Statement of voting at the last Annual General Meeting

The following table sets out the voting for the Remuneration Report, which was approved by shareholders at the Annual

General Meeting held on 1 September 2022, representing 62% of the issued share capital of the Company, and also for





Remuneration Report 

Votes cast % Votes cast %

For    

Against    

Votes cast    

Withheld  

Maria Bentley

Chair of the Remuneration Committee

24 May 2023

Strategic Report

Governance

Financial Statements Additional Information

Picton Property Income Limited

Annual Report 2023

123

Directors’ Report



Income Limited present the Annual



statements for the year ended



The Company is registered under





Principal activity

The principal activity of the Group is

commercial property investment in

the United Kingdom

Results and dividends

The results for the year are set out





The Company is a UK Real Estate

Investment Trust (REIT) and must

distribute to its shareholders at least



rental business for each accounting













per share, making a total dividend for





All four interim dividends were paid



Directors

The Directors of the Company who

served throughout the year are:

 Lena Wilson

 Maria Bentley

 Mark Batten

 Andrew Dewhirst

 Richard Jones

 Michael Morris

The Directors’ interests in the shares of

the Company as at 31 March 2023 are



All of the Directors will offer





2018 UK Corporate Governance

Code Compliance Statement



ended 31 March 2023 the principles of

good corporate governance contained

in the 2018 UK Corporate Governance



The Company is fully compliant with



Listing

The Company is listed on the main



Share capital

The issued share capital of the

Company as at 31 March 2023 was

547,605,596 (2022: 547,605,596)

ordinary shares of no par value,

including 2,388,694 ordinary shares

which are held by the Trustee of the





The Directors have authority to buy







shareholders at each Annual General





Guernsey law, and the making and





ordinary shares were purchased under



At the 2022 Annual General Meeting

shareholders gave the Directors

authority to issue up to 54,760,558

shares (being 10% of the Company’s

issued share capital as at 4 August







under this authority, which expires at

this year’s Annual General Meeting

and resolutions will be proposed for



Shares held in the Employee

BeneﬁtTrust















acquired 1,250,000 ordinary shares









Statement of going concern

The Directors have focused on

assessing whether the going





statements for the year ended



assessment the Directors have

considered the principal and

emerging risks relating to the Group,

its loan covenants, access to funding



considered a number of scenarios,







timescales, and the potential



performance, asset values, capital



and investment transactions have

been assumed to be curtailed



Future lease events over the

assessment period have been







regarding the Group’s business

activities, together with the factors

affecting performance, investment

activities and future development





position of the Group, including its

liquidity position, borrowing facilities







Picton Property Income Limited

Annual Report 2023

124

Directors’ Report/Continued

Under all of these scenarios the



continue its operations, and remain

within its loan covenants, for a period

of at least 12 months from the date of



Based on their assessment and

knowledge of the portfolio and market,

the Directors have therefore continued

to adopt the going concern basis in



Viability assessment and statement

The UK Corporate Governance Code



statement’ which considers the

Company’s current position and

principal and emerging risks and

uncertainties combined with an

assessment of the future prospects for

the Company, in order that the Board

can state that the Company will be

able to continue its operations over



The Board conducted this review over







The assessment has been undertaken

taking into account the principal and

emerging risks and uncertainties

faced by the Group which could

impact its investment strategy,









rates, other recessionary pressures

and the lead up to a general election



the ordinary course of business, the



model on a quarterly basis, including



allows for different assumptions

regarding lease expiries, breaks and



viability assessment of the Group, the





The Board considered a number

of scenarios and their impact on

the Group’s property portfolio and



included different levels of rent

collection, occupier defaults, void

periods and incentives within the

portfolio, and the consequential

impact on property costs and loan



assumptions were reviewed over the

period under the different scenarios,

including their impact on revenue



in capital values were included in

these scenarios, including their

potential impact on the Group’s



term loan facilities are contracted

to be in place throughout the

assessment period, while the Board

has assumed that the Group will





The Board considered the impact

of these scenarios on its ability to

continue to pay dividends at different



These matters were assessed over



will continue to be assessed over



The Directors consider that the





under extreme conditions the



Based on their assessment, and in

the context of the Group’s business

model and strategy, the Directors

expect that the Group will be able to

continue in operation and meet its

liabilities as they fall due over the



Substantial shareholdings





by the Company’s brokers, the

Company understands the following



of 3% or more of the Company’s



% of issued

share capital



Limited 

 

 

 

 

RBC Brewin Dolphin Limited 

Alder Investment Management

Limited UK 

Strategic Report

Governance

Financial Statements Additional Information

Picton Property Income Limited

Annual Report 2023

125

Disclosure of information

toauditor



date of approval of this Directors’



each aware, there is no relevant audit

information of which the Company’s

auditor is unaware and each Director

has taken all the steps that he or she

ought to have taken as a Director to

make themselves aware of any

relevant audit information and to

establish that the Company’s auditor



Auditor







auditor and a resolution proposing its

reappointment will be submitted at



Statement of Directors’

responsibilities

The Directors are responsible for

preparing the Annual Report and the





Company law requires the Directors to







statements in accordance with

International Financial Reporting

Standards, as issued by the IASB, and



Under company law the Directors





that they give a true and fair view of

the state of affairs of the Company





the Directors are required to:

 select suitable accounting policies

and then apply them consistently;

 

that are reasonable, relevant and

reliable;

 state whether applicable

accounting standards have been



departures disclosed and



statements;

 assess the Group and Company’s

ability to continue as a going

concern, disclosing, as applicable,

matters related to going concern;

and

 use the going concern basis of

accounting unless they either

intend to liquidate the Group or

the Company or to cease

operations, or have no realistic



The Directors are responsible for

keeping proper accounting records



the Company’s transactions and

disclose with reasonable accuracy at



Company and enable them to ensure



with the Companies (Guernsey) Law,



internal controls as they determine are

necessary to enable the preparation of



from material misstatement, whether

due to fraud or error, and have a

general responsibility for taking such

steps as are reasonably open to them

to safeguard the assets of the Group

and to prevent and detect fraud and



The Directors are responsible for





included on the Company’s website,

and for the preparation and



Legislation in Guernsey governing the

preparation and dissemination of





Directors’ responsibility statement

in respect of the Annual Report and

ﬁnancial statements



knowledge:

 

in accordance with the applicable

set of accounting standards, give







 the Strategic Report includes a fair

review of the development and

performance of the business and

the position of the Issuer, together

with a description of the principal

risks and uncertainties that



We consider the Annual Report and

accounts, taken as a whole, are fair,

balanced and understandable and

provide the information necessary for

shareholders to assess the Company’s

position and performance, business



By Order of the Board

Andrew Dewhirst

24 May 2023

126

Annual Report 2023

Picton Property Income Limited

Financial Statements

This section sets out the Group’s ﬁnancial

statements for the year ended 31 March 2023.

Welcome to

our ﬁnancial

statements

Strategic Report

Financial Statements

Additional InformationGovernance

Financial Statements

128 Independent Auditor’s Report

132 Consolidated Statement of

Comprehensive Income

133 Consolidated Statement

of Changes in Equity

134 Consolidated Balance Sheet

135 Consolidated Statement of Cash Flows

136 Notes to the Consolidated

Financial Statements

Additional Information

155 EPRA BPR and Supplementary

Disclosures

159 Property Portfolio

160 Five Year Financial Summary

161 Glossary

164 Financial Calendar

165 Shareholder Information

Annual Report 2023

Picton Property Income Limited 127

Picton Property Income Limited

Annual Report 2023

128

Financial Statements/Continued

Independent Auditor’s Report to the Members of Picton Property

Income Limited

Our opinion is unmodiﬁed

We have audited the consolidated



Property Income Limited (the

‘Company’) and its subsidiaries

(together, the ‘Group’), which comprise

the consolidated balance sheet as at

31 March 2023, the consolidated

statements of comprehensive income,



the year then ended, and notes,



policies and other explanatory

information.

In our opinion, the accompanying

consolidated ﬁnancial statements:

 give a true and fair view of the



31 March 2023, and of the Group’s





 are prepared in accordance with

International Financial Reporting



 comply with the Companies

(Guernsey) Law, 2008.

Basis for opinion

We conducted our audit in

accordance with International

Standards on Auditing (UK) (‘ISAs (UK)’)

and applicable law. Our responsibilities



our ethical responsibilities under, and

are independent of the Company

and Group in accordance with, UK

ethical requirements including the

FRC Ethical Standard as required

by the Crown Dependencies’

Audit Rules and Guidance. We

believe that the audit evidence we



appropriate basis for our opinion.

Valuation of investment

properties The risk Our response

£746 million (2022:



Refer to page 102 of the

Audit and Risk Committee



accounting policies and

Note 13 investment

properties disclosures.

Basis:

The Group’s investment properties accounted

for 94% (2022: 93%) of the Group’s total assets

as at 31 March 2023. The fair value of

investment properties at 31 March 2023 was

assessed by the Board of Directors based on

independent valuations prepared by the

Group’s third party independent valuer (the

‘Valuer’). The Valuer performed the valuations

based on the Royal Institution of Chartered

Surveyors (‘RICS’) Valuation – Global Standards

and the requirements of IFRS.

In determining the valuation of a property, the



information such as the current tenancy

agreements and rental income and apply

assumptions for yields and estimated market



yields and comparable market transactions, to



Risk:

The valuation of the Group’s investment





estimates and judgements that may be

involved in the determination of their fair value

and given that it represents the majority of the

total assets of the Group.

The valuation is inherently subjective due to



not limited to, the individual nature of the

property, the location and condition of the

property and the expected future rental

streams for that particular property.

Our audit procedures included:

Control Evaluation:

We assessed the design, implementation and operating

effectiveness of controls over the valuation of investment

properties including the capture and recording of information

contained in the lease database for investment properties.

Evaluating experts engaged by management:

We assessed the competence, capabilities and objectivity of

the Valuer. We also assessed the independence of the Valuer

by considering the scope of their work and the terms of their

engagement.

Evaluating assumptions and inputs used in the valuation:

With the assistance of our own Real Estate valuation specialist

we assessed the valuations prepared by the Valuer by:

– evaluating the appropriateness of the valuation

methodologies and assumptions used

– critically evaluating key subjective valuation inputs and

assumptions, on a judgemental sample of properties, against

market information such as industry benchmarks and our

own knowledge and understanding of the property market.

We also compared a sample of the key inputs used to calculate

the valuations such as annual rent and tenancy contracts for





entire property portfolio were correctly included in the



Assessing disclosures:

We also considered the Group’s investment property valuation

policies and their application as described in the notes to the



addition to the adequacy of disclosures in Note 13 in relation to

fair value of the investment properties.

Key audit matters: our assessment of

the risks of material misstatement

Key audit matters are those matters

that, in our professional judgement,





statements and include the most



misstatement (whether or not due



those which had the greatest effect





and directing the efforts of the

engagement team. These matters

were addressed in the context of our



statements as a whole, and in forming

our opinion thereon, and we do

not provide a separate opinion on

these matters. In arriving at our audit

opinion above, the key audit matter

was as follows (unchanged from 2022):

Strategic Report

Financial Statements

Additional Information

Picton Property Income Limited

Annual Report 2023

129

Governance

Our application of materiality and an

overview of the scope of our audit

Materiality for the consolidated















our procedures on individual account







reduce to an acceptable level the































any corrected or uncorrected























in those areas as detailed above.



















Going concern

The directors have prepared the









and as they have concluded that the





They have also concluded that there









date of approval of the consolidated



























resources or ability to continue



 





 



 























concern disclosure in Note 2 to the









 









 

















 





























future events or conditions and as













continue in operation.

