![]() Occupier focused, Opportunity led. Picton Property Income Limited Annual Report 2024 ### Future-proofing our portfolio, ### unlocking value ![]() Through our occupier focused, #### opportunity led approach, we #### aim to be one of the consistently #### best performing diversified #### UK REITs listed on the London #### Stock Exchange. #### To us this means being a #### responsible owner of commercial #### real estate, helping our occupiers #### succeed and being valued by all #### our stakeholders. Strategic Report 01 Business Overview 02 Highlights 04 Purpose 05 Strategy 06 Business Model 08 Future-proofingourPortfolio 16 ChiefExecutive’sReview 20 KeyPerformanceIndicators 24 OurMarketplace 28 PortfolioReview 38 FinancialReview 42 PrincipalRisks 47 TCFDStatement 56 Being Responsible: Sustainability Reporting Governance 78 Chair’sIntroduction 80 GovernanceataGlance 82 BoardofDirectors 84 OurTeam 86 Leadership and Purpose 90 Section172Statement 94 DivisionofResponsibilities 96 Composition,SuccessionandEvaluation 103 Audit,RiskandInternalControl 109 RemunerationReport 128 Directors’Report Financial Statements 131 IndependentAuditor’sReport 135 ConsolidatedStatementof ComprehensiveIncome 136 ConsolidatedStatementofChanges inEquity 137 ConsolidatedBalanceSheet 138 ConsolidatedStatementofCashFlows 139 NotestotheConsolidatedFinancial Statements Additional Information 158 EPRABPRandSupplementary Disclosures 162 PropertyPortfolio 163 FiveYearFinancialSummary 164 Glossary 167 FinancialCalendar 168 ShareholderInformation ClickheretowatchourAtaGlancevideo ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 01 These results demonstrate that we have been able to grow EPRA earnings despite the impacts of inflation, higher interest rates and a weaker economic backdrop. This year, helped by our industrial exposure and strategy to reposition non-core office assets for alternative uses, our portfolio has outperformed the MSCI UK Quarterly Property Index. This marks our eleventh consecutive year of outperformance and maintains our track record of upper quartile performance since launch in 2005. We have a resilient business model with long-term fixed rate financing, and we are confident in our ability to capture the significant income upside potential from our portfolio. I am pleased that we were able to announce in April a near 6% dividend increase. Lena Wilson CBE Chair #### Performance summary 4.0p EPRAearningspershare 114% Dividendcover 3.5p Dividends paid per share 96p NAV per share ReadmoreinourChair’sIntroductionto theGovernanceReportonpages78–79 Business Overview ![]() Picton Property Income Limited / Annual Report 202402 Highlights #### Highlights 2023/2024 #### Valuable long-term #### debt structure 28% Loan to value 93% Borrowings Atfixedinterestrates 3.9% Weighted average interest rate #### 7.2 years Debt maturity profile 101p EPRA Net Disposal Value (per share) Reflectingfairvalueofdebt £524m Net asset value 96p NAV per share £19m Dividends paid 114% Dividend cover #### Robust financial performance delivering #### EPRA earnings growth £745m Portfolio valuation £22m EPRA earnings Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 03 80% EPC ratings A-C Improvedfrom76%in2023 16% Reduction in Scope 1 & 2 emissions comparedto2019baseline 184% Increase in solar capacity comparedto2023 £4.5m Invested into upgrading over 20 assets 62% Occupier energy data coverage 99% Of leases contained green clauses #### 3% increase in passing rent, #### contracted rent #### and ERV #### 4.5% increase in net #### property income Allfiguresarestatedasat31March2024orfortheyearended31March2024unlessotherwisestated.Comparative figuresarefortheyearended31March2023. TheFinancialStatementsarepreparedunderIFRS.Weuseanumberofalternativeperformancemeasures(APMs) whenreportingontheperformanceofthebusinessanditsfinancialposition.Incommonwithmanyotherlisted propertycompanies,wereporttheEPRAperformancemeasures.IntheAdditionalInformationsectionofthis reportonpages158–161weprovidemoredetailedinformationandreconciliationstoIFRSwhereappropriate. 26 Lettings 3%aheadofMarch2023ERV 31 Lease renewals/regears 2%aheadofMarch2023ERV 13 Rent reviews 2%aheadofMarch2023ERV 99% Rent collection 93% Occupancy (Excludingassetsheldforsale) 29% Reversionary potential (Abovecurrentpassingrent) #### Continued sustainability #### progress towards net zero #### carbon targets #### Outperforming property portfolio with #### improving income and reversionary potential #### Repositioning our #### portfolio to improve #### income and occupancy #### Continued MSCI outperformance #### for the eleventh consecutive year #### and long-term upper quartile #### outperformance since launch #### Diversified income #### stream with over ![]() Picton Property Income Limited / Annual Report 202404 Purpose #### Our purpose 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 #### Principled We are professional, #### diligent and strategic. Demonstratedthroughour transparentreporting,occupier focusedapproach,alignment withshareholders,deliveryofour PictonPromise,ourcommitment to sustainability and positive environmentalinitiatives. #### Perceptive We are insightful, #### thoughtful and intuitive. Demonstratedthroughour long-termtrackrecord,our gearingstrategy,ourdynamic positioningoftheportfolio,and engagementwithouroccupiers. #### Progressive We are forward-thinking, enterprising, and #### continually advancing. Demonstratedthroughour culture,workethic,andproactive assetmanagement. #### Creating stakeholder value Shareholders £19m Dividends paid Occupiers £4.5m Investedintoupgradingproperties Communities 15 Charities supported Our people 86% Employeesatisfactionscore The environment 80% EPCratingsA-C Formoredetailedinformationon ourstakeholders,seeourSection172 Statementonpages90–91 Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 05 Strategy Throughouroccupierfocused,opportunityledapproach,weaim tobeoneoftheconsistentlybestperformingdiversifiedUKREITs, creatingvalueforourshareholders. Ourstrategicprioritiesguidethedirectionofourbusinessandare reviewedannually. #### Our strategic priorities #### Portfolio #### Performance / Managetheportfolio toprovideincomeand capitalgrowth / Growoccupancyand incomeprofile / Enhanceassetquality andcreatespace thatmeetsevolving occupierexpectations / OutperformtheMSCIUK QuarterlyPropertyIndex #### Operational #### Excellence / Runanefficient and innovative operatingplatform / Adapttomarkettrends withanagileandflexible businessmodel / Deliver earnings growth / Maintain appropriate capitalstructureforthe marketcycle / Pursue opportunities forgrowthtodeliver economiesofscale #### Acting #### Responsibly / Reduceouremissions tobecomenetzero carbonby2040 / Activelyengage withouroccupiers, shareholders,communities and other stakeholders / Promoteourcompany values,nurtureapositive workingculture,and alignmentoftheteam / Ensurethelong-term successofthebusiness withstronggovernance and transparent reporting 1 2 3 Fordetailsontheassociatedrisks seepages42–46 FordetailsonconnectedKPIs seepages20–23 Fordetailsonourstrategicprogressseethe ChiefExecutive’sReviewonpages16–19 ![]() 04 02 01 03 Knowledge, expertise and research led decision making Selling assets to recycle into better opportunities Creating value through proactive asset management Asset selection and acquisition Picton Property Income Limited / Annual Report 202406 Business Model #### Our business model #### How we create value This is underpinned by: Risk management Ourdiverseportfolioandoccupierbasespreadsrisk andgeneratesastableincomestreamthroughoutthe propertycycle.Weadaptourcapitalstructureanduse debteffectivelytoachieveenhancedreturns.Wemaintain acovereddividendpolicytogenerateasurpluswhichwe caninvestbackintotheportfolio. Responsible stewardship Wehavearesponsibleandethicalapproachtobusiness andsustainabilityisembeddedwithinourcorporate strategy.Weunderstandtheimpactofourbusinesson theenvironmentandarecommittedtoactingforthe benefitofallourstakeholders. 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. Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 07 Long-term outperformance through a diversified approach Wehavealong-termperformance trackrecord,outperformingthe MSCIUKQuarterlyPropertyIndex forelevenconsecutiveyears.We ownadiverserangeofassetswhich enablesustopositiontheportfolio asmarketconditionsdictateand havedeliveredupperquartile performanceoverthree,fiveandten years,andsincelaunchin2005. Aligned and high performing management team Ourexperiencedandknowledgeable teamhasaprovenlong-termtrack recordofsuccessandisfinancially aligned.Weareinternallymanaged enablingustounlockefficiencies throughgrowth.Ouragilebusiness modelprovidesflexibilitytoadapt tochangingmarketconditions. Occupier focused, opportunity led Ourcollaborativeapproachensures weengagewithouroccupiers tocreatespacestohelpthem succeed.Ourproactiveasset managementhelpstomaintain highoccupancyacrosstheportfolio. Sustainable thinking, responsible business Ourresponsibleapproachtobusiness withanincreasingenvironmental focusisessentialforthebenefitofall our stakeholders and understanding thelong-termimpactofour decisionshelpsustomanagerisk andcontinuetogeneratevalue. 01 Knowledge, expertise and research led decision making Ourin-depthunderstandingof theUKcommercialproperty marketenablesustoidentify andsourcevalueacrossdifferent sectorsandrepositiontheportfolio throughthepropertycycle. 02 Asset selection and acquisition – buying into growth assets, locations or sectors Wehaveestablishedadiversified UKpropertyportfolioandwhile incomefocused,wewillconsider opportunitieswherewecan enhancevalueand/orincome. 03 Creating value through proactive asset management Ourdiverseoccupierbasegenerates astableincomestream,which weaimtogrowthroughactive managementandcapturing marketrentaluplifts.Ouroccupier focused,opportunityledapproach ensureswecreatespacethat meetsouroccupiers’needsin ordertomaintainhighlevelsof occupancyacrosstheportfolio. 04 Selling assets to recycle into better opportunities Weidentifyassetsfordisposalto maximisevaluecreation.Proceeds areinvestedintonewopportunities, orusedelsewherewithintheGroup. #### What makes us different Readmoreonpages8–15 Readmoreonpages8–15 Readmoreonpages32–37 Readmoreonpages56–77 ![]() Picton Property Income Limited / Annual Report 202408 Future-proofi ng our Portfolio #### Portfolio at a glance Key Our strategic priorities Portfolio Performance 1 Operational Excellence 2 Acting Responsibly 3 ## Future-proofi ng our portfolio, ## unlocking value We own a portfolio strategically positioned to capture income and capital growth, currently weighted towards the industrial sector. Our agile business model provides fl exibility to adapt to evolving market trends over the long-term as demonstrated by our track record of upper quartile outperformance against the MSCI UK Quarterly Property Index. £745m Portfolio valuation 59% Industrial weighting 30% Offi ce weighting 11% Retail and Leisure weighting 49 Assets 400 Occupiers Back to contents ![]() Picton Property Income Limited / Annual Report 2024 Financial Statements Additional InformationGovernanceStrategic Report 09 #### Our occupier focused approach #### ensures we engage with our occupiers to create spaces to meet their evolving requirements, help their businesses succeed and #### maintain high occupancy across #### the portfolio. We are opportunity led and our business model provides fl exibility to adapt to evolving market trends. Alongside our proactive asset management and disciplined approach to capital structure, we have delivered outperformance and a consistently higher income return than the MSCI Quarterly Property Index over the long-term. We are committed to acting responsibly and have a target to become net zero carbon by 2040, which we believe is essential for the benefi t of all our stakeholders. #### Unlocking value #### with alternative #### use strategies Recognising the changing offi ce sector landscape, we have made good progress on repositioning our portfolio to secure more valuable alternative uses at some of our offi ce assets. Read more on pages 10–11 #### Investing in our #### assets to improve #### sustainability #### credentials We are committed to improving the environmental performance of our buildings and ensuring these are future-proofed and meet our evolving occupier requirements. Read more on pages 14–15 #### Capturing reversionary potential #### with proactive asset management With occupational demand remaining positive within the industrial sector, we have been able to capture rental growth. Over the year, we have successfully increased income through our proactive approach to asset management. Read more on pages 12–13 Strategic priority 1 2 3 Strategic priority 1 23 Strategic priority 123 ![]() Picton Property Income Limited / Annual Report 202410 Future-proofi ng our Portfolio / Continued #### We have made #### signifi cant progress #### securing more valuable #### alternative uses. Michael Morris Chief Executive #### Offi ce to alternative use #### strategy – repositioning th #### e portfolio Since the pandemic, the offi ce sector has evolved, with occupier demands and preferences changing, following remote and hybrid working arrangements and different workplace dynamics. While it is clear that well-located, amenity rich, sustainable space is still in demand, it is building specifi c, with secondary space struggling to attract occupiers without signifi cant capital expenditure. Recognising these changes in the offi ce sector, we have made signifi cant progress exploring and securing more valuable alternative uses at selected offi ce assets. Several of our properties have alternative use potential, and we have agreed sales to developers in respect of two of them as well as securing a healthcare occupier at a third following receipt of planning. #### Longcross, Cardiff #### We have exchanged contracts #### to sell a partially vacant #### offi ce building to an #### experienced student #### accommodation developer. The transaction is conditional on planning permission and vacant possession. The sale price is dependent on the exact planning consent obtained and in particular upon the number of rooms secured. The base price was 16% ahead of the March 2023 valuation and we expect to benefi t from an overage payment once planning is secured. We will retain a small income-producing industrial unit and car parking site that will be sold separately in due course. To facilitate the disposal, we have completed a number of transactions that have ensured we can secure vacant possession in 2024. We expect planning to be secured in the fourth quarter of 2024. Accounting for 12% Of the total portfolio void 16% Base price ahead of the March 2023 valuation Strategic priority 123 Back to contents ![]() Picton Property Income Limited / Annual Report 2024 Financial Statements Additional InformationGovernanceStrategic Report 11 #### Angel Gate, London #### During the year, we obtained #### residential consent via #### permitted development rights on #### 30,000 sq ft of vacant offi ce space. This was made possible during a period when the Article 4 restrictions had lapsed, however, from September 2023, any further conversion of offi ce space to residential was restricted by an updated Article 4 Direction. We engaged directly with both the local and national planning authorities. As a result of this proactive approach, the new Article 4 Direction was modifi ed to remove the entire 1.7 acre site from this restriction, unlocking a further 34,000 sq ft of space for residential conversion. Having secured the site’s full residential conversion potential, this has enabled us to sell the property to a residential developer. Contracts were exchanged in March with the sale completing post year-end. While we worked through the planning position, we were able to maintain occupancy at an average of 50%, ensuring positive cash fl ow from the asset. 19% Of the total portfolio void Accounting for #### Colchester #### Business Park At Colchester Business Park, we have leased a vacant offi ce suite to a healthcare occupier at a rent of £0.1 million per annum, which is in line with ERV. The lease completed following receipt of planning permission for change of use and once the associated conditions were satisfi ed. ![]() Picton Property Income Limited / Annual Report 202412 #### Creating value #### through proactive #### asset management #### Our diverse occupier base generates a stable income stream, #### which we aim to grow through #### active management and capturing #### market rental uplifts. Occupational demand in the industrial sector remains positive and we are continuing to capture rental growth. A lack of supply, especially of multi-let estates, coupled with increasing build costs, means that occupiers have restricted choice when looking for space, which has driven rental growth across the country. Future-proofi ng our Portfolio / Continued 44% Uplift on the previous passing rent #### Parkbury, Radlett At our largest asset in Radlett, we have captured rental growth at lease events over the year. A rent review was settled with a trade supplier to the professional audio, broadcast, light and power industries where the rent was increased by 56% to £0.1 million per annum. We agreed a renewal with a cosmetics business, who renewed for ten years, subject to break, at a rent of £0.2 million per annum, an uplift of 44% on the previous passing rent. The combined new rent was in line with ERV. We have relocated an occupier to our estate in Luton, meaning we now have one vacant unit we are refurbishing. This will be the fi rst open market letting since 2019 on the estate and we believe will provide further rental growth. The unit is being refurbished in line with our sustainable refurbishment guidelines. Strategic priority 1 23 Back to contents ![]() Picton Property Income Limited / Annual Report 2024 Financial Statements Additional InformationGovernanceStrategic Report 13 #### River Way, Harlow In Harlow, we enabled a food packaging provider to expand into an adjoining unit that we had comprehensively refurbished after a previous occupier vacated, improving its environmental credentials and EPC rating from a D to an A. This secured higher, longer-term income across both units, with the new rent increasing by 47% on their existing unit and 57% ahead of the rent the previous occupier was paying on the additional unit. 38% Rent increase to £1.6 million per annum 8% Rent ahead of ERV #### Grantham #### distribution #### warehouse A rent review was settled with a book distributor where the rent was increased by 38% to £1.6 million per annum, 8% ahead of ERV. We are in discussions with the occupier to extend the lease and carry out sustainability improvements to the unit. #### Ten-year lease at a rent of #### £0.7 million #### per annum 47% Higher passing rent ![]() Picton Property Income Limited / Annual Report 202414 Future-proofi ng our Portfolio / Continued 4% Rent ahead of ERV #### Sustainable refurbishments: #### investing in our buildings #### We are committed to enhancing #### the environmental performance #### of our buildings to improve #### their operational effi ciency #### and to ensure that they meet #### occupier requirements. In line with our sustainable refurbishment guidelines, when space becomes vacant, we seek to improve its sustainability credentials in terms of certifi cation, services, structure and building resilience. Where possible, we aim to remove gas fi red systems and install solar on roofs to provide on-site renewable energy, with fi ve projects having been completed this year. Sentinel House, #### Fleet In Fleet, which is leased to a serviced offi ce provider, we extended their lease by a further fi ve years, to 2030. We agreed a small rental uplift in 2025 to £0.5 million per annum, 4% ahead of ERV. The reversionary lease included our standard green lease clauses, and we arranged for solar panels to be installed, with the cost being deducted from the incentive being given to the occupier. In addition, we have added insulation to the property and refurbished the windows. The building achieved an A rated EPC and the works align with our net zero commitments as well as reducing our occupier’s running costs. £4.5m Invested across the portfolio 80% EPC ratings A–C Strategic priority 1 2 3 Back to contents ![]() Picton Property Income Limited / Annual Report 2024 Financial Statements Additional InformationGovernanceStrategic Report 15 #### The circular #### economy #### As part of our net zero carbon pathway, we are embracing the circular economy principles to #### reuse, recycle and repurpose #### where possible. We have agreed to sell Longcross, Cardiff and as part of the agreement, we are permitted to strip the building of any internal fi nishes. We are reusing 20,000 sq ft of carpet, a modern air-conditioning system, lights and furniture which will be used in the refurbishment of two other offi ce buildings in Colchester and Bristol. By reusing the air-conditioning unit, we estimate this will save £0.2 million with further cost savings from repurposing the fi xtures and fi ttings. Easter Court, #### Warrington As part of the full refurbishment works at Unit 1, we removed gas heating systems from the warehouse and replaced the roof. The offi ce area, common areas and warehouse area have all been fi tted with new LED lighting. We also installed solar panels on the roof to provide on- site renewable energy and allow excess electricity to be fed back into the grid which will help to reduce the operational emissions of the unit. These refurbishments have improved the EPC rating of the building to an A rating. We subsequently leased the unit to a national car dealership at a rent of £0.1 million per annum, which was in line with ERV. £0.2m Savings by reusing the air-conditioning equipment from Cardiff ![]() Picton Property Income Limited / Annual Report 202416 #### We have grown rental income, capturing and #### improving reversionary #### potential during the year. Michael Morris Chief Executive Chief Executive’s Review Well-positioned and #### resilient portfolio Back to contents ![]() Picton Property Income Limited / Annual Report 2024 Financial Statements Additional InformationGovernanceStrategic Report 17 We have operated with a well-covered dividend of 114% (covered for the twelfth consecutive year) and earlier this month we were able to announce a near 6% uplift, increasing the dividend above its pre-pandemic level. Our share price performance over the year has been weaker, with a total shareholder return of -1%. At the year- end our discount to net asset value was 32%, but encouragingly this has narrowed in recent weeks, in part refl ecting some of the positive activity that we have been able to announce. Portfolio Performance Outperforming property portfolio We have again outperformed the MSCI UK Quarterly Property Index, now for the eleventh consecutive year and we continue to deliver upper quartile performance since launch in 2005. Our diversifi ed approach and long-term track record highlight the benefi ts of being able to adapt the portfolio to changing market conditions. Growing occupancy and income We have taken steps to reposition the portfolio, through our alternative use strategy, looking to reduce our offi ce exposure. During the year, we exchanged contracts to sell two part-vacant offi ce buildings, both at premiums to the preceding valuation. One disposal completed following the year-end and the other is conditional upon planning permission which is expected to be obtained during the next fi nancial year. Headline occupancy remained stable at 91%. Occupancy in our industrial and retail assets was more than 97%, but offi ces remained lower, in part due to market conditions, and also the need to obtain vacant possession on some assets in order to maximise disposal proceeds. Excluding the two assets held for sale at the year- end, occupancy rose to 93%. We have been able to grow rental income and capture some of the reversionary potential in the portfolio through leasing activity and rent reviews during the year, particularly in the industrial assets, and further details are within the Portfolio Review section. This year, we have increased both rental income and the reversionary potential of our portfolio, despite the impact of higher costs, and we have also been able to grow our EPRA earnings. The business is well-positioned with valuable long-term fi xed rate debt and we continue to outperform the MSCI UK Quarterly Property Index. Despite a challenging economic backdrop we have achieved letting success across all areas of the portfolio and extended or increased income, capturing reversionary potential and demonstrating rental growth within the portfolio. The team has worked incredibly hard and I would like to thank them for their individual and collective contributions over the last 12 months as we have continued to make good progress with our strategic priorities. Performance We have seen considerably more stability in the property market, however, it has not been an easy operating environment with the ongoing impact of rising interest rates affecting sentiment and activity. Our portfolio valuation reduced from £766 million to £745 million or 2.8% over the year, contributing to a decline in net assets of 4.2% to £524 million or 96 pence per share. Encouragingly our net assets showed stability between December 2023 and March 2024, the fi rst time since the 2022 disruption in bond markets. Despite this, we have improved many key metrics over the year. Most notably, we have increased the passing rent, contracted rent and also the reversionary potential of the portfolio by 3%. #### We have successfully continued our long-term track record of #### outperformance through our proactive #### approach to asset management. £745m Portfolio valuation 96p Net asset value per share 4.0p EPRA earnings per share Click here to watch our Results Video ![]() Picton Property Income Limited / Annual Report 202418 Chief Executive’s Review / Continued During the year, we incurred a number of non-recurring costs to further develop and improve the operation of the business. Effective from October, we internalised our company secretarial function, which has improved our corporate governance and our overall operational effectiveness. We have also recruited a new Chief Financial Offi cer, Saira Johnston, as successor to Andrew Dewhirst who retired at the end of the fi nancial year. Andrew has been with the Company since 2011 and will be greatly missed by the team. We are looking forward to working with Saira who has a proven track record in real estate fi nance. Despite the infl ationary pressures on costs generally and an increase in these one-off costs, we have been able to grow EPRA earnings by 2.2% over the year. Operational excellence The long-term success we have had at a property level has also been mirrored with prudent management of our balance sheet. We have been able to repay our revolving credit facility using proceeds from an asset sale, post year-end. At the time of writing, our revolving credit facility of £50.0 million remains fully undrawn and we will be exploring options to extend this ahead of its maturity next year. We have a valuable debt structure with 100% of our long-term debt fi xed for over seven years and at an average interest rate of 3.7%, well below the prevailing market rate. The fair value of our debt book is not refl ected in our reported net assets, but in our EPRA NDV which is 5% higher or 101 pence per share. #### We have a valuable #### debt structure with 100% #### of our long-term debt fi xed #### for over seven years. Michael Morris Chief Executive 101p EPRA NDV per share 28% Loan to value Back to contents ![]() Picton Property Income Limited / Annual Report 2024 Financial Statements Additional InformationGovernanceStrategic Report 19 We considered multiple opportunities during the year and specifi cally had extensive discussions in 2023 about a possible combination with UK Commercial Property REIT, which we were disappointed to be unable to progress. We still believe there is merit in consolidation, and equally that there is a place for a well-managed diversifi ed REIT that can adapt to changing market conditions. While the rationale for merging was to capitalise on our internalised management model and track record, allowing shareholders to benefi t from the economies of scale, we believe this corporate activity also had some adverse short- term impact on our share price. Outlook 2024 appears to have started with considerably more momentum than the preceding year and this has been apparent in the continued rental growth and stabilisation in capital growth as captured in the MSCI indices. The occupier markets remain more resilient than some had expected and we have a good pipeline of activity across all areas of the portfolio. Our approach capitalises on real estate being an ever-evolving asset class, with buildings continually adapted, upgraded or repurposed to meet changing occupier demand. There remains signifi cant income upside within the portfolio, whether that is captured directly at rent review or lease expiry or through the recycling of assets and reinvestment. Our priority in the short-term is continuing to grow EPRA earnings while focusing on improving our share price rating to be more refl ective of the performance and potential of the business. Michael Morris Chief Executive 22 May 2024 Acting responsibly We have continued to invest in our portfolio to ensure not only that it meets the needs of today’s occupiers but is also future- proofed and helps us achieve our net zero carbon commitments. We have invested in our assets and improved our portfolio EPCs with 80% of the portfolio now rated A–C. This is yet another year-on- year improvement and compares with 55% A–C rated in 2020. We have made good progress in removing gas installations and converting heating to electrical systems across fi ve assets. This is refl ected in the 10% reduction in like-for-like Scope 1 emissions in the year. We have installed more on-site renewables in the form of solar this year than in any preceding period; an increase in capacity of 184%. Consolidation and growth The Board and the team are committed to act in the interests of all stakeholders and recognise the need to remain relevant to shareholders. Much has been written about the challenges with the UK listed markets generally. Real estate businesses have been impacted by the rising interest rate environment and wide share price discounts have led to consolidation, acquisitions and managed wind-downs. Our priority is to #### continue to grow EPRA #### earnings while focusing #### on improving our share #### price rating to be more refl ective of the potential #### of the business. Michael Morris Chief Executive ![]() 2 024 2 023 2 022 -0.9 -13.9 28.3 2 024 2 023 2 022 -1.0 -26.4 18.7 2 024 2 023 2 022 1.6 -8.7 24.3 Picton Property Income Limited / Annual Report 202420 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. #### Financial KPIs Total return (%) -0.9% Total shareholder return (%) -1.0% Total property return (%) 1.6% 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 year, plus dividends paid. The Group’s total return is used to assess whether our aim to be one of the consistently best performing diversified UK REITs is being achieved, and is a measure used to determine the annual bonus. Why we use this indicator The total shareholder return measures the change in our share price over the year, plus dividends paid. We use this indicator because it is the return seen by investors on their shareholdings. Our total shareholder return relative to a comparator group is a performance metric used in the Long-term Incentive Plan. 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. We use this indicator because it shows the success of the portfolio strategy without the impact of gearing and corporate costs. Our total property return relative to the MSCI UK Quarterly Property Index is a performance condition for both the annual bonus and the Long-term Incentive Plan. Our performance in 2024 We have grown EPRA earnings this year, but this has been offset by the adverse valuation movements over the year. Our performance in 2024 In line with the property sector generally, our share price has declined over the year. Our performance in 2024 We have outperformed the MSCI UK Quarterly Property Index for the eleventh consecutive year, delivering a return of 1.6% compared to the Index return of -1.0% for the year. We have also delivered upper quartile outperformance against MSCI over three, five and ten years, and since launch in 2005. 1 2 3 1 2 31 2 3 Backtocontents ![]() 2 024 2 023 2 022 5.1 4.4 4.5 2 024 2 023 2 022 27.9 26.7 21.2 2 024 2 023 2 022 1.2 1.0 1.0 Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 21 Weconsiderthatindustrystandardmeasures,suchasthosecalculated byMSCI,areappropriatetousealongsidecertainEPRAmeasuresand othersthatarerelevanttous.Inthisregard,weconsiderthattheEPRA nettangibleassetpershare(EPRANTA),earningspershareandvacancy ratearethemostappropriatemeasurestouseinassessingourperformance. Keyperformanceindicatorsarealsousedtodetermine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. Property income return (%) 5.1% Loan to value ratio (%) 27.9% Cost ratio (%) 1.2% Why we use this indicator The property income return, as calculated by MSCI, is the income return of the portfolio. Income is an important component of total return and our portfolio is biased towards income generation. Why we use this indicator The loan to value ratio is total Group borrowings, net of cash, as a percentage of the total portfolio value. This is a recognised measure of the Company’s level of borrowings and is a measure of financing risk. See the Supplementary Disclosures section for further details. Why we use this indicator The cost ratio, recurring administration expenses as a proportion of the average net asset value, shows how efficiently the business is being run, and the extent to which economies of scale are being achieved. See the Supplementary Disclosures section for further details. Our performance in 2024 The income return for the year of 5.1% was ahead of the MSCI UK Quarterly Property Index of 4.7%, and we have also outperformed over three, five and ten years, and since launch in 2005. Our performance in 2024 The loan to value ratio has increased slightly over the year with the adverse valuation movements. After the year-end, we have reduced this measure through the repayment of our revolving credit facility. Our performance in 2024 The cost ratio has increased over the year, predominantly due to the reduction in net assets over the period, rising staff costs and additional resource. 1 2 3 1 2 3 1 2 3 Our strategic priorities PortfolioPerformance 1 OperationalExcellence 2 ActingResponsibly 3 FormoreinformationonEPRA Best Practices Recommendations see pages 158–161 Remuneration Link ![]() 2 024 2 023 2 022 96 100 120 2 024 2 023 2 022 4.0 3.9 3.9 2 024 2 023 2 022 9.2 9.5 7.2 Picton Property Income Limited / Annual Report 202422 Key Performance Indicators / Continued #### EPRA KPIs EPRA NTA per share (pence) 96p EPRA earnings per share (pence) 4.0p EPRA vacancy rate (%) 9.2% Why we use this indicator The EPRA net tangible assets (NTA) per share, calculated in accordance with EPRA, measures the value of shareholders’ equity in the business. We use this to measure the growth of the business over time and regard this as the most relevant net asset metric for the business. 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 exceptional items. We use this because it measures the operating profit generated by the business from the core property rental business. The growth in EPRA earnings per share is also a performance measure used for the annual bonus and the Long-term Incentive Plan. Why we use this indicator The vacancy rate measures the amount of vacant space in the portfolio at the end of each financial period, and over the long-term, is an indication of the success of asset management initiatives undertaken. Our performance in 2024 The EPRA NTA per share has declined slightly this year as a result of the adverse valuation movements, despite earnings growth. Our performance in 2024 EPRA earnings per share have grown this year to 4.0 pence per share, reflecting growth in income. Our performance in 2024 Our vacancy rate has remained stable this year. However, it has improved subsequent to the year-end with the sale of a part-vacant office building, in line with our alternative use strategy. 1 2 3 1 2 31 2 3 Backtocontents ![]() 2 024 2 023 2 022 76 67 37 2 024 2 023 2 022 80 76 71 2 024 2 023 2 022 86 82 82 Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 23 #### Non-financial KPIs Retention rate (%) 76% EPC rating A-C (%) 80% Employee satisfaction (%) 86% 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. Why we use this indicator Energy Performance Certificates (EPCs) indicate how energy efficient a building could be by assigning a rating from A (very efficient) to G (very inefficient). From 1 April 2023, Minimum Energy Efficiency Standards (MEES) regulations prohibited leasing space that is F or G rated, unless an exemption certificate applies. The minimum EPC rating is likely to be raised further, with the UK Government consulting on proposals to require a minimum of C by 1 April 2028, and B by 1 April 2030. Why we use this indicator We use this indicator to assess our performance against one of our strategic objectives, to nurture a positive culture reflecting the values and alignment of the team. The indicator is based on the employee survey carried out during the year. Our performance in 2024 Our significantly higher retention rate reflects our proactive approach to asset management and engagement with our occupiers. Total ERV at risk due to lease expiries or break options totalled £6.4 million, higher than last year. This excludes office buildings where we have kept space vacant for alternative uses. Our performance in 2024 The proportion of EPC ratings between A–C has increased against the prior year and makes up 80% of the portfolio. The remaining 20% is rated D or E. Our performance in 2024 Our employee satisfaction score has increased this year with very positive team sentiment. 1 2 3 1 2 31 2 3 ![]() Picton Property Income Limited / Annual Report 202424 Our Marketplace #### Lower interest rates will #### fuel economic recovery AccordingtotheONS,retailsales volumeshavebeenonadownward trajectorysinceApril2021,whereas retailsalesvalueshavebeenrising, whichreflectstheimpactof inflation.Lookingatthequarterto March2024,retailsalesvolumesdid increaseby1.9%comparedtothe previousthreemonths,following thelowsalesvolumesoverthe Christmasperiod.Goingforwards, householdsbenefittingfromfalling inflationandinterestratesshould supportconsumerspending. Theshorttomedium-termeconomic outlookofferssignsofcautious optimism.Downsiderisksremain, particularlyinrelationtogeopolitical instabilityintheMiddleEastand easternEurope,whichcould potentiallyfuelinflationarypressures. ThetimingofandscaleoftheBank ofEngland’sinterestratecutsare highlydependentonthetrajectory ofinflationandstrengthofthelabour marketinthecomingmonths. #### Economic backdrop Afterachallenging2023,theUK economyappearstobeimproving, withinflationfallingandtheBank ofEnglandwidelyanticipatedto commencebaseratecutsinthe secondhalfof2024.Thisexpected reductionininterestratesshould continuethepositivemomentum intermsofimprovingbusiness, investorandconsumerconfidence, asthecostofdebtandcostof livingpressurescontinuetoease. Despiteincreasesinlong-term UKGovernmentbondyieldsover theyear,paralleledbysimilar risesinpropertyyields,thereare signsofstabilisationemerging. Theeconomyhasalreadyrecovered fromthemildtechnicalrecession of2023,withtheOfficeforNational Statisticsestimatingencouragingly strongGDPgrowthof0.6%for thefirstthreemonthsof2024. Intermsofoutput,bothservicesand productioncontributedpositively totherecovery,recordinggrowth of0.7%and0.8%respectively. Outputfromconstructionfell-0.9%, whichsomewhatreflectsthebad weatherconditionsthataffected thebuildingsectorduringthis period.Intermsofexpenditure, increasesinthevolumeofnettrade, householdandGovernmentspending contributedtoeconomicgrowth. Inflationhasfallenalongwayfrom itsforty-yearpeakof11.1%inOctober 2022,withtheannualincreasein theconsumerpricesindexinMarch 2024at3.2%.Coreinflation(excluding energy,foodandtobaccoprices), whichhasbeenmorestubborn, reducedto4.2%inMarch2024. Therehasrecentlybeensome softeningwithinthelabourmarket, withtheunemploymentlevel increasingto4.3%,andjobvacancy numbersonadownwardtrend, however real wage growth is now positiveandhasremainedsosince June2023.AsatMarch2024,wage growthinrealtermswas2.0% perannumforregularpayand 1.7%perannumfortotalpay. Thehousingmarkethasremained resilientinthefaceofrisinginterest rates,andhousepricegrowthhas startedtore-emerge,withnew mortgageratesdownfromthepeak ofsummer2023.Accordingtothe HalifaxHousePriceIndex,house pricesgrew1.1%intheyeartoApril 2024.Widespreadloandefaults andforcedsaleshavenotbeena featureofthisdownturn,partlydue tostricterlendingcriteriaandhigh levelsofemploymentincomparison topreviousmarketcycles. 0.6% IncreaseinUKGDPinthethree monthstoMarch2024 Backtocontents ![]() All Retail Office 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 Mar 2024 40 30 20 10 0 -10 -20 -30 -40 All Retail Office 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 Mar 2024 0 5 10 15 -5 -10 -15 Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 25 TheMSCIRetailtotalreturnfor theyeartoMarch2024was-0.2%, comprisingcapitalgrowthof-5.9% andincomereturnof6.0%. Retailcapitalgrowthrangedfrom -8.3%to-1.0%betweensub-sectors; Supermarketsexperiencedthe strongestfallincapitalvalues,whereas OutofTownShoppingCentreswas thebestperformer.InMarch2024,the MSCIRetailequivalentyieldwas6.8% (March2023:6.6%).RetailERVgrowth was1.0%,withsub-sectorsranging from-1.6%forShoppingCentres–In Townto3.7%forDepartmentStores. During the year there has been lacklustretransactionalactivity,dueto theincreasedcostofdebtandfalling capitalvalues.MSCIrecorded£40.1 billionofinvestmenttransactionsfor theyeartoMarch2024,whichis27% downonthe£55.4billionrecordedfor theyeartoMarch2023and51%lower thanthe£82.1billiontransactedinthe yeartoMarch2022.Transactionsin theindustrialsectorhadthehighest weighting,comprising24%ofthetotal. Withinterestratesanticipatedto reducefromthesecondhalfof2024 andincreasedliquidityinthelending market,itisexpectedthattrading activitywillbegintopickupaswe headtowardstheendoftheyear. #### UK property market FortheyeartoMarch2024,the propertymarketremainedsubdued astheimpactofhigherinterest ratescontinuedtobefelt. TheMSCIUKQuarterlyPropertyIndex reported an All Property total return of-1.0%,comprising-5.5%capital growthand4.7%incomereturn. Thiswasasignificantimprovement onthe-12.6%totalreturnforthe yeartoMarch2023.InMarch2024, theMSCIAllPropertyequivalent yieldwas6.6%(March2023:6.2%). Theoccupiermarkethasrecently shownmoreresiliencethanthe investmentmarket,withAllProperty ERVgrowthfortheyeartoMarch2024 recordedat3.7%(March2023:3.5%). TheAllPropertyaveragesmask nuancesatsectorandsub-sector levels,withpolarisationremaining akeytheme. Thechartsaboveshowannualcapital growthandERVgrowthrecordedby theMSCIUKQuarterlyPropertyIndex, withallpropertydepictedinthebars andthesectorswiththemarkers. Ofthethreemainsectors,industrial wasthebestperformer,bothin termsofinvestmentreturnsand rentalgrowth.Standardindustrial marketfundamentalsareparticularly favourable,withcontinued healthydemandforwell-placed unitsandlowlevelsofsupply. TheMSCIIndustrialtotalreturnfor theyeartoMarch2024was4.4%, comprisingcapitalgrowthof0.0% andanincomereturnof4.3%. Lookingatsub-sectors,capitalgrowth rangedfrom-0.9%forDistribution Warehousesto1.7%forStandard Industrial–London.InMarch2024the MSCIIndustrialequivalentyieldwas 6.0%(March2023:5.7%).Industrial rentalgrowthfortheyeartoMarch 2024was6.5%andstronginall sub-sectors,rangingfrom5.7%for StandardIndustrial–RestofUKto 7.0%forStandardIndustrial–London. Theofficesectorisstillundergoing aperiodofrecalibration,with increasingrefurbishmentand upgradingcosts,combined withweakerandmoreselective occupationaldemand,impacting bothpricingandinvestorsentiment. TheMSCIOfficetotalreturnfor theyeartoMarch2024was-9.5%, comprising-13.1%capitalgrowthand 4.1%incomereturn.Officecapital growthwasnegativeacrossallsub- sectors,rangingfrom-18.7%inthe RestofLondonto-9.9%inCentral London.InMarch2024theMSCIOffice equivalentyieldwas7.6%(March2023: 6.7%).Officerentalgrowthfortheyear toMarch2024was2.8%andpositive forallsub-sectors,rangingfrom 0.5%fortheRestofLondonto4.6% inCentralLondon,however,these rentalgrowthnumbersdonotreflect capitalinvestedintoupgradingspace. Theretailsectorhasshownsignsof stabilisation,aidedbyeasinginflation andarecoveryinrealearnings positivelyimpactingconsumer confidence.However,storeclosures andCVAsstillremainafeatureof themarketandnotallsub-sectors arerecoveringatthesamepace. MSCI UK Quarterly Property Index Annual Capital Growth (%) MSCI UK Quarterly Property Index Annual Estimated Rental Value Growth (%) ![]() Picton Property Income Limited / Annual Report 202426 Our Marketplace / Continued #### Market drivers Theme Impact on investment markets Impact on occupational markets Our strategic response Geopolitical drivers: / Conflict / Uncertainty / Supplychaindisruption / Energyprices Highlevelsofgeopoliticaluncertaintycanhaveanadverseimpactoninvestmentmarkets. Geopoliticaltensionandconflicthavethepotentialtocreatedisruption,causepriceshocks, andincreasetheriskpremium. However,theUKisanattractivelocationforinvestorsinaglobalcontext,offeringhighlevels oftransparency,governanceandstability.TheUKisrankedfirstinthelatestJLLGlobal TransparencyIndex. Geopoliticaltensionhasthepotentialtoimpactsupplychains,increase energyprices,increaseimport/exportcosts,causesocialunrestand impactbusinessconfidence. Factorsaffectingoccupierdecisionmakingrelatingtoproperty requirementsmayincludechanginglocations,improvingsupplychain efficiency,theneedtoreducecostsandanincreaseddesireforon-site renewableenergy. Wehaveanagileandflexiblebusinessmodelandsoareabletoadaptand respondtomarkettrends. Wehavebeenabletokeepenergycostsdownforsomeofouroccupiers throughworkingwithourmanagingagentstoofferreducedratesand bulkbuying. Weareundertakingaphasedroll-outofon-siterenewableenergyacross ourportfoliowherefeasible,whichwillbeavailabletoouroccupiersat areducedrate.Fivesiteswerefittedwithsolarpanelsduringtheyear. ForfurtherdetailsseethePrincipalRiskssectionofthisreportonpages42–46. Economic drivers: / GDP growth / Inflation / Interestrates / Businessandconsumerconfidence ThepaceatwhichtheBankofEnglandincreasedthebaseratebetweenJanuary2022andAugust 2023inresponsetosoaringinflationcauseduncertaintyintheGovernmentbondmarkets.CPI inflationreachedapeakof11.1%inOctober2022andremainedelevatedforlongerthanexpected. Long-termgiltyieldsrose,whichnarrowedthegapbetweentherisk-freerateandpropertyyields. Acorrectionfollowed,causingcommercialpropertyvaluestofall. Investmentvolumesareadverselyimpactedbyhighlevelsofuncertaintyandanincreaseinthecost ofdebt.Highercostsincreasethehurdlerateaninvestmentisrequiredtoachieve,affectingfeasibility. During2023,UKcommercialpropertyinvestmentvolumesweresignificantlybelowaverage. CPIinflationhasfallento3.2%asatMarch2024andtheBankofEnglandbaseratehasbeenheldat 5.25%sinceAugust2023.ItisexpectedthattheBankofEnglandwillstarttoreducethebaseratein thesecondhalfof2024. Thestateoftheeconomyaffectsoccupiers’outlookfortheirbusinesses, intermsofconfidence,expansionactivityandtheirneedforspace. Thedifferentpropertysectorsaretypicallylinkedtoeconomicconditions indifferentways.Forexample,retailersarestronglyimpactedby consumerconfidenceandretailsales,whereasindustrialoccupiersmay havestrongertiestoimport/exportvolumes. Ifoccupiersareinexpansionmode,thisismorelikelytoincreasetakeup/ netabsorptionfigures,reducevacancyratesandgeneraterentalgrowth. Theoppositeistrueifoccupierbusinessesarestruggling. Wehaveanappropriatecapitalstructureforthemarketcycleandhave retainedourdefensiveposition,withaloantovalueratioof28%and93% ofborrowingsfixed,with2031/32maturities.Ourweightedaverageinterest rateislessthanthebaserateat3.9%. Wehaveadiverseincomebaseviaour400occupiersthathaveprovento beveryresilient,operatingwithinawidevarietyofindustries.Ouroccupier focused,opportunityledapproachenablesustocreatespacestohelpour occupierssucceed. Proactiveassetmanagementdrivesperformancethroughenhancingasset quality,attractingandretainingoccupiers,minimisingthecostofvacancy andmaximisingefficiency. Property cycles: / Sectordifferences / Stagesofrecovery Thecommercialpropertymarketiscyclicalduetoavarietyoffactors,forexampledemandsupply dynamics,economicconditions,theimpactofinflationonconstructioncosts,andpropertyyields comparedtobondyields. Thiscyclicalityisadriverofcapitalmarkets,giventhattimingofinvestmentdecisionscanhave asignificantimpactonreturns. Thedifferentsectorswithincommercialpropertycanbeatdifferentpointsinthecycle,therefore adiversifiedapproachcanbringthebenefitofreducedriskoverthelonger-term. Structuraldriverscanimpacttheoccupiermarketsofpropertysectors differently,placingthematdifferentphasesofthecycle. E-commercehashadaprofoundimpactontheindustrialandretail sectors.Demandforindustrialpropertysoaredasaresultofan increasingproportionofretailspendoccurringonline.Supplydid notkeeppace,andasaresult,thesectorhasbenefittedfromstrong increasesinrents.Theoppositesituationoccurredintheretailsector, whereconsolidation,CVAsandinsolvenciescontributedtorising vacancyratesandfallingrents. PosttheCovid-19pandemicandriseinworkingfromhome,the officesectorcontinuestoexperienceastructuralchange,with occupiersreassessingtheirrequirements.However,astherehasbeen reasonablylimiteddevelopmentactivity,thereiscompetitionforprime spacethatmeetsmodernESGrequirements,leadingtopolarisation withinthesector. Ourin-depthunderstandingoftheUKcommercialpropertymarketenables ustoidentifyandsourcevalueacrossdifferentsectorsandrepositionthe portfoliothroughthepropertycycle. Throughmaintainingadiversifiedportfolio,weareabletodilutecyclical risksassociatedwithasinglesector.Dynamicsthatcauseadownturn ordisproportionateshockinonesectorhaveareducedimpacton overallperformance. Wehaveretainedouroverweightpositionintheoutperformingindustrial sectorandareseekingalternativeusesforselectedbuildingswithinour officeportfolio. ForfurtherdetailsseethePortfolioReviewsectionofthisreporton pages28–37. ESG drivers: / Environmentalfactors / Climatechange / Biodiversity / Socialimpact / Governance FactorsconsideredundertheumbrellatermofEnvironmental,SocialandGovernanceareplaying anincreasinglyvitalroleininvestmentpricinganddecisionmaking. Assetswhicharedecarbonised,energyefficient,carryahighEPCratingandalowlevelofphysical riskaremorelikelytocommanda‘greenpremium’,whereasa‘browndiscount’canbeapplicable toassetsoftheoppositecalibre. Assetswhicharenotdecarbonised,carryingphysicalrisksfromtheimpactsofclimatechange,or transitionrisksthroughnotconformingwithregulationandlegislation,areatriskofbecomingstranded. Investorsarealsodrivenbysocialissues,andwanttobeseentobemakingarealpositiveimpact ratherthangreenwashing.Propertyownerswhodonotbalancedifferentstakeholders’needs, ornatureandthebuiltenvironmentriskscrutiny. OccupiershavevariousmotivesforengagingwithESG.Ultimately,being moresustainablecanincreaseprofitability.Achievingmorewhilstusing fewerresourcescutscosts,andoccupyingasustainablebuildingaligns withthisnarrative. Someoccupierswillbemotivatedbytheirownpathwaystonetzero. Occupyingtechnologyenabled,energyefficientbuildings,signingupto greenleaseclausesandinitiativeslikesharingenergyusagedata,using on-siterenewableandadoptinggreenenergytariffswillaidprogress. Fromasocialperspective,buildingscontaininghealthandwellness facilities,greenspaces,biophilicdesignandotheramenitiescanimprove occupiers’employeesatisfactionandretention. 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. Wearefocusedonbecomingnetzerocarbonby2040throughfollowing theUKGreenBuildingCouncil’snetzerocarbonhierarchy.Weareinvesting indecarbonisingtheportfolio,includingremovingfossilfuel-basedsystems, installationofon-siterenewablesandengagingwithouroccupiersto measureandmanageourScope3emissions. Wehavecarriedoutriskassessmentsofourexistingassetsinlinewiththe TCFDframework,andintegratedsustainability-focusedduediligenceinour investmentprocess. ForfurtherdetailsseetheBeingResponsiblesectionofthisreporton pages56–77. Technology drivers: / AI / PropTech / Big Data / Digitalisationofsociety / Supplychainoptimisation / Rapidpaceofchange Technologydriversaffectingcapitalmarketscouldbeintheformofconstructsdrivingstructural changes,liketheevolutionofGeneralPurposeAI,MachineLearning,BigDataandthedigitalisation ofsociety,whichhavethepotentialtoaffecthowandwherewework,liveandspendrecreational time,andthereforewhichpropertysectorswillwinorloseasaresult. AIandBigDataarelikelytogiveacompetitiveadvantagetothosewhousethesetoolstomake investmentdecisions. AIalsocarrieswiderrisks,forexampleintheformofcyberinsecurity,joblosses,socialriskand informationinaccuracy.Investorswhofailtoaccountforthesemaybecompromisedinthelonger-term. Morespecifically,assetswhichhavetechnologicalcapabilityandsupportinginfrastructurearelikely tobemoreinvestablethanthosethatfallshortorarereliantonlegacysystems. Advancesintechnology,causedforexamplebyautomation,emerging industriesandnewskills,reshapetheemploymentindustry,andrequire evolutionofspacesandplacesthatbusinessesoccupy. Buildingsthataretechnologyenabled,forexamplewithelementsof automationandsufficientgridcapacity,arelikelytobemoreappealing tooccupiersandcommandarentalpremium. Therearesectorspecificoccupationaldrivers,forexampletechnologyto optimisesupplychainsandthecapacitytorunfleetsofelectricvehicles withinthelogisticsector,orthetechnologicalcapabilityofabuildingto beusedasadatacentre. Wearecommittedtomaintaininganefficientoperatingplatformand continuetoinvestigateandinvestinPropTechsolutionswhereappropriate. Whereverpossible,weusedatatomeasure,manageanddriveprogresson ourstrategy,includingoursustainabilitygoals. ForfurtherdetailsseethePrincipalRiskssectionofthisreportonpages42–46. Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 27 Theme Impact on investment markets Impact on occupational markets Our strategic response Geopolitical drivers: / Conflict / Uncertainty / Supplychaindisruption / Energyprices Highlevelsofgeopoliticaluncertaintycanhaveanadverseimpactoninvestmentmarkets. Geopoliticaltensionandconflicthavethepotentialtocreatedisruption,causepriceshocks, andincreasetheriskpremium. However,theUKisanattractivelocationforinvestorsinaglobalcontext,offeringhighlevels oftransparency,governanceandstability.TheUKisrankedfirstinthelatestJLLGlobal TransparencyIndex. Geopoliticaltensionhasthepotentialtoimpactsupplychains,increase energyprices,increaseimport/exportcosts,causesocialunrestand impactbusinessconfidence. Factorsaffectingoccupierdecisionmakingrelatingtoproperty requirementsmayincludechanginglocations,improvingsupplychain efficiency,theneedtoreducecostsandanincreaseddesireforon-site renewableenergy. Wehaveanagileandflexiblebusinessmodelandsoareabletoadaptand respondtomarkettrends. Wehavebeenabletokeepenergycostsdownforsomeofouroccupiers throughworkingwithourmanagingagentstoofferreducedratesand bulkbuying. Weareundertakingaphasedroll-outofon-siterenewableenergyacross ourportfoliowherefeasible,whichwillbeavailabletoouroccupiersat areducedrate.Fivesiteswerefittedwithsolarpanelsduringtheyear. ForfurtherdetailsseethePrincipalRiskssectionofthisreportonpages42–46. Economic drivers: / GDP growth / Inflation / Interestrates / Businessandconsumerconfidence ThepaceatwhichtheBankofEnglandincreasedthebaseratebetweenJanuary2022andAugust 2023inresponsetosoaringinflationcauseduncertaintyintheGovernmentbondmarkets.CPI inflationreachedapeakof11.1%inOctober2022andremainedelevatedforlongerthanexpected. Long-termgiltyieldsrose,whichnarrowedthegapbetweentherisk-freerateandpropertyyields. Acorrectionfollowed,causingcommercialpropertyvaluestofall. Investmentvolumesareadverselyimpactedbyhighlevelsofuncertaintyandanincreaseinthecost ofdebt.Highercostsincreasethehurdlerateaninvestmentisrequiredtoachieve,affectingfeasibility. During2023,UKcommercialpropertyinvestmentvolumesweresignificantlybelowaverage. CPIinflationhasfallento3.2%asatMarch2024andtheBankofEnglandbaseratehasbeenheldat 5.25%sinceAugust2023.ItisexpectedthattheBankofEnglandwillstarttoreducethebaseratein thesecondhalfof2024. Thestateoftheeconomyaffectsoccupiers’outlookfortheirbusinesses, intermsofconfidence,expansionactivityandtheirneedforspace. Thedifferentpropertysectorsaretypicallylinkedtoeconomicconditions indifferentways.Forexample,retailersarestronglyimpactedby consumerconfidenceandretailsales,whereasindustrialoccupiersmay havestrongertiestoimport/exportvolumes. Ifoccupiersareinexpansionmode,thisismorelikelytoincreasetakeup/ netabsorptionfigures,reducevacancyratesandgeneraterentalgrowth. Theoppositeistrueifoccupierbusinessesarestruggling. Wehaveanappropriatecapitalstructureforthemarketcycleandhave retainedourdefensiveposition,withaloantovalueratioof28%and93% ofborrowingsfixed,with2031/32maturities.Ourweightedaverageinterest rateislessthanthebaserateat3.9%. Wehaveadiverseincomebaseviaour400occupiersthathaveprovento beveryresilient,operatingwithinawidevarietyofindustries.Ouroccupier focused,opportunityledapproachenablesustocreatespacestohelpour occupierssucceed. Proactiveassetmanagementdrivesperformancethroughenhancingasset quality,attractingandretainingoccupiers,minimisingthecostofvacancy andmaximisingefficiency. Property cycles: / Sectordifferences / Stagesofrecovery Thecommercialpropertymarketiscyclicalduetoavarietyoffactors,forexampledemandsupply dynamics,economicconditions,theimpactofinflationonconstructioncosts,andpropertyyields comparedtobondyields. Thiscyclicalityisadriverofcapitalmarkets,giventhattimingofinvestmentdecisionscanhave asignificantimpactonreturns. Thedifferentsectorswithincommercialpropertycanbeatdifferentpointsinthecycle,therefore adiversifiedapproachcanbringthebenefitofreducedriskoverthelonger-term. Structuraldriverscanimpacttheoccupiermarketsofpropertysectors differently,placingthematdifferentphasesofthecycle. E-commercehashadaprofoundimpactontheindustrialandretail sectors.Demandforindustrialpropertysoaredasaresultofan increasingproportionofretailspendoccurringonline.Supplydid notkeeppace,andasaresult,thesectorhasbenefittedfromstrong increasesinrents.Theoppositesituationoccurredintheretailsector, whereconsolidation,CVAsandinsolvenciescontributedtorising vacancyratesandfallingrents. PosttheCovid-19pandemicandriseinworkingfromhome,the officesectorcontinuestoexperienceastructuralchange,with occupiersreassessingtheirrequirements.However,astherehasbeen reasonablylimiteddevelopmentactivity,thereiscompetitionforprime spacethatmeetsmodernESGrequirements,leadingtopolarisation withinthesector. Ourin-depthunderstandingoftheUKcommercialpropertymarketenables ustoidentifyandsourcevalueacrossdifferentsectorsandrepositionthe portfoliothroughthepropertycycle. Throughmaintainingadiversifiedportfolio,weareabletodilutecyclical risksassociatedwithasinglesector.Dynamicsthatcauseadownturn ordisproportionateshockinonesectorhaveareducedimpacton overallperformance. Wehaveretainedouroverweightpositionintheoutperformingindustrial sectorandareseekingalternativeusesforselectedbuildingswithinour officeportfolio. ForfurtherdetailsseethePortfolioReviewsectionofthisreporton pages28–37. ESG drivers: / Environmentalfactors / Climatechange / Biodiversity / Socialimpact / Governance FactorsconsideredundertheumbrellatermofEnvironmental,SocialandGovernanceareplaying anincreasinglyvitalroleininvestmentpricinganddecisionmaking. Assetswhicharedecarbonised,energyefficient,carryahighEPCratingandalowlevelofphysical riskaremorelikelytocommanda‘greenpremium’,whereasa‘browndiscount’canbeapplicable toassetsoftheoppositecalibre. Assetswhicharenotdecarbonised,carryingphysicalrisksfromtheimpactsofclimatechange,or transitionrisksthroughnotconformingwithregulationandlegislation,areatriskofbecomingstranded. Investorsarealsodrivenbysocialissues,andwanttobeseentobemakingarealpositiveimpact ratherthangreenwashing.Propertyownerswhodonotbalancedifferentstakeholders’needs, ornatureandthebuiltenvironmentriskscrutiny. OccupiershavevariousmotivesforengagingwithESG.Ultimately,being moresustainablecanincreaseprofitability.Achievingmorewhilstusing fewerresourcescutscosts,andoccupyingasustainablebuildingaligns withthisnarrative. Someoccupierswillbemotivatedbytheirownpathwaystonetzero. Occupyingtechnologyenabled,energyefficientbuildings,signingupto greenleaseclausesandinitiativeslikesharingenergyusagedata,using on-siterenewableandadoptinggreenenergytariffswillaidprogress. Fromasocialperspective,buildingscontaininghealthandwellness facilities,greenspaces,biophilicdesignandotheramenitiescanimprove occupiers’employeesatisfactionandretention. 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. Wearefocusedonbecomingnetzerocarbonby2040throughfollowing theUKGreenBuildingCouncil’snetzerocarbonhierarchy.Weareinvesting indecarbonisingtheportfolio,includingremovingfossilfuel-basedsystems, installationofon-siterenewablesandengagingwithouroccupiersto measureandmanageourScope3emissions. Wehavecarriedoutriskassessmentsofourexistingassetsinlinewiththe TCFDframework,andintegratedsustainability-focusedduediligenceinour investmentprocess. ForfurtherdetailsseetheBeingResponsiblesectionofthisreporton pages56–77. Technology drivers: / AI / PropTech / Big Data / Digitalisationofsociety / Supplychainoptimisation / Rapidpaceofchange Technologydriversaffectingcapitalmarketscouldbeintheformofconstructsdrivingstructural changes,liketheevolutionofGeneralPurposeAI,MachineLearning,BigDataandthedigitalisation ofsociety,whichhavethepotentialtoaffecthowandwherewework,liveandspendrecreational time,andthereforewhichpropertysectorswillwinorloseasaresult. AIandBigDataarelikelytogiveacompetitiveadvantagetothosewhousethesetoolstomake investmentdecisions. AIalsocarrieswiderrisks,forexampleintheformofcyberinsecurity,joblosses,socialriskand informationinaccuracy.Investorswhofailtoaccountforthesemaybecompromisedinthelonger-term. Morespecifically,assetswhichhavetechnologicalcapabilityandsupportinginfrastructurearelikely tobemoreinvestablethanthosethatfallshortorarereliantonlegacysystems. Advancesintechnology,causedforexamplebyautomation,emerging industriesandnewskills,reshapetheemploymentindustry,andrequire evolutionofspacesandplacesthatbusinessesoccupy. Buildingsthataretechnologyenabled,forexamplewithelementsof automationandsufficientgridcapacity,arelikelytobemoreappealing tooccupiersandcommandarentalpremium. Therearesectorspecificoccupationaldrivers,forexampletechnologyto optimisesupplychainsandthecapacitytorunfleetsofelectricvehicles withinthelogisticsector,orthetechnologicalcapabilityofabuildingto beusedasadatacentre. Wearecommittedtomaintaininganefficientoperatingplatformand continuetoinvestigateandinvestinPropTechsolutionswhereappropriate. Whereverpossible,weusedatatomeasure,manageanddriveprogresson ourstrategy,includingoursustainabilitygoals. ForfurtherdetailsseethePrincipalRiskssectionofthisreportonpages42–46. ![]() 15 7 14 11 11 17 12 4 49 39 45 46 43 47 37 30 35 26 29 32 21 48 36 40 42 13 10 44 38 25 23519161841282420 2219 273133236834 Picton Property Income Limited / Annual Report 202428 Portfolio Review Our property portfolio consists of 49 assets. Our diverse exposure provides flexibility to adapt as market conditions dictate. 