Fraud and breaches of laws and

regulations – ability to detect

Identifying and responding to risks

of material misstatement due to

fraud







conditions that could indicate an







included:

 











 



and

 

identify any unusual or unexpected

relationships.

Picton Property Income Limited

Annual Report 2023

130

Financial Statements/Continued

























to external data sources or











 









 

unpredictability in our audit

procedures.

Identifying and responding to risks

of material misstatement due to

non-compliance with laws and

regulations





















































part of our procedures on the related











disclosures in the consolidated





















procedures to identify non-















not detect that breach.

Context of the ability of the audit to

detect fraud or breaches of law or

regulation











































internal controls. Our audit procedures







fraud and cannot be expected to





Independent Auditor’s Report to the Members of Picton Property

Income Limited/Continued

Other information

The directors are responsible for the





included in the annual report but does





thereon. Our opinion on the









conclusion thereon.





responsibility is to read the other

























Disclosures of emerging and

principal risks and longer term

viability



















relation to:

 





have carried out a robust











 







Strategic Report

Financial Statements

Additional Information

Picton Property Income Limited

Annual Report 2023

131

Governance

 the directors’ explanation in the

Viability assessment and statement

(page 124) as to how they have

assessed the prospects of the

Group, over what period they have

done so and why they consider

that period to be appropriate, and

their statement as to whether they

have a reasonable expectation that

the Group will be able to continue

in operation and meet its liabilities

as they fall due over the period of

their assessment, including any

related disclosures drawing

attention to any necessary



We are also required to review the

Viability assessment and statement,

set out on page 124 under the Listing



we have concluded that the above

disclosures are materially consistent





Corporate governance disclosures

We are required to perform procedures

to identify whether there is a material

inconsistency between the directors’

corporate governance disclosures and







concluded that each of the following

is materially consistent with the



our audit knowledge:

 the directors’ statement that they

consider that the annual report



statements taken as a whole is fair,

balanced and understandable, and

provides the information necessary

for shareholders to assess the

Company’s position and

performance, business model



 the section of the annual report

describing the work of the Audit

Committee, including the



committee considered in relation to





 the section of the annual report

that describes the review of the

effectiveness of the Company’s risk

management and internal control



We are required to review the part of

Corporate Governance Statement

relating to the Company’s compliance

with the provisions of the UK







We have nothing to report on other

matters on which weare required to

report by exception

We have nothing to report in respect

of the following matters where the

Companies (Guernsey) Law, 2008

requires us to report to you if, in our

opinion:

 the Company has not kept proper



 

statements are not in agreement



 we have not received all the

information and explanations,

which to the best of our

knowledge and belief are

necessary for the purpose of our



Respective responsibilities

Directors’ responsibilities

As explained more fully in their

statement set out on page 125, the

directors are responsible for: the

preparation of the consolidated







determine is necessary to enable the



statements that are free from material

misstatement, whether due to fraud



Company’s ability to continue as a

going concern, disclosing, as

applicable, matters related to going



basis of accounting unless they either

intend to liquidate the Group or the

Company or to cease operations, or

have no realistic alternative but to



Auditor’s responsibilities

Our objectives are to obtain

reasonable assurance about whether



as a whole are free from material

misstatement, whether due to fraud

or error, and to issue our opinion in an



is a high level of assurance, but does

not guarantee that an audit

conducted in accordance with ISAs

(UK) will always detect a material



Misstatements can arise from fraud or

error and are considered material if,

individually or in aggregate, they could



the economic decisions of users taken

on the basis of the consolidated



A fuller description of our

responsibilities is provided on the





The purpose of this report and

restrictions on its use by persons

other than the Company’s members

as a body

This report is made solely to the

Company’s members, as a body, in

accordance with section 262 of the



audit work has been undertaken so

that we might state to the Company’s

members those matters we are

required to state to them in an

auditor’s report and for no other



permitted by law, we do not accept or

assume responsibility to anyone other

than the Company and the Company’s

members, as a body, for our audit

work, for this report, or for the opinions



Steven Stormonth

For and on behalf of KPMG Channel

Islands Limited

Chartered Accountants and

Recognised Auditors

Guernsey

24 May 2023

Picton Property Income Limited

Annual Report 2023

132

Financial Statements/Continued

Consolidated statement of comprehensive income

for the year ended 31 March 2023

Notes

2023

£000

2022

£000

Income

Revenue from properties

51,816 46,543

Property expenses

(15,566) (11,098)

Net property income

36,250 35,445

Expenses

Administrative expenses

(5,955) (5,755)

Total operating expenses

(5,955) (5,755)

Operating profit before movement on investments

30,295 29,690

Investments

Profit on disposal of investment properties

– 42

Revaluation of owner-occupied property

(382) –

Investment property valuation movements

(110,433) 129,801

Total (loss)/profit on investments

(110,815) 129,843

Operating (loss)/profit

(80,520) 159,533

Financing

Interest received

24 –

Interest paid

(9,034) (8,502)

Debt prepayment fees

– (4,045)

Total finance costs

(9,010) (12,547)

(Loss)/profit before tax

(89,530) 146,986

Tax

– –

(Loss)/profit after tax

(89,530) 146,986

Other comprehensive income

Revaluation of owner-occupied property

(434) 434

Total other comprehensive (loss)/income for the year

(434) 434

Total comprehensive (loss)/income for the year

(89,964) 147,420

Earnings per share

Basic 11

(16.5)p 27.0p

Diluted 11

(16.5)p 26.9p

All items in the above statement derive from continuing operations.

All of the profit and total comprehensive income for the year is attributable to the equity holders of the Company.

Notes 1 to 27 form part of these consolidated financial statements.

Strategic Report

Financial Statements

Additional Information

Picton Property Income Limited

Annual Report 2023

133

Governance

Consolidated statement of changes in equity

for the year ended 31 March 2023

Notes

capital

£000

Retained

earnings

£000

Other

reserves

£000

Revaluation

reserve

£000

Total

£000

Balance as at 31 March 2021

164,400 364,466 (669) – 528,197

Profit for the year

– 146,986 – – 146,986

Dividends paid 10

– (18,425) – – (18,425)

Share-based awards

668

Purchase of shares held in trust 7

(730)

– 668

– (730

)

Other comprehensive income for the year 14

– –

– 434 434

Balance as at 31 March 2022

164,400 493,027 (731) 434 657,130

Loss for the year

– – (89,530)

Dividends paid 10

– – (19,091)

Share-based awards

675

Purchase of shares held in trust 7

(1,126)

– 675

– (1,126)

Other comprehensive loss for the year

– (89,530)

– (19,091)

– –

– (434) (434)

Balance as at 31 March 2023

164,400 384,406 (1,182) – 547,624

Notes 1 to 27 form part of these consolidated financial statements.

Picton Property Income Limited

Annual Report 2023

134

Financial Statements/Continued

Consolidated balance sheet

as at 31 March 2023

Notes

2023

£000

2022

£000

Non-current assets

Investment properties

746,342 830,027

Property, plant and equipment

3,415 4,383

Total non-current assets

749,757 834,410

Current assets

Accounts receivable

22,749 22,850

Cash and cash equivalents

20,050 38,547

Total current assets

42,799 61,397

Total assets

792,556 895,807

Current liabilities

Accounts payable and accruals

(19,471) (19,138)

Loans and borrowings

(1,129) (1,068)

Obligations under leases

(114) (114)

Total current liabilities

(20,714) (20,320)

Non-current liabilities

Loans and borrowings

(221,635) (215,764)

Obligations under leases

(2,583) (2,593)

Total non-current liabilities

(224,218) (218,357)

Total liabilities

(244,932) (238,677)

Net assets

547,624 657,130

Equity

Share capital

164,400 164,400

Retained earnings

384,406 493,027

Other reserves

(1,182) (731)

Revaluation reserve

– 434

Total equity

547,624 657,130

Net asset value per share 23

100p 120p

These consolidated financial statements were approved by the Board of Directors on 24 May 2023 and signed on its

behalf by:

Andrew Dewhirst

Director

24 May 2023

Notes 1 to 27 form part of these consolidated financial statements.

Strategic Report

Financial Statements

Additional Information

Picton Property Income Limited

Annual Report 2023

135

Governance

Notes

2023

£000

2022

£000

Operating activities

Operating (loss)/profit

(80,520) 159,533

Adjustments for non-cash items

111,655 (129,010)

Interest received

24 –

Interest paid

(7,937) (8,102)

Decrease/(increase) in accounts receivable

101 (3,305)

(Decrease)/increase in accounts payable and accruals

(291) 897

Cash inflows from operating activities

23,032 20,013

Investing activities

Purchase of investment properties

(20,613) (25,005)

Capital expenditure on investment properties

(6,135) (9,551)

Disposal of investment properties

–

Purchase of tangible assets

(13) (3)

Cash outflows from investing activities

(26,761) (33,833)

Financing activities

Borrowings repaid

(6,368) (26,917)

Borrowings drawn

12,000 79,545

Debt prepayment fees

Financing costs

(183)

Purchase of shares held in trust

(1,126)

(4,045)

(419)

(730)

Dividends paid

(19,091) (18,425)

Cash (outflows)/inflows from financing activities

(14,768) 29,009

Net (decrease)/increase in cash and cash equivalents

(18,497) 15,189

Cash and cash equivalents at beginning of year

38,547 23,358

Cash and cash equivalents at end of year 16

20,050 38,547

Notes 1 to 27 form part of these consolidated financial statements.

Consolidated statement of cash flows

for the year ended 31 March 2023

– 726

Picton Property Income Limited

Annual Report 2023

136

Financial Statements/Continued

1. General information

Picton Property Income Limited (the ‘Company’ and together with its subsidiaries the ‘Group’) was established on

15 September 2005 as a closed ended Guernsey domiciled investment company and entered the UK REIT regime on

1 October 2018. The consolidated financial statements are prepared for the year ended 31 March 2023 with comparatives

for the year ended 31 March 2022.

2. Signiﬁcant accounting policies

Basis of accounting

The financial statements have been prepared on a going concern basis and adopt the historical cost basis, except for

the revaluation of investment properties. Historical cost is generally based on the fair value of the consideration given

in exchange for the assets. The financial statements, which give a true and fair view, are prepared in accordance with

International Financial Reporting Standards (IFRS) as issued by the IASB and the Companies (Guernsey) Law, 2008.

The Directors have assessed whether the going concern basis remains appropriate for the preparation of the financial

statements. They have reviewed the Group’s principal and emerging risks, existing loan facilities, access to funding

and liquidity position and then considered different adverse scenarios impacting the portfolio and the potential

consequences on financial performance, asset values, dividend policy, capital projects and loan covenants. Under all

these scenarios the Group has sufficient resources to continue its operations, and remain within its loan covenants, for

the foreseeable future and in any case for a period of at least 12 months from the date of these financial statements.

Based on their assessment and knowledge of the portfolio and market, the Directors have therefore continued to adopt

the going concern basis in preparing the financial statements.

The financial statements are presented in pounds sterling, which is the Company’s functional currency. All financial

information presented in pounds sterling has been rounded to the nearest thousand, except when otherwise indicated.

New or amended standards issued

The accounting policies adopted are consistent with those of the previous financial period, as amended to reflect the

adoption of new standards, amendments and interpretations which became effective in the year as shown below.

‒ Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37)

‒ Annual Improvements to IFRS Standards 2018-2020

‒ Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)

‒ Reference to the Conceptual Framework (Amendments to IFRS 3)

The adoption of these standards has had no material effect on the consolidated financial statements of the Group.

At the date of approval of these financial statements, there are a number of new and amended standards in issue

but not yet effective for the financial year ended 31 March 2023 and thus have not been applied by the Group.

‒ IFRS 17 Insurance Contracts

‒ Amendments to IFRS 17

‒ Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)

‒ Definition of Accounting Estimates (Amendments to IAS 8)

‒ Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction – Amendments to IAS 12 Income Taxes

‒ Initial Application of IFRS 17 and IFRS 9 – Comparative Information (Amendments to IFRS 17)

‒ Classification of Liabilities as Current or Non-current (Amendments to IAS 1)

‒ Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)

‒ Non-current Liabilities with Covenants (Amendments to IAS 1)

‒ Sale or Contributions of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28)

The adoption of these new and amended standards, together with any other IFRSs or IFRIC interpretations that are not

yet effective, are not expected to have a material impact on the financial statements of the Group.

Use of estimates and judgements

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates

and assumptions that affect the application of policies and the reported amounts of assets, liabilities, income and

expenses. The estimates and associated assumptions are based on historical experience and various other factors that are

believed to be reasonable under the circumstances, the results of which form the basis of estimates about the carrying

values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these

estimates. The estimates and underlying assumptions are reviewed on an ongoing basis.

Notes to the consolidated ﬁnancial statements

for the year ended 31 March 2023

Picton Property Income Limited

Annual Report 2023

137

Financial Statements

Strategic Report Additional InformationGovernance

2. Signiﬁcant accounting policies/Continued

Signiﬁcant judgements and estimates

Judgements made by management in the application of IFRSs that have a significant effect on the financial statements

and major sources of estimation uncertainty are disclosed in Note 13.

The critical estimates and assumptions relate to the investment property and owner-occupied property valuations

applied by the Group’s independent valuer. Revisions to accounting estimates are recognised in the year in which the

estimate is revised if the revision affects only that year, or in the year of the revision and future years if the revision affects

both current and future years.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the

Company at the reporting date. The Group controls an entity when it is exposed to, or has rights to, variable returns from

its involvement with the entity and has the ability to affect these returns through its power over the entity.

Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated

from the date on which control is transferred out of the Group. These financial statements include the results of the subsidiaries

disclosed in Note 12. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Fair value hierarchy

The fair value measurement for the Group’s assets and liabilities is categorised into different levels in the fair value

hierarchy based on the inputs to valuation techniques used. The different levels have been defined as follows:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the

measurement date.

Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly

or indirectly.

Level 3: unobservable inputs for the asset or liability.

The Group recognises transfers between levels of the fair value hierarchy as of the end of the reporting period during

which the transfer has occurred.

Investment properties

Freehold property held by the Group to earn income or for capital appreciation, or both, is classified as investment

property in accordance with IAS 40 ‘Investment Property’. Property held under head leases for similar purposes is also

classified as investment property. Investment property is initially recognised at purchase cost plus directly attributable

acquisition expenses and subsequently measured at fair value. The fair value of investment property is based on a

valuation by an independent valuer who holds a recognised and relevant professional qualification and who has recent

experience in the location and category of the investment property being valued.

The fair value of investment properties is measured based on each property’s highest and best use from a market

participant’s perspective and considers the potential uses of the property that are physically possible, legally permissible

and financially feasible.

The fair value of investment property generally involves consideration of:

‒ Market evidence on comparable transactions for similar properties;

‒ The actual current market for that type of property in that type of location at the reporting date and current market

expectations;

‒ Rental income from leases and market expectations regarding possible future lease terms;

‒ Hypothetical sellers and buyers, who are reasonably informed about the current market and who are motivated, but

not compelled, to transact in that market on an arm’s length basis; and

‒ Investor expectations on matters such as future enhancement of rental income or market conditions.

Gains and losses arising from changes in fair value are included in the Consolidated Statement of Comprehensive Income

in the year in which they arise. Purchases and sales of investment property are recognised when contracts have been

unconditionally exchanged and the significant risks and rewards of ownership have been transferred.

An investment property is derecognised for accounting purposes upon disposal or when no future economic benefits are

expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as

the difference between the net disposal proceeds and the carrying amount of the item) is included in the Consolidated

Statement of Comprehensive Income in the year the asset is derecognised. Investment properties are not depreciated.

The majority of the investment properties are charged by way of a first ranking mortgage as security for the loans made

to the Group; see Note 18.

Picton Property Income Limited

138

Notes to the consolidated ﬁnancial statements/Continued

Financial Statements/Continued

2. Signiﬁcant accounting policies/Continued

Property, plant and equipment

Owner-occupied property

Owner-occupied property is stated at its revalued amount, which is determined in the same manner as investment

property. It is depreciated over its remaining useful life (in this case 40 years) with the depreciation included in

administrative expenses. On revaluation, any accumulated depreciation is eliminated against the gross carrying amount

of the property concerned, and the net amount restated to the revalued amount. Subsequent depreciation charges are

adjusted based on the revalued amount. Any difference between the depreciation charge on the revalued amount and

that which would have been charged under historic cost is transferred between the revaluation reserve and retained

earnings as the property is used. Any gain arising on this remeasurement is recognised in profit or loss to the extent that it

reverses a previous impairment loss on the specific property, with any remaining gain recognised in other comprehensive

income and presented in the revaluation reserve. Any loss is recognised in profit or loss. However, to the extent that an

amount is included in the revaluation surplus for that property, the loss is recognised in other comprehensive income and

reduces the revaluation surplus within equity.

Plant and equipment

Plant and equipment is depreciated on a straight-line basis over the estimated useful lives of each item of plant and

equipment. The estimated useful lives are between three and five years. 

Leases

Where the Group holds interests in investment properties other than as freehold interests (e.g. as a head lease), these are

accounted for as right of use assets, which is recognised at its fair value on the Balance Sheet, within the investment

property carrying value. Upon initial recognition, a corresponding liability is included as a lease liability. Minimum lease

payments are apportioned between the finance charge and the reduction of the outstanding liability so as to produce a

constant periodic rate of interest on the remaining lease liability. Contingent rent payable, being the difference between

the rent currently payable and the minimum lease payments when the lease liability was originally calculated, are

charged as expenses within property expenditure in the years in which they are payable.

The Group leases its investment properties under commercial property leases which are held as operating leases. An

operating lease is a lease other than a finance lease. A finance lease is one where substantially all the risks and rewards of

ownership are passed to the lessee. Lease income is recognised as income on a straight-line basis over the lease term.

Direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased

asset and recognised as an expense over the lease term on the same basis as the lease income. Upon receipt of a

surrender premium for the early termination of a lease, the profit, net of dilapidations and non-recoverable outgoings

relating to the lease concerned, is immediately reflected in revenue from properties if there are no relevant conditions

attached to the surrender.

Cash and cash equivalents

Cash includes cash in hand and cash with banks. Cash equivalents are short-term, highly liquid investments that are

readily convertible to known amounts of cash with original maturities in three months or less and that are subject to

an insignificant risk of change in value.

Income and expenses

Income and expenses are included in the Consolidated Statement of Comprehensive Income on an accruals basis.

All of the Group’s income and expenses are derived from continuing operations.

Lease incentive payments are amortised on a straight-line basis over the period from the date of lease inception to the

end of the lease term and presented within accounts receivable. Lease incentives granted are recognised as a reduction

of the total rental income, over the term of the lease.

Property operating costs include the costs of professional fees on letting and other non-recoverable costs.

The income charged to occupiers for property service charges and the costs associated with such service charges are

shown separately in Notes 3 and 4 to reflect that, notwithstanding this money is held on behalf of occupiers, the ultimate

risk for paying and recovering these costs rests with the property owner.

Employee beneﬁts

Deﬁned contribution plans

A defined contribution plan is a retirement benefit plan under which the Company pays fixed contributions into a

separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to

defined contribution pension plans are recognised as an expense in the Consolidated Statement of Comprehensive

Income in the periods during which services are rendered by employees.

Picton Property Income Limited

Annual Report 2023

139

Financial Statements

Strategic Report Additional InformationGovernance

2. Signiﬁcant accounting policies/Continued

Short-term beneﬁts

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service

is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing

plans if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided

by the employee and the obligation can be estimated reliably.

Share-based payments

The fair value of the amounts payable to employees in respect of the Deferred Bonus Plan, when these are to be settled

in cash, is recognised as an expense with a corresponding increase in liabilities, over the period that the employees

become unconditionally entitled to payment. Where the awards are equity settled, the fair value is recognised as an

expense, with a corresponding increase in equity. The liability is remeasured at each reporting date and at settlement

date. Any changes in the fair value of the liability are recognised under the category staff costs in the Consolidated

Statement of Comprehensive Income.

The grant date fair value of awards to employees made under the Long-term Incentive Plan is recognised as an expense,

with a corresponding increase in equity, over the vesting period of the awards. The amount recognised as an expense is

adjusted to reflect the number of awards for which the related non-market performance conditions are expected to be

met, such that the amount ultimately recognised is based on the number of awards that meet the related non-market

performance conditions at the vesting date. For share-based payment awards with market conditions, the grant date fair

value of the share-based awards is measured to reflect such conditions and there is no adjustment between expected

and actual outcomes.

The cost of the Company’s shares held by the Employee Benefit Trust is deducted from equity in the Consolidated

Balance Sheet. Any shares held by the Trust are not included in the calculation of earnings or net assets per share.

Dividends

Dividends are recognised in the period in which they are declared.

Accounts receivable

Accounts receivable are stated at their nominal amount as reduced by appropriate allowances for estimated irrecoverable

amounts. The Group applies the IFRS 9 simplified approach to measuring expected credit losses, which uses a lifetime

expected impairment provision for all applicable accounts receivable. Bad debts are written off when identified.

Loans and borrowings

All loans and borrowings are initially recognised at cost, being the fair value of the consideration received net of issue

costs associated with the borrowing. After initial recognition, loans and borrowings are subsequently measured at

amortised cost using the effective interest method. Amortised cost is calculated by taking into account any issue costs,

and any discount or premium on settlement. Gains and losses are recognised in profit or loss in the Consolidated

Statement of Comprehensive Income when the liabilities are derecognised for accounting purposes, as well as through

the amortisation process.

Assets classiﬁed as held for sale

Any investment properties on which contracts for sale have been exchanged but which had not completed at the period

end are disclosed as properties held for sale. Investment properties included in the held for sale category continue to be

measured in accordance with the accounting policy for investment properties.

Other assets and liabilities

Other assets and liabilities, including trade creditors, accruals, other creditors, and deferred rental income, which are not

interest bearing are stated at their nominal value.

Share capital

Ordinary shares are classified as equity. 

Revaluation reserve

Any surplus or deficit arising from the revaluation of owner-occupied property is taken to the revaluation reserve. A

revaluation deficit is only taken to retained earnings when there is no previous revaluation surplus to reverse.

Taxation

The Group elected to be treated as a UK REIT with effect from 1 October 2018. The UK REIT rules exempt the profits of the

Group’s UK property rental business from UK corporation and income tax. Gains on UK properties are also exempt from

tax, provided they are not held for trading. The Group is otherwise subject to UK corporation tax.

Picton Property Income Limited

140

Notes to the consolidated ﬁnancial statements/Continued

Financial Statements/Continued

2. Signiﬁcant accounting policies/Continued

Principles for the Consolidated Statement of Cash Flows

The Consolidated Statement of Cash Flows has been drawn up according to the indirect method, separating the cash

flows from operating activities, investing activities and financing activities. The net result has been adjusted for amounts

in the Consolidated Statement of Comprehensive Income and movements in the Consolidated Balance Sheet which

have not resulted in cash income or expenditure in the related period.