49 Numberofassets £745m Portfoliovalue 400 Occupiers 20 Properties in London & the SouthEast Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 29 Industrial 59% Retail and Leisure 11% Office 30% 1 Parkbury Industrial Estate Radlett 340,900sqft–Freehold 2 River Way Industrial Estate Harlow 454,800sqft–Freehold 3 Datapoint LondonE16 55,100sqft–Leasehold 4 Shipton Way Rushden 312,900sqft–Freehold 5 Lyon Business Park Barking 99,400sqft–Freehold 6 Sundon Business Park Luton 127,800sqft–Freehold 7 Trent Road Grantham 336,100sqft–Leasehold 8 The Business Centre Wokingham 96,400sqft–Freehold 9 Nonsuch Industrial Estate Epsom 41,400sqft–Leasehold 10 Madleaze Trading Estate Gloucester 304,800sqft–Freehold 11 Vigo 250 Washington 246,800sqft–Freehold 12 Mill Place Trading Estate Gloucester 355,200sqft–Leasehold 13 Swiftbox Rugby 99,500sqft–Freehold 14 Easter Court Warrington 81,800sqft–Freehold 15 1 & 2 Kettlestring Lane York 157,800sqft–Freehold 16 Downmill Road Bracknell 41,200sqft–Freehold 17 Abbey Business Park Belfast 61,500sqft–Freehold 18 Magnet Trade Centre Reading 13,700sqft–Freehold 19 Stanford Building LondonWC2 20,100sqft–Freehold 20 Angel Gate\* LondonEC1 64,600sqft–Freehold 21 Tower Wharf Bristol 70,600sqft–Freehold 22 50 Farringdon Road LondonEC1 31,300sqft–Leasehold 23 30 & 50 Pembroke Court Chatham 86,000sqft–Leasehold 24 Colchester Business Park Colchester 150,500sqft–Leasehold 25 Metro Manchester 71,000sqft–Freehold 26 180 West George Street Glasgow 52,300sqft–Freehold 27 Charlotte Terrace\* LondonW14 32,900sqft–Freehold 28 401 Grafton Gate Milton Keynes 57,500sqft–Freehold 29 Queen’s House Glasgow 49,400sqft–Freehold 30 Longcross\* Cardiff 69,700sqft–Freehold 31 Trident House St Albans 19,000sqft–Freehold 32 109–117 High Street Cheltenham 16,800sqft–Freehold 33 Atlas House Marlow 24,000sqft–Freehold 34 Sentinel House Fleet 33,500sqft–Freehold 35 Waterside House Leeds 25,200sqft–Freehold \*Assetsbeingrepositionedforalternativeusesand/or heldforsale 36 Queens Road Sheffield 105,600sqft–Freehold 37 Parc Tawe North Retail Park Swansea 116,700sqft–Leasehold 38 Gloucester Retail Park Gloucester 113,900sqft–Freehold 39 Angouleme Retail Park Bury 76,200sqft–Freehold 40 Regency Wharf Birmingham 41,500sqft–Leasehold 41 Thistle Express Luton 81,600sqft–Leasehold 42 Scots Corner Birmingham 25,500sqft–Freehold 43 Crown & Mitre Building Carlisle 25,200sqft–Freehold 44 53–57 Broadmead Bristol 13,200sqft–Leasehold 45 78–80 Briggate Leeds 7,700sqft–Freehold 46 17–19 Fishergate Preston 52,300sqft–Freehold 47 72–78 Murraygate Dundee 9,700sqft–Freehold 48 7–9 Warren Street Stockport 8,700sqft–Freehold 49 6–12 Parliament Row Hanley 17,300sqft–Freehold ![]() Picton Property Income Limited / Annual Report 202430 Portfolio Review / Continued #### Top ten #### assets River Way Industrial Estate, Harlow Shipton Way, Rushden Parkbury Industrial Estate, Radlett Approximate area (sq ft) /  3 4 0 , 9 0 0 Capital value (£m) / >100 Number of occupiers / 20 Occupancy rate (%) / 98 EPC rating / A–D Approximate area (sq ft) / 55,100 Capital value (£m) / 20–30 Number of occupiers / 6 Occupancy rate (%) / 100 EPC rating / B–C Approximate area (sq ft) / 20,100 Capital value (£m) / 30–50 Number of occupiers / 5 Occupancy rate (%) / 100 EPC rating / B–D Approximate area (sq ft) / 454,800 Capital value (£m) / 50–75 Number of occupiers / 9 Occupancy rate (%) / 100 EPC rating / A–D Approximate area (sq ft) / 312,900 Capital value (£m) / 20–30 Number of occupiers / 1 Occupancy rate (%) / 100 EPC rating / C Datapoint, Cody Road, London E16Stanford Building, London WC2 2/Industrial 5/Industrial 1/Industrial 4/Industrial3/Office Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 31 Approximate area (sq ft) / 99,400 Capital value (£m) / 20–30 Number of occupiers / 8 Occupancy rate (%) / 100 EPC rating / B–E Approximate area (sq ft) / 31,300 Capital value (£m) / 20–30 Number of occupiers / 4 Occupancy rate (%) / 100 EPC rating / B Approximate area (sq ft) / 127,800 Capital value (£m) / 20–30 Number of occupiers / 12 Occupancy rate (%) / 100 EPC rating / B–D Approximate area (sq ft) / 70,600 Capital value (£m) / 20–30 Number of occupiers / 5 Occupancy rate (%) / 67 EPC rating / B–C Approximate area (sq ft) / 64,600 Capital value (£m) / 20–30 Number of occupiers / 14 Occupancy rate (%) / 52 EPC rating / B–D \*Assetheldforsale Lyon Business Park, Barking Sundon Business Park, Luton Tower Wharf, Cheese Lane, Bristol Angel Gate, City Road, London EC1\* 50 Farringdon Road, London EC1 7/Industrial 8/Industrial 9/Office 6/Office 10/Office ![]() Picton Property Income Limited / Annual Report 202432 Portfolio Review / Continued #### Continued portfolio #### outperformance #### We have been working with #### our occupiers, investing in our #### properties, and advancing our #### sustainability priorities. Jay Cable HeadofAssetManagement Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 33 This year we have been able to repurpose assets to unlock value with alternative use potential and continue our property level outperformance. Top ten occupiers Thelargestoccupiers,basedasapercentageofcontractedrent,asat31March 2024,areasfollows: Occupier Contracted rent (£m) % Publicsector 1.7 3.6 WhistlUKLimited 1.6 3.4 TheRandomHouseGroupLimited 1.6 3.4 B&QPlc 1.2 2.6 SnorkelEuropeLimited 1.2 2.4 XMALimited 1.0 2.0 PortalChathamLLP 0.9 1.8 DHLSupplyChainLimited 0.8 1.6 4AcesLimited 0.7 1.4 Hi-SpeedServicesLimited 0.7 1.4 Total 11.4 23.6 SouthEast 42% RestofUK 17% Industrial weighting 59% RetailWarehouse 7% HighStreetRestofUK 2% Leisure 2% Retail and Leisure weighting 11% RestofUK 9% SouthEast 8% Central London 7% Alternative use 6% Office weighting 30% Occupationaldemandremains robustintheindustrialsectorand intheretailsectorithasstabilised forgoodqualityrealestate.The officesectorisstillgoingthrough aperiodoftransition,withthevery bestqualityandgreenerbuildings seeingrentalgrowth,whileoffices requiringgreatercapitalinvestment orwhichareinthewronglocation, arestrugglingtoattractoccupiers. Wehavesuccessfullyrepurposed officeassetsinCardiffforstudent accommodationandinLondonfor residentialuse,resultinginexchange ofcontractstosellbothassetsat premiumstotheprecedingquarterly independentvaluation.Wearealso pursuing an alternative use strategy atCharlotteTerrace,LondonW14. Ourinvestmentintoover20assetshas helpedustoretainandsecurenew occupierswhileimprovingourEPC ratingsforthefourthconsecutiveyear. Wecontinuetoactivelymanage theportfoliocompletingover80 assetmanagementtransactions, increasingbothpassingrentand estimatedrentalvalue(ERV). Attheyear-end,theportfoliopassing rentwas£44.7million,anincrease fromtheprioryearof£1.4million, or3%.Thecontractedrent,which isthegrossrentreceivableafter theexpiryofleaseincentives,also increasedby3%or£1.2million. TheMarch2024ERVoftheportfolio was£57.6million,a3%increase ontheprioryear.WehadERV growthof3%intheindustrialsector provenbynewlettingsandactive management.Theofficesector wasup4%withourcentralLondon holdings in Farringdon and Covent Gardenparticularlybenefittingfrom rentalgrowth,andtheretailand leisuresectorincreasedby1%. Recognisingtheweakeconomic backdropduringtheyear, occupationalmarketshavebeen remarkablyresilient,andthereis anoticeableimprovementsofar in2024comparedwith2023. £44.7m Passing rent 3% IncreaseinERV ![]() Picton Property Income Limited / Annual Report 202434 Portfolio Review / Continued #### Portfolio overview Capitalvaluesweremarginally positiveovertheyear.Thepassing rentincreasedby12%andthe ERVgrewby3%,or£0.9million. Weremaincommittedtothesector overthemedium-term,primarily duetothestrengthofoccupational demand,lackofsupplyandlow capitalexpenditurerequirements. OurUK-widedistributionwarehouse assetstotal1.2millionsqftinfive units,whicharefullyleasedwith aweightedaverageunexpired leasetermof3.8years. Themulti-letestates,ofwhich88% byvalueareintheSouthEast,total 2.1millionsqftandweonlyhave sevenvacantunitsoutof158,with twounderofferandonecurrently undergoingrefurbishment. Theindustrialportfoliocurrently has£6.1millionofreversionary incomepotential,with£0.7million relatingtothevoidunits. Office Thereislimitedappetitefor investmentintheofficesector,dueto concernsaboutoccupationaldemand andcapitalexpenditurerequirements. Whilethisiscertainlythecasein respectofsomesecondarybuildings, primeofficesarestillattracting occupiersandshowingrental growthasreflectedinourportfolio. Assetselectioniskey.Eachbuilding mustbeviewedindependently, inrespectofitslocationand dynamics,sustainability,flexibilityof floorplatesandoccupieramenities. Certainsecondarylocations lackoccupierdemandpost- pandemic,andaremoresuited toalternativeusestrategies. Wehavearollingcapitalinvestment programme,whichiscurrently focusedonremovingnaturalgas frombuildingsasweupgrade air-conditioningsystemsthathave reachedorareapproachingtheend oftheirlife. Capitalvaluesdecreasedby8%, or£20.4million.Thepassingrent decreasedby7%,someofwhich wasrelatedtoobtainingvacant possessionforalternativeuses,and theERVgrewby4%,or£0.8million. Excludingthepropertiesheldfor sale,theofficeportfoliocurrently has£5.9millionofreversionary incomepotential,with£2.9million relatingtothevoidunits. Retail and Leisure Thecostoflivingcrisishasfurther affectedthesector,withwell- publicisedretailfailuresthisyear. However,itisagainveryassetspecific andifthelocationisnotsignificantly oversuppliedthereisoccupational demandforwell-configuredunits. Weseeopportunitiesinthesectorfor certainretailwarehouseandprime highstreetlocationsoffrebasedrents. Ourfullyleasedretailwarehouse parks are underpinned by value-led retailersandmakeup7%ofthetotal portfolio.Theyconsistof0.4millionsq ftin19unitsacrossfourparksandare fullyleased,withaweightedaverage unexpiredleasetermof4.6years. Our high yielding high street portfolio,whichmakesup2%of thetotalportfolio,isfullyleased exceptfortwosmallshopsin Carlislethatbecameavailable duringthesecondhalfoftheyear. Capitalvaluesdecreasedby2%, or£1.6million.Thepassingrent increasedby2%andtheERV increasedby1%,or£0.1million. Theretailandleisureportfoliohas negativereversionof£0.8million perannum,primarilyrelating totheoverrentingofsomeof thehighstreetretailassets. Performance Ourportfoliocomprises49assets,with around400occupiers,andisvaluedat £744.6millionwithanetinitialyieldof 5.2%andareversionaryyieldof7.0%. Theaveragelotsizeoftheportfolio is£15.2millionasat31March2024. Ourassetallocation,with59%in industrial,30%inofficeand11%in retailandleisure,combinedwith transactionalactivity,hasenabledus tomateriallyoutperformtheMSCIUK QuarterlyPropertyIndexovertheyear. Overall,thevaluationonlydecreased by3%,aftera12%decreaseinthe prioryear.Thiscompareswiththe MSCIUKQuarterlyPropertyIndex recordingcapitalgrowthof-5.5% overtheperiod. Webelievethattheportfolioremains wellplacedinrespectofouroverall sectorallocations,whicharecritical tooutperformancewhenthere issuchadivergenceinreturns. Industrial Webelievethatindustrialyields, and valuations are now stabilising forsomeofthebestmulti-letestates. Duetothelevelofdevelopmentof distributionunitsoverthepastfew years,weareoftheopinionthat secondaryunitsmaystruggleto attractoccupiers. Occupationaldemandinthesector remainsgoodandwearecapturing rentalgrowth.Alackofsupplyof multi-letestates,coupledwithhigh buildcosts,meansthatoccupiers haverestrictedchoicewhenlooking foraunit,whichhasdrivenrental growthacrossthecountry. #### Our overweight industrial position and #### transactional activity has #### enabled us to outperform #### the MSCI UK Quarterly #### Index over the year. Jay Cable HeadofAssetManagement £745m Portfoliovaluation 93% Occupancy (excludesassetsheldforsale) Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 35 #### Portfolio activity Leasing and occupancy Occupancyhasbeenstableduringthe yearat91%,risingto93%,excluding thetwoofficeassetswhichareheld forsaleattheyear-end.Thiscompares totheMSCIUKQuarterlyProperty Indexof92%asat31March2024. ThetotalvoidERVis£3.7million, excludingtheheldforsaleproperties. Ourindustrialportfoliois98%leased withdemandremaininghighacross thecountry.Wehaveonlyseven vacantindustrialunits,withtwounder offerandonebeingrefurbished. Theofficeportfoliooccupancyis80%, or85%,excludingthepropertiesheld forsale.Sevenofourofficebuildings arefullyleased,twoarebeingsold and we have suites available in the remainingeightbuildingswithfourof thesebeingover25%vacantbyERV. Intermsofretailandleisure, occupancyis98%.Theretail warehouseportfolioisfullyleased, andwehavetwosmallvacant highstreetshops.AtRegency Wharf,Birmingham,wehaveone remainingofficesuitetolease. Ourlargestvoids,excludingthe twopropertiesheldforsale,which accountfor31%ofthevoid,areat: / TowerWharf,Bristol–accountingfor 13%ofthetotalvoid.Wehaveagreed termstoupsizeanexistingoccupier, increasingtheirfloorspaceby146%. Wewillbeofferingfullyfittedsuitesin respectoftheremainingspace,which istoberefurbishedlaterthisyear. / CharlotteTerrace,London– accountingfor13%ofthetotalvoid. Weareworkingthroughoptionsfor alternative uses and are awaiting planningpermission. / ColchesterBusinessPark,Colchester –accountingfor11%ofthetotalvoid. Themajorityrelatestoanoffice buildingthatrecentlybecame available.Weareworkingupa refurbishmentoftheproperty,to includeSwiftSpacesuites,andalready haveoccupationalinterest. Retention Overtheyear,totalERVatrisk,dueto leaseexpiriesorbreakoptions,totalled £6.4million.Thisexcludesoffice buildings where we have intentionally keptspacevacantforchangeofuse. Weretained76%oftotalERVatrisk intheyeartoMarch2024.OftheERV thatwasnotretained,afurther1%or £0.1millionwasre-lettonewoccupiers duringtheyear. Inaddition,afurther£2.7millionof ERVwasretainedbyeitherremoving futurebreaksorextendingfuturelease expiriesaheadoftheleaseevent. Proactive management Ithasbeenanactiveyearinrespect ofassetmanagementtransactions. Wecompleted: / 26lettingsoragreementstolease, 3%aheadofERVandsecuring additionalcontractedrentof £2.4million / 31leaserenewalsorregears,2% aheadofERV,securinganuplift incontractedrentof£0.4million / 13rentreviews,2%aheadofERV, securinganupliftinpassingrent of£0.8million / Fiveleasevariationstoremove occupierbreakoptions,securing £1.0millionofincome / Sevenleasesurrenderstofacilitate activemanagement Longevity of income Asat31March2024,expressed asapercentageofcontracted rent,theaveragelengthofleases tofirstterminationwas4.2years (2023:4.6years).Thisissummarised asfollows: % 0 to 1 year 14.3 1 to 2 years 24.1 2 to 3 years 15.2 3 to 4 years 10.7 4 to 5 years 9.0 5 to 10 years 20.3 10 to 15 years 5.3 15yearsormore 1.1 Total 100 ![]() Picton Property Income Limited / Annual Report 202436 Portfolio Review / Continued #### Portfolio investment Investment activity Theinvestmentmarketwassubdued throughout2023,withalow volumeoftransactions.However, sincethestartof2024,wehave seenmoreactivityinthemarket, reflectinggreateroptimism. Noacquisitionsweremadeduringthe year,andweexchangedcontractsto selltwopropertiesasdetailedbelow. Angel Gate, London EC1 Contractswereexchangedattheend ofMarch2024tosellAngelGate,EC1, withcompletionoccurringmid-April. The sale is in line with our strategy to repurposeappropriateofficeassets andfollowsthesecuringofresidential planningconsentsduring2023. Thesaleconsiderationwas5% aheadofthe31December2023 valuationof£28.1million.Theproperty isapproximately50%occupied andrepresented19%ofthetotal portfoliovoidattheyear-end. Refurbishment upgrades Overtheyear,wehaveinvested £4.5millionintotheportfolio acrossmorethan20projects,with thetopfiveprojectsaccounting for57%ofthespend. Thesehaveallbeenaimedat enhancingspacetoretainandattract occupiers,improvesustainability credentialsandgrowincome.All works undertaken are in line with our sustainablerefurbishmentguidelines, outliningbestindustrypractice.Where appropriate,weremovenaturalgas frombuildings,installsolarpanels andupgradeinsulation,inlinewith ournetzerocarbonpathway. Wearecontinuallyfocusedon future-proofingourassetsfroma sustainabilityperspective,which hasresultedinanimprovement inourEPCratingswith80%of ourproperties(byrentalvalue) nowratedCandabove,an increaseof4%ontheprioryear. Longcross, Cardiff Duringtheyear,weexchanged contractstosellthisalmostvacant officebuildingtoanexperienced studentaccommodationdeveloper. Thetransactionisconditionalon planningpermission,whichwillbe submittedduringSummer2024.The salepriceisdependentontheexact planningconsentobtainedand,in particular,uponthenumberofrooms secured.Thebasepricewas16% aheadoftheMarch2023valuation andweexpecttobenefitfroman overagepaymentonceplanningis secured.Wewillretainanadjacent smallincome-producingindustrial unitandvacantcarparkingsite. Tofacilitatethedisposal,wehave completedanumberofsurrenders thatensurewecansecurevacant possessionin2024,albeitthishas ashort-termnegativeeffecton portfoliooccupancyandnetincome. Currently,thepropertyisapproximately 90%vacantandrepresents12%ofthe totalportfoliovoid. £4.5m Investedintotheportfolio 80% EPCratingsA–C We are continually focused on future-proofing our assets from a sustainability perspective, which has resulted in an improvement in our EPC ratings. Jay Cable HeadofAssetManagement Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 37 #### Looking ahead Ouroccupiersremainourkey focusandwehavelong-standing relationshipswithmanyof them,whichenableustowork with and assist businesses as theygrowandcontract. Asat31March2024,theportfolio had£12.8millionofreversionary incomepotential;£5.3millionfrom lettingthevacantspace,£3.9million fromexpiringrent-freeperiodsor steppedrentsand£3.6millionwhere therentisbelowmarketlevel. There is a wide disparity in performanceacrossthesectors anditcomesbacktoabuilding’s fundamentalsandmicro-location. Goodquality,well-locatedreal estatewillattractoccupiers,but secondaryassetswillremaininless demand.Thequalityoftheportfolio combinedwithsectorweightings arecriticaltooutperformance. Demandforourmulti-letindustrial propertiescontinuestobegood asprovenbyourhighoccupancy, significantrentalgrowthover theyearandgrowingERVs.Our distributionportfolioremainsfully let.Withindustrialaccountingfor 59%ofthetotalportfoliobyvalue, webelieveitwillcontributetoour performance,withsupplyconstraints andhighbuildingcostslikelyto leadtofurtherrentalgrowth. Eachofficebuildinghastobeviewed onitsownmerits,withthemajority ofourbuildingsofferingstrong fundamentalsintermsofamenities, naturallight,adaptablefloorplates andaboveaveragecarparking facilities.Ourstrategytoreduceoffice exposure,wherewebelievethereis alackofoccupationaldemandand ahighervaluealternativeusecanbe created,issuccessfullymovingforward withtwosalesexchangedandfurther potentialopportunitiesidentified. Theretailsectorisnowseeingsome stability,despiterecentretailer closures,forexampleTheBody ShopandWilko,however,value retailersaretakingalotofthespace becomingavailable.Thesector providesanattractiveyieldandbuying opportunitiesforbest-in-classstock. Theportfolioremainswell-placed andofahighquality,enabling ustomaintainandenhance incomethroughourproven occupierfocusedapproach. Ourfocusisonreducingoffice exposure,whichwillenablehigher occupancy,andimprovingthe overallportfolioincomethrough reinvestmentandrefurbishment. Jay Cable HeadofAssetManagement Outlook Thesharpyieldcorrectionin2022/23 causedawidespreadrepricing ofcommercialproperty,butwe are now seeing values stabilise andindeedsomeareincreasing. Occupationalmarketsonthewhole havecontinuedtoremainpositive evenwhenvalueswerefalling.With interestratespredictedtoreducein thesecondhalfof2024,wecansee valuesrisingforprimepropertiesin allthreesectorsweareinvestedin. Thequalityofourportfolio,whichhas benefitedfromsignificantinvestment inrespectofrefurbishments and sustainability upgrades in recentyears,meansthatwehave future-proofedpropertiesthat areattractivetooccupiers. The portfolio remains well-placed and of a high quality, enabling us to maintain and enhance income through our proven occupier focused approach. Jay Cable HeadofAssetManagement ![]() Picton Property Income Limited / Annual Report 202438 #### Earnings growth to support #### dividend increase Financial Review £549m EPRA NDV 2023:£570m 2022:£650m £524m EPRA NTA 2023:£548m 2022:£657m 96p Net assets per share 2023: 100p 2022: 120p £22m EPRA earnings 2023:£21m 2022:£21m 4.0p EPRA earnings per share 2023:3.9p 2022:3.9p 3.5p Dividends per share 2023:3.5p 2022:3.4p 114% Dividend cover 2023:112% 2022:115% 28% Loan to value 2023:27% 2022:21% Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 39 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). 2024 £m 2023 £m 2022 £m Netassets–IFRSandEPRAnettangibleassetvalue 524.5 547.6 657.1 Fairvalueofdebt 24.7 22.8 (6.7) EPRAnetdisposalvalue 549.2 570.4 650.4 Netassetvaluepershare(pence) 96 100 120 EPRAnettangibleassetvaluepershare(pence) 96 100 120 EPRAnetdisposalvaluepershare(pence) 101 105 119 Wehavedeliverednetproperty incomegrowthandincreasedEPRA earningsduringtheyear,despite achallengingeconomicbackdrop andhighinterestrateenvironment. EPRAearnings,comprisingthe operatingprofitbeforemovement oninvestments,lessthenetinterest expense,was£21.7million,anincrease of2.2%duringthefinancialyear.This was driven by growth in net property incomeof4.5%whichwasprimarily deliveredfromtheindustrialassets. Theoveralllossfortheyearwas£4.8 millionwhicharoseasaresultofthe negativevaluationmovementsof £26.5milliondespitecommercial property values stabilising during the lastquarterofthefinancialyear. Wehaveprioritisedthedivestmentof low-incomeproducingofficeassetsin order to support earnings growth over themedium-termwhichhasenabled ustorepayourfloatingratedebt aftertheyear-end.Wearefocusedon deliveringacoveredandsustainable dividendthroughoursectorand assetallocationalongsideasset managementthatsupportsdividend progressionforourshareholders. Net asset value TheGroup’snetassetsasat31March 2024was£524.5million,or96pence pershare.Thisreflectedadecrease of4%or4pencepershareover thefinancialyear.Theanalysisof thenetassetvaluemovementis setoutbelow. £m March2023netassetvalue 547.6 EPRAearnings 21.7 Valuationmovement (26.5) Share-based awards 0.8 Dividends paid (19.1) March 2024 net asset value 524.5 Income statement Netpropertyincomeincreased by£1.6millionduringthefinancial yearto£37.9million,delivering a4.5%increaseyear-on-year. Totalrevenuefromtheproperty portfolioincreasedby4%to£45.1 million,excludingservicecharge income.Theincreasewasprimarily driven by rental growth in the property portfolio(£0.9million)andother income(£0.8million).Theindustrial assetscontributedtoadditional rentalincomeofaround£1.0million withnotablerentreviewsconcluding atGranthamandGloucester,in additiontotheincrementalincome fromtheacquisitionofCheltenham thatcompletedintheprevious financialyear.Rentcollectionhas continuedtobestrong,reflecting thequalityofouroccupiersand assetmanagementoversight. Totalpropertyandvoidexpenses, excludingservicechargecosts, have been stable during the financialyear.Wearefocusedon reducingthesefurtherwiththe officedisposalprogramme;the twoofficeassetsheldforsaleasat the31March2024contributedto around15%ofthepropertycosts. Werecognisetheimportanceofcost managementandtheinflationary pressuresonourcosts,particularly inrelationtoadministrativecosts. Theseexpensesincreasedby £1.3millionto£7.2millionduring thefinancialyear,whichincludes thefollowingnon-recurringitems: / Costs in relation to abortive corporateactivityof£0.2million; / Costsforinternalisingthecompany secretarialfunctionandlender consentsof£0.3million;and / ChiefFinancialOfficertransition costsof£0.1million Staffcostsincreasedyear-on-yeardue toadditionalheadcountandsalary reviewsagreedatthestartoftheyear. OurEPRAcostratio(excluding directvacancycosts)hasincreased from21%to23%duringthe financialyearinpartduetothe non-recurringitemsnotedabove. TheGroupcostratiohasincreased from1.0%to1.2%whichisdue to the lower average net asset value over the period and the increasedadministrativecosts. #### Our industrial weighting has #### supported a net property income #### increase of £1.6 million to £37.9 million Saira Johnston ChiefFinancialOfficer ![]() Picton Property Income Limited / Annual Report 202440 Financial Review / Continued Summary of borrowings 2024 2023 2022 Fixedrateloans(£m) 211.1 212.6 213.9 Drawnrevolvingfacility(£m) 16.4 11.9 4.9 Totalborrowings(£m) 227.5 224.5 218.8 Borrowingsnetofcash(£m) 207.7 204.4 180.3 Undrawnfacilities(£m) 33.6 38.1 45.1 Loantovalueratio(%) 27.9 26.7 21.2 Weightedaverageinterestrate(%) 3.9 3.8 3.7 Averageduration(years) 7.2 8.4 9.6 Net finance costs Ourcostofdebtincreasedfrom £9.0millionto£9.5million.Thiswas mainlyduetoamountsdrawnunder ourrevolvingcreditfacilitywith interestchargedat150bpsabove SONIA.Therevolvingcreditfacility balanceoutstandingasat31March 2024was£16.4millionwhichwas repaidfollowingtheyear-end. Interestincomereceivedduring theyearwas£0.6million,which reflectsthehigherinterestrate environmentinadditiontoamounts receivedfrommanagingagents inrespectofinterestonclient moniesfrompreviousperiods. Dividends Thisyear,wemaintainedourquarterly dividendrateof0.875penceper share,equatingtoanannualrateof 3.5pencepershare.Totaldividends paidoutwere£19.1million,inline with2023.Dividendcoverforthe yearwas114%. Followingtheyear-endweincreased ourannualdividendrateto3.7 pencepershare,followingthe saleofAngelGate,Londonand subsequentdebtrepayment. Investment properties Asat31March2024,theportfolio comprised49assetsandthe appraisedvaluewas£744.6million. Thenegativecapitalmovement ontheportfoliowas£26.5million fortheyear,whichwasprimarily drivenbyyieldmovement. Therewerenoacquisitionsor disposalscompletedduringtheyear, however,weexchangedcontracts tosellthefollowingofficeassets, whichareclassifiedasassetsheld forsaleasat31March2024: / Longcross,Cardiff / AngelGate,London Wehavecontinuedtoinvestinthe propertyportfolioandincurred£4.5 millionincapitalexpenditureduring thefinancialyeartosupporttherental incomeincreasesandcapitalvalues overthemediumtolonger-term. Inlinewithlastyear,thevalue ofthefloorthatweoccupyat StanfordBuilding,London,has beenexcludedfromthevalueof InvestmentPropertiesandincluded separatelywithProperty,Plantand Equipment.Anycapitalmovements arisingfromtherevaluationofthis elementofthepropertyareshown withintheConsolidatedStatement ofComprehensiveIncome. Borrowings Totalborrowingswere£227.5millionat 31March2024,withtheloantovalue ratioat27.9%.Theweightedaverage interest rate on our borrowings was 3.9%whiletheaverageloanduration was7.2years. Thefairvalueofourdrawnborrowings at31March2024was£202.8million, lowerthanthebookvaluebysome £24.7million.Asaresult,ourEPRA NDVassetvaluewas£549million at31March2024,higherthanthe reportednetassetsunderIFRS. Bothlendingmarginsandgiltyields continuetobehigherrelativeto theratessetonourfacilities. At31March2024,wehad£16.4million drawnunderrevolvingcreditfacility, whichwasfullyrepaidinApril2024 withthesaleproceedsfromAngel Gate,London.The£50.0million facilitymaturesinMay2025and wewillseektoextenditduringthe yearinordertoprovideflexibilityto executetransactionsandmanage cashflow.Wehavestrongbanking relationshipswithourlenders;the Grouphasremainedfullycompliant withitsloancovenantsandhasmade scheduledamortisationpayments duringtheyearof£1.4million. Cash flow and liquidity Duringtheyear,ourcashbalances reducedby£0.3million.Thecash flowfromoperatingactivitiesthis yearwas£20.2millionandweinvested £4.5millionincapitalexpenditure intothepropertyportfolio.Overall borrowingsincreasedby£3.1million anddividendspaidwere£19.1million. Ourcashbalanceattheyear-end stoodat£19.8million. Share capital No new ordinary shares were issued duringtheyear. TheCompany’sEmployeeBenefit Trustnowholds1,642,440shares. AstheTrustisconsolidatedinto theGroup’sresults,theseshares areeffectivelyheldintreasuryand thereforehavebeenexcluded fromthenetassetvalueand earningspersharecalculations, fromthedateofpurchase. Saira Johnston ChiefFinancialOfficer 22 May 2024 Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 StrategicReport 41 AdditionalInformationFinancialStatementsGovernance EPRA Best Practices Recommendations (BPR) TheEPRAkeyperformancemeasures fortheyeararesetouthere,with moredetailprovidedintheEPRA BPRandSupplementaryDisclosures sectionwhichstartsonpage158. Alternative performance measures (APMs) Weuseanumberofalternative performancemeasures(APMs) whenreportingontheperformance ofthebusinessanditsfinancial position.Thesedonot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 withsimilarcompanies.Inthe AdditionalInformationsectionof thisreport,weprovidemoredetailed informationandreconciliations toIFRSwhereappropriate. Ourkeyperformanceindicators includethreeofthekeyEPRA measuresbutalsototalreturn, totalpropertyreturn,property incomereturn,totalshareholder return,loantovalueratio,costratio, occupierretentionrate,employee satisfactionandEPCratings.The definitionofthesemeasures,and therationalefortheiruse,issetout intheKeyPerformanceIndicators sectiononpages20to23. EPR A’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 Recommendationswhichrecognise thekeyperformanceindicator measures,asdetailedhere. SpecificEPRAmetricscanalsobe foundwithintheKeyPerformance Indicatorssectionofthisreport onpages20to23,withfurther disclosuresandsupporting calculationsonpages158to161. 96p EPRA NTA per share 2023: 100p 2022: 120p 101p EPRA NDV per share 2023: 105p 2022: 119p 105p EPRA NRV per share 2023: 110p 2022: 131p £21.7m EPRA earnings 2023:£21.3m 2022:£21.2m 4.0p EPRA earnings per share 2023:3.9p 2022:3.9p 9.2% EPRA vacancy rate 2023:9.5% 2022:7.2% #### EPRA measures 1 Includingdirectvacancycosts 2 Excludingdirectvacancycosts 5.4% EPRA net initial yield 2023:5.0% 2022:4.1% 5.9% EPRA ‘topped-up’ net initial yield 2023:5.5% 2022:4.8% 32.4% EPRA cost ratio 1 2023:29.9% 2022:26.0% 23.0% EPRA cost ratio 2 2023:21.3% 2022:19.9% 28.2% EPRA LT V 2023:27.0% 2022:21.3% ![]() Picton Property Income Limited / Annual Report 202442 Principal Risks #### Managing risks #### The Board recognises that there #### are risks and uncertainties that #### could have a material impact #### on the Group’s results. #### Principal risks and trends 1 #### Political and economic 2 #### Market cycle 3 #### Regulatory and tax 4 #### Climate change resilience 5 #### Portfolio strategy 6 #### Investment 7 #### Asset management 8 #### Valuation 9 #### People 10 #### Finance strategy 11 #### Capital structure Increasing Nochange/stable Decreasing Riskmanagementprovidesa structuredapproachtothedecision- makingprocesssuchthatthe identifiedriskscanbemitigatedand theuncertaintysurroundingexpected outcomescanbereduced.TheBoard hasdevelopedaRiskManagement Policywhichitreviewsonaregular basis.TheAuditandRiskCommittee carriesoutadetailedassessment ofallrisks,whetherinvestment oroperational,andconsidersthe effectivenessoftheriskmanagement andinternalcontrolprocesses.The ExecutiveCommitteeisresponsible forimplementingstrategywithinthe agreedRiskManagementPolicy,as wellasidentifyingandassessingrisk inday-to-dayoperationalmatters. TheManagementCommittees supporttheExecutiveCommittee inthesematters.Thesmallnumber ofemployeesandrelativelyflat managementstructureallowrisksto bequicklyidentifiedandassessed.The Group’sriskappetitewillvaryovertime andduringthecourseoftheproperty cycle.Theprincipalrisks–thosewith potentialtohaveamaterialimpacton performanceandresults–aresetout here,togetherwithmitigatingcontrols. TheUKCorporateGovernance CoderequirestheBoardtomakea ViabilityStatement.This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periodoftheirassessment. Thestatementissetoutinthe Directors’Reportonpage129. Backtocontents ![]() 4 6 7 8 8 2 2 11 10 3 5 5 9 1 Corporate strategy Financial Property Operational Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 43 #### Risk management framework Thematrixbelowillustratestheassessmentoftheimpactandlikelihoodofeach oftheprincipalrisksandtrendsincethelastyear-end. Principalriskimpact High  Medium Low Estimatedlikelihoodofrisk 0%to10% 10%to33% Greaterthan33% Emerging risks Duringtheyear,theBoardhas consideredthemeswhereemerging risksordisruptingeventsmay impactthebusiness.Thesemayarise frombehaviouralchanges,political orregulatorychanges,advances intechnology,environmental factors,economicconditions ordemographicchanges. Allemergingrisksarereviewed aspartoftheongoingrisk managementprocess. Theprincipalemergingriskshave beenidentifiedtobe: / Highandpersistingdiscounts to asset values within the listed propertysectoradverselyimpacting investorsentiment; / Politicaluncertaintyinthelead-up toageneralelectionintheUK; / Cybersecurityandrapidchanges intechnologysuchasAIarecausing businesses to reshape their operationalactivities; / Structuralchangeswithintheoffice sector,asbusinessescontinueto reassesstheirrequirementsinlightof homeworking,technologyadvances andESGfactors; / Changesinregulationsareincreasing environmentalstandardsandproperty ownersmustkeeppacetoavoidthe riskofstrandedassets;and / Increasingdemandonthe electricalinfrastructurebeingdriven bydecarbonisationandthephasing outoffossilfuels. Readmoreonpages44–46 Board / Has overall responsibility for risk management / Determines business model / Considers risk appetite Management Committees / Implement strategy and risk policy / Identify and assess risks / Carry out risk mitigation / Review specific transaction risks / Consider forthcoming legislation / Review operational risk Audit and Risk Committee / Recommends risk management policy / Reviews internal controls / Reviews detailed risk matrix / Considers principal and emerging risks ![]() Picton Property Income Limited / Annual Report 202444 Principal Risks / Continued #### Corporate Strategy 1 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 and increased occupier failure. Mitigation TheBoardconsiderseconomic conditionsandmarketuncertaintywhen settingstrategy,consideringthefinancial strategyofthebusinessandinmaking investmentdecisions. Commentary TheUKeconomyhasbeenmorestable thisyear,afterthevolatilityseenin 2022/23.However,growthhasbeen mutedandonlylimitedgrowthis forecastinthemedium-term.Interest ratesremainhigh.Theprospectofa generalelectionintheUKthisyearisalso causinguncertainty.Globalevents,such asthecrisisintheMiddleEastandthe continuingwarinUkraine,arealso hamperingeconomies. Risk trend 2 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businessobjectivesonaregularbasis andconsiderswhetheranychangeis needed,inlightofcurrentandforecast marketconditions. Commentary Althoughinterestratesroseduring2023, it appears that these have peaked and areforecasttofalllaterintheyear.Bond yields,however,haveremainedrelatively highandhaveincreasedsincethestart of2024. Risk trend 3 Regulatory and tax Risk The Group could fail to comply with legal, fiscal, health and safety or regulatory matters which could lead to financial loss, reputational damage 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 andEPRA,andmanagementattend industrybriefings. Commentary Therearenosignificantchanges expectedtotheregulatoryenvironment inwhichtheGroupoperates. Risk trend 4 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. Physical and transitional risks associated with climate change could give rise to asset obsolescence. Mitigation Sustainabilityisembeddedwithinthe Group’sbusinessmodelandstrategy. Wehavepublishedournetzerocarbon pathway and have reported on our progressthisyear. Wehaveaddressedtheidentification andassessmentofclimate-relatedrisks asidentifiedthroughtheTCFDprocess. Commentary Adaptationtoclimatechangeand assetresilienceisanimportantissuefor propertyowners.Thisyear,theGrouphas developeditson-siterenewablestrategy, withtheinstallationofsolarpanelsata numberofproperties. Risk trend Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 45 #### Property 5 Portfolio strategy Risk The Group has an inappropriate portfolio strategy, as a result of poor sector or geographical allocations, or holding obsolete assets, leading to lower shareholder returns. Mitigation TheGroupmaintainsadiversified portfolioinordertominimiseexposure toanyonegeographicalareaor marketsector. Commentary TheGrouphasimplementedastrategy toreduceitsofficesectorweighting throughexploringhighervalue alternativeuses.Theoutlookforthe industrialandretailsectorsispositive overthemedium-term. Risk trend 6 Investment Risk Investment decisions may be flawed as a result of incorrect assumptions, poor research or incomplete due diligence, leading to financial loss. Mitigation TheExecutiveCommitteemust approveallinvestmenttransactions overathresholdlevel,andsignificant transactionsrequireBoardapproval. Aformalappraisalandduediligence processiscarriedoutforallpotential purchases,includingenvironmental assessments. Areviewofeachacquisitionisperformed withintwoyearsofcompletion. Commentary Uncertaintyandhighinterestrateshave impactedinvestmentmarketvolumesin theUKthisyear.Recessionarypressures have started to ease and interest rates areexpectedtofalllaterin2024. Risk trend 7 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 and cash flow. Mitigation Managementpreparebusinessplansfor eachassetwhicharereviewedregularly. TheExecutiveCommitteemust approveallinvestmenttransactions overathresholdlevel,andsignificant transactionsrequireBoardapproval. Managementmaintainclosecontact withoccupierstohaveearlyindication ofintentions. Managementregularlyassess theperformanceoftheGroup’s PropertyManager. Commentary Theoccupationalmarkethasshown positivesignssincethebeginningof 2024.Rentcollectionhasremained highthroughouttheyear,withlimited occupierdefaults. Risk trend 8 Valuation Risk A fall in the valuation of the Group’s property assets could lead to lower investment returns and a breach of loan covenants. Mitigation TheGroup’spropertyassetsare valuedquarterlybyanindependent valuer with oversight by the Property ValuationCommittee.Market commentaryisprovidedregularly bytheindependentvaluer. TheBoardreviewsfinancialforecastsfor theGrouponaregularbasis,including sensitivityandadequateheadroom againstfinancialcovenants. Commentary Commercialpropertyvalueshave declinedtoamodestextentoverthe year.Interestrateshaverisenintheearly partoftheyearbutareconsideredto havepeakedandmayfalllaterin2024. Thereremainsgoodheadroomagainst theGroup’slendingcovenants. Risk trend ![]() Picton Property Income Limited / Annual Report 202446 #### Operational 9 People Risk The Group relies on a small team to implement the strategy and run the day-to-day operations. Failure to retain or recruit key individuals with the right 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. ThereisaNon-ExecutiveDirector responsibleforemployeeengagement whoprovidesregularfeedbackto theBoard. Commentary TheGroup’sFinanceDirectorretiredat theendofMarch,andtherehasbeena transitionperiodwithhissuccessor.The Group’scompanysecretarialfunctionhas beenbroughtin-house.Feedbackfrom theemployeeengagementsurvey remainedpositive. Risk trend #### Financial 10 Finance strategy Risk The Group has a number of loan facilities to finance its activities. Failure to comply with covenants or to manage refinancing events could lead to a funding shortfall for operational activities. Mitigation TheBoardreviewsfinancialforecastsfor theGrouponaregularbasis,including sensitivityagainstfinancialcovenants. TheGroup’spropertyassetsare valuedquarterlybyanindependent valuer with oversight by the Property ValuationCommittee.Market commentaryisprovidedregularly bytheindependentvaluer. TheAuditandRiskCommittee considersthegoingconcernstatus oftheGroupbiannually. Commentary TheGrouphasmainlyfixedrate long-termborrowingsinplacewith maturitiesin2031and2032.Covenants aremonitoredregularlyandthereisgood headroomagainstthese.Therevolving creditfacilitydoesnotmatureuntil2025. Risk trend 11 Capital structure Risk The Group operates a geared capital structure, which magnifies returns from the portfolio, both positive and negative. An inappropriate level of gearing relative to the property cycle could lead to lower investment returns. Mitigation The Board regularly reviews its gearing strategyanddebtmaturityprofile, atleastannually,inlightofchanging marketconditions. TheGrouphasarevolvingcreditfacility inplacewhichcanberepaidifrequired toreducethelevelofgearing. Commentary FollowingassetsalestheGroup’s revolvingcreditfacilityhasbeenfully repaidsubsequenttotheyear-end. AsaresulttheGroup’sloantovalue ratiohasreduced. Risk trend Principal Risks / Continued Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 47 TCFD Statement #### Overview opportunitieswehaveidentifiedtothebusiness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. Wearecommittedtoensuringthatsustainabilityis embeddedineverythingwedoasabusiness,andweare dedicatedtoproactivelymanagingourclimate-relatedrisks andreportingclimate-relatedfinancialinformationpublicly andtransparentlyforourstakeholders.Herewefirstly, outlineouroverarchingriskmanagementapproachand secondly,disclosetheclimate-relatedrisksand 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 settingtheGroup’sriskappetitethatdefinesthelimitsoftheGroup’sactivitiesandreviewingthe Group’sriskmatrixandriskradar.Asclimate-relatedriskshavebeenidentifiedasaprincipalrisktothe business,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atleastthreetimeseachyearandtheChair,MarkBatten, isresponsibleforreportingtheCommittee’sfindingsandrecommendationstotheBoard,including updatesontheGroup’soverallriskappetite,riskprofileandriskstrategy,accountingforthecurrentand prospectivemacroeconomicandfinancialenvironment,andappropriateclimate-relatedscenarios. 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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ournetzerocarbonpathway. TheExecutiveCommittee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. TheExecutiveCommitteemaintainsday-to-daymanagementandoversightofallrisksidentifiedand theirmitigatingactivities,andreportsrecommendationstotheAuditandRiskCommitteeorthe BoardfortheRiskManagementPolicy. 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 alllevelsofthebusiness.Thiswillensurethatourgovernance,oversightandmanagementofclimate- 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ClimateActionWorkingGroup’sprimarypurposeistomitigatethe impactofclimatechangeonourportfolioanddeliveragainstourcommitmenttonetzerocarbon, overseeingandcoordinatingsustainabilityimprovementsacrosstheportfoliogenerally. TheClimateActionWorkingGrouprepresentsacrosssectionofthebusinessandincludesthe propertyteamandmembersoftheResponsibilityCommittee.In2023,theExecutiveCommittee approvedthegroup’stermsofreference.Itsdutiesextend,butarenotlimitedto,implementingour netzerocarbonpathway,assistingwithclimatechangeriskandadaptation,monitoringEPCsacross theportfolio,sharingbestpracticeonallclimate-relatedissues,andidentifyingemergingclimate issuestoescalateasrequired. 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 202448 TCFD Statement / Continued Recommendation Commentary Strategy Climate-related risks and opportunities identified over the short, medium and long-term 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 riskscouldhaveseverefinancialandreputationalimplicationsaswellasphysicalriskstothose 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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 (2030–2039)andlong-term(>2040)aswellas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level,respectively, wewereabletoidentifytheriskprofilesofourassetsandmostat-riskassets,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’ susceptibilitytoclimate-relatedrisks,includingphysicalrisks,forexampleflooding,heatstressand extremeweatherevents,andtransitionrisks,suchasmarketrisksandtechnology,inquantitative terms,exposingthepotentialfinanciallossesandsavingsassociated. Thebusinesslevelassessmentqualitativelydeterminedthelikelihoodandimpactofarangeof physicalandtransitionclimate-relatedrisksonascaleofonetofive,withconsiderationoftheportfolio modellingresults,byrigorouslyanalysingthemostup-to-date,peer-reviewedscientificliterature.The impactassessmentfactoredinthelevelofdisruption,financialimpactandease/cost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graduallytorisksthat materialiserapidlyandendureoverasignificantperiod.Highimpactopportunitieswerealsoidentified inrelationtoourbusinessstrategy. Threeassetshavebeenacquiredaftertheassessmentexercisein2021.Aspartoftheacquisitiondue diligenceprocess,climateriskassessmentswerecompletedfortheseassets.Indoingso,weidentified potentialclimate-relatedrisks,whichdemonstratedthattheseassetsriskprofileswereconsistentwith therestofourportfolio,meaningourtoprisksandopportunitiesremainedthesame. Weidentifiedourtoprisks,whichareincludedinthetablebelow. 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. Short-term 2020–2029 Medium-term 2030–2039 Long-term >2040 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. 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clearstakeholder communicationsandasset planning,asnetzerocarbon andclimateresilience measurescanbeexecuted inparallel. 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. Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 49 Recommendation Commentary Strategy / Continued Physical and transition climate-related risks Time horizon Risk Risk description Risk impacts Mitigating controls Short-term 2020–2029 Changes in 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mayalsoshiftaway fromcertaingeographiesorsectors. / Lowerdemandforinefficient 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financialenvironmental on an ongoing basis / Implementapolicyof continual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 building standards requirements Policymandatesbuildingstoadhere tohigherstandards,toimprove efficienciesand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asmarketpreferencesshift towardslowcarbonsolutionsand climateresilience,orduetosustained damagefromclimate-relatedphysical impacts,potentiallyaffectingour abilitytosecurefinancialcapital, acquisitionactivitiesandassetvalues. / Rises in interest rates and a decreaseineconomicgrowth leadingtohigherfinancial capitalcosts / Economicdownturnreducing rentalincomeandassetvalue andincreasingoccupancyrisk Medium-term 2030–2039 Decarbonisation and increased energy demand/cost Increasingtheshareofrenewable energysourcesanddecarbonising energy-intensiveindustriescould intensifyothertransitionrisks associatedwithreputationdamage, financialimpactsandlitigationrisk. / 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 onembodiedcarbon Flooding Increaseddurationandintensityof precipitation,snowmeltandrising sealevelswillexacerbatealltypes offlooding.Ourcurrentportfolio isexposedtofluvialandpluvial floodingrisk,withlimitedexposure tocoastalflooding. / Repaircostsandlossofaccess to asset / Capitalexpendituretoinstall mitigationmeasures / Reducedregionalinvestment andfootfall / 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implementing on-site renewables and implementing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putspressureon bothourassetsandpeople.Our concentrationofassetsinSouthern Englandincreasesoursusceptibility tothisriskandtoassociatedcosts. / Degradationofplantand equipmentleadingtocapital expenditureassociated withreplacement / Increasedoperationalcosts / Reducedoccupierdemandfor spaceslackingsufficientcooling and/or ventilation Extreme weather 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 Long-term >2040 Drought and 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inefficientasset / Capitalexpenditureto improveefficiency ![]() Picton Property Income Limited / Annual Report 202450 TCFD Statement / Continued Recommendation Commentary Strategy / Continued Climate-related risk matrix 2 3 4 5 2 3 4 5 4 6 1 7 5 2 3 8 Likelihood Significance Short-term 2020–2029 Medium-term 2030–2039 Long-term >2040 1. Changesinmarketand occupierexpectations anddemand 2. Increasedbuildingstandards/ requirements 3. Financialmarketimpacts 4. Decarbonisationandincreased energydemand/cost 5. Flooding(fluvialandpluvial) 6. Heatstress 7. Extremeweatherevents 8. Droughtandwaterstress Additionally,wehaveidentifiedopportunitiesthatwecanleveragetodeliveroutstandingclimate-related performancetoouroccupiers.Theseincludeinvestmentintolow-carbontechnologiesandclimateadaptation measurestoachieveournetzerocarbonambitions,securepremiumoccupiers,enhanceassetvalues,enhance ourreputationandfuture-proofourbusiness. Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 51 Recommendation Commentary Strategy / Continued Impact of climate-related risks and opportunities on the organisation’s businesses, strategy and financial planning Werecognisethatclimatechangewillimpactourbusinessandthatwemustplayourpartintackling thisglobalchallenge.Therefore,weintegratesustainablethinkingacrossouractivitiesandaccordingly, climate-relatedissuesinformourbusiness,strategyandfinancialplanningdecisionsandprocesses. Ourpathwaytoachievenetzerocarbonby2040alignswiththeBetterBuildingPartnership’s(BBP) NetZeroCarbonPathwayFrameworkandtheUKGreenBuildingCouncil’s(UKGBC)netzerocarbon hierarchy.Toachieveourambitioussustainabilitytargets,includingnetzero,andenhanceour resiliencetoclimatechangeimpacts,climate-relatedriskshavebeenembeddedintoourbusiness strategyandplanningprocessesatallstagesofthepropertylifecycle. Duringtheacquisitionprocess,weundertakeenvironmentalassessmentstoidentifyclimateand environmental-relatedrisksassociatedwiththepropertyandgroundconditions,includingflooding. WehaveformallydefinedourriskappetiteforacquisitionduediligenceinrespecttoESGandclimate risk.Forexample,allacquisitionsmustconsiderournetzerocarbonpathway,andhowtheacquisition couldimpactitsaimsandtimeline,includingfinancialimplications.Additionally,wesetminimum criteriaaddressingphysicalandtransitionclimaterisks,suchasflooding(fluvialandpluvial),building fabricandEPCs.Thishelpsusidentifyandimplementopportunitiestostrengthenournetzero readinessandmakeconscientiousinvestmentdecisions.Ifanacquisitiondoesnotmeetour minimumcriteriatherehastobeaclearfinancialrationaletoproceed,whichconsidersthesize oftheassetrelativetotheriskandportfolio. Refurbishmentsprovideanopportunitytoundertakeclimateresilienceandnetzerocarbonupgrades, therefore,wehavecreatednetzerocarbonguidesforallassettypes(industrial,office,retailandleisure) inourportfolio,whichoutlinebestpracticemeasuresthatshouldbeassessedforinstallationto improveenergyefficiencyandenhancetheasset’sclimateresilience.Measuresinclude,forexample, on-siterenewableenergygenerationandlow-carbonheatingandlightingalternatives.Aswe recognisethatindustryknowledge,technologyandmitigationinterventionsareconstantlyimproving, theseguideswillevolvetoreflectmarketinnovations,aswellasourchangingnetzerocarbongoals. Theseguidessupportourexistingsustainablerefurbishmentguidelines,whichintegratearangeof climate-relatedminimumcriteria.Forexample,mediumrefurbishmentsmustmeetminimumEPCB standardsandbuildingcertificationstandardsaredefinedforeachassettype,suchasBREEAMfor ourofficeportfolio,supportingouroverallsustainabilityperformanceandresiliencetoclimate-related risks.Additionally,wehaveappointedanin-housebuildingsurveyortosupportourassetmanagers onallcapitalworksprojectstoensuretheyhaveaccesstosustainabilityexpertise. Ourassetmanagersproactivelyengageonsustainabilityandclimate-relatedissueswithouroccupiers, identifyingopportunitiestoenhancetheportfolio’sresiliencetomaterialrisksandimprovebuilding performance.Whensuchopportunitiesareidentified,ourassetmanagersescalateproposed initiativestotheClimateActionWorkingGroupandwhereappropriatetotheTransactionsand FinanceCommitteeforapproval,whichtheninformsourstrategyandfinancialplanningfortheasset inquestion.Forexample,oneofourassetmanagersidentifiedtheopportunitytoreplaceanasset’s gas-firedequipmentandinstallon-sitesolarpanels,whichwillenableareductionincarbonemissions andyieldenergyefficiencyimprovements. Effectivecollaborationwithouroccupiersisessentialifwearetoachieveournetzerocommitment. Therefore,wecreatedoccupierfit-outprinciplesthatoutlineaseriesofmeasuresandcriteriaour occupiersshouldengagewithduringfit-outworkstoimprovetheasset’ssustainabilityperformance andclimateresilience.Principlesareestablishedrelatingto,butnotlimitedto,occupierengagement, lowenergyuse,EPCs,minimisingandomittingfossilfuels,embodiedcarbonandwaste,aligningwith ourstrategicsustainabilitygoals. Inthelastthreeyears,ouractionshavechangedhowweaddressclimate-relatedissuesandour missiontofuture-proofourbusinessandportfoliocontinues.Thisyear,weformalisedaBiodiversity Policyaswerecognisetheimportanceofbiodiversityforthewellbeingofourplanetandthe communitiesinwhichweoperate.Asaresponsibleownerofcommercialrealestate,weare committedtointegratingbiodiversityconsiderationsintoourbusinesspracticestoensureouractions servetopreserveandenhancebiodiversity,promoteawarenessamongourstakeholdersandsupport ourtargets.Ourpolicysetskeyobjectivesaroundcompliance,awareness,assessment,integration, restorationandreporting,aswellasfiveimplementationareas,includingengagingstakeholders, settingtargets,makingimprovements,communicatingwithcommunities,andmonitoringand evaluation.Wewillreviewthispolicyannuallytoensureitseffectivenessandrelevance,amending asnecessaryinlinewiththebusinessenvironment,regulationsandbestpractice. Oursustainabilityactionplanroadmapsetsoutkeyactionsweintendtoundertakeinfuturetoensure wecancontinuetooperateinaworldwithincreasingclimatechangeimpacts.AsaBBPmember, underpinningourstrategyareclimatemitigationandclimateadaptation,whichweconsideras equallynecessarytoachieveholisticclimateresilience. ![]() Picton Property Income Limited / Annual Report 202452 TCFD Statement / Continued Recommendation Commentary Strategy / Continued Resilience of the organisation’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario HavingconductedcomprehensivebusinessandportfolioclimateriskassessmentsacrosstheIPCC’s RCP4.5andRCP8.5scenarios,wehaveaclearunderstandingofourmaterialclimate-relatedrisksand opportunities.Thisknowledgehasenabledustoproactivelyimplementmanagement,mitigationand adaptationmeasurestoimproveourresilienceandactearlytoharnessopportunities.Additionally,our netzerocarbonpathwayisalignedwithtargetsfora1.5°Cscenario.Inachievingthesetargets,wewill simultaneouslybemanagingseveralclimaterisksmaterialtothebusiness,particularlytransitionrisks associatedwithashifttoalow-carboneconomyandphysicalrisksassociatedwithflooding,heat stressanddrought. Ourchosenscenariosalignwithindustrybestpracticeandcoverthemostlikelyrangeofaverage globaltemperatureriseinthecomingdecades.TheRCP4.5climatescenarioischaracterisedby significantpolicyactionandmarketforcestodecarboniseandmeettheParisAgreement.Our resiliencetoriskspresentedbythelow-carbontransitionisbeingsecuredbyimplementingournet zerocarbonpathwayandrelatedactivitiesdescribedinthisTCFDdisclosure.TheRCP8.5scenariois characterisedbysignificantchangesinweatherpatternsandseverephysicalhazards.Ourresilience againstrisksassociatedwiththishighemissionsscenarioisbeingsecuredbyembeddingstringent mitigationmeasurestosupportclimateadaptionandresilienceacrosseachstageoftheproperty lifecycleandourproactiveapproachtoassessingandmanagingrisks. Analysingthesedistinctclimatescenarioshasenabledustounderstandthewidescopeofclimate- relatedrisksandopportunitiesandinformactionstosupportourresilience. Our scenarios # RCP 4.5 Low emissions scenario 1.7–3.2°C by 2100 Transition:LoweremissionsscenariowherethereisincreasingpolicyactiontomeettheParis Agreement.Transitionrisksdominate. Scenario impact Economic: Substantial regulatory and marketpressuretodecarboniseand associatedcoststomeetthesedemands. Environmental:Lessphysicalrisk,althougha 2°Cwarmingstillpresentssubstantialphysical climaterisks. # RCP 8.5 High emissions scenario 3.2–5.4°C by 2100 Transition:Higheremissions,business-as-usualscenariowherepolicyactionisnegligibleand warmingrisesdrastically.Physicalrisksdominate. Scenario impact Economic:PermanentlystuntedGDP growthandsevereeconomicand socialshifts. Environmental:Chronicchangestoweather patternsandecosystemscausingsevere impactsonaglobalscale. Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 53 Recommendation Commentary Risk management The organisation’s processes for identifying and assessing climate-related risks Inrecognitionofthethreatclimatechangeposestoourbusiness,sectorandglobaleconomy,inearly 2022weconductedarigorousclimateriskassessment.Atboththebusinessandportfoliolevel,we identifiedourmaterialclimate-relatedrisksandassessedtheirpotentiallikelihoodandsignificance, quantitativelyandqualitatively,relativetoeachother.Theseresultshavebeenintegratedintoourrisk matrix,containingallofourmaterialcorporaterisks,andgivenprobability,impactandresidualimpact ratingsrangingfromlowtohightodemonstratetherelativesignificanceofclimate-relatedrisksto otherrisks.Furthermore,lastyear,wetransformedouremergingriskdashboardintoanupgradedrisk radarthatidentifiestheprincipalandemergingriskstothebusiness.Ourriskradarrecognises‘climate change’asatopprincipalrisktothebusiness,andthereforeembedsclimate-relatedconsiderations intoallourriskmanagementanddecision-makingprocesses.Climate-relatedrisksarereviewedon anongoingbasisbytheExecutiveCommitteeandpresentedtotheBoardaspartoftheannualRisk ManagementPolicyreview,orasnecessary. Resultsfromtheclimateriskassessmentshighlightedthatfloodingisakeyphysicalriskfacingour existingportfolio.Therefore,in2022,wecompletedasset-leveldesktopassessmentsforourentire portfoliotounderstandourexposuretothisclimateriskatamoregranularlevel,addressingflooding fromrivers,surfacewater,reservoirsandsea.Thishelpedustoassignariskrankingtoeachasset, rangingfromverylowtohigh,wherebymitigationactionisrequiredatassetswithamediumorhigh rankwherefloodingexposureismaterial.Itisimportanttonotethatalthoughwehaveprioritised certainassetsasmediumandhighpriorityforresilience,thisrankingisinformedbyourriskappetite thresholds.Itdoesnotimplythathighpriorityassetsareconsidered‘highrisk’intermsoftheUK’s overallexposuretoflooding,whichissignificantincertainareasofthecountry.Wehavesubscribed tofloodwarningsandalertsforhighandmediumpriorityproperties,wherefeasible. Atourtoppriorityassets,thisyearweconductedin-depthevaluationstoassessfloodriskatanasset level,includingsitevisitstoassessfactorssuchaselevationandexistingflooddefencemeasures.We foundthatpluvialfloodingpresentedthegreatestmaterialrisk,whilefluvialfloodingriskwasminimal. Additionally,weassessedtheresilienceoflocalflooddefencestowithstandpotentialfloodingevents, usingopensourceGovernmentdata.Forexample,wehavereviewedfloodalleviationschemesin LutonandCarlisle,twohigherriskszonesinourportfolio,tounderstandtheirlong-termresilience capacity.Byassessingasset-levelriskandlocalresiliencecapacity,wegainaholisticunderstandingof theresidualriskweface,enhancingourabilitytomakeinformedcapitalexpendituredecisions.Italso facilitateseffectivecollaborationwithpropertymanagementteams,equippingthemwithknowledge offlooddefencesandoperatingprocedurestomitigaterisks.Thisexercisehasandwillcontinueto informourinvestmentintofloodresiliencemeasures. ![]() Picton Property Income Limited / Annual Report 202454 TCFD Statement / Continued Recommendation Commentary Risk management / Continued The organisation’s processes for managing climate-related risks OurriskmatrixandriskradararereviewedandupdatedregularlybytheExecutiveCommitteeto ensurethatweremainattentivetothechangingnatureoftheserisksandtoreflectevolvingstakeholder requirementsandthewidermacroeconomicandgeopoliticallandscape.Theriskmatrixidentifies individualclimate-relatedriskswitharesidualriskranking(low,mediumandhigh)andmitigating controlsandindividualresponsibilityaredeterminedtoensurerisksaremanagedappropriately.Based onranking,risksarecommunicatedacrossrelevantlevelsofourbusiness.Wedonotacceptanyriskthat exceedsourestablishedriskthresholdsthatcannotbemitigated,transferredorcontrolled. Fromdevelopingacomprehensiveunderstandingofthematerialclimate-relatedriskstoourportfolio, lastyearwebeganundertakingassetresilienceinspectionstomeasureeachasset’sresiliencetoits materialclimate-relatedrisks.Continuingthisin2023,wecommencedmultipleprojectstoenhance theadaptivecapacityofourassetstomitigateagainstmaterialclimate-relatedrisks.Wehavereplaced heatingandcoolingsystemsinthreeofourmulti-letofficebuildings,ensuringadequatetemperature controlandthermalcomfortforouroccupiersasheatstressriskbecomesincreasinglymaterialtothe UK.Inaddition,wehaveanongoingplantreplacementprojectintheconstructionphaseandfour furtherprojectsarecurrentlyinthedesignphase.Weacknowledgethatthisinvestmentisvitalto maintainthevalueofourassetsandtoremainattractivetooccupiersseekingclimatechangeresilience. Wewillcontinuetoinspectpropertiesonanongoingbasistoensuretheassetlevelstrategyevolves withchangingrisks,informationandtechnology,helpingustounderstandourportfolio’sbaseline resiliencetoclimateriskimpactsandinformingourassetresilienceplanningandcapitalexpenditure requirements.Thisensuresthatourmostat-riskassetsareprioritised,buildingourclimateresilience whereitmattersmostfirst.Wealsoremainfocusedonthelong-termnatureofclimatechangeand areintheinitialstagesofinvestigatingwatersupplyrisksacrossourportfolio.Whilerecognisingthisisa long-termrisktoourportfolio,webelieveitisimportanttobuildresiliencenowtoensureourportfolio canwithstandanypotentialaccelerationofclimatetrends,unforeseenclimateextremesandpotential short-termrisks,suchasreputationdamage.Indoingso,wearecommittedtofuture-proofingour portfolioandretainingitsvalue. WehavecreatedaTCFDandnetzerocarbonactiontrackerthatisutilisedacrossthebusinessto recordtheactionsbeingtakentomanagephysicalandtransitionclimate-relatedrisksattheportfolio levelandassetlevel.ThisdocumentismonitoredcentrallyandreviewedbytheExecutiveCommittee toguaranteeourclimateresiliencestrategyisprogressingasintended. Toenhanceourmanagementofclimate-relatedrisksinoccupier-controlledspaces,wehave introducedgreenleaseclausesandhaveupdatedourtemplatetoalignwiththenewBBPGreen LeaseToolkit.Weproactivelyengagewithouroccupiersonsustainabilityandclimate-relatedtopics, tailoringourapproachforourmulti-letandsingle-letoccupiers.Ourpropertymanagershostregular meetingswithouroccupiersatourlargerbuildings.Sustainabilityandclimate-relateditemsare featuredontheagenda,whichincludeitemssuchasdatacollectionandsharing,energysaving initiatives,on-siterenewablesandwaste. Sustainabilityandclimate-relatedconsiderationsareintegratedacrossourengagementwith occupiersatmultiplelevels,includinginallcommercialdiscussions,whenconductingrefurbishment worksandthroughcollaborationwithexternalconsultants.Furthermore,weconductoccupiersurveys togaingreaterinsightintoouroccupiers’userexperiences,identifyareasforimprovementandto understandtheircomprehensionofmaterialsustainabilityandclimate-relatedissues.Thesurveys havehighlightedvaluableopportunitiestoenhanceourportfolio’sperformanceandclimate-related resilience,plushavehighlightedwhichofouroccupiersarewillingtoengageandlearnmoreabout enhancingthesustainabilityoftheirbuildings.Inresponse,wearecurrentlydevelopinginitiatives thatwillprovideouroccupierswithgreaterknowledgeandexpertisetooptimisesustainability performanceoftheirbuildings. ConductingESGauditshasenabledustoidentifyopportunitiestoreduceenergyconsumptionand improveefficiencies,supportingourabilitytomakeinformeddecisionsduringourinvestmentand capitalallocationactivities,aswellasacquisitionanddivestmentdecisionstomaximisetheoverall performanceandresilienceofourportfolio.Thisyearwepreparedthermalmodelsofthreeofour multi-letofficebuildingstounderstandenergyefficiency,loadsandexternalfactors.Thisinformation isvaluableforoptimisingbuildingperformance,identifyingareasofimprovementandimplementing effectivestrategiestomaximiseoccupantcomfort.Wehavealsousedthermographicimaging technologytoassistwithenergyefficiencyimprovements.Ouractionsareyieldingtangibleresults, includingEPCratingimprovementsacrossourportfolio.Since2021,theshareofourportfolio achievingEPCA-Chasgrownfrom64%to80%. Weremaincommittedtoachievingour2040netzerocarbontarget,whichwillbekeytosupport ourresilienceagainsttransitionclimateriskimpacts.Wehavepublishedournetzerocarbonpathway, whichsetsoutourpriorityactionstowardsdecarbonisingtheportfolio.Aspartofouractionplan,we haveimplementedsolarinstallationsatmultipleassets,withthecapacitytogenerate400kWp,and conductedfeasibilitystudiesatothers.Ourfeasibilitystudiesconsiderenergyanalysis,systemdesign, financialmodellingandanetzeroimpactassessment,which,ifdeemedviable,informsourdelivery approachtosolarinstallations.Intotal,theseactivitiescover18%ofourportfolio,intermsoffloorarea Wherefeasible,weaimtooptimisethesolarenergygenerationcapacity. Thisyear,wetransformedhowwecollectandmanageourclimate-relateddatabymovingfrom athird-partymanagedsystemtoaninternalsystem.Thishasenhancedourabilitytoaccessdata andreal-timeupdatesacrosstheportfolio,assistingourmanagementofclimate-relatedissues. Wemeetregularly–usuallymonthly–withourinsuranceadvisersandperiodically,wecover climate-relatedissuestoensureweremainalignedandawareoftheirpositiononthesematters. Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 55 Recommendation Commentary Risk management / Continued The processes for identifying, assessing and managing climate-related risks are integrated into the organisation’s overall risk management TheRiskManagementPolicywehaveinoperationhasenabledustointegratetheclimate-related riskswehaveidentifiedandassessed(seeStrategysection)intoouroverallriskmanagement processeseffectivelysuchthatsustainabilityandclimate-relatedissuesareconsideredacrossallour activities.Wearecommittedtoconductingbusinessresponsiblyandinawaythatcreatesapositive impactonsociety.Therefore,wewillcontinuetoensureclimate-relatedrisksareidentified,assessed andmanagedappropriatelytofulfilourroleintacklingclimatechange. Metrics and targets Metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk management processes WereportinlinewithEPRASustainabilityBestPracticesRecommendationsforsustainability reportingandpublishourEPRAtablesannually.Weusearangeofmetricstoinformourstakeholders ofourclimate-relatedperformanceandactivities,including: / Totalandlike-for-likeScope1and2emissionsandtotalScope3emissions; / Totalandlike-for-likeelectricityconsumedinkWh,includingenergyintensityinkWh/m 2 ; / EnergyintensitiesforScope1and2emissionsusingthemetrictCO 2 e/m 2 ; / TotalrenewableenergygeneratedinkWh; / Totalandlike-for-likewaterconsumption,includingoccupierwaterconsumptioninabsoluteterms, foreachassettype;and / Totalandlike-for-likewastedisposalintonnes,splitintorecycling,composting,recovery,incineration andlandfill. Tosupplementourquantitativemeasures,wealsoassesskeyqualitativemeasures,includingEPC ratingsandbuildingcertificationstobuildaholisticviewofourportfolio’sperformance. Metricsincludedinournetzerocarbonpathwayinclude: / Portfolioon-siterenewableenergycapacity(MW) / Renewableenergyprocurement(%) / Highqualityrenewableenergyprocurement(%) / Majorrefurbishmentembodiedcarbonintensity(tCO 2 e/m 2 GIA) / Minordevelopmentandfit-outembodiedcarbonintensity(tCO 2 e/m 2 GIA) / Totalportfolioembodiedcarbondevelopment(tCO 2 e) / Totalcarbonemissionsoffset(tCO 2 e) Inthecomingyear,weintendtotrackandpubliclyreportadditionalmetricsrelatingtoourclimate adaptationactivitiestosupporttransparentcommunicationofourprogresstoourstakeholdersand investors.ThesewillbeincludedinournextTCFDreport. Scope 1, Scope 2 and if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks WediscloseScope1,2and3greenhousegasemissionsinourAnnualReportandSustainabilityData PerformanceReport.Weprovidetrendanalysissince2019toshowprogressandhistoricalperformance. WecalculateandreportouremissionsinlinewiththeGHGProtocolCorporateAccountingand ReportingStandard. Targets used by the organisation to manage climate-related risks and opportunities and performance against targets Inrecognitionoftheescalatingconcernsaroundclimatechangeandourawarenessthatthereal estateindustryisakeycontributortoglobalGHGemissions,wehavedevelopeda1.5°Calignednet zerocarbonpathwaywithatargetyearof2040. Wearecurrentlydevelopinginterim/short-termreductiontargetsforourScope1,Scope2and Scope3emissions,aswebelievethiswillguidemorefocusedactionstoreduceemissionsacross ouroperationsWeintendtofocusondefiningourScope1andScope2targetsinitially,followedby ourScope3targets,whichwewilldiscloseinourfuturereportsonceconfirmed.Tosetourtargets weareusingtheUKGBC’stargetsforofficesandtheCarbonRiskRealEstateMonitor(CRREM)1.5°C GlobalPathways’alignedtargetsforallotherassettypes.Thesetargetswillsupportournetzero carbonguides. Wearepursuinganembodiedcarbontargetof300kgCO 2 e/m 2 by2040formajorrefurbishments, aligningwiththeLETI2030DesignTargetforupfrontembodiedcarbon(A1-A5). Toincreaseouraccountabilityandculturallyembedclimateriskmanagementthroughoutthe organisation,wehavesetremuneration-linkedannualobjectivesapplicabletoExecutiveDirectors’ bonusopportunitiesforsustainabilityperformance. ![]() Picton Property Income Limited / Annual Report 202456 Being Responsible Sustainable thinking: #### our responsible #### approach to business #### Global trends driving #### sustainability 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. Actingresponsiblyisakeystrategic priorityandsustainabilityisembedded withinourday-to-dayactivities involvingthewholeoftheteam. Wearecommittedtoclearand transparentsustainabilityreporting. WehavecontributedtoGRESBfor anumberofyearsandaremembers oftheBetterBuildingsPartnership. Duringtheyear,wehavecontinued tomakeprogressagainstour sustainabilitypriorities.Wehave significantlyincreasedouron-site renewablecapacity,wehave reducedourlike-for-likeScope1 emissionsandcontinuedour policyofoccupierengagement. Wehavebeencollaborating withouroccupierswithregard totheiremissionscreatedusing ourbuildings.Wearefocusedon capturingenergyusedatatohelp usmakeinformeddecisionsto ensureweprioritiseefficiencies thatreduceemissions. Duringtheyear,wehavebeen focusedontheinstallationofon-site renewables,intheformofsolar energyatourbuildings.Thishas predominantlybeenwherewehave beenimprovingbuildingsahead ofleasing,toensurethattheyare moreattractivetothoseoccupiers whoarealsoseekingtomeettheir ownnetzerocommitments. Wehavealsointroduceda BiodiversityPolicytoensurethat wearethinkingmoreholistically aroundtheenvironmentin additiontofocusingonclimate risksanddecarbonisation.Aspart ofthiswehaveagreedtosupport Youngwilders,acommunity interestcompany,focusedon engaging young people in nature recoveryprojectsacrosstheUK. Weareasmallteam,butare ambitiousinrespectofwhat wecanachievebothwithregard toreducingourimpactonthe environment,andalsohaving apositiveimpactmorewidely. Michael Morris ChiefExecutive Aswenavigatethedynamic landscapeofenvironmentaland socialchallengesimpactingthe worldtoday,thereisawidely acknowledgedneedtobalance traditionalcorporateobjectiveswitha moreholisticapproach,incorporating environmentalandsocialobjectives, nature-based solutions and circulareconomyprinciples. Therehasbeensomepositive global sustainability progress reportedoverthelast12months. Wearetransitioningawayfrom singleuseplastics,vastsumshave beeninvestedintocleanerenergy procurementandCOP28drovethe climatechangeagendaforwards. However,theWorldMeteorological Organizationconfirmedthat2023 wasthewarmestyearonrecord, withtheaverageglobaltemperature approaching1.5°Cabovepre-industrial levels.EachmonthfromJuneto December2023waswarmerthanthe correspondingmonthinanyprioryear. Thisisparticularlyrelevantgiventhe ParisAgreement’sgoaloflimitingthe riseintheaverageglobaltemperature to1.5°Cabovepre-industriallevels overthelong-term.Theleveland paceofactiononaglobalscalemust increaseifthisgoalistobeachieved andirreversibleclimatetipping pointsavoided.Withthewarming effectsofElNiñostillprevalent, itisanticipatedthatnewrecords willcontinuetobesetin2024. Withthisriseintemperatures camerecord-breakingextreme weathereventsthroughout2023, includingdrought,floodingand wildfires.Sucheventsrepeatedly haveadisproportionateeffect ondisadvantagedcommunities, whoaremorevulnerabletothe consequencesofclimatechange. Theintrinsiclinksbetweenbiodiversity lossandclimatechangearenow widelyrecognised.In2023,biodiversity andtheNaturePositivemovement becamemoreprominent,withthe launchofthefinalTaskforceon Nature-relatedFinancialDisclosures (TNFD)recommendationsand reportingframework.Althoughnotyet mandatoryintheUK,TNFDaimsto OurSustainabilityDataPerformance Report is available on our website Backtocontents ![]() Sustainable thinking, #### responsible business Energy efficiency 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 G o v e r n a n c e & a d v o c a c y E n v i r o n m e n t a l f o c u s S t a k e h o l d e r e n g a g e m e n t Picton Property Income Limited / Annual Report 2024 StrategicReport 57 AdditionalInformationFinancialStatementsGovernance #### Our approach Sustainable thinking is integrated withinallourbusinessactivities. Wearecommittedtomaking apositivecontributiontosociety, whilstminimisinganynegative impactonpeople,localcommunities andtheenvironment. 