The cash amounts in the Consolidated Statement of Cash Flows include those assets that can be converted into cash

without any restrictions and without any material risk of decreases in value as a result of the transaction.

3. Revenue from properties

2023

£000

2022

£000

Rents receivable (adjusted for lease incentives)

42,964 40,133

Surrender premiums

147 59

Dilapidation receipts

170 21

Other income

107 118

Service charge income 8,428 6,212

51,816 46,543

Rents receivable have been adjusted for lease incentives recognised of £1.2 million (2022: £2.8 million).

4. Property expenses

2023

£000

2022

£000

Property operating costs

3,491 2,477

Property void costs

3,647 2,409

Recoverable service charge costs 8,428 6,212

15,566 11,098

5. Operating segments

The Board is responsible for setting the Group’s strategy and business model. The key measure of performance used by

the Board to assess the Group’s performance is the total return on the Group’s net asset value. As the total return on the

Group’s net asset value is calculated based on the net asset value per share calculated under IFRS as shown at the foot of

the Consolidated Balance Sheet, assuming dividends are reinvested, the key performance measure is that prepared

under IFRS. Therefore, no reconciliation is required between the measure of profit or loss used by the Board and that

contained in the financial statements.

The Board has considered the requirements of IFRS 8 ‘Operating Segments’. The Board is of the opinion that the Group,

through its subsidiary undertakings, operates in one reportable industry segment, namely real estate investment, and

across one primary geographical area, namely the United Kingdom, and therefore no segmental reporting is required.

The portfolio consists of 49 commercial properties, which are in the industrial, office, retail and leisure sectors.

6. Administrative expenses

2023

£000

2022

£000

Director and staff costs

3,487 3,415

Auditor’s remuneration

195 206

Other administrative expenses 2,273 2,134

5,955 5,755

Picton Property Income Limited

Annual Report 2023

141

Financial Statements

Strategic Report Additional InformationGovernance

6. Administrative expenses/Continued

Auditor’s remuneration comprises:

2023

£000

2022

£000

Audit fees:

Audit of Group financial statements

92 92

Audit of subsidiaries’ financial statements

87 82

Audit-related fees:

Review of half-year financial statements 16 16

195 190

Non-audit fees:

Additional controls testing – 16

– 16

195 206

7. Director and sta coff costs

2023

£000

2022

£000

Wages and salaries

1,879 1,765

Non-Executive Directors’ fees

275 275

Social security costs

425 402

Other pension costs

34 27

Share-based payments – cash settled

142 201

Share-based payments – equity settled 732 745

3,487 3,415

The emoluments of the Directors are set out in detail within the Remuneration Committee report, including the audited

totals on page 115.

Employees participate in two share-based remuneration arrangements: the Deferred Bonus Plan and the Long-term

Incentive Plan (the ‘LTIP’).

For all employees, a proportion of any discretionary annual bonus will be an award under the Deferred Bonus Plan. With

the exception of Executive Directors, awards are cash settled and vest after two years. The final value of awards is

determined by the movement in the Company’s share price and dividends paid over the vesting period. For Executive

Directors, awards are equity settled and also vest after two years. On 17 June 2022, awards of 500,905 notional shares

were made which vest in June 2024 (2022: 531,108 notional shares). The next awards are due to be made in June 2023 for

vesting in June 2025.

The table below summarises the awards made under the Deferred Bonus Plan. Employees have the option to defer the

vesting date of their awards for a maximum of seven years.

Vesting date

Units

at 31 March

2021

Units

granted in

the year

Units

cancelled in

the year

Units

redeemed in

the year

Units

at 31 March

2022

Units

granted

in the year

Units

cancelled

in the year

Units

redeemed in

the year

Units

at 31 March

2023

19 June 2021

438,907 – – (438,907) – – – – –

29 June 2022

599,534 – – – 599,534 – – (589,779) 9,755

22 June 2023

– 531,108 – – 531,108 – – – 531,108

17 June 2024 – – – – – 500,905 – – 500,905

1,038,441 531,108 – (438,907) 1,130,642 500,905 – (589,779) 1,041,768

The Group also has a Long-term Incentive Plan for all employees which is equity settled. Awards are made annually and

vest three years from the grant date. Vesting is conditional on three performance metrics measured over each three-year

period. Awards to Executive Directors are also subject to a further two-year holding period. On 17 June 2022, awards for

a maximum of 1,174,589 shares were granted to employees in respect of the three-year period ending on 31 March 2025.

In the previous year, awards of 1,107,155 shares were made on 22 June 2021 for the period ending 31 March 2024.

Picton Property Income Limited

142

Notes to the consolidated ﬁnancial statements/Continued

Financial Statements/Continued

7. Director and sta coff costs/Continued

The three performance metrics are:

‒ Total shareholder return (TSR) of Picton Property Income Limited, compared to a comparator group of similar listed

companies;

‒ Total property return (TPR) of the property assets held within the Group, compared to the MSCI UK Quarterly Property

Index; and

‒ Growth in EPRA earnings per share (EPS) of the Group.

The fair value of share grants is measured using the Monte Carlo model for the TSR metric and a Black-Scholes model for

the TPR and EPS metrics. The fair value is recognised over the expected vesting period. For the awards made during this

year and the previous year the main inputs and assumptions of the models, and the resulting fair values, are:

Assumptions

Grant date

17 June 2022 22 June 2021

Share price at date of grant

92.6p 87.3p

Exercise price

Nil Nil

Expected term

3 years 3 years

Risk-free rate – TSR condition

2.28% 0.23%

Share price volatility – TSR condition

28.3% 28.3%

Median volatility of comparator group – TSR condition

32.4% 31.8%

Correlation – TSR condition

25.0% 29.4%

TSR performance at grant date – TSR condition

(2.5)% 0.3%

Median TSR performance of comparator group at grant date – TSR condition

2.2% 10.7%

Fair value – TSR condition (Monte Carlo method)

46.0p 37.7p

Fair value – TPR condition (Black-Scholes model)

92.6p 87.3p

Fair value – EPS condition (Black-Scholes model) 92.6p 87.3p

The Trustee of the Company’s Employee Benefit Trust acquired 1,250,000 ordinary shares during the year for £1,126,000

(2022: 750,000 shares for £730,000).

The Group employed ten members of staff at 31 March 2023 (2022: nine). The average number of people employed by the

Group for the year ended 31 March 2023 was nine (2022: ten).

8. Interest paid

2023

£000

2022

£000

Interest payable on loans

8,576 8,134

Interest on obligations under finance leases

175 129

Non-utilisation fees 283 239

9,034 8,502

The loan arrangement costs incurred to 31 March 2023 are £3,328,000 (2022: £3,325,000). These are amortised over the

duration of the loans with £304,000 amortised in the year ended 31 March 2023 and included in interest payable on

loans (2022: £967,000).

9. Tax

The charge for the year is:

2023

£000

2022

£000

Tax expense in year – –

Total tax charge – –

Picton Property Income Limited

Annual Report 2023

143

Financial Statements

Strategic Report Additional InformationGovernance

9. Tax/Continued

A reconciliation of the tax charge applicable to the results at the statutory tax rate to the charge for the year is as follows:

2023

£000

2022

£000

(Loss)/profit before taxation (89,530) 146,986

Expected tax (credit)/charge on ordinary activities at the standard rate of taxation of 19% (2022: 19%) (17,011) 27,927

Less:

UK REIT exemption on net income

(4,044) (3,257)

Revaluation movement not taxable

21,055 (24,662)

Gains on disposal not taxable – (8)

Total tax charge – –

As a UK REIT, the income profits of the Group’s UK property rental business are exempt from corporation tax, as are any

gains it makes from the disposal of its properties, provided they are not held for trading. The Group is otherwise subject

to UK corporation tax at the prevailing rate.

As the principal company of the REIT, the Company is required to distribute at least 90% of the income profits of the

Group’s UK property rental business. There are a number of other conditions that are also required to be met by the

Company and the Group to maintain REIT tax status. These conditions were met in the year and the Board intends

to conduct the Group’s affairs such that these conditions continue to be met for the foreseeable future. Accordingly,

deferred tax is no longer recognised on temporary differences relating to the property rental business.

10. Dividends

2023

£000

2022

£000

Declared and paid:

Interim dividend for the period ended 31 March 2021: 0.8 pence

– 4,365

Interim dividend for the period ended 30 June 2021: 0.85 pence

– 4,644

Interim dividend for the period ended 30 September 2021: 0.85 pence

– 4,640

Interim dividend for the period ended 31 December 2021: 0.875 pence

– 4,776

Interim dividend for the period ended 31 March 2022: 0.875 pence

4,774 –

Interim dividend for the period ended 30 June 2022: 0.875 pence

4,775 –

Interim dividend for the period ended 30 September 2022: 0.875 pence

4,771 –

Interim dividend for the period ended 31 December 2022: 0.875 pence 4,771 –

19,091 18,425

The interim dividend of 0.875 pence per ordinary share in respect of the period ended 31 March 2023 has not been

recognised as a liability as it was declared after the year-end. This dividend of £4,771,000 will be paid on 31 May 2023.

11. Earnings per share

Basic and diluted earnings per share is calculated by dividing the net (loss)/profit for the year attributable to ordinary

shareholders of the Company by the weighted average number of ordinary shares in issue during the year, excluding the

average number of shares held by the Employee Benefit Trust for the year. The diluted number of shares also reflects the

contingent shares to be issued under the Long-term Incentive Plan.

The following reflects the (loss)/profit and share data used in the basic and diluted profit per share calculation:

2023 2022

Net (loss)/profit attributable to ordinary shareholders of the Company from continuing operations (£000)

(89,964) 147,420

Weighted average number of ordinary shares for basic earnings per share

545,378,286 545,904,197

Weighted average number of ordinary shares for diluted earnings per share  546,856,450  547,295,589

Picton Property Income Limited

144

Notes to the consolidated ﬁnancial statements/Continued

Financial Statements/Continued

12. Investments in subsidiaries

The Company had the following principal subsidiaries as at 31 March 2023 and 31 March 2022:

Name Place of incorporation Ownership proportion

Picton UK Real Estate Trust (Property) Limited Guernsey 100%

Picton (UK) REIT (SPV) Limited Guernsey 100%

Picton (UK) Listed Real Estate Guernsey 100%

Picton UK Real Estate (Property) No 2 Limited Guernsey 100%

Picton (UK) REIT (SPV No 2) Limited Guernsey 100%

Picton Capital Limited England & Wales 100%

Picton (General Partner) No 2 Limited Guernsey 100%

Picton (General Partner) No 3 Limited Guernsey 100%

Picton No 2 Limited Partnership England & Wales 100%

Picton No 3 Limited Partnership England & Wales 100%

Picton Financing UK Limited England & Wales 100%

Picton Financing UK (No 2) Limited England & Wales 100%

Picton Property No 3 Limited Guernsey 100%

The results of the above entities are consolidated within the Group financial statements.

Picton UK Real Estate Trust (Property) Limited and Picton (UK) REIT (SPV) Limited own 100% of the units in Picton (UK)

Listed Real Estate, a Guernsey Unit Trust (the ‘GPUT’). The GPUT holds a 99.9% interest in both Picton No 2 Limited

Partnership and Picton No 3 Limited Partnership and the remaining balances are held by Picton (General Partner) No 2

Limited and Picton (General Partner) No 3 Limited respectively.