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. #### 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. mitigatenature-relatedbusinessrisk andcontributetoreversingnatureloss by2030.In2024,theUKGovernment introducednewBiodiversityNet Gain(BNG)legislation,specifying thatdevelopmentsoveracertainsize mustdeliverBNGofatleast+10% tothesite,aimingtoensurewildlife habitatsareleftinabetterstatepost- developmentthantheywerebefore. AccordingtotheWorldEconomic Forum’slatestGlobalRiskPerception Survey,risksinthegeopoliticaland socialcategoriesdominatedthetop tenlistedshort-termrisksperceived bygloballeaders.Interstatearmed conflict,involuntarymigration, socialpolarisation,andlackof economicopportunitywereall amongstthetopconcernsforthe nexttwoyears.Bymid-2023,itwas estimatedbytheUnitedNations RefugeeAgencythattherewere 110millionforciblydisplacedpeople worldwide,includingover30million refugees,withongoingandnew conflictsbringingtheresulting humanitariancrisistoprofoundlevels. Bycapitalisingonthehighlevels ofawareness,societyisnowbetter placedtodrivepositivechange.The propertyindustryhasanimportant roletoplayandthroughtransparency, collaborationandinnovation, itcancontributetoprogressing globalsustainabilitytargets. 16% ReductioninScope1&2emissions comparedtoour2019baseline 62% Occupierdatacoverage ![]() Picton Property Income Limited / Annual Report 202458 Being Responsible / Continued #### Performance #### dashboard Our sustainability priorities Key objectives 2023/24 progress Key priorities for the year ahead #### Environmental #### focus Meet net zero target across the portfolio by 2040 Measure and reduce embodied carbon Measure and reduce our operational carbon Maximise renewable opportunities Develop a carbon offsetting strategy 16%reductioninabsoluteScope1and2emissions comparedtothe2019baseline 18%reductioninScope1energyintensitycompared to 2019 baseline 53%reductioninScope2energyintensitycompared to 2019 baseline 57leasescompletedcontaininggreenleaseclauses Engagedwithoccupiersandachievedoccupierenergy datacoverageof62% Progresseddecarbonisationstrategyacrosstheportfolio Increasedsolarcapacityby184%withinstallationofsolar arraysonfiveassets 80% EPCsratedA–C–improvedfrom76%inMarch2023 Setnewinterimtargetstoprogressdecarbonisationstrategy CreateaBBPalignedclimateadaptationplan ContinuetodecarbonisetheportfolioinlinewiththeUK GreenBuildingCouncil’snetzerocarbonhierarchy / Investinourassetsinlinewithoursustainable refurbishmentguidelinestoimproveoperationalefficiency / Continuetoremovefossilfuel-basedsystemsfrom our buildings / Continue to install on-site renewables Workwithoccupierstofurtherimproveoverallenergy datacollection Developourcarbonoffsettingstrategy #### Stakeholder #### engagement Engage with our shareholders to update on performance and continue to ensure clear and transparent reporting Develop occupier engagement strategy and plan to deliver on our key Picton Promise commitments around Action, Community, Technology, Support and Sustainability Actively promote our values and nurture a positive team culture Carriedoutannualoccupiersurveyatofficeandindustrial properties 91% Ofoccupierswouldrecommendusasalandlord (2023:85%) Developedouroccupierengagementstrategyand launchedouroccupierappacrosseightmulti-let officebuildings Commissionedahealthandsafetyregulatoryriskreview Carriedoutannualemployeeengagementsurveywith animprovedoverallemployeesatisfactionscoreof86% (2023:82%) £25,000 Charitabledonations,supporting15charities Continuetoactivelyengagewithoccupierson sustainability initiatives Considerroll-outofoccupierappsacrossaselectionof industrial properties Maintainourhighlevelofhealthandsafetycompliance #### Governance #### and advocacy Maintain high standards of sustainability governance, #### management and reporting #### Continue to improve GRESB rating ThirdpartydataassuranceofGRESBsubmissiondata MaintainedEPRAGoldawardsforbothAnnualReport and sustainability reporting MaintainedourGRESBratingofthreegreenstarstatus ReportedinlinewithTaskForceonClimate-related FinancialDisclosures ReviewedandupdatedourSustainabilityPolicy PublishedBiodiversityPolicy Extendthirdpartydataassuranceonsustainabilityreporting Maintainclearandtransparentreporting ImproveGRESBrating Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 StrategicReport 59 AdditionalInformationFinancialStatementsGovernance Our sustainability priorities Key objectives 2023/24 progress Key priorities for the year ahead #### Environmental #### focus Meet net zero target across the portfolio by 2040 Measure and reduce embodied carbon Measure and reduce our operational carbon Maximise renewable opportunities Develop a carbon offsetting strategy 16%reductioninabsoluteScope1and2emissions comparedtothe2019baseline 18%reductioninScope1energyintensitycompared to 2019 baseline 53%reductioninScope2energyintensitycompared to 2019 baseline 57leasescompletedcontaininggreenleaseclauses Engagedwithoccupiersandachievedoccupierenergy datacoverageof62% Progresseddecarbonisationstrategyacrosstheportfolio Increasedsolarcapacityby184%withinstallationofsolar arraysonfiveassets 80% EPCsratedA–C–improvedfrom76%inMarch2023 Setnewinterimtargetstoprogressdecarbonisationstrategy CreateaBBPalignedclimateadaptationplan ContinuetodecarbonisetheportfolioinlinewiththeUK GreenBuildingCouncil’snetzerocarbonhierarchy / Investinourassetsinlinewithoursustainable refurbishmentguidelinestoimproveoperationalefficiency / Continuetoremovefossilfuel-basedsystemsfrom our buildings / Continue to install on-site renewables Workwithoccupierstofurtherimproveoverallenergy datacollection Developourcarbonoffsettingstrategy #### Stakeholder #### engagement Engage with our shareholders to update on performance and continue to ensure clear and transparent reporting Develop occupier engagement strategy and plan to deliver on our key Picton Promise commitments around Action, Community, Technology, Support and Sustainability Actively promote our values and nurture a positive team culture Carriedoutannualoccupiersurveyatofficeandindustrial properties 91% Ofoccupierswouldrecommendusasalandlord (2023:85%) Developedouroccupierengagementstrategyand launchedouroccupierappacrosseightmulti-let officebuildings Commissionedahealthandsafetyregulatoryriskreview Carriedoutannualemployeeengagementsurveywith animprovedoverallemployeesatisfactionscoreof86% (2023:82%) £25,000 Charitabledonations,supporting15charities Continuetoactivelyengagewithoccupierson sustainability initiatives Considerroll-outofoccupierappsacrossaselectionof industrial properties Maintainourhighlevelofhealthandsafetycompliance #### Governance #### and advocacy Maintain high standards of sustainability governance, #### management and reporting #### Continue to improve GRESB rating ThirdpartydataassuranceofGRESBsubmissiondata MaintainedEPRAGoldawardsforbothAnnualReport and sustainability reporting MaintainedourGRESBratingofthreegreenstarstatus ReportedinlinewithTaskForceonClimate-related FinancialDisclosures ReviewedandupdatedourSustainabilityPolicy PublishedBiodiversityPolicy Extendthirdpartydataassuranceonsustainabilityreporting Maintainclearandtransparentreporting ImproveGRESBrating ![]() Picton Property Income Limited / Annual Report 202460 Environmental Focus Sustainable thinking, practical solutions: #### our progress towards #### net zero carbon Backtocontents ![]() Reduce embodied carbon Optimise energy efficiency Maximise on-site renewable energy Purchase high quality carbon offsets for residual emissions Maximise high quality off-site renewable energy procurement Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 61 #### Environmental #### focus Sustainable thinking, practical solutions Asaresponsibleownerofcommercial realestate,wearecommitted toenhancingtheenvironmental performanceofourbuildings andreducingouremissions. Sustainablethinkingisembedded intoourbusiness,asbothatop- downstrategicpriorityandfroma bottom-upassetlevelperspective. Inpracticalterms,allourassetshave aplaninplacetomeasure,monitor andreducecarbonemissions,setting outthestepsrequiredtoprogress alongournetzerocarbonpathway. 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 it aligns with the Better Buildings 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. Bythen,alloperationalemissions willbereducedasmuchas possiblethroughenergyefficiency measuresandrenewableenergy, withanyresidualemissionsoffset. From2040onwards,allcompleted refurbishmentprojectswillhave reducedtheirembodiedand operationalcarbonasmuchas possible,withanyresidualemissions offsetuponpracticalcompletion. Wehavedefinedourportfolio’s baselinecarbonfootprint,using2019 asthemostrepresentativerecent year,tomaptheemissionsreductions requiredtomeetour2040target. Aswithsimilarproperty companies,themajorityofour emissionsrelatetotheenergy consumptionofouroccupiers. Net zero governance OurClimateActionWorking Group was established in 2022 to mitigateclimatechangerisksand implementournetzerocarbon pathway,throughoverseeing andcoordinatingsustainability improvementsacrosstheportfolio. Nowinitssecondyear,theClimate ActionWorkingGroupcontinuesto makeprogressagainstkeypriorities. ![]() Picton Property Income Limited / Annual Report 202462 Environmental Focus / Continued Our net zero carbon progress Measuring and reducing embodied carbon Ourtargetformajorrefurbishment embodiedcarbonintensityis 300kgCO 2 e/m 2 by2040.Themajority ofourdevelopmentactivitycomprises refurbishmentsandretrofitworks, forwhichtherearenoindustry benchmarksthusfar.Wewillconduct wholelifecarbonassessmentsfor allmajorrefurbishments(above £1.5million)andfit-outsinpursuing anembodiedcarbontargetfor ourmajorrefurbishments. Toachievethemaximumembodied carbonsavings,oursustainable refurbishmentguidelinesdefine ourexpectationsforeachproject fromtheoutset. Thisyear,wecontinuedtoundertake refurbishmentactivityacrossthe portfoliotoimproveandenhancethe buildings’sustainabilitycredentials throughmakingalterationsto structure,mechanicalandelectrical maintenanceorlandscaping. Wehaverecentlydecidedtoseek independentexternalexpertise throughtheappointmentofa specialistenvironmentalconsultant. This will enable us to gain regular accesstostrategicadvice,updateson industrybestpracticeandguidance, aswefurtherdevelopinterimtargets onournetzerocarbonpathway. Thisyear,wehaveupdatedour sustainablerefurbishmentguidelines, inlinewiththelatestguidancefrom theBetterBuildingsPartnership. Wecontinuetoincorporatenet zerocarboncriteriaintoour acquisitionduediligenceprocess. Net zero carbon progress Aims Progress Metrics Embodied carbon Minimisetheembodied carboncostofdevelopments, majorrefurbishmentsand occupierfit-outs. Nowholelifecarbon assessmentswererequired duringtheyear,asindividual assetrefurbishmentactivitydid notexceed£1.5million. Targetembodiedperformance oflessthan300kgCO 2 e/m 2 for majorrenovations. Operational carbon Ensureoperationalcarbon performanceandefficiency acrosstheportfolioisimproved. Wehaveworkedonengaging withouroccupierson automateddatasharingto streamlinetheenergydata collectionprocess. 16%reductioninoperational carbonemissionsforScope1and 2,relativetoour2019baseline. On-site generation Maximiseamountofon-site renewablegeneration. Wehavecontinuedtoinstall solar panels on our industrial assetswherefeasible. Thisyear,wehavecompleted theinstallationofsolararraysat afurtherfiveproperties, increasingthegeneration capacityby184%to0.5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. Weintendtodevelopour strategyforhighqualityoffsets postnetzerocarbontargetyear of2040inthecomingyear. Third party verification Maintaincredibilityand transparencyofour emissionsdata. Annual independent third-party assuranceofenergydata. Certificationofenergy, water,andwastedataby third-partyassurance. Asthecontractvalueofeach refurbishmenthasbeenunder£1.5 million,inlinewithourrefurbishment guidelineswedidnotcarryout anyembodiednetzerocarbon assessments,butweendeavouredto repurpose,recycleandreusematerials wherepossible,minimisingsitewaste. ReadmoreonourGHGemissionson pages 64–65 Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 63 Measuring and reducing operational carbon Overtheyear,wehavebeen introducingenergyefficiency measuresacrosstheportfolio tohelpreduceoccupierenergy consumption,including: / Improvingenergyefficiencyduring refurbishmentworks,inlinewithour updatedrefurbishmentguidelines / Continuingtodecarbonise assetsthroughremovalofgas fuelledsystems / Continuing to install on-site renewables / Increasingouruseofan environmentaldatamanagement systemtoincludeScope3and monitoringofemissionsatamore granular level / Engagingwithoccupiers toencouragesharingofdata, enhancingourabilitytomeasure andmanageemissions / Continuingtoincludegreen leaseclauseswithinourleases, with57completedthisyear 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five schemesandundertakenafurther fiverenewableenergyfeasibility studiestoidentifyasset-specific opportunitiesacrosstheportfolio. Maximising off-site renewable procurement Withinourportfolio,currently100% oflandlordprocuredelectricity is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. Itmustbefromrenewablenon- fossilfuelenergysources;create additionalcapacityinthegrid; andhaveexclusiveownershipand claimsoftheenergyattributes. 2022 Underway/Completed Future initiatives 2023 2024 2025 2040+... Embodied Carbon Operational Carbon Occupier Engagement Net Zero Governance Applyrefurbishment guidelines to all new developments,refurbishments andfit-outs Implementon-site renewables,prioritising mostcost-effectivesites Conductwholelifecarbonassessments forallmajorrefurbishmentsandfit-outs Liaisewithkeyoccupierstounderstand theirenergyreductionplansandto investigate joint initiatives Undertakenetzeroaudits acrosstheportfolioand establishassetspecific carbonreductionplans Installsub-metering forallenergy rechargingto understandoccupier usage Develop a data and targetmonitoring process 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 actionstowardsnetzero 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 Integratefindingsof netzeroauditsinto longer-termassetplans Conductrenewablefeasibility studiesforassetstoestimate renewable power generation potential Identifyacost-effective solutionformonitoringthe energyconsumptionofoccupiers Create a detailed occupier engagementplan Embednetzerocriteria intopre-acquisitiondue diligenceprocess Integrateenergyandcarbonclausesintonewand renewedleases,includingaccesstoenergydatawhere energyprocureddirectlybyoccupiers Implementsoftwaretotrackembodied carbonfrom‘inuse’standingassets ![]() Picton Property Income Limited / Annual Report 202464 Environmental Focus / Continued Greenhouse gas emissions Scope 1 Ourlike-for-likeScope1emissions fortheperiodwere1,005tCO 2 e, adecreaseof10%compared tothepreviousyear. Ourlike-for-likeScope1energyintensity hasdecreasedby11%overtheyear. OurabsoluteScope1emissions fortheperiodwere1,161tCO 2 e, whichis3%higherthanthe previousyear.Theincreaseis partlyduetoanacquiredproperty providingafullyearofemissions dataforthefirsttimein2023. AbsoluteScope1emissionsin2023 wereflatincomparisontothe2019 baseline,howeverthecompositionof theportfoliohaschangedsince2019. OurScope1energyintensity hasincreasedby1%overthe yearbuthasdecreasedby18% comparedtoour2019baseline. Scope 2 Ourlike-for-likeScope2emissions fortheperiodwere1,429tCO 2 e,an increaseof3%comparedtothe previousyear.Thisispartlydue totheamendedUKGovernment emissionsfactorasexplainedabove. Ourlike-for-likeScope2energy intensityhasincreasedby1%over theyear,againattributabletothe changingemissionsfactor. OurabsoluteScope2emissionsfor theperiodwere1,731tCO 2 e,which is4%higherthanthepreviousyear. Thisreflectsboththeemissions factorchangeandacquiredproperty providingafullyearofemissionsdata forthefirsttimein2023.Absolute Scope2emissionsin2023were 25%lowerthanthe2019baseline. Emission source 2023 2022 2021 GHG Scope Absolute GHG emissions (tCO 2 e) GHG intensity (tCO 2 e/m 2 ) Absolute GHG emissions (tCO 2 e) GHG intensity (tCO 2 e/m 2 ) Absolute GHG emissions (tCO 2 e) GHG intensity (tCO 2 e/m 2 ) Combustionoffuelandoperationoffacilities 1 1,161 0.020 1,132 0.019 1,020 0.019 Electricity,heat,steamandcoolingpurchasedforownuse 2 1,731 0.020 1,665 0.019 1,448 0.028 Officepremises 2 7 0.023 8 0.026 5 0.018 Total Scope 1 and 2 2,899 0.029 2,805 0.028 2,473 0.044 Business travel 3 9 N/A 3 N/A 2 N/A Occupierdata 3 7,189 0.030 9,664 0.033 10,455 0.039 Landlordwaterandtreatment 3 18 0.000 21 0.002 6 0.000 Landlord waste 3 10 0.000 16 0.003 8 0.000 Total Scope 3 7,226 0.022 9,703 0.026 10,471 0.032 Total all Scopes 10,125 N/A 12,508 N/A 12,944 N/A Pleasenote2022numbersarere-stated Energy usage InlinewithEPRAbestpractice, we report energy usage data on an absoluteGHGemissions(tCO 2 e)and GHGintensity(tCO 2 e/m 2 )basis,both absoluteandlike-for-likeunderScopes 1,2and3.Absolutedataprovides theentirepicturewithouttakingany changestoportfoliocompositioninto account,whereaslike-for-likedata enablesustocompareusageacross thesamepropertiesyear-on-year. Energyintensitymeasuresnormalise consumptionbyfloorareatogivea comparativemeasureofefficiency. Sustainabilitydatacollectionand qualityposesakeychallengefor theindustryasawhole,andweare workingtoimprovetheaccuracy, timelinessandtransparency ofourenergyusagedata. Post-dataassuranceandpublication ofour2022emissionsdata,revisions havesincebeenmadeattwo propertieswherereconciliation hasidentifiedmeterreadingerrors, thereforerequiringamendments toScope1emissions.Changeshave beenreflectedinthetablebelow. ThisyeartheUKGovernmentraised thegridcarbonemissionfactor(which convertselectricityconsumptioninto GHGequivalentunits)resultingina GHGconsumptionincreasenationally. Thisisreflectedintheincreaseinour Scope2emissionsdetailedbelow. Comparedtoour2019baseline,our totalabsoluteScope1and2GHG emissionsdecreasedby16%to 2,899tCO 2 e.Weareworkingwith ouroccupierstoincreaseScope3 datacoverageandhavecollected 62%of2023datatodate,which showsa13%decreaseinScope3 intensitycomparedto2022. OurScope2energyintensity hasincreasedby3%overthe yearbuthasdecreasedby53% comparedtoour2019baseline. Scope 3 Duetothecompositionofour portfolio,themajority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,todate wehavecollected62%oftheportfolio data.Wehaveachievedthisviadirect meterreadingsaswellasongoing engagementwithouroccupiers. OurScope3collectionprocessis continuingandwewillprovidean update within our Sustainability DataPerformanceReport. Ourlike-for-likeScope3emissionsfor theperiodofthedatacollectedto dateare6,965tCO 2 e,a15%reduction ontheprioryear.However,thisfigure islikelytobeamendedasfurther dataiscollectedandwillbere-stated usingassureddataintheGRESBand EPRAdatatablespublishedinJune. Ourlike-for-likeScope3energy intensityhasincreasedby3%in theyear. Onanabsolutebasis,ourScope 3emissionscollectedtodate are7,226tCO 2 e,a26%reduction onthepreviousyear.Again,this issubjecttochangeasfurther occupierdataiscollected. Usingdataavailable,ourScope3 energyintensityhasreducedby13% overtheyearto0.022tCO 2 e/m 2 . Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 65 Wecontinuetoreportona calendaryearbasistoensure thereissufficienttimetocollect occupierconsumptiondata. Wehavecalculatedourintensity measurementsbasedonthearea servedbyeachmeter,forexample wholesite,commonareaoraspecific floorwithinanasset.Externalsupplies havebeenexcludedfromtheintensity calculations.Sothatanaccurate comparisoncanbemadebetween reportingyears,thisapproachhas beenbackdatedto2019figures. 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2023. Year-on-year,wewillcontinueto updatepreviousreportedfiguresif applicabletoremoveestimatesand ensureactualdataiscapturedand reported.Weoccupyafloorwithin oneofourassetsundermanagement andassuch,haveapportionedoutour consumptionbasedonfloorareaand thisisreportedasaseparatelineitem. Methodology Wecollectallofourlandlord controlledenergydataviaautomatic meterreadings,achieving62% coveragetodate.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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2023. Head office Westartedcollectingandreporting ourheadofficedatain2016,andwhile itisonlyasmallpartofouroverall footprint,webelieveitisimportant toprovideaholisticviewwhere possible.Ourofficeislocatedona floorwithinStanfordBuilding,London, whichisoneofourownassets.This isarefurbishedspace,providing thelatesttechnologyandenergy efficiencymeasures.Thishasallowed ustoobtainmorereliabledata.In turn,wehaveoptimisedouroffice heating/coolingandlightingsystems tominimiseouremissions.In2023, ourenergyusagereducedby11%. Business travel Ourbusinesstravelfootprinthas increasedovertheyearasaresultof increasedactivityacrosstheportfolio requiringphysicalattendanceto optimiseoutcomes.Wecontinueto encouragesustainableformsoftravel andvirtualmeetingswherepractical. #### We are committed to increasing our Scope 3 #### data coverage with automated data collection. Tim Hamlin DirectorofAssetManagement 10% Like-for-likereduction inScope1emissions 62% Scope3occupierenergy datacollection ![]() Picton Property Income Limited / Annual Report 202466 Environmental Focus / Continued #### 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theefficiencyofexisting equipmentandsupportouroccupiers withtheirownsustainabilitystrategies. Sustainable action plans Wemaintainbespokesustainability actionplansforeachofourmulti- letassets,incorporatingenergy, environment,health,wellbeingand biodiversityimprovementmeasures, whicharereviewedannually. Opportunitieshavebeenidentified fortechnologytoreduceelectrical consumptionwithinmulti-letoffice buildings,supplychainmanagement andbuildingcertificationschemes.We havealsorefinedourrefurbishment guidelinestoensurealignment withournetzerocarbongoals. #### Electric vehicle #### charging points Duringtheyear,wecontinued tosupportouroccupierswho wishedtoinstallelectricvehicle chargingpoints. Wehavealsoinstalledcharging pointsacrossseveralsites,including WesternIndustrialEstate,Bracknell, AngelGate,LondonandWaterside House,Leeds. Safeinstallationandoperationof thesechargingpointsisofprimary importancetous,andwiththe supportofourinsurerswehave developedacomprehensivelistof safetyrequirementswhichallEV installations at our buildings have tocomplywithbeforeconsent forinstallationcanbegiven. Wearereassessingthefeasibility ofinstallationofelectrifiedparking bays at our retail warehouse sites inconjunctionwithanelectric vehicleinfrastructureoperator. Sustainable refurbishments Oursustainablerefurbishment guidelines were updated in 2023 andnowincludetargetsaround energyusetransparency,supplychain management,legislativerequirements andthecollectionofbuildingdata andrecords.Theguidelinescontinue tounderpinouraimsandobjectives forsustainablerefurbishments. The guidelines have been the catalystforprogressthisyear inseveralareas,including:. / Thecompletionoffourproperty leveldecarbonisationfeasibility studies,which,throughworking withoccupiers,haveresultedin propertyupgradesthatachieved commongoals / Adoptionofcirculareconomy principles,includingthereuseof equipment,materials,fixturesand fittingswithintheportfolio,thereby reducingcostsandwaste / Completingrenewableenergy feasibilitystudiesonthree industrial sites / Increasedcollaborationwith occupiersduringrefurbishment projectstoincreaseefficiencyand reducedwaste / ImprovementstoEPCratingsof refurbishedspace.Duringtheyear, theweightedaverageimprovement inEPCratingonanERVbasiswas fromaDtoaBrating / Increasedfittingofenergyefficiency measures,forexampleLEDlighting andmotionsensorsthroughoutthe portfoliowhereappropriate / Wehavealsoinstalledmotion sensorlightingatTridentHouse, StAlbansandParkburyIndustrial Estate,Radlett Lookingahead,wewillcontinue toimprovetheportfolioin accordancewithoursustainable refurbishmentguidelines,and alsoseektoimplementnew technologywhereappropriate. #### We have been working #### with occupiers during refurbishment projects to #### ensure greater efficiencies #### and the reduction of waste. Andy Lynch HeadofBuildingSurveying 184% Increaseinsolargenerationcapacity Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 67 #### Net zero carbon #### building audits Last year we reported undertaking netzerocarbonbuildingaudits atfiverepresentativeassets acrossourportfolioincluding: / Atourofficeassets;Pembroke Court,Chathamand401Grafton Gate,MiltonKeynes / At our retail warehouse asset in Bury / At our industrial estates in Luton and Radlett Theoutputfromthereportshas beenvaluableinhelpingdefine ourdecarbonisationstrategy formulti-letofficeassets. Wehaveundertakena comprehensivemeteringsurvey acrossourservicechargesitesto ensureeffectivemeteringand improveenergyreportingwhich isseeninthecurrentyear’sdata. Whilstourstrategyisto decarboniseourmulti-letoffice assets,wecontinuetoutilisethe AssetIQbuildingmanagement systemtomonitorandoptimise energyefficiencyatassets awaitingdecarbonisation:401 GraftonGate,MiltonKeynes, PembrokeCourt,Chathamand 180WestGeorgeStreet,Glasgow. Solar Wehaveinplaceastrategyto considerinstallingsolarpanelswhen undertakingrefurbishmentprojects, so that the building has a renewable energysourcewhichwillalsoenhance lettingprospects.Abuilding’sEPC ratingwillalsobeimprovedwith solarenergycapacityinplace. Wehavefocusedonutilisingsolar installations at our industrial assets duetothelargeravailableroofspace andusageandpowerconsiderations. Thelargerroofspacecanprovide the opportunity to generate greater levelsofelectricityandsomakea moresignificantcontributionto reducingrelianceonfossilfuels. Wehavealsoworkedwithour occupierswhoareconsidering solar installations to help assess theviabilityofanyschemes. Theinstallationofsolarpanels providesasourceofsustainable energyforabuilding,andhasfinancial benefits.On-sitesolargenerationcan beusedwithintheproperty,while excessenergycanpotentiallybefed backtothegrid. Thefeasibilityofsolarinstallations candependonarangeoffactors. Theproperty’sroofmustbeina goodconditionandbeabletocarry theextraweightofasolararray.The abilitytoexportelectricitybackto thegridhasanumberofconstraints atalocallevel.Noexportcapacity changesthefinancialmodellingand businesscasefortheinstallation. Atthestartoftheyear,wehadfive operationalsolararraysacrossthe portfoliowithacapacityof0.176MWp. Thisyear,wehavecompleted theinstallationofsolararraysata furtherfiveproperties,increasing thegenerationcapacityby184% to0.5MWp.Wenowhavesolar generationattenproperties, includingourindustrialassets atBracknell,Gloucester,Harlow, RadlettandWarrington. Wearecontinuingtoassessthe viabilityofsolarinstallationsona case-by-casebasis.Installationsare currentlytakingplaceatouroffice buildinginChathamaspartofa decarbonisationproject,andat anotherindustrialunitatRadlett. Wealsohavefeasibilitystudiesin handatafurtherfiveproperties. Building certifications Whilstournetzerocarbonpathway isfocusedonreducingcarbon emissions,wealsorecognisethe valueofbuildingcertificationsto providethirdpartyvalidation. Wehavethreecertifiedoffice buildingsinourportfolio,atMetro, ManchesterandTowerWharf, Bristol,whichwerebothawarded BREEAM‘Excellent’whentheywere constructedandAngelGate,London, whichhasISO14001certification. Furthertothisandrecognisingthe importanceofpromotingsustainable travelchoices,wehaveundertaken ActiveScorecertifications(which measureprovisionoffacilities forcyclists)atsixassetsthisyear: FarringdonRoad,London,Pembroke Court,Chatham,401GraftonGate, MiltonKeynesandAngelGate, Londonaswellasattwoofour industrialassetsatParkburyIndustrial Estate,Radlett,andGrantham. Angel Gate and Farringdon officesreceivedgoldandsilver ratings,respectively. Lookingahead,weplanto undertakefurtherBREEAMor NABERSassessmentsatassets whereitisappropriatetodoso. Asset type Green building certification 2024\* Office 43% Industrial,BusinessParks 17% Industrial,Distribution Warehouse 29% Hotel 0% Leisure 0% Retail High Street 0% RetailWarehouse 0% % of total portfolio 22% \*Byfloorarea #### In an ever-evolving #### market with new technology #### and expertise available, we #### actively seek opportunities #### to improve sustainability. Andy Lynch HeadofBuildingSurveying ![]() 50 45 40 35 30 25 20 15 10 5 0 E F GDCBA 90 80 70 60 50 40 30 20 10 0 20242023202220212020 EPC ratings as a percentage of portfolio by ERV (%) Percentage of portfolio EPC ratings A–C by ERV (%) Picton Property Income Limited / Annual Report 202468 Environmental Focus / Continued 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. Whilsttherehasbeennochangeto MEESregulationsfollowingtheUK Governmentconsultationin2021 onraisingtheminimumEPClevel toaBby2030,wearecommitted toimprovingourEPCratingstoa Borbetterwhereveritiseconomic andappropriatetodoso. AlignmentwithMEESregulations isintegraltoournetzerocarbon pathway,occupierengagement strategy,andenvironmentalfocus. Wewillcontinuetoproactively managetheportfolioonthisbasis. Green lease clauses Greenleasingcontinuestobe animportanttooltoenableus andouroccupierstoimprovethe performanceofabuilding. Agreenleasewillhelpenhancethe environmentalperformanceofa building,mitigateanyenvironmental legislativeandmarketriskandfoster improvementsindatacollection.Over theyear,99%ofourleasescompleted includedgreenleaseclauses. InJanuary2024,theBetterBuildings Partnership released updated guidanceongreenleasing.Asat April2024,wehaveupdatedour standardformleaseandheadsof termstoalignwiththenewbest practiceandmovingforwardallleases will align with the Better Buildings PartnershipGreenLeaseEssentials. Wewillcontinuetouseleaseevents andlettingofvacantunitstodrive furthertakeup. Minimum Energy Efficiency Standards (MEES) WecontinuetoimprovetheEPC profileoftheportfolio.Lookingatthe percentageofEPCratingsbyestimated rentalvalue(ERV)ofourportfolio, 80%haveanEPCratingofA–C,this isanimprovementonthe76%A–C recordedfortheyeartoMarch2023. Wecontinuetobefullycompliant withMEESandhavenoForG ratedspaceintheportfolio. Overtheyear,wereassessed43 EPCs.Usingthesamereporting basisasabove,88%havebeen reassessedtoanA–Crating,12%to aDorErating,andnonewereFor Grated.Theweightedaveragescore oftheEPCscompletedintheyear improvedfromaDtoaBrating. Our green lease clauses continue to be successfully incorporated in new lettings and renewals. We are now fully aligned with the updated Better Buildings Partnership best practice. Jay Cable HeadofAssetManagement 80% EPCratingsA–C 57 Greenleasescompleted Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 69 Biodiversity WehavecreatedanewBiodiversity Policyinwhichwerecognisethe importanceofbiodiversityforthe wellbeingoftheplanetandthe communitiesinwhichweoperate. Asaresponsibleownerofcommercial realestate,wearecommittedto integratingbiodiversityconsiderations intoourbusinesspractices.Our policyoutlinesourcommitment topreservingandenhancing biodiversity and outlines the steps wewilltaketoachieveourtargets. Weplantoenactourpolicythrough: / Raising awareness with our stakeholders.Forexample,by discussingideasforbiodiversity improvementswithouroccupiersat ouroccupiermeetingsandensuring ourcontractorstakebiodiversityinto accountwithintheiractivities / Settingrealistictargetswhichcan becosteffectivelyachieved.Many ofourindustrialestatesnowhave arangeofbiodiversitymeasuresin place,andinconjunctionwithour managingagentsandcontractorswe willregularlyreviewhowsuccessful theseareandimplementappropriate changesaccordingly / Makingimprovementstomeet ourtargets,including,forexample expandingonanyexistingmeasures suchasnomowzones,birdandbat boxesorbeehives,orthroughthe introductionofdifferentinitiatives, suchaswildflowermeadowsor introducingrulestomakethe productsweuseinourofficebuildings morebiodiverse Inaddition,wehavethisyear partneredwithacommunityinterest company,calledYoungwilders, whoarefocusedonbiodiversity andnaturerecovery-ledprojects. Water consumption Thisyear,wehavebeenableto receivethebenefitoftheautomatic datacollectionreaderspreviously installedacrossourmulti-let portfolio.Thishasledtogreater accuracyindatacollection,and wenowcollect44%ofourlandlord waterdatafromthesemeters. Overtheyear,wehaveseen areductioninlandlordwater consumptionof4%onbothan absoluteandintensitybasis.This reflectstheimproveddataaccuracy, aswellaswaterefficiencymeasures carriedoutatsomeofourbuildings. Duetothenatureoftheretail portfolioanddistributionwarehouse portfolio(whichhaveveryfew communalareasorutilitysupplies), thewaterconsumptionfigures oftheseareinsignificantata portfoliolevel(comprisingless than6%ofthetotallandlord- controlledwaterconsumption). Goingforward,wewillcontinueto usebuildingrefurbishments,andour sustainabilityactionplanstoimprove waterefficiencyacrosstheportfolio. Materials and waste Werecognisetheimportanceof sustainable waste disposal and remaincommittedtoeliminating landfillwastedisposalacrossthe portfolio.Wearealsoamendingour leasestoensureouroccupiersare obligatedtoavoidwastetolandfill. Thisyear,wehaveagain successfullydiverted100%of wastefromlandfillacrossproperty managementactivities,using eitherrecyclingorheatrecovery. Overallwastegenerationreduced by39%overtheyear,whichreflects improvedmanagementpractices acrossourmanagedpropertyassets. Ofthewasteproduced74%was recycledand26%recovered. Wecontinuetoengagewithour wasteprovidersandoccupierswith theaimofimprovingthesortingand filteringofwasteatourproperties. Thebenefitofthisistomake thedownstreamsortingand filtering,recyclingandrecovery processmoreefficient. 