13. Investment properties

The following table provides a reconciliation of the opening and closing amounts of investment properties classified as

Level 3 recorded at fair value.

2023

£000

2022

£000

Fair value at start of year

830,027 665,418

Capital expenditure on investment properties

6,135 9,551

Acquisitions

20,613 25,005

Disposals

– (687)

Acquisition of right of use asset

– 897

Realised gains on disposal

– 42

Unrealised movement on investment properties (110,433) 129,801

Fair value at the end of the year 746,342 830,027

Historic cost at the end of the year 681,118 654,370

The fair value of investment properties reconciles to the appraised value as follows:

2023

£000

2022

£000

Appraised value

766,235 849,325

Valuation of assets held under head leases

2,081 2,237

Owner-occupied property

(3,248) (4,168)

Lease incentives held as debtors (18,726) (17,367)

Fair value at the end of the year 746,342 830,027

The investment properties were valued by independent valuers, CBRE Limited, Chartered Surveyors, as at 31 March 2023

and 31 March 2022 on the basis of fair value in accordance with the version of the RICS Valuation – Global Standards

(incorporating the International Valuation Standards) and the UK national supplement (the Red Book) current as at the

valuation date. The total fees earned by CBRE Limited from the Group are less than 5% of their total UK revenue.

The fair value of the Group’s investment properties has been determined using an income capitalisation technique,

whereby contracted and market rental values are capitalised with a market capitalisation rate. The resulting valuations are

cross-checked against the equivalent yields and the fair market values per square foot derived from comparable market

transactions on an arm’s length basis.

Picton Property Income Limited

Annual Report 2023

145

Financial Statements

Strategic Report Additional InformationGovernance

13. Investment properties/Continued

In addition, the Group’s investment properties are valued quarterly by CBRE Limited. The valuations are based on:

‒ Information provided by the Group including rents, lease terms, revenue and capital expenditure. Such information

is derived from the Group’s financial and property systems and is subject to the Group’s overall control environment.

‒ Valuation models used by the valuers, including market-related assumptions based on their professional judgement

and market observation.

The assumptions and valuation models used by the valuers, and supporting information, are reviewed by senior

management and the Board through the Property Valuation Committee. Members of the Property Valuation Committee,

together with senior management, meet with the independent valuer on a quarterly basis to review the valuations and

underlying assumptions, including considering current market trends and conditions, and changes from previous

quarters. The Board will also consider whether circumstances at specific investment properties, such as alternative uses

and issues with occupational tenants, are appropriately reflected in the valuations. The fair value of investment properties

is measured based on each property’s highest and best use from a market participant’s perspective and considers the

potential uses of the property that are physically possible, legally permissible and financially feasible.

As at 31 March 2023 and 31 March 2022 all of the Group’s properties, including owner-occupied property, are Level 3 in the

fair value hierarchy as it involves use of significant judgement. There were no transfers between levels during the year and

the prior year. Level 3 inputs used in valuing the properties are those which are unobservable, as opposed to Level 1

(inputs from quoted prices) and Level 2 (observable inputs either directly, i.e. as prices, or indirectly, as derived from prices).

Information on these significant unobservable inputs per sector of investment properties is disclosed as follows:

2023 2022

Office Industrial Retail and Leisure Office Industrial Retail and Leisure

Appraised value (£000)

245,260 439,570 81,405 251,125 509,730 88,470

Area (sq ft, 000s)

877 3,240 692 828 3,240 692

Range of unobservable inputs:

Gross ERV (sq ft per annum)

– range

£11.00 to

£84.12

£3.30 to

£27.83

£3.23 to

£26.05

£10.96 to

£82.32

£2.82 to

£26.77

£3.23 to

£28.49

– weighted average

£35.33 £13.16 £11.66 £35.10 £11.47 £11.83

Net initial yield

– range

–0.68% to

11.65%

2.28% to

7.75%

3.51% to

30.85%

0.92% to

9.00%

0.00% to

6.75%

3.07% to

25.00%

– weighted average

5.32% 4.30% 8.56% 4.64% 3.25% 7. 33%

Reversionary yield

– range

4.76% to

13.55%

4.83% to

8.17%

6.87% to

12.18%

4.29% to

9.63%

3.04% to

7.37%

6.19% to

12.89%

– weighted average

7.87% 5.78% 7.98% 7.00 % 4.24% 7.42%

True equivalent yield

– range

4.57% to

10.38%

4.75% to

7.98%

7.00% to

12.17%

4.09% to

9.95%

3.00% to

7.00%

6.25% to

13.02%

– weighted average 7.23% 5.51% 8.11% 6.49% 4.11% 7.55%

An increase/decrease in ERV will increase/decrease valuations, while an increase/decrease to yield decreases/increases

valuations. We have reviewed the ranges used in assessing the impact of changes in unobservable inputs on the fair value

of the Group’s property portfolio and concluded these were still reasonable. The table below sets out the sensitivity of the

valuation to changes of 50 basis points in yield.

Sector Movement 2023 Impact on valuation 2022 Impact on valuation

Industrial

Increase of 50 basis points Decrease of £36.7m Decrease of £55.2m

Decrease of 50 basis points Increase of £44.5m Increase of £69.0m

Office

Increase of 50 basis points Decrease of £16.1m Decrease of £11.9m

Decrease of 50 basis points Increase of £18.0m Increase of £12.5m

Retail and Leisure

Increase of 50 basis points Decrease of £4.5m Decrease of £5.1m

Decrease of 50 basis points Increase of £5.1m Increase of £5.9m

Picton Property Income Limited

146

Notes to the consolidated ﬁnancial statements/Continued

Financial Statements/Continued

14. Property, plant and equipment

Property, plant and equipment principally comprises the fair value of owner-occupied property. The fair value of these

premises is based on the appraised value at 31 March 2023.

Owner

Occupied

Property

£000

Plant and

equipment

£000

Total

£000

At 1 April 2021 3,830 281 4,111

Additions – 3 3

Depreciation (96) (69) (165)

Revaluation 434 – 434

At 31 March 2022 4,168 215 4,383

Additions – 13 13

Depreciation (104) (61) (165)

Revaluation (816) – (816)

At 31 March 2023 3,248 167 3,415

15. Accounts receivable

2023

£000

2022

£000

Tenant debtors (net of provisions for bad debts)

2,855 4,618

Lease incentives

18,726 17, 367

Other debtors 1,168 865

22,749 22,850

The estimated fair values of receivables are the discounted amount of the estimated future cash flows expected to be

received and the approximate value of their carrying amounts.

Amounts are considered impaired using the lifetime expected credit loss method. Movement in the balance considered

to be impaired has been included in the Consolidated Statement of Comprehensive Income. As at 31 March 2023, tenant

debtors of £92,000 (2022: £302,000) were considered impaired and provided for.

16. Cash and cash equivalents

2023

£000

2022

£000

Cash at bank and in hand

20,045 38,542

Short-term deposits 5 5

20,050 38,547

Cash at bank and in hand earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made

for varying periods of between one day and one month depending on the immediate cash requirements of the Group

and earn interest at the respective short-term deposit rates. The carrying amounts of these assets approximate to their

fair value.

17. Accounts payable and accruals

2023

£000

2022

£000

Accruals

4,712 4,994

Deferred rental income

8,654 8,399

VAT liability

1,782 1,638

Trade creditors

515 357

Other creditors 3,808 3,750

19,471 19,138

Picton Property Income Limited

Annual Report 2023

147

Financial Statements

Strategic Report Additional InformationGovernance

18. Loans and borrowings

Maturity

2023

£000

2022

£000

Current

Aviva facility –

1,433 1,372

Capitalised finance costs – (304) (304)

1,129 1,068

Non-current

Canada Life facility 24 July 2031

129,045 129,045

Aviva facility 24 July 2032

82,089 83,518

NatWest revolving credit facility 26 May 2025

11,900 4,900

Capitalised finance costs – (1,399) (1,699)

221,635 215,764

222,764 216,832

The following table provides a reconciliation of the movement in loans and borrowings to cash flows arising from

financing activities.

2023

£000

2022

£000

Balance at start of year

216,832 163,655

Changes from financing cash flows

Proceeds from loans and borrowings

12,000 79,545

Repayment of loans and borrowings

(6,368) (26,917)

Financing costs paid (183) (419)

5,449 52,209

Other changes

Amortisation of financing costs

304 967

Change in accrued financing costs 179 1

483 968

Balance as at 31 March 222,764 216,832

The Group has a £129.0 million loan facility with Canada Life which matures in July 2031. Interest is fixed at 3.25% per

annum over the remaining life of the loan. The loan agreement has a loan to value covenant of 65% and an interest cover

test of 1.75. The loan is secured over the Group’s properties held by Picton No 2 Limited Partnership and Picton UK Real

Estate Trust (Property) No 2 Limited, valued at £353.2 million (2022: £415.2 million). In the prior year a debt prepayment fee

of £4.0 million was incurred to reset the interest rate on the Canada Life facility.

Additionally, the Group has a £95.3 million term loan facility with Aviva Commercial Finance Limited which matures in

July 2032. The loan is for a term of 20 years and was fully drawn on 24 July 2012 with approximately one-third repayable

over the life of the loan in accordance with a scheduled amortisation profile. The Group has repaid £1.4 million in the year

(2022: £1.3 million). Interest on the loan is fixed at 4.38% per annum over the life of the loan. The facility has a loan to value

covenant of 65% and a debt service cover ratio of 1.4. The facility is secured over the Group’s properties held by Picton No

3 Limited Partnership and Picton Property No 3 Limited, valued at £193.6 million (2022: £208.1 million).

The Group also has a £50 million revolving credit facility (‘RCF’) with National Westminster Bank Plc which matures in May

2025. As at 31 March there was £11.9 million drawn under the facility, interest is charged at 150 basis points over SONIA on

drawn balances and there is an undrawn commitment fee of 60 basis points. The facility is secured on properties held by

Picton UK Real Estate Trust (Property) Limited, valued at £143.4 million (2022: £163.2 million).

The fair value of the drawn loan facilities at 31 March 2023, estimated as the present value of future cash flows discounted

at the market rate of interest at that date, was £201.7 million (2022: £225.6 million). The fair value of the drawn loan facilities

is classified as Level 2 under the hierarchy of fair value measurements.

There were no transfers between levels of the fair value hierarchy during the current or prior years.

The weighted average interest rate on the Group’s borrowings as at 31 March 2023 was 3.8% (2022: 3.7%).

Picton Property Income Limited

148

Notes to the consolidated ﬁnancial statements/Continued

Financial Statements/Continued

19. Contingencies and capital commitments

The Group has entered into contracts for the refurbishment of five properties with commitments outstanding at 31 March

2023 of approximately £2.9 million (2022: £2.4 million). No further obligations to construct or develop investment property or

for repairs, maintenance or enhancements were in place as at 31 March 2023 (2022: £nil).

20. Share capital and other reserves

2023

£000

2022

£000

Authorised:

Unlimited number of ordinary shares of no par value

– –

Issued and fully paid:

547,605,596 ordinary shares of no par value (31 March 2022: 547,605,596) – –

Share premium 164,400 164,400

The Company has 547,605,596 ordinary shares in issue of no par value (2022: 547,605,596).

No new ordinary shares were issued during the year ended 31 March 2023.

2023

Number of shares

2022

Number of shares

Ordinary share capital

547,605,596 547,605,596

Number of shares held in Employee Benefit Trust (2,388,694) (1,974,253)

Number of ordinary shares 545,216,902 545,631,343

The fair value of awards made under the Long-term Incentive Plan is recognised in other reserves.

Subject to the solvency test contained in the Companies (Guernsey) Law, 2008 being satisfied, ordinary shareholders are

entitled to all dividends declared by the Company and to all of the Company’s assets after repayment of its borrowings

and ordinary creditors. The Trustee of the Company’s Employee Benefit Trust has waived its right to receive dividends on

the 2,388,694 shares it holds but continues to hold the right to vote. Ordinary shareholders have the right to vote at

meetings of the Company. All ordinary shares carry equal voting rights.

The Directors have authority to buy back up to 14.99% of the Company’s ordinary shares in issue, subject to the annual

renewal of the authority from shareholders. Any buy-back of ordinary shares will be made subject to Guernsey law, and

the making and timing of any buy-backs will be at the absolute discretion of the Board.

21. Adjustment for non-cash movements in the cash ﬂow statement

2023

£000

2022

£000

Profit on disposal of investment properties

– (42)

Movement in investment property valuation

110,433 (129,801)

Revaluation of owner-occupied property

382 –

Share-based provisions

675 668

Depreciation of tangible assets 165 165

111,655 (129,010)

Picton Property Income Limited

Annual Report 2023

149

Financial Statements

Strategic Report Additional InformationGovernance

22. Obligations under leases

The Group has entered into a number of head leases in relation to its investment properties. These leases are for fixed

terms and subject to regular rent reviews. They contain no material provisions for contingent rents, renewal or purchase

options nor any restrictions outside of the normal lease terms.

Lease liabilities in respect of rents on leasehold properties were payable as follows:

2023

£000

2022

£000

Future minimum payments due:

Within one year

185 185

In the second to fifth years inclusive

740 740

After five years 8,898 9,083

9,823 10,008

Less: finance charges allocated to future periods (7,126) (7,301)

Present value of minimum lease payments 2,697 2,707

The present value of minimum lease payments is analysed as follows:

2023

£000

2022

£000

Current

Within one year 114 114

114 114

Non-current

In the second to fifth years inclusive

405 410

After five years 2,178 2,183

2,583 2,593

2,697 2,707

Operating leases where the Group is lessor

The Group leases its investment properties under commercial property leases which are held as operating leases.

At the reporting date, the Group’s future income based on the unexpired lease length was as follows (based on

annual rentals):

2023

£000

2022

£000

Within one year

43,824 41,928

One to two years

39,548 39,244

Two to three years

34,806 35,416

Three to four years

29,506 29,972

Four to five years

25,454 24,748

After five years 105,675 99,788

278,813 271,096

These properties are measured under the fair value model as the properties are held to earn rentals. Commercial

property leases typically have lease terms between five and ten years and include clauses to enable periodic upward

revision of the rental charge according to prevailing market conditions. Some leases contain options to break before

the end of the lease term.

23. Net asset value

The net asset value per share calculation uses the number of shares in issue at the year-end and excludes the actual

number of shares held by the Employee Benefit Trust at the year-end; see Note 20.

Picton Property Income Limited

150

Notes to the consolidated ﬁnancial statements/Continued

Financial Statements/Continued

24. Financial instruments

The Group’s financial instruments comprise cash and cash equivalents, accounts receivable, secured loans, obligations

under head leases and accounts payable that arise from its operations. The Group does not have exposure to any

derivative financial instruments. Apart from the secured loans, as disclosed in Note 18, the fair value of the financial assets

and liabilities is not materially different from their carrying value in the financial statements.

Categories of ﬁnancial instruments

31 March 2023 Notes

Held at

fair value

through

profit or loss

£000

Financial

assets and

liabilities at

amortised

cost

£000

Total

£000

Financial assets

Debtors

15 – 4,023 4,023

Cash and cash equivalents 16 – 20,050 20,050

– 24,073 24,073

Financial liabilities

Loans and borrowings

18 – 222,764 222,764

Obligations under head leases

22 – 2,697 2,697

Creditors and accruals 17 – 9,035 9,035

– 234,496 234,496

31 March 2022 Notes

Held at

fair value

through

profit or loss

£000

Financial

assets and

liabilities at

amortised

cost

£000

Total

£000

Financial assets

Debtors 15 – 5,483 5,483

Cash and cash equivalents 16 – 38,547 38,547

– 44,030 44,030

Financial liabilities

Loans and borrowings 18 – 216,832 216,832

Obligations under head leases 22 – 2,707 2,707

Creditors and accruals 17 – 9,101 9,101

– 228,640 228,640

25. Risk management

The Group invests in commercial properties in the United Kingdom. The following describes the risks involved and the

risk management framework applied by the Group. Senior management reports regularly both verbally and formally

to the Board, and its relevant Committees, to allow them to monitor and review all the risks noted below.

Capital risk management

The Group aims to manage its capital to ensure that the entities in the Group will be able to continue as a going concern

while maximising the return to stakeholders through optimising its capital structure. The Board’s policy is to maintain

a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of

the business.

The capital structure of the Group consists of debt, as disclosed in Note 18, cash and cash equivalents and equity

attributable to equity holders of the Company, comprising issued share capital, reserves, retained earnings and

revaluation reserve. The Group is not subject to any external capital requirements.

The Group monitors capital on the basis of its gearing ratio. This ratio is calculated as the principal borrowings

outstanding, as detailed under Note 18, divided by the gross assets. There is a limit of 65% as set out in the Articles of

Association of the Company. Gross assets are calculated as non-current and current assets, as shown in the Consolidated

Balance Sheet.

Picton Property Income Limited

Annual Report 2023

151

Financial Statements

Strategic Report Additional InformationGovernance

25. Risk management/Continued

At the reporting date the gearing ratios were as follows:

2023

£000

2022

£000

Total borrowings

224,467 218,835

Gross assets 792,556 895,807

Gearing ratio (must not exceed 65%) 28.3% 24.4%

The Board of Directors monitors the return on capital as well as the level of dividends to ordinary shareholders. The Group

has managed its capital risk by entering into long-term loan arrangements with different maturities, which will enable the

Group to manage its borrowings in an orderly manner over the long-term. The Group also has a revolving credit facility

which provides greater flexibility in managing the level of borrowings.

The Group’s net debt to equity ratio at the reporting date was as follows:

2023

£000

2022

£000

Total liabilities

244,932 238,677

Less: cash and cash equivalents (20,050) (38,547)

Net debt 224,882 200,130

Total equity 547,624 657,130

Net debt to equity ratio at end of year 0.41 0.30

Credit risk

The following tables detail the balances held at the reporting date that may be affected by credit risk:

31 March 2023 Notes

Held at

fair value

through

profit

or loss

£000

Financial

assets and

liabilities at

amortised

cost

£000

Total

£000

Financial assets

Tenant debtors

15 – 2,855 2,855

Cash and cash equivalents 16 – 20,050 20,050

– 22,905 22,905

31 March 2022 Notes

Held at

fair value

through

profit

or loss

£000

Financial

assets and

liabilities at

amortised

cost

£000

Total

£000

Financial assets

Tenant debtors 15 – 4,618 4,618

Cash and cash equivalents 16 – 38,547 38,547

– 43,165 43,165

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the

Group. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining collateral where

appropriate, as a means of mitigating the risk of financial loss from defaults. The Group’s exposure to and credit ratings

of, its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst

approved counterparties.

Picton Property Income Limited

152

Notes to the consolidated ﬁnancial statements/Continued

Financial Statements/Continued

25. Risk management/Continued

Tenant debtors consist of a large number of occupiers, spread across diverse industries and geographical areas. Ongoing

credit evaluations are performed on the financial condition of tenant debtors and, where appropriate, credit guarantees

or rent deposits are acquired. As at 31 March 2023 tenant rent deposits held by the Group’s managing agents in

segregated bank accounts totalled £2.6 million (2022: £2.4 million). The Group does not have access to these rent deposits

unless the occupier defaults under its lease obligations. Rent collection is outsourced to managing agents who report

regularly on payment performance and provide the Group with intelligence on the continuing financial viability of

occupiers. The Group does not have any significant concentration risk whether in terms of credit risk exposure to any

single counterparty or any group of counterparties having similar characteristics. The credit risk on liquid funds is limited

because the counterparties are banks with strong credit ratings assigned by international credit rating agencies.

The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents

the Group’s maximum exposure to credit risk. The Board continues to monitor the Group’s overall exposure to credit risk.

The Group has a panel of banks with which it makes deposits, based on credit ratings assigned by international credit

rating agencies and with set counterparty limits that are reviewed regularly. The Group’s main cash balances are held with

National Westminster Bank Plc (‘NatWest’), Nationwide International Limited (‘Nationwide’) and Lloyds Bank Plc (‘Lloyds’).

Insolvency or resolution of the bank holding cash balances may cause the Group’s recovery of cash held by them to

be delayed or limited. The Group manages its risk by monitoring the credit quality of its bankers on an ongoing basis.

NatWest, Nationwide and Lloyds are rated by all the major rating agencies. If the credit quality of any of these banks were

to deteriorate, the Group would look to move the relevant short-term deposits or cash to another bank. Procedures exist

to ensure that cash balances are split between banks to minimise exposure. At 31 March 2023 and at 31 March 2022,

Standard & Poor’s short-term credit rating for each of the Group’s bankers was A-1.

There has been no change in the fair values of cash or receivables as a result of changes in credit risk in the current or

prior periods, due to the actions taken to mitigate this risk, as stated above.

Liquidity risk

Ultimate responsibility for liquidity risk management rests with the Board, which has put in place an appropriate liquidity

risk management framework for the management of the Group’s short, medium and long-term funding and liquidity

management requirements. The Group’s liquidity risk is managed on an ongoing basis by senior management and

monitored on a quarterly basis by the Board by maintaining adequate reserves and loan facilities, continuously

monitoring forecasts, loan maturity profiles and actual cash flows and matching the maturity profiles of financial assets

and liabilities for a period of at least 12 months.

The table below has been drawn up based on the undiscounted contractual maturities of the financial assets/(liabilities),

including interest that will accrue to maturity.

31 March 2023

Less than

1 year

£000

1 to 5

years

£000

More than

5 years

£000

Total

£000

Cash and cash equivalents

20,652 – – 20,652

Debtors

4,023 – – 4,023

Capitalised finance costs

304 785 614 1,703

Obligations under head leases

(185) (740) (8,898) (9,823)

Fixed interest rate loans

(9,262) (37,049) (233,629) (279,940)

Floating interest rate loans

(690) (12,696) – (13,386)

Creditors and accruals (9,035) – – (9,035)

5,807 (49,700) (241,913) (285,806)

31 March 2022

Less than

1 year

£000

1 to 5

years

£000

More than

5 years

£000

Total

£000

Cash and cash equivalents 38,547 – – 38,547

Debtors 5,483 – – 5,483

Capitalised finance costs 304 934 765 2,003

Obligations under head leases (185) (740) (9,083) (10,008)

Fixed interest rate loans (8,524) (37,049) (242 ,891) (288,464)

Floating interest rate loans (113) (5,031) – (5,144)

Creditors and accruals (9,101) – – (9,101)

26,411 (41,886) (251,209) (266,684)

The Group expects to meet its financial liabilities through the various available liquidity sources, including a secure rental

income profile, asset sales, undrawn committed borrowing facilities and, in the longer-term, debt refinancing.

Picton Property Income Limited

Annual Report 2023

153

Financial Statements

Strategic Report Additional InformationGovernance

25. Risk management/Continued

Market risk

The Group’s activities are primarily within the real estate market, exposing it to very specific industry risks.

The yields available from investments in real estate depend primarily on the amount of revenue earned and capital

appreciation generated by the relevant properties, as well as expenses incurred. If properties do not generate sufficient

revenues to meet operating expenses, including debt service costs and capital expenditure, the Group’s operating

performance will be adversely affected.

Revenue from properties may be adversely affected by the general economic climate, local conditions such as oversupply

of properties or a reduction in demand for properties in the market in which the Group operates, the attractiveness of the

properties to occupiers, the quality of the management, competition from other available properties and increased

operating costs.

In addition, the Group’s revenue would be adversely affected if a significant number of occupiers were unable to pay

rent or its properties could not be rented on favourable terms. Certain significant expenditure associated with investment

in real estate (such as external financing costs and maintenance costs) is generally not reduced when circumstances

cause a reduction in revenue from properties. By diversifying in regions, sectors, risk categories and occupiers, senior

management expects to mitigate the risk profile of the portfolio effectively. The Board continues to oversee the profile

of the portfolio to ensure risks are managed.

The valuation of the Group’s property assets is subject to changes in market conditions. Such changes are taken to the

Consolidated Statement of Comprehensive Income and thus impact on the Group’s net result. A 5% increase or decrease

in property values would increase or decrease the Group’s net result by £38.3 million (2022: £42.5 million).

Interest rate risk management

Interest rate risk arises on interest payable on the revolving credit facility only. The Group’s senior debt facilities have

fixed interest rates over the terms of the loans. The amount drawn under the revolving credit facility makes up a small

proportion of the overall debt, the Group therefore has limited exposure to interest rate risk on its borrowings and no

sensitivity is presented.

Interest rate risk

The following table sets out the carrying amount, by maturity, of the Group’s financial assets/(liabilities).

31 March 2023

Less than

1 year

£000

1 to 5

years

£000

More than

5 years

£000

Total

£000

Floating

Cash and cash equivalents

20,050 – – 20,050

Secured loan facilities

– (11,900) – (11,900)

Fixed

Secured loan facilities

(1,433) (6,401) (204,733) (212,567)

Obligations under leases (114) (405) (2 ,178) (2,697)

18,503 (18,706) (206,911) (207,114)

31 March 2022

Less than

1 year

£000

1 to 5

years

£000

More than

5 years

£000

Total

£000

Floating

Cash and cash equivalents 38,547 – – 38,547

Secured loan facilities – (4,900) – (4,900)

Fixed

Secured loan facilities (1,372) (6,127) (206,436) (213,935)

Obligations under leases (114) (410) (2,183) (2,707)

37,061 (11,437) (208,619) (182,995)

Picton Property Income Limited

154

Notes to the consolidated ﬁnancial statements/Continued

Financial Statements/Continued

25. Risk management/Continued

Concentration risk

As discussed above, all of the Group’s investments are in the UK and therefore the Group is exposed to macroeconomic

changes in the UK economy. Furthermore, the Group derives its rental income from around 400 occupiers, although the

largest occupier accounts for only 4.8% of the Group’s annual contracted rental income.

Currency risk

The Group has no exposure to foreign currency risk.

26. Related party transactions

The total fees earned during the year by the Non-Executive Directors of the Company amounted to £275,000 (2022:

£275,000). As at 31 March 2023, the Group owed £nil to the Non-Executive Directors (2022: £nil).

The remuneration of the Executive Directors is set out in note 7 and in the Annual Remuneration Report.

Picton Property Income Limited has no controlling parties.

27. Events after the Balance Sheet date

A dividend of £4,771,000 (0.875 pence per share) was approved by the Board on 25 April 2023 and will be paid on 31 May 2023.

A further £3,000,000 was drawn down under the revolving credit facility with National Westminster Bank Plc on 3 May 2023.

Strategic Report Governance Financial Statements

Additional Information

Picton Property Income Limited

Annual Report 2023

155

EPRA BPR and supplementary disclosures (unaudited)

for the year ended 31 March 2023

The European Public Real Estate Association (EPRA) is the industry body representing listed companies in the real estate

sector. EPRA publishes Best Practices Recommendations (BPR) to establish consistent reporting by European property

companies. Further information on the EPRA BPR can be found at www.epra.com.

EPRA performance measures

Measure  2023 2022

EPRA earnings Recurring earnings from core operational activities.

 

EPRA earnings per share EPRA earnings per weighted number of ordinary shares.

 

EPRA net reinstatement value (NRV) Assumes assets are never sold and aims to represent the value required to

rebuild the entity.  

EPRA net tangible assets (NTA) Assumes entities buy and sell assets, thereby crystallising certain levels of

deferred tax liability.  

EPRA net disposal value (NDV) Represents the shareholders’ value under a disposal scenario.

 

EPRA net initial yield Annualised rental income based on the cash rents passing at the balance

sheet date, less non-recoverable property operating expenses, divided by the

market value of the property.  

EPRA ‘topped up’ net initial yield This measure incorporates an adjustment to the EPRA NIY in respect of the

expiration of rent-free periods (or other unexpired lease incentives).  

EPRA vacancy rate Estimated Market Rental Value (ERV) of vacant space divided by ERV of the

whole portfolio.    

EPRA cost ratio Administrative & operating costs (including costs of direct vacancy) divided by

gross rental income.  

Administrative & operating costs (excluding costs of direct vacancy) divided by

gross rental income.  

EPRA LT V Debt divided by market value of the property.  

EPRA earnings per share

EPRA earnings represents the earnings from core operational activities, excluding investment property revaluations and

gains/losses on asset disposals. It demonstrates the extent to which dividend payments are underpinned by recurring

operational activities.

2023

£000

2022

£000

2021

£000



  

Exclude:

Investment property valuation movement

  

Gains on disposal of investment properties

–  

Revaluation of owner-occupied property

 – –

Debt prepayment fees –  –

EPRA earnings   

Weighted average number of shares in issue (000s)   

   

EPRA NRV per share

The EPRA net reinstatement value measure highlights the value of net assets on a long-term basis. Assets and liabilities







related costs such as real estate transfer taxes should be included.

2023

£000

2022

£000

2021

£000

Balance Sheet net assets

  

Purchasers’ costs

  

Fair value of debt

– – –

Deferred tax – – –

EPRA NRV   

Shares in issue (000s)   

   

Additional Information/Continued

Picton Property Income Limited

Annual Report 2023

156

EPRA NTA per share

The EPRA net tangible assets calculation assumes entities buy and sell assets, thereby crystallising certain levels of





2023

£000

2022

£000

2021

£000

Balance Sheet net assets

  



– – –

Deferred tax – – –

EPRA NTA   

Shares in issue (000s)   

   

EPRA NDV per share

The EPRA net disposal value shows the impact to shareholder value if company assets are sold and/or liabilities are not

held until maturity.

2023

£000

2022

£000

2021

£000

Balance Sheet net assets

  

Fair value of debt   

EPRA NDV    

Shares in issue (000s)   

   

EPRA net initial yield (NIY)

EPRA NIY is calculated as the annualised rental income based on the cash rents passing at the Balance Sheet date, less

non-recoverable property operating expenses, divided by the gross market valuation of the properties.

2023

£000

2022

£000

2021

£000

Investment property valuation

  

Allowance for estimated purchasers’ costs   

   

Annualised cash passing rental income

  

Property outgoings   

   

   

EPRA ‘topped-up’ net initial yield

The EPRA ‘topped-up’ NIY is calculated by making an adjustment to the EPRA NIY in respect of the expiration of rent-free

periods (or other unexpired lease incentives such as discounted rent periods and step rents).

2023

£000

2022

£000

2021

£000

EPRA NIY annualised net rents

  

Annualised cash rent that will apply at expiry of lease incentives   

   

   

EPRA BPR and supplementary disclosures (unaudited)/Continued

for the year ended 31 March 2023

Strategic Report Governance Financial Statements

Additional Information

Picton Property Income Limited

Annual Report 2023

157

EPRA vacancy rate

The EPRA vacancy rate is the estimated rental value (ERV) of vacant space divided by the ERV of the whole property,



2023

£000

2022

£000

2021

£000

Annualised potential rental value of vacant premises

  

Annualised potential rental value for the complete property portfolio   

     

EPRA cost ratio



2023

£000

2022

£000

2021

£000

Property operating costs

  

Property void costs

  

Administrative expenses

  

Less:

Ground rent costs   

    

Property void costs   

   

Gross rental income

  

Less ground rent costs   

   

   

   

The Company has not capitalised any overhead or operating expenses in the accounting years disclosed above.

Only costs directly associated with the purchase or construction of properties as well as subsequent value-enhancing

capital expenditure are capitalised.

Capital expenditure



Recommendations.

2023 2022



£000





£000





£000

Group

£000

Joint

ventures

£000

Total

Group

£000

Acquisitions

 –   – 

Development

– – – – – –

Investment properties

Incremental lettable space

– – – – – –

No incremental lettable space

 –   – 

Tenant incentives

– – – – – –

Other material non-allocated types of expenditure – – – – – –

  –   – 

Conversion from accrual to cash basis – – – – – –

  –   – 

Additional Information/Continued

Picton Property Income Limited

Annual Report 2023

158

EPRA like-for-like rental growth

The table below sets out the like-for-like rental growth of the portfolio, by sector, in accordance with EPRA Best Practices

Recommendations.

Rental

income from

like-for-like

portfolio

2023

£000

Rental

income from

like-for-like

portfolio

2022

£000







£000









Industrial

   



   

Retail and Leisure    

    

The like-for-like rental growth is based on changes in rental income for those properties which have been held for the

duration of both the current and prior reporting years. This represents a portfolio valuation, as assessed by the valuer, of

£747.1 million (2022: £849.3 million).

EPR A LTV

EPRA loan to value’s aim is to assess the gearing of the shareholder equity within a real estate company.

2023

£000

2022

£000

2021

£000

Loans and borrowings

  

Less:

Cash and cash equivalents    

   

Investment properties (excluding head lease right of use asset)

  

Property, plant and equipment

  

Net receivable

  

   

EPRA LTV   

1 Net receivable is calculated as the net position of the following line items shown on the Balance Sheet: accounts receivable and accounts payable and accruals.

Loan to value

The loan to value ratio (LTV) is calculated by taking the Group’s total borrowings, net of cash, as a percentage of the total

portfolio value.

2023

£000

2022

£000

2021

£000

Total borrowings

  

Less:

Cash and cash equivalents    

   

Investment property valuation   

   

Cost ratio

The cost ratio is based on historical information and provides shareholders with an indication of the likely level of cost of

managing the Group. The cost ratio uses the annual recurring administrative expenses as a percentage of the average net

asset value over the period.

2023

£000

2022

£000

2021

£000

Administrative expenses   

Average net asset value over the year   

   

EPRA BPR and supplementary disclosures (unaudited)/Continued

for the year ended 31 March 2023

Strategic Report Governance Financial Statements

Additional Information

Picton Property Income Limited

Annual Report 2023

159



 Parkbury Industrial Estate, Radlett, Herts.



 River Way Industrial Estate, River Way, Harlow, Essex



 Angel Gate, City Road, London EC1

 Stanford Building, Long Acre, London WC2

 Express Business Park, Shipton Way, Rushden,

Northants.



 Datapoint, Cody Road, London E16

 Lyon Business Park, Barking, Essex

 Tower Wharf, Cheese Lane, Bristol

 50 Farringdon Road, London EC1

 Sundon Business Park, Dencora Way, Luton, Beds.

 30 & 50 Pembroke Court, Chatham, Kent



 Grantham Book Services, Trent Road, Grantham, Lincs.

 The Business Centre, Molly Millars Lane, Wokingham,

Berks.

 Colchester Business Park, The Crescent, Colchester,

Essex

 Metro, Salford Quays, Manchester

 180 West George Street, Glasgow

 

 Nonsuch Industrial Estate, Kiln Lane, Epsom, Surrey

 Parc Tawe North Retail Park, Link Road, Swansea

 Vigo 250, Birtley Road, Washington, Tyne and Wear

 Gloucester Retail Park, Eastern Avenue, Gloucester

 Madleaze Trading Estate, Bristol Road, Gloucester

 Charlotte Terrace, 99-119 Hammersmith Road,



 401 Grafton Gate East, Milton Keynes, Bucks.

 Mill Place Trading Estate, Bristol Road, Gloucester

 Swiftbox, Haynes Way, Rugby, Warwickshire

 Easter Court, Europa Boulevard, Warrington



 Units 1 & 2, Kettlestring Lane, York

 Units 1 & 2, Western Industrial Estate, Downmill Road,

Bracknell, Berks.

 Angouleme Retail Park, George Street, Bury, Greater

Manchester

 Queen’s House, St Vincent Place, Glasgow

 Longcross, Newport Road, Cardiff

 Regency Wharf, Broad Street, Birmingham

 Trident House, Victoria Street, St Albans, Herts.

 Thistle Express, The Mall, Luton, Beds.

 109-117 High Street, Cheltenham



 Atlas House, Third Avenue, Marlow, Bucks.

 Crown & Mitre Complex, English Street, Carlisle,

Cumbria

 Scots Corner, High Street, Kings Heath, Birmingham

 Sentinel House, Harvest Crescent, Fleet, Hants.

 Abbey Business Park, Mill Road, Newtownabbey, Belfast

 Waterside House, Kirkstall Road, Leeds

 53-57 Broadmead, Bristol

 Magnet Trade Centre, 6 Kingstreet Lane, Reading

 78-80 Briggate, Leeds

 17-19 Fishergate, Preston, Lancs.

 72-78 Murraygate, Dundee

 7-9 Warren Street, Stockport

 6-12 Parliament Row, Hanley, Staffs.

Property portfolio

Additional Information/Continued

Picton Property Income Limited

Annual Report 2023

160

2023 2022 2021 2020 2019



Net property income

    

Administrative expenses

    

Exceptional costs

– – – – 

    



    

     

Tax

– – –  

     

Property gains and losses

    

Revaluation of owner-occupied property

  – – –

Debt prepayment fee

–  – – 

      

Dividends paid     

2023 2022 2021 2020 2019



Investment properties

    

Borrowings

     

Other assets and liabilities

    

     

Net asset value per share (pence)

    

EPRA net tangible asset per share (pence)

    

Earnings per share (pence)

    

Dividends per share (pence)

    



    

Share price (pence)     



Five year ﬁnancial summary

Strategic Report Governance Financial Statements

Additional Information

Picton Property Income Limited

Annual Report 2023

161



A CBRE product that monitors the use of building systems.





A collaboration of UK commercial property owners working to improve sustainability of building

stock.





A computer-based control system installed in buildings that control and monitor the building’s



security systems.







An established sustainability rating assessment for projects, infrastructure and buildings. It assesses

assets across their life cycle, from new construction to in-use and refurbishment. www.breeam.com



The most abundant greenhouse gas in our planet’s atmosphere. It is often the benchmark gas





The contracted gross rent receivable which becomes payable after all the occupier incentives in the

letting have expired.



Total operating expenses, excluding one-off costs, as a percentage of the average net asset value

over the period.





Provides the real estate industry with transparent, science-based decarbonization pathways aligned

with the Paris Climate Goals of limiting global temperature rise to 2°C, with ambition towards 1.5°C.



EPRA earnings divided by dividends paid.

DTR

Disclosure and Transparency Rules, issued by the United Kingdom Listing Authority.





issue during the period.







lettable unit. The scale ranges from A–G.

EPRA

European Public Real Estate Association, the industry body representing listed companies in the

real estate sector.





A framework that socially conscious investors use to screen potential investments. Environmental

criteria consider how a company performs as a steward of nature. Social criteria examine how it

manages relationships with employees, suppliers, customers, and the communities where it

operates. Governance deals with a company’s leadership, executive pay, audits, internal controls, and

shareholder rights.



The external valuers’ opinion as to the open market rent which, on the date of the valuation, could

reasonably be expected to be obtained on a new letting or rent review of a property.



Amount of energy used per square foot annually.



A vehicle powered using a battery, solar panels, fuel cells or electric generator.



The estimated amount for which a property should exchange on the valuation date between a

willing buyer and a willing seller in an arm’s length transaction after the proper marketing and

where parties had each acted knowledgeably, prudently and without compulsion.



An accounting adjustment to change the book value of an asset or liability to its fair value.



A lease which imposes full repairing and insuring obligations on the tenant, relieving the landlord

from all liability for the cost of insurance and repairs.

GHG

Greenhouse gas.



Total GHG emissions.



A normalised metric set against an economic output such as number of employees, revenue or area.

Allows for an emission reduction target to be set which accounts for economic growth.





An investor-driven organisation assessing the sustainability performance of the real estate sector,

through detailed analysis of ESG metrics from the corporate to the individual asset level.

www.gresb.com

Glossary

Additional Information/Continued

Picton Property Income Limited

Annual Report 2023

162

Glossary/Continued



Refers to the changing methods of grid power generation which rely less on fossil fuels and more on

renewable/sustainable energy sources resulting in fewer emissions per unit of electricity generated.



Picton Property Income Limited and its subsidiaries.



International Accounting Standards Board.



International Financial Reporting Standards.



Annual cash rents receivable (net of head rents and the cost of vacancy), as a percentage of gross

property value, as provided by the Group’s external valuers. Rents receivable following the expiry of

rent-free periods are not included.





An independent, non-governmental international organisation with a membership of 164 national

standards bodies, that develops voluntary, consensus-based, market relevant international standards

that support innovation and provide solutions to global challenges.





A measure of emissions intensity.



A standard unit for measuring electricity consumption.





A unit of measure of a property based on the annual electricity consumption by a single square

metre. The aggregation of energy in this way allows for a direct comparison between properties.



Incentives offered to occupiers to enter into a lease. Typically this will be an initial rent-free period, or



through the Income Statement on a straight-line basis until the lease expiry.









A piece of legislation set by the UK Government. From April 2018 a landlord is unable to renew or



rating of F or G.



An organisation supplying independent market indices and portfolio benchmarks to the property

industry.



A unit of measurement for the output of power from a source such as solar or wind where the

output may vary.

NAV

Net asset value is the equity attributable to shareholders calculated under IFRS.



The point at which the amount of carbon being released into the atmosphere is equal to the

amount removed from the atmosphere.



The process of removing carbon from the atmosphere to balance emissions into the atmosphere.



Space where the passing rent is above the ERV.



The annual rental income currently receivable as at the Balance Sheet date. Excludes rental income

where a rent-free period is in operation.



A device used to allow automatic lighting control.





A global proponent of responsible investment that supports an international network of investors to

incorporate ESG factors into their investment and ownership decisions.



The ungeared income return of the portfolio as calculated by MSCI.



Photovoltaic (PV) materials and devices that convert sunlight into electrical energy.





Four pathways developed for the climate modelling community to assess a number of different

climate scenarios.





A scheme which demonstrate electricity has been generated from renewable sources.



The estimated rental value as a percentage of the gross property value.





Strategic Report Governance Financial Statements

Additional Information

Picton Property Income Limited

Annual Report 2023

163



Scope 2 emissions are indirect emissions from the generation of purchased energy, for example

from electricity.



All indirect emissions (not included in Scope 2) that occur in the value chain of the reporting

company, including both upstream and downstream emissions (e.g. occupier emissions).





A framework to help public companies disclose climate-related risks.



Tonnes of carbon dioxide equivalent, which is a measure that allows you to compare the emissions

of other greenhouse gases relative to one unit of CO



gas’s emissions by its 100-year global warming potential.



Combined income and capital return from the property portfolio.



The change in the Group’s net asset value, in accordance with IFRS, plus dividends paid.



Measures the change in share price over the year plus dividends paid.





A charity launched by the construction industry to promote sustainability across the built

environment value chain.





Each tranche of Group debt is multiplied by the remaining period to its maturity and the result is

divided by total Group debt in issue at the period end.



The Group loan interest per annum at the period end, divided by total Group debt in issue at the

period end.





contracted rental income.

Additional Information/Continued

Picton Property Income Limited

Annual Report 2023

164

Annual results announced 25 May 2023

Annual results posted to shareholders June 2023

June 2023 NAV announcement July 2023

Annual General Meeting September 2023

2023 half-year results to be announced November 2023

December 2023 NAV announcement January 2024

Dividend payment dates August/November/February/May

Financial calendar

Strategic Report Governance Financial Statements

Additional Information

Picton Property Income Limited

Annual Report 2023

165



Lena Wilson (Chair)

Mark Batten

Maria Bentley

Andrew Dewhirst

Richard Jones

Michael Morris



PO Box 255

Trafalgar Court

Les Banques

St Peter Port

Guernsey

GY1 3QL

Registered Number: 43673



Stanford Building

27A Floral Street

London

WC2E 9EZ

T: 020 7628 4800

E: enquiries@picton.co.uk



Northern Trust International Fund Administration

Services (Guernsey) Limited

PO Box 255, Trafalgar Court

Les Banques

St Peter Port

Guernsey

GY1 3QL

T: 01481 745001

E: team_picton@ntrs.com



Computershare Investor Services (Guernsey) Limited

1st Floor

Tudor House

Le Bordage

St Peter Port

Guernsey

GY1 1DB

T: 0370 707 4040

E: info@computershare.co.je



JP Morgan Securities Limited

25 Bank Street

London

E14 5JP

Stifel Nicolaus Europe Limited

150 Cheapside

London

EC2V 6ET



KPMG Channel Islands Limited

Glategny Court

Glategny Esplanade

St Peter Port

Guernsey

GY1 1WR



Tavistock Communications

18 St Swithin’s Lane

London

EC4N 8AD

T: 020 7920 3150

E: james.verstringhe@tavistock.co.uk





Norton Rose Fulbright LLP

3 More London Riverside

London

SE1 2AQ



DLA Piper UK LLP

Suite 3

The Plaza

Old Hall Street

Liverpool

L3 9QJ



Carey Olsen

PO Box 98

Carey House

Les Banques

St Peter Port

Guernsey

GY1 4BZ



CBRE Limited

Henrietta House

Henrietta Place

London

W1G 0NB



Deloitte LLP

Hill House

1 Little New Street

London

EC4A 3TR



All enquiries relating to holdings in Picton Property Income





should be addressed to the Company’s registrars.



The Company has a corporate website which contains

more detailed information about the Group.



Shareholder information

Picton Property Income Limited

Annual Report 2023

166

Notes



environmental management system.

This product is made using recycled materials limiting the impact on our

precious forest resources, helping reduce the need to harvest more trees.

100% of the inks used are HP Indigo ElectroInk which complies with



Ecolabel (Nordic Swan) for printing companies, 95% of press chemicals

are recycled for further use and, on average 99% of any waste associated

with this production will be recycled and the remaining 1% used to

generate energy.

The paper is Carbon Balanced with World Land Trust, an international

conservation charity, who offset carbon emissions through the purchase

and preservation of high conservation value land. Through protecting

standing forests, under threat of clearance, carbon is locked-in, that

would otherwise be released.

Picton Property Income Limited Annual Report 2023

Picton Property Income Limited

Stanford Building

27A Floral Street

London

WC2E 9EZ

020 7628 4800