100% Wastedivertedfromlandfillfrom propertymanagementactivities ![]() Picton Property Income Limited / Annual Report 202470 #### Stakeholder #### engagement Buildingonthesuccessofourapp roll-outweintendtofurtherdevelop the app by: / Encouragingoccupierstoshare andpromotetheirservices / Utilisingtheapptocollect sustainability-related data / Exploringusesforaccesscontrol andvisitormanagement / Linkinguptodigitalscreensin buildingreceptions / Extendingbeyondofficebuildings, primarilyinvestigatingpotential benefitstoindustriallocations Duringtheyear,wealsoundertook ourannualoccupiersurveyacross ourmulti-letofficesandindustrial estates.Singleletproperties,retail properties and those properties being disposedofwereexcludedfromthe surveycarriedoutbyourproperty managementteamatCBRE. Forthefirsttimethisyear,we additionally published the survey via ourbuildingappswhichhelpedto driveasignificantlyhigherresponse rateacrossourofficeoccupiers. Theresultsofthesurveyindicated animprovementonlastyear’sresults acrosskeyareasofserviceweprovide: / 83%ofrespondentswerehappy withourcommunication / 78%ofrespondentswerehappy with our responsiveness / 81%ofrespondentswerehappy withthelevelofservicesweprovided Mostnotably,wewerepleased toseethat91%ofrespondents wouldrecommendusasa landlordtoothers,comparedwith 85%ofrespondentslastyear. Occupier engagement, wellbeing and satisfaction Workingwithouroccupiersisatthe heartofwhatwedo.Understanding theirevolvingrequirementsand workingcollaborativelytoreduceour environmentalimpactiskeyforus. Weaimtocontinuallyimproveour occupiers’experience.Wecreatedthe PictonPromisetobringtogetherour fivekeycommitmentstoouroccupiers: Action,Community,Technology, SupportandSustainability.Theseareat thecoreofourengagementstrategy. During2023,wedevelopedour placemakingstrategyandcontinued toroll-outouroccupierappwhich formsakeypartofthisstrategy.The appisnowinplaceatnineofour officelocationswithover1,200regular usersevenlyspreadacrossalllocations. Theappisusedtocommunicate andengageregularlywithouroffice occupiers.AtColchesterBusiness Park,weusedittosupportthe successfulstartupofalocalbusiness groupcalledSeverallsConnect. Theapphasfacilitatedarange ofplacemakinginitiativesand eventsatourmulti-letbuildings, whichhaveprovenapopular wayforouroccupierstomeet, shareideasandpromotetheir businesseswithinthecommunity. Allindividualcommentsandbuilding specificissuesraisedinthesurvey havebeenpromptlyactedupon andfollowedupthroughdirect communicationwiththeoccupiers byourmanagingagentsandHead ofOccupierServices.Thevaluable feedbackweobtainfromtheseannual surveys helps to shape our ongoing occupierengagementstrategy. Lastyear,wesetouttobroaden ourcollaborationwithoccupierson sustainabilitymatterseitherthrough directdialogueorwithintheregular occupiermeetingsheldatourmulti- letoffices.Overthecourseoftheyear, wehaveheldarangeofsuccessful sustainabilitythemedeventsat ourofficebuildingsincluding: / A‘StopFoodWaste’initiative / Mental health awareness and HappinessatWorkweek / Yogaclasses,bikeworkshopsand vouchergiveaways / WorldEnvironmentDay / Plastic-freeJuly Inalignmentwithourplacemaking strategyandtakingintoaccount thepositivefeedbackwehave receivedfromouroccupiers,we willcontinuetoofferavaried programmeofeventsacrossoursites. Weremainfocusedoncollaborating withouroccupierstoreduceenergy costs,improvetheeffectivenessof wasteremovalandshareutilities consumptiondata.Overtheyear, wehavemadegoodprogress with energy data sharing with our occupiersthroughtheintroduction ofDeepki,anenergydatacollection andreportingplatform. Stakeholder Engagement Jay, Andy and the team were a pleasure to workwith from day one, and whilst a lot of landlords talk of co-operation, being proactive and building relationships, Picton are already embodying all of this. Ellen Peters PropertyDirector,Lush Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 71 Duringtheyear,wemadethe followingprogressinhealthandsafety: / Ourassetmanagementteam completedatrainingcoursein asbestos awareness provided by an accreditedUKATA(UKAsbestos TrainingAssociation)memberand compliantwithRegulation10ofthe ControlofAsbestosRegulations2012 / CommencedaRAACassessment acrossourportfoliowhichhasnot revealedanyconcernsorreasonsto believe that RAAC is present / Commissionedaregulatoryrisk reviewbyWillisTowerWatson(WTW) tofollowupthereviewtheydidin2021 / Reviewedhealthandsafety measuresaspartoftheproperty managementauditundertakenby BDOLLP(BDO) / Completedaseriesofhealthand safety-relatedworksacrosssomeof ourbuildingsfocusingonroofsafety accessequipment,firesuppression measuresandfiredoorimprovements / Focusedonsafetymeasures associatedwithelectricvehicle chargingpoints,ebikesandPVpanels toensuretheseareusedsafelyat our buildings / Wehavemadeimprovementsto securityandlightingatseveral industrialsites,includingParkbury IndustrialEstate,RadlettandNonsuch IndustrialEstate,Epsom Wealsoholdindividualbuilding occupierforumsonsustainability toshareideasonwasteremoval andenergyefficiencyinitiatives. Wewillcontinuetofocusongrowing thenumberofbusinessessharingtheir energydataonDeepki.Furthermore, inthecomingyearweareseekingto collaboratewithandprovidesupport tooccupierswishingtoenhancetheir healthandwellbeingstrategies. Occupier health and safety Wearecommittedtomaking ourbuildingsahealthyandsafe environmentforouroccupiers andtheirvisitors,ouremployees, 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themanagement cultureofourorganisation. OurHealthandSafetyCommittee meetseveryothermonthandreviews allaspectsofhealthandsafetyacross ourportfolioandinourownoffice. 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in2023 withnoreportableaccidents,near missesorotherhealthandsafety incidentsduringtheyear.Wewere 98.3%compliantinallcriticaland 97.9%compliantinallsecondary healthandsafetydocumentation. In2024,weplantoadoptthe recommendationsoftheWTW reviewtofurtherimproveourrobust approachtohealthandsafety. Wewillensurewealsoadoptthe recommendationsoftheBDOreview onhowtoimprovethestructureof reportingfromourmanagingagents byfocusingthisonthebigsixhealth andsafetyissues:gas,fire,electricity, legionella,liftsandasbestos. WewillcontinuetofocusonPV, EVandebikesafetymeasuresand engagementwithourmanaging agentsandoccupiersonthis.We willalsoaimtoundertakemore training,forexamplebyreceiving briefingsoncurrenthealthand safetytopicsfromourmanaging agents’healthandsafetyexperts. Wehavenotedtheincreased focusoftheHealthandSafety Executive(HSE)onasbestosasa risk so we will review our asbestos managementplanstomakesure allarefullyuptodate,bothwhere weorouroccupiersareresponsible forputtingmeasuresinplace. Wewerepleasedwiththeresults oftheWTWandBDOreviews. TheWTWreviewnotedthat: “Theoverallscoreof91%(70%in 2021)representsagoodability todefendregulatoryaction.We noteandarepleasedthatPicton havetakenonboardmostof ourrecommendationsfromour previousreport(datedJanuary 2021).Thisisreflectedintheoverall highscoreachieved.Picton’s commitmenttoimprovingtheir positionsinceourlastreport cannotbeunderstated.” The BDO report noted that: “Pictonhasappropriatemeasures inplaceacrossproperty managementactivities(including healthandsafety).Therolesand responsibilitiesofthemanaging agentshavebeendefinedand Pictonisabletodemonstrate thatitmaintainsoversighton eachofthethreeagents.” ![]() Picton Property Income Limited / Annual Report 202472 Stakeholder Engagement / Continued 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 theDirectors.Thisyear’ssurveywas carriedoutindependentlybya third-partyconsultant,whohelped todevelopandrefinethesurveyand providedmorecontextaroundthe results.Positivesentimentremains strong,andoverallsatisfaction hadrisensincelastyear.Feedback fromtheteamindicatedtheywere verycontentandthattheyhad agoodunderstandingofwhatis expectedofthemandofPicton’s valuesandstrategicobjectives. Theoverallsatisfactionscore was86%.Issuesthatwere raisedbytheteamincluded: / Flexibleworkingarrangements were highly valued / Continuingtolookforgrowth opportunities / Timeandresourceneededto achieveobjectives Thisyear’steamoff-sitewasheldnear Reading.Wediscussedmanyissues andchallengesfacingthebusiness andwhatactionsandimprovements couldbemade.Theteamalsovisiteda numberofassetsintheThamesValley. 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. Werecognisethebenefitsof diversity and the value this brings totheGroup.Weaimtomaintain therightblendofskills,experience andknowledgewithintheGroup. Thenumbersofmenandwomen employedbytheGroupasat 31Marchare: Men Women PictonBoard 4 2 Restofteam 5 5 Total 9 7 86% Employeesatisfactionscore Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 73 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 part ofworkinglife / Developmentneedsaremetbyamix ofactivities,whichincludeinternaland externaltrainingcourses,structured ‘on-the-job’experienceandthrough interactionwithprofessionalcolleagues Wellbeing and benefits Webelievethathavingahappy andhealthyteamisimportantto thesuccessofthebusiness.Our commitmenttoprovidingasafe andhealthyworkingenvironment forouremployeesisachievedby: / Adhering to the appropriate health andsafetystandards / 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 friendlypolicies Weofferhealthbenefitstoall 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 1.8%.Therewerenofatalitiesorwork- relatedinjuriesduringtheyear. Theturnoverofemployeesduringthe year was: Number % of average number during year Joiners 3 27 Leavers 1 9 Our joiners during the year were KathyThompson,ournewCompany Secretary,LucindaChristopherson, whohasreplacedMelissaRicardoas OfficeManager,andSairaJohnston, ournewChiefFinancialOfficer. WehaveanEmployeeHandbook whichincludesourstudyleave policy,whichisamaximumof 15daysperannum,inaddition tocompliancepoliciessuchas whistleblowing,modernslavery andgiftsandhospitality. Allouremployeeshaveaformal performanceappraisalonanannual basis,togetherwithamid-year reviewoftheirprogressagainst objectivessetatthestartoftheyear. Thisyear,theamountoftraining carriedoutbytheteamwas1.9%, 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 havecompletedacybersecurity awarenesstrainingprogramme. 320 Traininghoursfortheyear ![]() Picton Property Income Limited / Annual Report 202474 Stakeholder Engagement / Continued Thisyear,wecreatedaSocialValue Framework,alignedwiththeBetter BuildingsPartnershipandUK GreenBuildingCouncil’sguidance. Underthefollowingfourthemesof employmentandskills,supporting growthofresponsiblebusiness, healthier,saferandmoreresilient communities,anddecarbonisation andprotectinghabitats,the frameworkoutlinesourobjectives andhowprogressismeasured. Employment and skills / Weprovidetrainingopportunities andcareerprogressionforallour employees,remainingcommittedto developing our talent pipeline and enablingallouremployeestoreach theirfullpotentialandcareergoals / Onaverage,1.9%ofemployees’ timewasspenttrainingintheyear toMarch2024 / Themajorityoftheteamhave completedtheBBPSustainability forRealEstateProfessionalscourse / Twooftheteamhavecompleted theUniversityofCambridgeCertificate inBusinessandClimateChange TowardsNetZeroEmissions / Through our partnership with Coram,wecontinuetoofferyoung peoplefromtheirYoungCitizen programmeopportunitiestotake partinworkexperience,CVworkshops andmentoring Community and social value Asaresponsibleownerofcommercial property,wearecommitted tomaximisingthesocialvalue wedelivertoourstakeholders, communities,andwidersociety. Weacknowledgetheimportance ofsocialresponsibilityand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recognisethatweareasmall team,howeverthroughour relationshipswithsuppliers, contractors,andoccupierswe havethecapacitytoindirectly haveawiderinfluence. Community engagement programme Site type Building coverage (assets) Office 100% Retail,HighStreet 100% Retail,Warehouse 100% Industrial,BusinessParks 100% Industrial,DistributionWarehouse 100% Hotel 100% Supporting growth of responsible business / Wesupportlocaleconomies throughcreatingemployment opportunities in our buildings andlocalcommunities / Wecontinuetoprocuregoods andserviceslocallywherepossible, throughtransparent,ethicaland sustainablesupplychains / Weensurethatoursuppliersadhere toourSupplierCodeofConduct / Wepromotehealthandwellness initiativesacrossourteamandtoour occupiersthroughoccupierappsand various on-site events / Wehaveestablishedpartnerships withnationalandlocalcharities / Wesupportlocalandnational charitieswithinourcommunitiesas setoutinourCharitableGivingPolicy / WecontinuetobeamemberofThe FosteringNetwork’sFosteringFriendly Employersscheme / Ouroccupierledcharitymatched givinginitiativecontinuestosupport occupierswithinourportfolioin theirlocalcommunity-based fundraisingefforts Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 75 Decarbonisation and protecting habitats / Wehavecommittedtobenetzero carbonforoperationalandembodied emissionsby2040 / Duringtheyear,wesawa16% reductioninabsoluteScope1and2 emissionscomparedto2019baseline / Wealsosawa53%reductionin Scope2energyintensitycompared to 2019 baseline / Wehavenowinstalledsolarpanels attenofourbuildings,withfurther feasibilitystudiesunderwayacross theportfolio / WecontinuetoimprovetheEPC profileofourportfolio,with80%now ratedA–CbyERV / Wearecommittedtocontinuing toimproveouroverallenergydata coverage / In2024wepublishedour BiodiversityPolicy / Wehaveinstalledbeehives,batand birdboxesandbughotelsacrossour sites where appropriate / Wecontinuetoevolveour approachtolandscapingtopromote wild vegetation / In2024,wepartneredwith Youngwilders,acommunityinterest companywhowillhelpusgaina greaterunderstandingofbiodiversity issuesgenerallyandatsomeof our sites Byadheringtothisframework,and throughcontinuouscollaboration, innovation,andevolution,weaim tofostersustainablecommunities, demonstrateourenvironmental commitment,andcreatealong- lastingpositiveimpactonsociety. Charitable giving and partnerships Thisyear,wesupported15charities anddonatedatotalof£25,000.In accordancewithourCharitableGiving Policy,ourobjectiveistoinvestinour communitiesatagrassrootslevel, aimingtomakeapositivedifference tothelocalareasinwhichour occupiersoperate.Thisisachieved eitherthroughprovidingbenefits directlytolocalareasorsupporting localpeoplewithservicesoractivities. Healthier, safer and more resilient communities / OurPictonPromisebringstogether thefivemaincommitmentstoour occupiers:Action,Community, Technology,SupportandSustainability / Wecontinuetomaintainastrong healthandsafetyrecordacrossall our buildings / Wehavetrainedouremployees inareasincludingtheBuilding SafetyAct,firstaid,asbestos management,regulatorydefensibility and RAAC awareness / Wecontributetosafercommunities throughinvestmentinsecurityand surveillancetechnologyonoursites / Wehaveconductedaseriesof investorandoccupiersustainability briefingstoshareknowledgeandhelp drivechangeintheindustry / Wehavesupportedoccupiersto createacommunitysupportgroup atourBusinessParkinColchester / Ouroccupierappprovidesa platformforustocommunicatewith ouroccupiersandsharecommunity initiatives Weseektosupportcharitieswhich: / Drivepositivesocialchange / Respondtospecificlocalneeds / Createapositivecommunityimpact / Arecommittedtoimprovingthe localarea Wecontinuetoofferouroccupierled charitablematchedgivinginitiative, wherebyouroccupiersareinvited toapplyforadonationofupto£100 peryeartoboosttheirfundraising effortsforaregisteredUKcharity. Thisyear,weweredelightedto extendourcharitypartnershipsand beginworkingwithYoungwilders, anot-for-profitcommunityinterest companywhichformedtoaccelerate therewildingoftheUKwithyouth- lednaturerecoveryprojects.Akey elementtoYoungwilders’approach is involving young people in the naturerecoverymovement,providing peopleages18–30withpractical experienceandopportunitiesto feelmoreconnectedtonature. Welookforwardtoworkingwith Youngwilders to support their progressandexchangeadviceon biodiversitywithinourportfolio. WecontinuetosupportTheFunding Network,Coram,TheFostering Network and Future Youth Zone throughourestablishedcharity partnerships.Wedothisthrough providingregularfunding,volunteers andeventspaceswhererequired. WealsocontinuetosupportLandAid annuallythroughtheirChristmas CardAlternativecampaign. Thisyear,theteamspentsometime volunteeringatCoram’scentral Londonfacility,helpingtoprepare outsidespaceontheircampus groundsforanadoptionactivityday. Coram’sadoptiondaysarecrucialfor childrenfromaneglectedbackground topotentiallybematchedwith theirfuturefamilies.Thespaceis alsousedforcreativetherapies,to supportthechildrenpost-adoption. 15 Charities supported ![]() Picton Property Income Limited / Annual Report 202476 #### Governance #### and advocacy 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asat31March2024. Function Number % Non-ExecutiveChair 1 17 ExecutiveDirectors 2 33 Independent Non-ExecutiveDirectors 3 50 Diversity Number % Male 4 67 Female 2 33 Tenure Number % 3 to 6 years 4 67 6 to 9 years 2 33 Age Number % 50 to 54 years 1 17 60 to 64 years 4 67 65 to 69 years 1 16 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outspecific functionsonits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. 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. Wearecommittedtoensuring 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 modernslaveryandhumantrafficking aslow,asthevastmajorityofour suppliersarebasedintheUK. 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 additionalclausesreflectingthe perceivedlevelofrisk.Wearealso usingoursupplierduediligence questionnairefornewsuppliers. 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. Moredetailontheroleandactivities oftheBoard,includingtheir biographies,anditsCommitteesis setoutintheGovernancesection. ReadmoreintheGovernancesection on pages 78–130 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2023 remainedat77,andthreegreen stars.Wescoredinlinewithorahead oftheGRESBaverageineachofthe Environmental,SocialandGovernance categories,andoverallwereahead oftheGRESBaverage. Wehaveidentifiedareasof improvementgoingforward, particularlyarounddatacoverage andcertifications. Wehavecontinuedtoreportinline withtheEPRASustainabilityBest PracticesRecommendationsand receivedaGoldawardforour 2023reporting. OurSustainabilityDataPerformance Report is available on our website Governance Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 77 Better Buildings Partnership The Better Buildings Partnership (BBP)isacollaborationoftheUK’s leadingcommercialproperty owners.WejoinedtheBBPin 2020 and are a signatory to the BBPClimateCommitment. Thisyear,theteamhavecontinued toparticipateinBBPprojects suchtheESGTrainingCourse forRealEstateProfessionals. Wehavecontinuedtoreportour portfolio’senergydataintheBBPReal EstateEnvironmentalBenchmark. Policies Wehaveinplaceanoverriding SustainabilityPolicy.Thissetsout ourapproachtosustainabilityissues andhowtheyareembeddedinto allofouractivities.Webelievethat aresponsibleandethicalapproach tobusinessisessentialforthe benefitofallourstakeholdersand withinourpolicyweseek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, definesandleadsourfocusonthese priorities.OurSustainabilityPolicyis supportedbyspecificsustainability strategiesandinitiativesincluding: / Netzerocarbonpathway / CommunityandSocialValuePolicy / CharitableGivingPolicy / Biodiversity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 torelevantregulatoryrequirements. Westrivetoprovidetimelyand accuratedatatoourstakeholders,in aformatthatiseasilyunderstandable. 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achieveoursustainabilityobjectives, we have taken steps during the year to broaden our understanding ofenergyuseatourbuildings. Thisyear,wehavecontinuedto integrateanESGdatamanagement andmonitoringsystemdesigned to help real estate stakeholders gainabetterunderstandingoftheir sustainabilityperformanceand achievetheirsustainabilitygoals. ForScope3data,wehaveincreased ourdialoguewithouroccupiers on sustainability and energy managementandaimtoimprove 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 202478 Chair’s Introduction Introduction to #### the Corporate #### Governance Report Dear Shareholder OnbehalfoftheBoard,Iam pleasedtointroduceour2024 CorporateGovernanceReport. Board activities The Board has been engaged throughouttheyearfocusingon arangeoftopics.Thisincluded continuedexplorationofvarious opportunitiesaimedatincreasing thescaleofthebusinesstobring bothfinancialandnon-financial benefitstoourshareholders.Wehad significantlyadvanceddiscussions withtheBoardofUKCommercial PropertyREITandtheiradvisers,and althoughencouragedbythepositive feedbackfromourshareholders, we were disappointed that their key shareholder was unwilling to engageorsupportatransaction. WeconsideredBoardcomposition andsuccessionwithaparticular focusondiversityandinclusion. Wehavekeptourportfoliostrategy underreview,whichthisyear hasculminatedinthesuccessful repositioningofoneofourlargest officeassets,AngelGate,London. The Board has also overseen the progressmadetowardsdelivering onoursustainabilitypriorities. Furtherdetailontheactivitiesof theBoardanditsCommitteesis includedundertheLeadershipand Purposesectionofthisreport. Board composition and diversity Therewerenochangesinthe compositionoftheBoardduringthis financialyear.However,following AndrewDewhirst’sdecisiontoretire during2024andafterconductinga comprehensiverecruitmentprocess, the Board was pleased to be able toannouncetheappointment ofSairaJohnstonasAndrew’s successorinOctober2023. IamdelightedtowelcomeSaira,who bringsawealthofexperienceand complementaryskillstoPicton,which willensurewemaintainourdisciplined approachtocapitalallocation, withafocusonearningsgrowth. Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 79 OnbehalfoftheBoard,Iwouldalso like to take this opportunity to thank Andrewforhiscommitmentand excellentfinancialleadershipsince2011. Wewarmlywishhimwellinretirement. FollowingSaira’sappointmentwith effectfrom1April2024,theBoard isnowfullycompliantwiththeFCA ListingRulesondiversityandinclusion. Iwouldalsoliketocongratulate MariaBentleyfollowingherrecent appointmentasChairofDaiwa CapitalMarketsEuropeLimited, whereshehasbeenaNon-Executive Directorforanumberofyears.In March,MariainformedtheBoard ofherintentiontostepdownasa DirectorandasaresultMariawillnot bestandingforre-electionatthe forthcomingAnnualGeneralMeeting. TheBoardhasalreadycommenced asearchforasuitablesuccessor andwewillprovidefurtherupdates toshareholdersinduecourse. Finally,Iwouldliketoexpressmy gratitudetoMaria,onbehalfof theBoard,forherconsiderable contributiontotheCompany, particularlyinherroleasRemuneration CommitteeChairandalsoforher workonemployeeengagement andsustainability.TheBoardwishes hereverysuccessinhernewrole. Governance Followinglastyear’sdecisiontobringthe companysecretarialfunctionin-house, KathyThompsonjoinedtheCompanyin May2023andsubsequentlyoversawthe transferofresponsibilitiesfromNorthern Trustupuntilherappointmentas CompanySecretaryon1October2023. Asaresultofthischange,Kathyhasbeen abletosupportbothmyselfandthe Boardonarangeofgovernancerelated mattersandhasoverseenimprovements madetoBoardgovernanceprocesses andacrosstheCompanygenerally. InrelationtoourStatementof CompliancewiththeCorporate GovernanceCode,thisissetout withintheDirectors’ReportandIam pleasedtoreportthatwehavefully compliedwiththeCodethisyear. TheworkingsoftheBoardandthe Committeesandhowtheseinteract withtheprovisionsoftheCorporate GovernanceCodearedescribedin thisandthefollowingsectionsof theCorporateGovernanceReport. Board evaluation Thisyear,ourBoardevaluationwas carriedoutinternally,inlinewith ourthree-yearannualreviewcycle, withtheprocessbeingsupported byournewCompanySecretary.The Boarddiscussedthereviewfindings andIamdelightedtoreportthat whilstthereweresuggestionsfor improvements,theoverallconclusion wasthattheBoardanditsCommittees continuetooperateveryeffectively. Duringtheyear,theBoardalso oversawtheactionstakenin responsetotherecommendations fromlastyear’sexternalreview conductedbyBoardroomReview Limited,whichincludedthereview ofourcompanysecretarialand governancearrangements. Further details are provided in the NominationCommitteeReport. Remuneration OurcurrentDirectors’Remuneration Policywasapprovedbyshareholders in 2021 and is due to be presented toshareholdersforapprovalatour AnnualGeneralMeetingthisyear.We havereviewedandupdatedthePolicy basedonexternaladvicefromour remunerationconsultants,Deloitte,to ensureitremainsappropriateandin accordancewithbestpractice.Wewill consultwithourlargestshareholdersto confirmtheirsupporttothechanges proposed.Furtherdetailisincluded intheRemunerationReport. Annual General Meeting Our Annual General Meeting was heldinSeptember2023,withall oftheresolutionsbeingapproved withatleast94%ofvotesinfavour andIwouldliketothankour shareholdersfortheirsupport. TheBoardhasreviewedthetiming ofour2024AnnualGeneralMeeting anddecidedtobringforwardthedate thisyearto30July,tobeclosertothe announcementofourannualresults andinlinewithmarketpractice. Thisyear,inadditiontotheroutine businessconsideredeachyearandthe requestforapprovalofthenew2024 RemunerationPolicy,shareholders willbeaskedtoconsiderandapprove newArticlesofIncorporationforthe Company.Theprincipalchangerelates toaproposedincreaseintheNon- ExecutiveDirectors’feecap,which waspreviouslyincreasedin2012. Our people and culture TheBoardrecognisestheimportance ofitspeopletothesuccessfuldelivery ofstrategyandwelcomesthe opportunities during the year when theDirectorsareabletomeetin personwiththeteamaspartofthe quarterlyBoardmeetingprogramme. Thisregularcontactsupportsthe strongandopencultureandshared valuesacrosstheCompany. Theresultsofthisyear’semployee engagementsurveywerediscussed atourBoardmeetinginMarchand MariaBentley,whohasresponsibility foremployeeengagement,fedback totheteaminperson.Thesurvey resultsshowedthatteamsentiment remainsverypositiveandoverall satisfactionhasrisensincelastyear. More detail is provided in the Being Responsiblesectiononpage72. Our stakeholders Ouroccupierfocusedapproach continuestobeembeddedwithin ourpurpose,valuesandbusiness model.Thisyearwecarriedout twooccupiersurveys,oneforour officesusingouroccupierapp,which facilitatedagreaterresponseratethan inpreviousyears,andanotherforour industrialassets.Theoverallresults discussedbytheBoard,werevery pleasingandthevaluablefeedback receivedwillbeusedtohelpshapeour engagementstrategyin2024.Further detailscanbefoundonpage70. Reporting Iampleasedtoreportthatlastyear’s Annual Report and sustainability reportingbothmaintainedEPRA Goldawards,reflectingouraimto reportouractivitiesandresultsclearly andconcisely.Theprogressthat wehavemadeagainstournetzero carbonpathwayissetoutintheBeing Responsiblesectiononpages60–69. Inlinewithpreviousyears,wewill publishallofoursustainability datainaseparatereportonline, whichwillbeavailableshortly. Inwhathasbeenabusyandproductive year,Inowlookforwardtoworking withmynewandexistingBoard colleaguesintheyearahead. Lena Wilson CBE Chair 22 May 2024 ![]() Picton Property Income Limited / Annual Report 202480 Governance at a Glance #### Governance at a glance Director changes / AndrewDewhirst,steppeddown fromtheBoardon31March2024 / SairaJohnston,appointedtothe Board on 1 April 2024 / MariaBentley,steppingdownfrom theBoardinSummer2024 #### Focus areas for 2023/2024 /Earnings growth and scale /Board composition and succession /New Remuneration Policy /Internalisation of company #### secretarial function #### Key priorities for 2024/2025 /Board succession /Shareholder total return #### Compliance with the UK #### Corporate Governance #### Code 2018 (the Code) TheCompanycompliedwiththe relevant provisions set out in the 2018versionoftheCode,which appliedthroughoutthefinancial yearended31March2024. The Code is available on the FRC’swebsite:www.frc.org.uk. Further detail on how the Code principleshavebeenapplied canbefoundonthepages notedinthetablebelow. Board Leadership and Company Purpose 78–79 EffectiveBoard 86 Purpose,valuesandstrategy 94 Governanceframework 90–93 Stakeholderengagement 72–73 WorkforcePoliciesandpractices Division of Responsibilities 94 Board leadership and roles 95 Divisionofresponsibilities 87,99 Conflictsofinterestand externalappointments 88–89 KeyactivitiesoftheBoard Composition, Succession, Evaluation 99–100 Boardappointments 81–83 Boardskillsandexperience 100–102 Board evaluation Audit. Risk and Internal Control 105–106 Financialreportingandreview ofthe2024AnnualReport 105–106 Externalandinternal auditoreffectiveness 105–106 Riskmanagementand Internalcontrolsframework Remuneration 110–112 Remunerationalignedto purpose,valuesandstrategy 116–119 Directors’RemunerationPolicy 120–125 Remunerationoutcomesin2024 Backtocontents ![]() Independent Non-independent 3 2 Chair 1 Men Women 4 2 Lena Wilson Mark Batten 0 1 2 3 4 5 6 7 8 9 Maria Bentley Richard Jones Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 81 #### Governance at a glance Demonstrating our skills TheskillsmatrixshowsthelevelofexpertiseofourBoardacrossarangeofdisciplines. Lena Wilson Mark Batten Maria Bentley Richard Jones Michael Morris Andrew Dewhirst Skills Leadership and strategy Real estate Accounting/finance and risk Remuneration People, talent and culture Other listed Board experience Corporate finance Governance CEO or other operational experience Sustainability Technology leadership Board attendance as at 31 March 2024 >98% Board attendance 4.7 #### years Board independence as at 31 March 2024 50% Of our Board is independent Board gender balance as at 31 March 2024 33% Of our Board are women (50%after31March2024) Board tenure Non-Executive Director average tenure as at 31 March 2024 ![]() Picton Property Income Limited / Annual Report 202482 Board of Directors #### We have the relevant #### skills and experience #### for future growth. Lena Wilson CBE Chair Chair of the Nomination Committee Mark Batten Chair of the Audit and Risk Committee Senior Independent Director Maria Bentley Chair of the Remuneration Committee Appointed to the Board January 2021 ResponsibleforensuringtheBoardiseffective insettingandimplementingtheCompany’s directionandstrategy,includingreviewingand evaluatingtheperformanceoftheCEO. Key strengths and skills / Over15yearsofNon-Executive,Senior IndependentDirectorandChairexperience, includingFTSE100companiesacrossthe financialandindustrialsectors / Multi-disciplinaryglobalcareeracrossprivate andpublicsectors / ExperiencedCEOleadingorganisationswith aninternationalfootprint Principal external commitments / Non-ExecutiveDirectorandChairoftheGroup PerformanceandRemunerationCommittee NatWestGroupplc / MemberoftheEuropeanAdvisoryBoardof WorkdayInc. Previous experience and appointments / Chair,Chiene+TaitLLP / ChiefExecutive,ScottishEnterprise / SeniorInvestmentAdvisorattheWorldBank / Non-ExecutiveDirector,IntertekPLC / Non-ExecutiveDirector,ScottishPowerRenewables / Non-ExecutiveDirectorandSeniorIndependent Director,ArgentexGroupPLC / Chair,AGSGroup Appointed to the Board October2017 Responsibleforfinancialreportingand accountingpolicies,auditstrategyandthe evaluationofinternalcontrolsandrisk managementsystems. Key strengths and skills / CharteredAccountantandrestructuring specialist / Extensiveexperienceinbanking,insurance,real estate,debtstructuringandrestructuring / Broadrealestateknowledge,coveringmost sub-sectors Principal external commitments / Chair,AssuredGuarantyUKLimited / Non-ExecutiveDirector,AssuredGuarantyLtd. / SeniorIndependentDirectorand ChairoftheAuditandRiskCommittee, WeatherbyBankLimited / Chair,GoverningBody,WestminsterSchool Previous experience and appointments / Partner,PricewaterhouseCoopersLLP (restructuringandcorporatevaluationpractices) / Non-ExecutiveDirector,L&FIndemnity / Senioradviser,UKGovernmentInvestments / Non-ExecutiveadviserandChairoftheFinance Committee,RoyalBromptonandHarefieldNHS ClinicalGroup Appointed to the Board October2018 Responsibleforleadingontherecommendation ofremunerationpoliciesandlevels,foreffective successionplanningandemployeeengagement. Key strengths and skills / Businessheadleadingchangeacross globalteams / Expertiseinhumanresources / Extensiveexperienceinfinancialservices Principal external commitments / Non-ExecutiveDirectorandChairoftheHuman ResourcesCommittee,RBCGlobalAsset Management(UK)Limited(formerlyBlueBay AssetManagementLLP) / Chair(from1April2024),Non-ExecutiveDirector andChairoftheRemunerationCommittee, DaiwaCapitalMarketsEuropeLimited / SeniorIndependentDirectorandChairof RemunerationCommittee,PeelHuntLimited Previous experience and appointments / SeniorManagingDirector&GlobalHeadofHR, Wholesale&HeadofHREMEA,Nomura Internationalplc / GroupManagingDirector&GlobalHeadofHR, UBSInvestmentBank / ManagingDirector,GlobalHeadofHR forEquitiesandFixedIncome,Goldman SachsInternational Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 83 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 Michael Morris Chief Executive Saira Johnston Chief Financial Officer Appointed to the Board September2020 Responsibleforoverseeingthereviewof thequarterlyvaluationprocessandmaking recommendationstotheBoardasappropriate. Key strengths and skills / Significantrealestateinvestmentexperience / Broadexperienceofpropertyassetmanagement / Extensiveexperienceofpropertyvaluation Principal external commitments / InvestmentCommittee,HenleySecureIncome PropertyUnitTrust / InvestmentCommittee,HenleySecureIncome PropertyUnitTrustII / SpecialAdvisor,ClearbellUKStrategicTrust Previous experience and appointments / UKManagingDirectoronAviva’sInvestors’ GlobalRealEstateBoard / SpecialDirector,RibstonUKIndustrialProperty UnitTrust / Non-ExecutiveDirector,RoyalBromptonand HarefieldHospitalNHSFoundationTrust / TransportforLondon’sCommercialProperty Advisory Group Appointed to the Board October2015 Responsibleforoverallstrategicdirectionand executionoftheGroup’sbusinessmodel. Key strengths and skills / Successfultrackrecordofdrivinginvestment strategyanddeliveringresultsforshareholders / Proven leadership skills / In-depthunderstandingofrealestateequity capitalmarkets Principal external commitments / None Previous experience and appointments / Over25years’wide-rangingcommercialreal estatemarketexperience / SeniorDirectorandFundManager,INGReal EstateInvestmentManagement Appointed to the Board 1 April 2024 Responsibleforstrategicfinancialplanningand reportingfortheGroup. Key strengths and skills / Charteredaccountantwithover20years’ experienceinfinanceandmanagementroles / In-depthknowledgeoffinancialservices, capitalmarketsandrealestatefunds / Expertiseindebtandequityfinancing Principal external commitments / None Previous experience and appointments / ChiefFinancialOfficer,GravisCapital ManagementLimited / GroupFinancialControllerMoorfieldGroup, / DirectorofFinance,CBREGlobalInvestors/ING RealEstate / InvestmentController,MorganStanleyReal EstateFund ![]() Picton Property Income Limited / Annual Report 202484 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. Michael Morris Chief Executive Andrew Dewhirst Director of Finance James Forman Director of Accounting Mark Alder Head of Occupier Services Saira Johnston Chief Financial Officer Lucinda Christopherson Executive Assistant to Chief Executive and Office Manager Michaelhasover25yearsofexperience withintheUKcommercialpropertysector andisresponsibleforthestrategicdirection andeffectiveexecutionoftheGroup’s businessmodel.MichaelisChairofthe ExecutiveCommitteeandoftheTransaction andFinanceCommitteeandleadsthe Company’sClimateActionWorkingGroup. Andrewhasover30yearsofexperience withinthefinancialservicesandrealestate sectors.Andrewsteppeddownfromthe Boardon31March2024.Hewillberetiring shortlyfollowingasmoothtransitionand handover period with Saira and delivery ofthe2024AnnualReportandAccounts. JamesisaCertifiedAccountantandhas workedwiththeGroupsinceitslaunchin 2005andhasover20yearsofexperiencein therealestatesector.Heisresponsiblefor alltheaccountingandfinancialreporting fortheGroupandisamemberofthe TransactionandFinanceCommittee. Mark joined in 2020 and is a Chartered Surveyorwithover30yearsofproperty managementexperience.Heisresponsible fordeliveringeffectivepropertymanagement and strengthening our relationship withouroccupiers.Markisamember oftheResponsibilityCommitteeand theHealthandSafetyCommittee. SairaisaCharteredAccountantwithover20 yearsofexperienceworkingintherealestate sectorinarangeoffinancialandoperational relatedroles.From1April2024,Sairaassumed responsibilityforthefinancialstrategyand reportingfortheGroup.SairaisalsoChairof theResponsibilityCommitteeandamember oftheTransactionandFinanceCommittee. LucindajoinedinDecember2023asExecutive AssistanttotheChiefExecutive,Michael Morris,andisresponsiblefortheday-to-day managementoftheofficeandforoverseeingthe administrativeaspectsoftheCompany.Sheisa memberoftheHealthandSafetyCommittee. Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 85 Tim Hamlin Director of Asset Management Lucy Stearman Assistant Accountant Kathy Thompson Company Secretary Andy Lynch Head of Building Surveying Jay Cable Senior Director and Head of Asset Management Louisa McAleenan Senior Analyst – Research, Strategy and Sustainability TimisaCharteredSurveyorwithover 15yearsofrealestateexperienceandis responsibleforcreatingandimplementing asset level business plans in line with theportfolio’sstrategicdirectionandisa memberoftheResponsibilityCommittee. Lucyhasovertenyearsofexperiencewithin financialservicesandjoinedtheGroupin April2019toassistwiththeaccountingand financialreporting. Kathy joined in May 2023 and was appointed CompanySecretarytotheGroupon1October 2023.KathyisaCharteredSecretarywithover tenyearsofexperiencewithinthefinancial servicessector,havingpreviouslyqualified asaCharteredAccountantwithPwC. Andy is a Chartered Surveyor with over 15 yearsofexperiencewithinthecommercial realestatesector.AndyjoinedtheGroupin November2022andoverseesrefurbishment projectsandotherbuildingmatters acrosstheportfolio,withaparticularfocus onenvironmentalimprovements. ACharteredSurveyorwithover20yearsofreal estateexperience,Jayhasworkedwiththe Groupsinceitslaunchin2005.Heisresponsible fortheproactiveassetmanagementofthe portfolioandoverseeingitsstrategicdirection andisamemberoftheExecutiveCommittee, theTransactionandFinanceCommitteeand isChairoftheHealthandSafetyCommittee. Louisahasover15yearsofexperienceinreal estateresearchandisresponsibleforallaspects ofresearchandanalysis,contributingtothe directionoftheGroup’sinvestmentstrategy.She isamemberoftheResponsibilityCommittee andtheClimateActionWorkingGroup. ![]() Picton Property Income Limited / Annual Report 202486 Leadership and Purpose #### 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. Our culture and values Principled We are professional, diligent and strategic. Demonstrated through our transparent reporting, occupier focused approach, alignment with shareholders, delivery of our Picton Promise, our commitment to sustainability and positive environmental initiatives. Perceptive We are insightful, thoughtful and intuitive. Demonstrated through our long-term track record, our dynamic positioning of the portfolio, gearing strategy and engagement with our occupiers. Progressive We are forward-thinking, enterprising, and continually advancing. Demonstrated through our culture, work ethic, and proactive asset management. The role of the Board The Board is responsible for the long-term success of the business. It provides leadership and direction, with due regard to the views of all of the stakeholders in the business. The Board operates in an open and transparent way, and seeks to engage with its shareholders, employees, occupiers and local communities. The Board has full responsibility for the direction and control of the business, and sets and implements strategy, within a framework of strong internal controls and risk management. It establishes the culture and values of the Company. The Board has a schedule of matters reserved for its attention. This includes all acquisitions and signifi cant disposals, signifi cant leasing transactions, dividend policy, gearing and major expenditure. The Board has collectively a range of skills and experience that are complementary and relevant to the business. These are set out in the biographies of the individual Directors on pages 82 and 83 and illustrated in the skills matrix on page 81. Board meetings The Board has a regular timetable of meetings throughout the year, which includes two Board meetings scheduled each quarter. The fi rst shorter meeting is usually held virtually, to deal with the approval of the dividend and to review key portfolio activity. The second meeting is held in person and includes consideration of strategic and operational matters with time set aside for thematic discussions, as required. There are also two meetings held each year to approve the annual and the half-year results. Finally, in March, there is an annual strategy day, which provides the Board with an opportunity to refl ect on the previous year’s activities and achievements and to plan for the upcoming year. Board education sessions are included in the schedule, and external advisers are invited to attend Board meetings on a regular basis. Back to contents ![]() Picton Property Income Limited / Annual Report 2024 Financial Statements Additional InformationGovernanceStrategic Report 87 Board Committees The Board has established four Committees: Audit and Risk, Remuneration, Property Valuation and Nomination. These are comprised entirely of Non- Executive Directors and operate within defi ned terms of reference, which are available on the Company’s website. Committee Terms of Reference 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 – 6/6 4/4 3/3 Michael Morris 01.10.2015 10/10 – – – – Andrew Dewhirst 01.10.201810/10–––– Mark Batten 01.10.201710/104/46/64/43/3 Maria Bentley 1 01.10.2018 10/10 3/4 5/6 4/4 3/3 Richard Jones 01.09.2020 10/10 4/4 6/6 4/4 3/3 Total number of meetings 10 4 6 4 3 1. Maria Bentley was unable to attend the 2 May 2023 Audit and Risk Committee and Remuneration Committee meetings due to illness. Mark Batten, as Senior Independent Director, chaired the Remuneration Committee meeting in Maria’s absence. The above meetings were the scheduled Board and Committee meetings. Additional meetings were held to deal with other matters as required and are not included above. Confl icts of interest Directors are required to notify the Company of any potential confl icts of interest that they may have. Any confl icts are recorded and reviewed by the Board at each meeting. No confl icts have been recorded during the year. The process for obtaining Board approval for external appointments is included in the Nomination Committee Report. ![]() Picton Property Income Limited / Annual Report 202488 Leadership and Purpose / Continued #### Board activities #### The Board met formally #### on ten occasions during #### the year, as well as holding #### a more informal strategy day in March. A wide #### range of matters were #### considered by the Board #### and key Board activities and approvals over the #### year are set out here. #### How the Board has #### engaged with all its #### stakeholders is set out on pages 92 and 93, and #### consideration of Section #### 172 matters is described #### on pages 90 and 91. Impacted stakeholders #### Strategy and management #### Financials/fi nancial #### reporting and performance #### Risk management #### and internal controls #### People, culture and values #### Governance #### Stakeholder engagement #### Sustainability Back to contents ![]() Picton Property Income Limited / Annual Report 2024 Financial Statements Additional InformationGovernanceStrategic Report 89 Activity / Annual and mid-year strategy review / Consideration of a number of corporate opportunities / Consideration of the operational performance of the business / Review of portfolio strategy and activity / Review of operational matters, including health and safety / Approval of the Annual Report and Interim Results and related Stock Exchange announcements / Review of portfolio and fi nan cial forecasts / Review of quarterly management accounts / Approval of operating budget for the 2024 fi na ncial year-end / Approval of quarterly dividends and related Stock Exchange announcements / Consideration of macroeconomic updates from external advisers / Review and approval of Risk Management Policy, including risk appetite / Review of risk radar and risk matrix / Agreement of internal audit programme / Review of the internal audit reports / Review of internal controls report for Property Manager / Evaluation of external auditor / Approval of the 2024 Remuneration Policy / Review of independent benchmarking report on market remuneration levels, both for employees and Directors / Approval of Deferred Bonus and LTIP share awards for the team / Approval of the salary and bonus awards / Discussion of the outcomes and actions from the employee engagement survey / Consideration of reports from the Chairs of each Board Committee on key areas of Committee discussion and focus / Consideration of report from the Company Secretary and governance update / Discussion of Board diversity and succession including Chief Financial Offi ce r / Discussion of progress made against the action plans from the 2023 Board evaluation / Discussion of feedback from 2023/24 internal Board evaluation / Acceptance of the quarterly independent valuations / Approval of the appointment of new Guernsey Trustee and registered offi ce provider / Approval of Modern Slavery Statement / Approval of Health and Safety Policy Statement / Approval of asset disposals / Review and approval of updated Committee Terms of Reference / Planning for the forthcoming Annual General Meeting / Annual General Meeting and shareholder engagement / Review of feedback from shareholders following annual and half-year results / Market update from the Company’s brokers / Review of feedback received on corporate opportunity possibilities / Discussion of the outcomes and actions from the occupier engagement survey / Review of progress against sustainability priorities / Approval of the Sustainability Policy / Approval of the Biodiversity Policy Our people Local communities and charities Our occupiers Our investors Suppliers Our stakeholders ![]() Picton Property Income Limited / Annual Report 202490 Leadership and Purpose / Continued #### Section 172 #### Statement Consideration of these factors and other relevant matters is embedded into all Board decision making, strategy development and risk assessment throughout the year. We consider our key stakeholders to be our shareholders, our occupiers, our people, our communities, and our suppliers. Working closely with our stakeholders is a key strategic priority. 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 We rely on the support of our shareholders and their views are important to us. The long-term success of the business will deliver value for shareholders. The Chair and Chief Executive hold regular meetings with shareholders and feedback from these meetings is reported back to the Board. This feedback may be on macro trends, share price performance, our growth strategy, operational matters, fi nancing strategy or dividend policy, as examples. There are also investor presentations arranged following our Annual General Meeting and after release of our interim results, which provide an opportunity for investors to raise questions. Other Non-Executive Directors will engage with shareholders on specifi c matters as appropriate and all of the Directors normally attend the Annual General Meeting to meet with shareholders and to answer any questions they may have. As the Company is registered in Guernsey, the UK Companies Act 2006 does not apply. 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 benefi t of shareholders as a whole. The Directors have regard to: The likely long-term consequences of decisions Read more on pages 86–93 The interests of its employees Read more on page 72 The Company’s relationships with its suppliers, customers and others Read more on pages 70–75 The impact of the Company’s operations on the community and the environment Read more on pages 56–69 The Company’s reputation and maintaining a reputation for high standards of business conduct Read more on pages 78–95 The need to act fairly towards shareholders Read more on pages 88–93 Back to contents ![]() Picton Property Income Limited / Annual Report 2024 Financial Statements Additional InformationGovernanceStrategic Report 91 Our occupiers One of our key priorities is to work with our occupiers, so 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 management team, who have ongoing communication with occupiers, and use this information when making proposals to the Board on investment transactions, such as refurbishment projects or leasing events. Our people Our people are key to our success and we want them to succeed both as individuals and as a team. One of our Non-Executive Directors, Maria Bentley, has responsibility for employee engagement. We carried out our annual employee survey this year using an independent third- party consultant which provided a more insightful view of the feedback given which was then discussed by the Board. The Board has also been able to meet with the whole team informally when the quarterly in-person Board meetings have been held at Stanford Building. Local communities and environment We are committed to improving the impact of our buildings on local communities, whether providing space to local businesses, improving local areas or minimising the environmental impact of buildings themselves. The Board has established a Responsibility Committee, which is chaired by one of the Executive Directors, to manage sustainability initiatives on its behalf. The Board reviews progress on sustainability matters and against our net zero carbon pathway, and at this year’s strategy day received a presentation from the Better Buildings Partnership. Suppliers We have in place a framework for conducting business across the Group in a way that makes a positive contribution to society, while minimising any negative impact on people and the environment. The Board has agreed the overall business framework and delegated its implementation to the management team. Considering stakeholders in key Board decision making The table below sets out several examples of important decisions taken by the Board during the year. These decisions are not only material to the Group but are also signifi cant to any of our key stakeholders. As part of the decision making process, the Board considers the feedback from stakeholder engagement as well as the need to act fairly between shareholders and to maintain high standards of business conduct. Actions Evaluation of growth opportunities The Board considered a number of potential corporate opportunities that would have enabled both earnings growth and provided increased scale. Growth would also bring further benefi ts to the team in the form of career progression. Evolving occupational demand The Board has considered the changes in occupier demand within the offi ce sector and where appropriate approved a strategy to secure more valuable alternative uses at selected offi ce assets. The post-year-end sale of Angel Gate, London brings fi nancial benefi ts to our shareholders allowing the Company to repay our debt and increase the dividend. Review of dividend The Board is aware of the value of regular dividend payments to shareholders and reviews the level of dividend each quarter. Whilst the dividend level was maintained throughout the year, following the sale of Angel Gate, the Board approved an increase in the dividend to shareholders in April. Occupier engagement The Board agreed that occupier surveys should be carried out again this year to better understand the evolving requirements and areas of concern for our occupiers to ensure that satisfaction levels can be met or exceeded. Sustainability and Biodiversity Policy The Board reviewed the Company’s Sustainability Policy and approved a new Biodiversity Policy this year, as part of our commitment to the wellbeing of the local communities in which we operate and to minimising the environmental impact of our buildings. Remuneration Policy The Board has approved a new Remuneration Policy for recommendation to shareholders at our Annual General Meeting, with the changes proposed consistent with our objective of providing remuneration packages for our Executive Directors which are fair and reasonable. Annual General Meeting The Board considered the timing of our Annual General Meeting and decided to bring forward the date to July 2024, being closer to the release of our Annual Results which the Board felt would be benefi cial to shareholders. ![]() Picton Property Income Limited / Annual Report 202492 Leadership and Purpose / Continued Stakeholders and what is important to them Why we engage Our people / Fair and equal treatment / Career development / Fair pay and conditions / Good work/life balance / Positive work culture an d values We seek our employees’ views on our working arrangements and practices, our purpose, values and activities, which all support our continued strong and open culture. Local communities and charities / Local employment opportunities / Positive contribution to local economy / Safe and clean environment We seek to inform our social value related activity which aims to deliver positive social outcomes and enhanced wellbeing for the communities and charities located near our assets. Our occupiers / Cost-effective space suited to their needs / Fair lease terms / Well-managed, effi ciently run and sustainable buildings / Good relationships We are occupier focused in our approach and aim to understand our occupiers’ evolving requirements to continually improve their occupier experience and create spaces in which they will succeed. Our investors / Clear strategy / Regular dividends / Financial performance / Clear and transparent rep orting Engaging with our investors helps to inform our strategic decision making, communicate clearly and report on both our fi nancial and sustainability performance. Suppliers / Prompt payment / Fair terms of business / Long-term relationships E ngaging with our suppliers ensures we are operating in an ethical way in accordance with relevant laws and regulations and in line with our own business principles. Engagement with stakeholders We believe that taking into account the views of our key stakeholders is critical to the long-term success of the business. We engage with all of our stakeholders to understand what is important to them. The following table sets out our key stakeholders and why and how we effectively engage with them. Our Section 172 Statement for the year ended 31 March 2024 is available on the previous pages and sets out how some of the key decisions made by the Board during the year were guided by stakeholder engagement. Back to contents ![]() Picton Property Income Limited / Annual Report 2024 Financial Statements Additional InformationGovernanceStrategic Report 93 How we engage What we have done this year We have a small team and engage regularly with them. We have an appraisal process where each member of the team will discuss their performance and objectives with their line manager twice a year. We carry out an annual employee survey, and the results of this are discussed by the Board. The Board also meets with the whole team informally when in-person Board meetings are held at Stanford Building. The Board discussed the results of the employee engagement survey which refl ected the high level of positive sentiment amongst the team. The Board noted the continued support for our fl exible working arrangements and will follow up on other issues raised. We are committed to improving local communities where we own buildings, whether providing space to local businesses, improving local areas or minimising the environmental impact of buildings themselves. We engage through our charity and community initiatives and through our occupier engagement programme. Our charitable donations for the year were £25,000, and we supported over 15 different charities. We have maintained our long-standing partnerships with Coram and The Funding Network and further strengthened our charity partnerships with The Fostering Network and Future Youth Zone. Additionally, our new partnership with Youngwilders, a not-for-profi t organisation, was approved in February 2024,which aligns with our policy on biodiversity. One of our key priorities is to work with our occupiers, so that we can understand their needs and aim to meet their current and future requirements. Our asset managers, guided by our Picton Promise, maintain regular contact with occupiers and discuss with them any issues regarding the buildings and any future plans we have. Our Head of Occupier Services has developed an occupier engagement programme and attends occupier meetings and other events. We send out an occupier newsletter regularly with relevant and helpful information. This year, we have undertaken occupier surveys at our offi ces and industrial properties. The results from the surveys were positive, and any specifi c issues raised regarding buildings have been addressed by our property managers. We also continued the roll-out of our occupier app at a further nine properties, with over 1,200 regular users across all our locations. We will continue this roll-out programme over the course of the year. We value the views of all our shareholders and senior management hold regular meetings to update shareholders on progress and activity. We issue regular investor updates with key fi nancial highlights and updates on the portfolio. Our website provides investors with up-to-date information about the Group. This year our Annual General Meeting was at Stanford Building in September and we also held a webinar for shareholders for those unable to attend in person. The Chair and Chief Executive have held meetings with major shareholders this year to receive feedback on issues important to the strategic direction and growth of the business. The Chair of the Remuneration Committee has sought consultation from our shareholders in respect of the Remuneration Policy ahead of this year’s Annual General Meeting. We seek to maintain productive and long-term relationships with our business partners. We have in place a framework for conducting business across the Group in a way that makes a positive contribution to society, while minimising any negative impact on people and the environment. We have continued to ensure that our suppliers are paid promptly and within payment terms. We continue to ensure that new suppliers comply with our modern slavery terms. ![]() Picton Property Income Limited / Annual Report 202494 Division of Responsibilities #### The role of the Board and its Committees Board Committees Management Committees The Board Chair: Lena Wilson CBE Comprises: 2 Executive Directors and 4 Non-Executive Directors Responsibilities: / Directs and controls the business / Overall long-term success / Sets and implements strategy / Establishes the culture and values of the business / Promotes wider stakeholder relationships Audit and Risk Chair: Mark Batten Comprises: 3 Non-Executive Directors Responsibilities: / Oversees fi nancial reporting / Monitors risk management / Reviews system of internal controls / Agrees internal audit plan and reviews reports / Evaluates external auditor Remuneration Chair: Maria Bentley Comprises: 4 Non-Executive Directors Responsibilities: / Determines remuneration policy / Sets remuneration of Executive Directors / Reviews remuneration of whole workforce / Approves bonus and LTIP awards Property Valuation Chair: Richard Jones Comprises: 4 Non-Executive Directors Responsibilities: / Oversees the independent valuation process / Recommends the appointment and remuneration of the valuer / Ensures compliance with applicable standards Nomination Chair: Lena Wilson CBE Comprises: 4 Non-Executive Directors Responsibilities: / Recommends Board appointments / Considers succession planning / Oversees Board evaluation recommendations / Considers Board composition and diversity Executive Committee Chair: Michael Morris Comprises: 2 Executive Directors and 1 senior executive Responsibilities: / Implementation of strategy / Management of operations / Day-to-day management of the business / Employee remuneration and development Transaction and Finance Chair: Michael Morris Comprises: 2 Executive Directors and senior management Responsibilities: / Reviews and recommends portfolio transactions / Monitors portfolio costs / Reviews compliance with lending covenants Responsibility Chair: Saira Johnston Comprises: 1 Executive Director and senior management Responsibilities: / Determines Sustainability Policy and strategy / Monitors compliance with relevant standards and legislation / Oversees Health and Safety Committee and Climate Action W orking Group / Approves sustainability reporting / Monitors employee wellbeing Back to contents ![]() Picton Property Income Limited / Annual Report 2024 Financial Statements Additional InformationGovernanceStrategic Report 95 #### Responsibilities of the Directors The roles and responsibilities of each of the Directors are explained below: Role Resp onsibilities Chair Lena Wilson CBE / Leads the Board / Responsible for overall Board effectiveness / Promotes Company culture and values / Sets the agenda and tone of Board discussions / Ensures that all Directors receive full and timely information to enable e ffective decision making / Promotes open debate at meetings / Ensures effective communication with stakeholders / Fosters productive relationships between Executive and Non-Executive Directors Chief Executive Michael Morris / Develops and recommends strategy to the Board / Responsible for the implementation of strategy set by the Board / Manages the business on a day-to-day basis / Manages communication with shareholders and ensures that their views are repre sented to the Board Senior Independent Director Mark Batten / Leads the evaluation of the Chair / Oversees appointment of new Chair / Available for communication with shareholders when other channels are not appropriate / Acts as alternate to the Chair when unable to act Non-Executive Directors Mark Batten Maria Bentley Richard Jones / Bring independent judgement and scrutiny to the decisions of the Board / Bring a range of skills and experience to the deliberations of the Board / Monitor business progress against agreed strategy / Review the risk management framework and the integrity of fi nan cial information / Determine the Remuneration Policy for the Group and approve performance targets in line with strategy Executive Director Andrew Dewhirst (to 31 March 2024) and Saira Johnston (from 1 April 2024) / Supports the Chief Executive in the formulation of strategy / Manages the fi nancial operations of the Group / Develops and maintains the system of fi nancial controls within the Group / Recommends the risk management framework to the Audit and Risk Comm ittee and the Board ![]() Picton Property Income Limited / Annual Report 202496 Composition, Succession and Evaluation #### Board composition #### and diversity #### These charts set out the Board’s composition, #### tenure and diversity #### characteristics as at #### 31 March 2024. 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2024theBoard comprised50%independent Non-ExecutiveDirectors, excludingtheChair. 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. Function 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% 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% Age Diversity Tenu re  Non-ExecutiveChair–1(17%)  ExecutiveDirectors–2(33%)  IndependentNon-ExecutiveDirectors–3(50%)  50to54years–1(17%)  60to64years–4(66%)  65to69years–1(16%)  Male–4(67%)  Female–2(33%)  3to6years–4(67%)  6to9years–2(33%) FCA Listing Rule Requirements FollowingSairaJohnston’sappointment totheBoardwitheffectfrom1April2024, theCompanywillmeettheFCAListingrule requirementsregardingGenderandEthnicity. Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 97 QA & Saira Johnston Andrew Dewhirst Andrew Dewhirst stepped down from the Board on 31 March 2024 and will be shortly retiring. Saira Johnston joined as his successor and was appointed to the Board on 1 April 2024. What attracted you to Picton? Saira: Iwasimpressedbytheir trackrecordandpropertylevel performance,aswellastheir internalmanagementstructure andthesizeofbusiness. Asacompanytheyofferaunique blendofprofessionalism,working withinalistedenvironmentyetwith arealentrepreneurialfeel.Theteam clearlyhaveapassionforwhattheydo. What do you think will be key challenges or differences in this role than your previous roles? Saira: Akeydifferenceisthe internalmanagementstructure whichisuniqueinthewayitaligns managementtoperformance. Therehasbeenalotofactivityin thelistedrealestatemarketand giltyieldshavebeenachallenge toREITs.Iwasimpressedbytheir disciplinedapproachtocapital structurewithalongmaturity andfixedinterestdebtbook. What are you most looking forward to? Saira: Iamlookingforwardto joiningtheteamandmakinga valuablecontribution.Withover20 years’experienceacrossrealestate investmentsIamexcitedtoplayapart inthenextstageofPicton’sjourney. What is your most used app? Saira: Life360tokeepaneyeon thefamily!OrStravaforlogging myactivity,mainlyrunning. Myfavouritetimeofdayisthe morningandbeingoutdoorsdoing someexerciseisagreatstarttomy day,althoughmyhusbandmight disputethatwhenthealarmgoes offat5.30!Overthelastthreeyears Ihaverunover1,000kmeach yeartoraisemoneyforcancer charities,whichisagreatmotivator andachancetogivesomething backdoingsomethingIlove. What has been the highlight of your time at Picton? Andrew: Therehavebeenmany! It’sbeengreatbeingpartofa smallteamandseeingitdevelop andevolve,whilebeingableto workwithoutthebureaucracy andpoliticsofbigorganisations. Atthestartwewereinanempty officeworkingfromsecondhand desks and had to set everything upfromscratch–everythingfrom stationerytoITandsystems.Soseeing thebusinessgrowfromitshumble beginningstowhereitisnow,a well-regardedandoutperforming UKREIThasbeenveryrewarding. Keyachievementsincludethe earlyre-financingbackin2012and thentheREITconversionin2018. It’sbeengreattobuildrelationships withkeyadvisersandIwillmiss workingwiththeteam,itneverfelt likeachorecomingintowork. Iwon’tmisstheabortedlandings comingintoGuernseyAirport though–‘we’lljustgoroundagain’! Do you have any advice for Saira? Andrew: Bepatient,speakyour mind,alwaystrytoimprove howthingsaredone. What is your most used app? Andrew: Spotifyprobably.Ienjoylive musicandlisteningtowhat’snew. Iamlookingforwardtohittingafew morefestivalsinmyretirement. ![]() Picton Property Income Limited / Annual Report 202498 Composition, Succession and Evaluation / Continued #### Nomination #### Committee Lena Wilson CBE Chair of the Nomination Committee TheNominationCommittee ischairedbyLenaWilson. Theothermembersof theCommitteeare MarkBatten,MariaBentley andRichardJones.There havebeennochanges tothecompositionofthe Committeeduringtheyear. #### Focus areas for 2023/2024 /Succession planning /Appointment of Saira Johnston #### as Chief Financial Officer Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 99 TheCommittee’smainresponsibilities includereviewingthecomposition oftheBoardtoensureithasthe rightbalanceofskills,knowledge, experienceanddiversitytocarry outitsdutiesandprovideeffective leadership.TheCommitteealso leadstheselectionprocessand thenominationofcandidatesfor appointmenttotheBoard,ensuring theprocessisformal,rigorousand transparent and there are appropriate successionplansinplaceforboth theBoardandseniormanagement. ItisalsotheCommittee’sroleto reviewtheresultsoftheannual Boardevaluationtakingparticular regardtofeedbackrelatingto compositionandsuccession. TheCommitteemakes recommendationstotheBoard regardingthecompositionofthe AuditandRisk,Remuneration, NominationandProperty ValuationCommittees,taking intoaccountindividuals’time commitmentsandexperience. Terms of reference TheCommittee’stermsofreference includeconsiderationofthefollowing: / 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 tofillBoardvacanciesastheyarise; / ReviewtheresultsoftheBoard evaluationrelatingtocomposition andsuccession; / Reviewthetimeandindependence requirementsforDirectors;and / Recommendthemembership ofBoardCommittees. Visit our website picton.co.uk Activity TheCommitteemetfivetimes duringtheyearended31March2024, whichincludedthethreescheduled meetingsandtwoadhocmeetings. Akeyfocusofactivityforthe Committeehasbeenonsuccession planning,includingcommencing andcompletingthesearchforanew ChiefFinancialOfficertosucceed AndrewDewhirstinthefirsthalfof theyear;andcommencingthesearch foranewNon-ExecutiveDirectorand RemunerationCommitteeChairto succeedMariaBentley.Theselection processforeachBoardrolefully takesintoconsiderationtheFCA ListingRulesondiversitytargets. Forfurtherdetailsseepage100. TheCommitteehasalsokeptunder reviewbothexistingandnewexternal appointmentsofthecurrentDirectors toensurethatthetimecommitments arisingfromtheseexternalroleswould notaffecttheircontinuedabilityto dischargetheirdutieseffectively; andtoensureDirectorsarenot over-boardedandcontinuetomeet therequiredstandardsconcerning independence.Aspartofthisreview, considerationwasalsogiventoany charitableorothernot-for-profit positionsheldbytheNon-Executive Directors,giventhatthiscouldalso impacttheirtimeavailability. Duringtheyear,thefollowingexternal appointmentswereapproved: / MarkBatten’sappointmentas Non-ExecutiveDirector,Chairof theAuditCommitteeandSenior IndependentDirectorofWeatherbys BankLimited,asChairofAssured GuarantyUKLimitedwherehewas alreadyaNon-ExecutiveDirector,and asaNon-ExecutiveDirectorofthe parentcompany,AssuredGuarantyLtd / MariaBentley’sappointmentas SeniorIndependentDirectorofPeel HuntLimitedandasNon-Executive ChairofDaiwaCapitalMarketsEurope Limited,where,forbothcompaniesshe wasalreadyaNon-ExecutiveDirector Routinemattersconsideredbythe Committeeincludedreviewing theperformanceandconstitution oftheCommitteeandreviewing itsTermsofReference.Following adetailedreview,theTermsof Referencewereupdatedtobring theminlinewiththeUKCorporate GovernanceCodeandbestpractice andweresubsequentlyapproved bytheBoard.TheCommittee alsooversawtheactionstakenin responsetotherecommendations fromtheexternalBoardevaluation, carriedoutin2023,andconsidered thefeedbackfromtheinternal Boardevaluationcarriedoutatthe beginningoftheyear,andagreedthe actionstobetakeninresponse.See pages101to102forfurtherdetail. ![]() Picton Property Income Limited / Annual Report 2024100 Recruitment and succession planning TheCommittee’smainfocusduring theyearwasontheselectionand appointmentofanewChiefFinancial OfficertosucceedAndrewDewhirst, followinghisplannedretirement in2024. Forthisrole,independentexecutive searchconsultants,TeneoPeople Advisory,wereappointedtoassistwith identifyingashortlistofcandidates fromwhichtheCommitteeselected Sairaasthepreferredcandidate. FollowingtheCommittee’s recommendationtheBoardapproved Saira’sappointmentinOctober2023. FollowingMariaBentleyinforming theBoardofherintentiontostep downfromtheBoard,andasChair oftheRemunerationCommittee attheendoftheAnnualGeneral Meeting,theCompanycommenced asearchforasuitablesuccessor. Afteratenderprocessconducted bytheChair,ChiefExecutiveand CompanySecretary,Teneowereagain selectedtoundertakethesearchfor asuccessor.Therecruitmentprocess willfollowasimilarformattothat followedpreviouslyandprogresswill bemonitoredbytheCommittee. Boardsuccessionwilltherefore continuetobeakeyfocusforthe Committeeintheyearahead. Induction Aninductionprogrammeisinplacefor newBoardmembersandisoverseen bytheChairandtheCompany Secretary.Aspartoftheinduction programme,theChiefFinancialOfficer spenttimewithfellowBoardmembers atstrategy,BoardandCommittee meetings,priortoformallybeing appointed to the Board on 1 April 2024.Inaddition,theChiefFinancial Officerhashadmeetingswitha rangeofkeystakeholders,including ourbrokers,bankersandexternal and internal auditors whilst working closelywiththeretiringFinance Directorforasmoothtransition. Diversity and inclusion TheCompanybelievesthatdiversity amongstouremployeesisessential foroursustainedbusinesssuccess. Wevaluethecontributionsmadeby allofourteamandarecommitted totreatingallemployeesequally. Despitebeingasmallteam,weensure thatequity,diversityandinclusionare keyconsiderationsforourrecruitment partnersaspartoftheircandidate recommendations.Allcandidates arethenconsideredonmeritbut havingregardtotherightblendof skills,experienceandknowledge. Composition, Succession and Evaluation / Continued #### The internal review concluded that the Board, its Committees and #### the individual Directors continue #### to operate very effectively. Lena Wilson CBE ChairoftheNominationCommittee 50% Boardgenderbalance as at 1 April 2024 Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 101 Board evaluation InaccordancewiththerequirementsoftheCode,theBoardundertakesareviewoftheeffectivenessofitsperformance andthatofitsCommitteeseveryyear.Anexternalreviewisnormallycarriedouteverythreeyears,withinternalreviews intheinterveningyears. In2023,anexternalreviewoftheBoard’seffectivenesswascarriedoutbyBoardroomReviewLimited.Thefollowingtable setsoutkeyactionsthatwereidentifiedfollowingthereviewtogetherwiththeprogressmadesincethereview. Action Progress 1. Ensureopportunitiesfor growthandincreasingscale arefullyconsidered TheChairandtheChiefExecutivehaveregularlyprovidedstatusupdates. Inaddition,adhocmeetingswerearrangedasappropriatethroughouttheyear todiscussstrategicinitiativesastheywereprogressed. 2. Establishclearparameters on risk appetite TheRiskManagementPolicy(whichincludestheriskparameters)isreviewed annuallybytheAuditandRiskCommittee.Theriskradarandriskmatrix,which formpartoftheriskmanagementframework,arereviewedateachmeetingof theAuditandRiskCommittee. 3. Maintainoccupierfocus, especiallyaroundoffice workingandtechnology Theroll-outofouroccupierappatofficepropertieshascontinuedasaprimary focusintheyear.Thishassignificantlyenhancedouroccupierengagementas evidencedbytherecentsurvey. 4. Encouragemoreexternal perspectives,particularly ESGandtechnology SeveralexternalpresentationswerearrangedfortheBoardstrategyday. TheseincludedanoverviewofeconomicoutlookandtrendsgivenbyCapital EconomicsandaninsightintoESGinitiativesandoccupierengagementfrom theBetterBuildingsPartnership. 5. Considerfuture Boardcomposition SuccessionplanningisincludedasastandingagendaitemfortheNomination Committeeforconsiderationannuallyormorefrequentlyifrequired. 6. ImprovediversityatBoardlevel (andwithintheteam) Theconsiderationofdiversityandinclusionfactorsformpartofoursuccession planningprocesses. 7. Considerexpertiseandresource withintheteam Wideningthedepthandexperienceoftheteamisanongoingconsideration, andcontributedtotheappointmentofournewin-houseCompanySecretary, KathyThompsoninMay2023,andtotheexpansionoftheofficemanagerrole toincludetheprovisionofexecutiveassistantsupporttoourChiefExecutive, withtheappointmentofLucindaChristophersoninDecember. 8. Developtalentwithintheteam Thisisanongoingconsiderationformanagementaspartoftheannualreview processforallemployees. 9. Reviewexistingcompany secretarialarrangements TheplanstotransitionfromNorthernTrusttoin-houseprovisionofourcompany secretarialarrangementswerecompletedsuccessfullyon30September2023. 10. Optimisinginternalaudit BDOhavebeenappointedasoutsourcedproviderofInternalAuditservicesand havecompletedtheirsecondyearofauditreviewscoveringasset,leaseand propertymanagement.Recommendationsfromthesereviewsandfromthe firstyearroundofauditreviewsoncybersecurityandkeyfinancialcontrolshave beenprogressedduringtheyear. 11. Reviewcybersecurityanddata BDOcarriedoutareviewofcybersecuritywithseveralrecommendationsbeing actionedasaresult,whichincludedtheCompanyachievingCyberEssentials accreditationduringtheyear. ![]() Picton Property Income Limited / Annual Report 2024102 Composition, Succession and Evaluation / Continued Thisyear,ourBoardevaluation wascarriedoutinternally,inline withthethree-yearreviewcycle. Thisconsistedofaquestionnaire preparedbytheCompany Secretaryfollowingdiscussion withtheChair.Thequestionnaire coveredthefollowingareas: / Board roles and responsibilities / Boardcomposition,skills, knowledgeanddevelopment / Boardmeetingconduct and operations Thequestionnairewascompleted bytheeachoftheDirectorsand theoverallconclusionswerethat theBoardandtheCommittees continuedtooperateveryeffectively. Thekeythemesandactionsarising fromthereviewwere: 1. Continuetoconsideropportunities forgrowthandincreasingscale on Board agenda 2. Reviewandupdatetherisk managementframework 3. ReviewBoardmeetingschedule andallocationoftopicsfor eachmeeting 4. IncludealessonslearnedBoard agendaitemonaregularbasis, tocoverbothstrategicand operationalmatters 5. IncreasefocusofBoardreporting onwhathaschangedsincethe previousBoardmeeting 6. ReviewhowtheBoardconsiders stakeholdersaspartofitsroutine businessandinthedecision- makingprocess 7. Ensuresuccessionplanningand diversityareregularlyincludedfor discussionatNomination Committeemeetings 8. ReviewDirectorinduction andongoingDirectortraining ensuringthiscoverskeyareas suchassustainability Tenure and re-election ThetenureofNon-ExecutiveDirectors, includingtheChair,is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andallDirectors withtheexceptionofMariaBentley, whowillstepdownfromthe BoardinJuly,willbeproposedfor re-election,orelectioninthecase ofSairaJohnston,attheAnnual GeneralMeetinginJuly2024. Lena Wilson CBE ChairoftheNominationCommittee 22 May 2024 Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 103 Suchreviewprocedureshave beeninplacethroughoutthefull financialyear,anduptothedate oftheapprovalofthefinancial statements,andtheBoardis satisfiedwiththeireffectiveness. Thisprocessincludes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.The Boardconsidersthatthisprovides itwith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. 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 afairreflectionoftheGroup’s activitiesduringtheyear. 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.These systemsaredesignedtoensure effectiveandefficientoperations, 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, andnotabsolute,assuranceagainst materialmisstatementorloss.The Board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. 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theaudit ofthefinancialstatementsand representativesofseniormanagement areexcludedfromthatdiscussion. Audit, Risk and Internal Control 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. ![]() Picton Property Income Limited / Annual Report 2024104 Audit, Risk and Internal Control / Continued #### 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. #### Focus areas for 2023/2024 /Annual and Interim Reports /Internal audit reviews /Risk management Mark Batten Chair of the Audit and Risk Committee Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 105 Thekeyareaofjudgementthat theCommitteeconsideredin reviewingthefinancialstatements 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 half-yearfinancialstatementsand isinherentlysubjective,requiring significantjudgement.Membersof 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30April 2024andconfirmedthatthefollowing 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. TheAuditandRiskCommittee reviewedthereportfromtheChair ofthePropertyValuationCommittee, includingtheassumptionsapplied tothevaluationandconsidered their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financialstatements. Theexternalauditorhaspresented theirfindingstotheCommittee; noareasofconcernwereraisedin respectofmanagementjudgements exercisedinthepreparationofthe financialstatementsormatters thatneededadditionalwork. Activity TheAuditandRiskCommittee metfourtimesduringthe yearended31March2024and consideredthefollowingmatters: / Externalauditstrategyandplan; / Auditandaccountingissues ofsignificance; / TheAnnualandInterimReports oftheGroup; / 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. Financial reporting and significant reporting matters TheCommitteeconsidersall financialinformationpublishedin theannualandhalf-yearfinancial statementsandconsidersaccounting policiesadoptedbytheGroup, presentationanddisclosureofthe financialinformationandthekey judgementsmadebymanagement inpreparingthefinancialstatements. TheDirectorsareresponsiblefor preparingtheAnnualReport. AttherequestoftheBoard,the Committeeconsideredwhether the2024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. MeetingsoftheAuditandRisk Committeeareattendedbythe Group’sFinanceDirectorandother membersofthefinanceteam,the internalauditorandtheexternal auditor.Theexternalauditorisgiven theopportunitytodiscussmatters withoutmanagementpresent. Terms of reference TheCommittee’stermsof referenceincludeconsideration ofthefollowingissues: / Financialreporting,including significantaccountingjudgements andaccountingpolicies; / Developmentofacomprehensive RiskManagementPolicyforthe adoptionbytheGroup; / EvaluationoftheGroup’srisk profileandriskappetite,and whether these are aligned with itsinvestmentobjectives; / Ensuringthatkeyrisks,including climate-relatedrisks,arebeing effectivelyidentified,measured, 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 #### The Committee was satisfied that the 2024 Annual Report is fair, #### balanced and understandable. Mark Batten ChairoftheAuditandRiskCommittee ![]() Picton Property Income Limited / Annual Report 2024106 Annual auditor assessment Onanannualbasis,theCommittee assessesthequalifications,expertise 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 questionnaireandconfirmationfrom 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thereviewofauditor independenceandeffectiveness, KPMGChannelIslandsLimited haveconfirmedthat: / 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 amaterialpartoftheirtotalfee income;and / Theyconsiderthattheyhave maintainedtheirindependence throughouttheyear. InevaluatingKPMGChannel IslandsLimited,theCommittee completeditsassessmentofthe externalauditorforthefinancial periodunderreview.Ithassatisfied itselfastotheirqualificationsand expertiseandremainsconfidentthat theirobjectivityandindependence arenotinanywayimpairedby reasonofanynon-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inFebruary2020.The currentauditengagementpartner, SteveStormonth,hascompleted twoyearsasauditpartner. TheCommitteerecommendsthat KPMGChannelIslandsLimitedare recommendedforreappointment atthenextAnnualGeneralMeeting. Mark Batten ChairoftheAuditandRiskCommittee 22 May 2024 TheCommitteehasreceivedand reviewedacopyofCBRELimited’s RealEstateAccountingServices– ServiceOrganisationControlReport asat31December2023,prepared inaccordancewithInternational StandardonAssuranceEngagements 3402,inrespectofthesuitabilityofthe designandoperatingeffectivenessof controlsofthepropertymanagement accountingservicesprovidedto PictonPropertyIncomeLimited. BDO provides internal audit andassuranceservicestothe Group.TheCommitteeagreeda programmeofreviewsfor2023/24, whichcoveredassetmanagement, leasemanagementandproperty management.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 2024/25whichwillcovercapital expenditure,ITcontrolsandafollow uponpreviousrecommendations. 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, andobtainsconfirmation,where 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auditor anditsmemberfirmsareasfollows: 2024 £000 2023 £000 Auditfees 223 179 Interimreviewfees 25 16 Non-auditfees – – 248 195 TheCommitteewassatisfiedthatthe 2024AnnualReportisfair,balanced andunderstandableandincludedthe necessaryinformationassetouthere, andithasconfirmedthistotheBoard. 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proactive riskidentification,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those risksthatmaysignificantly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. Aspartofthisprocess,ariskmatrix hasbeenpreparedthatidentifies theCompany’skeyfunctionsand theindividualactivitiesundertaken withinthosefunctions.From this,theBoardhasidentifiedthe 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. Audit, Risk and Internal Control / Continued Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 107 #### Property Valuation #### Committee The Property Valuation Committeeischairedby RichardJones.Theother membersoftheCommittee areMarkBatten,MariaBentley andLenaWilson. #### Focus areas for 2023/2024 /Quarterly external valuer reports /New RICS rules on valuer rotation /Review of valuer performance Richard Jones Chair of the Property Valuation Committee ![]() Picton Property Income Limited / Annual Report 2024108 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: / Significantadjustmentsfrom previousquarters; / Individualpropertyvaluations; / Commentaryfrommanagement; / Significantissuesthatshouldbe raisedwithmanagement; / Materialandunexplained movementsintheCompany’snet assetvalue; / Compliancewithapplicable standardsandguidelines; / Reviewingfindingsor recommendationsofthevaluers;and / Theappointment,remuneration andremovaloftheCompany’svaluers, makingsuchrecommendationstothe Boardasappropriate. Visit our website picton.co.uk Activity TheCommitteemetfourtimes duringtheyearended31March2024. MembersofthePropertyValuation Committee,togetherwith management,metwiththeexternal valuereachquartertoreviewthe valuationsandconsideredthe followingmatters: / Propertymarketconditions andtrends; / Movementscompared topreviousquarters; / Yields on properties within theportfolio; / Lettingactivityand vacantproperties; / Covenant strength and leaselengths; / Estimatedrentalvalues;and / Comparablemarketevidence. TheCommitteehasconsidered themarkettrendsthathavebeen evidentoverthecourseoftheyear andareconfidentthatthesewere fullyreflectedbytheexternalvaluer. TheCommitteewassatisfiedwiththe valuationprocessthroughouttheyear. 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 intotheGroup’shalf-yearand annualfinancialstatements,and thequarterlynetassetstatements. The valuations are undertaken inaccordancewiththeRoyal InstitutionofCharteredSurveyors RedBookvaluationstandards. TheCommitteereviewedthe performanceofthevaluerand recommendedthattheappointment becontinuedforafurther12months. TheCommitteeiscognisantofthe newRICSrulesrequiringtheperiodic rotationofvaluersintheUK,which willcomeintoforceon1May2024and requireachangetotheCompany’s valuereverytenyears.TheCommittee intends to appoint a new valuer in goodtimetoallowforaperiodof overlapandasmoothhandover, withtheappointmentprocessdue tobecommencedlaterthisyear. Richard Jones ChairofthePropertyValuation Committee 22 May 2024 Audit, Risk and Internal Control / Continued #### We are encouraged to see values #### stabilising as the year has progressed. Richard Jones ChairofthePropertyValuationCommittee 2.2% Relative Capital Growth outperformancecomparedtoMSCI Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 109 Remuneration Report #### Remuneration #### Committee OtherattendeesatCommittee meetingsduringtheyear wereMichaelMorrisand AndrewDewhirst.Neither participatedindiscussionsrelating totheirownremuneration. #### Focus areas for 2023/2024 /New Remuneration Policy /Bonus and LTIP awards /Remuneration package for new #### Chief Financial Officer Maria Bentley Chair of the Remuneration Committee TheRemuneration Committeeischairedby MariaBentley.Theother membersoftheCommittee areMarkBatten,Richard JonesandLenaWilson. ![]() Picton Property Income Limited / Annual Report 2024110 Remuneration Report / Continued Terms of reference Theprincipalfunctionsofthe Committeeassetoutinthetermsof referenceincludethefollowingmatters: / Review the ongoing appropriateness andrelevanceoftheDirectors’ RemunerationPolicy; / Determinetheremunerationof theChair,ExecutiveDirectorsand suchmembersoftheexecutive managementasitisdesignated toconsider; / Reviewthedesignofallshare incentiveplansforapprovalby theBoard;and / Appointandsettheterms ofreferenceforanyremuneration consultants. Visit our website picton.co.uk Advisers Duringtheyear,DeloitteLLPhas providedindependentadvice inrelationtomarketdata,share valuations,shareplanadministration andcontentoftheRemuneration Report.Totalfeesfortheyearwere £54,580(calculatedonatimespent basis).DeloitteLLPisafounding memberoftheRemuneration ConsultantsGroupand,assuch, voluntarily operates under the CodeofConductinrelationto executiveremunerationconsulting intheUK.Inaddition,Deloittealso providedtaxationservicesand advicetotheCompanyduringthe year.TheCommitteehasreviewed thenatureofthisadditionaladvice andissatisfiedthatitdoesnot compromisetheindependence oftheadvicethatithasreceived. Annual statement Dear Shareholders Introduction OnbehalfoftheBoard,Iampleased tointroducetheRemuneration CommitteeReportfortheyearended 31March2024. Thisreportcomprisesthreesections: / Thisannualstatement; / TheproposednewDirectors’ RemunerationPolicy;and / The Annual Report on Remunerationfortheyearended 31March2024. TheCommitteemetsixtimes during the year and set out below isasummaryofitsactivity. Revised Remuneration Policy Ourobjectiveistoprovide 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 andenhancedshareholdervalue. ThecurrentDirectors’Remuneration Policywassetin2021andapproved by shareholders at the Annual GeneralMeetingthatyear.Itisnow approachingtheendofitsthree- yearlife,andweareputtingforward arevisedPolicyforapprovalby shareholdersthisyear.Ourexisting Policyisalreadycompliantwiththe CorporateGovernanceCodesothere areonlyminorchangesbeingmadein theproposednewPolicy.Asummary ofthechangesissetoutonpage113. New Executive Director Duringtheyear,theCommittee consideredandapprovedthe remunerationofSairaJohnston,who joinedtheBoardasChiefFinancial Officeron1April2024,replacing AndrewDewhirst.TheCommittee agreedthatthebasesalaryforSaira Johnstonwouldbe£240,000.Detailsof herentitlementtoincentivesin2024/25 aresetoutintheImplementationof Policysectionofthisstatement.In addition,theCommitteeagreedthat shewouldreceivebuy-outawardsof £240,000undertheDeferredBonus PlaninJune2024,payableinshares andvestingintwoyears’time,and acashpaymentof£35,000,bothas compensationfortheforfeitofawards fromherpreviousemployment. Our objective is to provide straightforward remuneration packages for our Executive Directors, to fairly reward delivery of strategic priorities and enhanced shareholder value. Maria Bentley ChairoftheRemunerationCommittee 100% Teamalignedthroughbonusdeferral andLTIP Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 111 TheCommitteeconsideredthe formulaicbonusoutcomeinthe contextoftheGroup’soverall performancefortheyear.Thekey highlightsofperformancefortheyear aresetoutearlierinthisstatement. TheCommitteeconcludedthatit wassatisfiedtheformulaicbonus outcomewasafairreflection ofoverallGroupperformance duringthepastfinancialyear. Long-term Incentive Plan awards (performance period to 31 March 2024) TheLTIPprovidesthelinkbetween thelong-termsuccessoftheCompany andtheremunerationofthewhole team.Theawardsmadeunderthe Long-termIncentivePlan(LTIP) in June 2021 were based on three performanceconditionsmeasured over the three-year period ended on31March2024.TheCommittee hasassessedtheextentto whichthesethreeperformance conditionshavebeenmet. Thethreeequallyweighted performanceconditionsweretotal shareholderreturn,totalproperty returnandgrowthinEPRAearnings pershare.Theactualoutcomesfor theseconditionsaresetoutinthe AnnualReportonRemuneration and give rise to an overall award of49.2%ofthemaximumgranted. Asexplainedabove,theCommittee concludedthatitwassatisfied theformulaicoutcomewasa fairreflectionofoverallGroup performanceoverthe performanceperiod. Annual bonus awards for 2023/24 TheExecutiveDirectorswereseta numberofchallengingtargetsfor thisyear,comprisingacombination offinancialmeasuresandcorporate andpersonalobjectives. Thetwofinancialmeasuresweretotal returnandtotalpropertyreturn.The actualoutcomesaresetoutinthe AnnualReportonRemuneration, but the overall result was that the Directorsearnedanestimated46% ofthemaximumawardavailable underthesefinancialmeasures. Thecorporateobjectiveswereset toensurethatspecifickeystrategic targetswerefocusedon.These includedtargetsrelatingtoimproving incomeandoccupancy,thedisposal ofassetsinlinewiththealternative usestrategy,identificationand evaluationofgrowthopportunities andsustainability,includingprogress againstthenetzerocarbonpathway. TheCommitteeconsideredthe extenttowhichtheExecutive Directorshadmettheobjectives, andconcludedthatgoodprogress hadbeenmadeagainstmany,but notedthatoccupancyhadremained stableandthatoperatingcosts hadincreasedsignificantlythisyear. Overall,theCommitteeconsidered thatanoutcomeof65%ofthe maximumawardforeachofthetwo ExecutiveDirectorsweremerited againstthecorporateobjectives. Inaggregate,annualbonusawards forthetwoExecutiveDirectors are54%ofthemaximumaward (2022/23:77%ofmaximum). TheCommitteeconsideredtheoverall bonus awards against the reported financialresultsanddeterminedthat theproportionofthebonusdeferred be set at a higher than standard 55%fortheExecutiveDirectors. Group performance and alignment Wehavesetoutonpages20to23, theKeyPerformanceIndicators(KPIs) thatwecurrentlyusetomonitor thesuccessofthebusiness.Inorder toappropriatelyalignexecutive remunerationwithbusiness performanceweincorporateKPIs withinourincentiveschemes. Forboth2023/24and2024/25, theKPIsthatweareusingto determinevariableremuneration aresetoutinthetableabove. Theremaining40%ofthe annualbonusisdetermined bycorporateobjectives. Thekeyperformancehighlightsnoted bytheCommitteeincluded: / The total property return was ahead oftheMSCIUKQuarterlyProperty Indexfortheyear,andourlong-term recordofoutperformancehasbeen maintainedoverone,three,fiveand tenyears,andsincelaunchin2005; / EPRAearningsroseby2.2% comparedto2022/23; / TheportfolioERVincreasedby3% overtheyear; / Netpropertyincomeroseby4.5% comparedtothepreviousyear; / Further progress on the installation ofon-siterenewables,increasing capacityby184%; / Contractsexchangedonthe disposaloftwopartvacantoffice assets,facilitatingloanrepayment anddividendincrease; / Theproportionoftheportfolio’s EPCratings(A-C)hasincreasedto 80%from76%lastyear;and / Scope1and2greenhousegas emissionsare16%belowthe 2019baseline. Measure Comparator Annual bonus Long-term Incentive Plan Total return Relative to comparatorgroup (30%weighting) Total property return RelativetoMSCIUK QuarterlyPropertyindex (30%weighting) (33%weighting) Total shareholder return Relative to comparatorgroup (33%weighting) EPRA EPS Absolute target range (33%weighting) ![]() Picton Property Income Limited / Annual Report 2024112 Employee remuneration and engagement Asinprioryears,theCommittee receivedanindependent benchmarkingreportcoveringeach oftheroles,whichdetailedmarket trends.Havingconsideredthereport, theCommitteedeterminedthat,for theteamasawhole(excludingthe ExecutiveDirectors),therewould beanoverallaverageriseof3.2% inbasesalarieswitheffectfrom 1April2024.Theaverageemployee bonus(excludingtheExecutive Directors)fellby15.6%,reflecting ourcontinuedoutperformancebut alsothemoredifficulteconomic andpropertymarketconditions. Ihavemetinformallywiththeteam onanumberofoccasionsthisyear, andwehavealsocarriedoutour annualemployeeengagement survey.Thisisdiscussedinmore detailelsewhere,buttheresults continuetodemonstrateahighlevel ofsatisfactionamongtheteam. UK Corporate Governance Code Wehaveconsideredtheprovisionsof theCodeinrespectofremuneration andbelievethatourapproachremains compliant.Inparticular,weoperatea consistentlevelofpensionprovision acrossourworkforce;LTIPawardsare onlyreleasedtoExecutiveDirectors fiveyearsafteraward;andmalus andclawbackprovisionsapplytoall incentiveawards.Wehaveprovisions intherulesofourremuneration shareplansthatprevent,other thaninexceptionalcircumstances, acceleratedvestingofawards whenanemployeeleavesPicton. Wealsohavepost-employment shareholdingguidelinesinplace. Theremunerationarrangements providealignmentwithshareholders throughtheuseoffinancialmetrics andcorporateobjectives.Allmembers oftheteamparticipateintheannual bonusandLTIP,notjusttheExecutive Directors.TheRemunerationPolicy anditscomponentsareclearlyset outinthisreportandtherulesofthe variableremunerationschemesare availabletothewholeteam.Weuse standardperformancemetrics,which arealsokeyperformanceindicators forthebusiness,todetermine awards.Therearecleartargetand maximumlevelsforeachmetric. TheCommitteebelievesthatthe variableremunerationschemesin placearefairandproportionate andaligntheremunerationofthe teamwiththeGroup’sperformance. Wearealsosatisfiedthatthe remunerationstructuredoesnot encourageinappropriaterisk-taking. TheCommitteedoesretaindiscretion overformulaicoutcomesifitconsiders thatthesearenotafairreflection oftheGroup’sperformance. Implementation of Policy Ourremunerationstructurewill beinaccordancewiththePolicy fortheyearto31March2025. For2024/25theCommitteeagreed thattherewouldbenoincreases inbasesalariesfortheExecutive Directors.Themaximumannual bonuspotentialfor2024/25will remainat145%ofbasesalaryforthe ExecutiveDirectors.Asinprevious years the annual bonus will be determined60%byfinancialmetrics and40%bycorporateobjectives.For 2024/25wewillcontinuetousetwo financialmetrics,beingtotalreturn, relativetoacomparatorgroup,and totalpropertyreturn,relativetothe MSCIUKQuarterlyPropertyIndex. TheawardfortheChiefExecutive undertheLong-termIncentivePlan hasremainedatlastyear’slevelto reflectthelowersharepriceand discounttonetassetvalue,and toavoidanywindfallgainsarising onvesting.Thisyearnoawardhas beenmadetotheChiefFinancial Officerduetothebuy-outawards grantedonherappointmentasset outonpage110.Fortheawardsto bemadeinJune2024forthethree- yearperiodto31March2027,we willretainthethreeperformance measuresusedpreviously,being: / Totalshareholderreturn,compared toacomparatorgroup / Totalpropertyreturn,comparedto theMSCIUKQuarterlyPropertyIndex / GrowthinEPRAearningspershare ForthegrowthinEPRAearningsper share,weintendtouseanabsolute rangeoftargetsbasedonforecasts overtheperformanceperiod. TheCommitteeissatisfiedthatthe significantdeferralelementtothe annualbonuscombinedwiththe Long-termIncentivePlanopportunity plus shareholding guidelines ensuresthatExecutiveDirectors arealignedwithandfocusedon deliveringlong-termgrowth. TheCommitteeagreedthatfeelevels fortheChairandNon-Executive Directorswouldbeincreasedbyan averageof2.0%from1April2024, andthatanadditionalfeeof£8,000 perannumfortheroleofSenior IndependentDirectorbeintroduced. AsaCommittee,wearecommitted to ongoing dialogue with our shareholdersandwelcomeany feedbackregardingourremuneration practicesaheadoftheAnnualGeneral Meeting.Welookforwardtoreceiving yourcontinuedsupportatthe forthcomingAnnualGeneralMeeting. Maria Bentley ChairoftheRemunerationCommittee 22 May 2024 Remuneration Report / Continued Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 113 Thebelowtablesummarisesthe revisedDirectors’Remuneration Policywhichwillbeputforwardto shareholdersatthe2024AGM. ThefullPolicycanbefoundon pages 116–119 #### Revised Policy #### Overview ThecurrentDirectors’RemunerationPolicywasapprovedbyourshareholdersattheAnnualGeneralMeetingin2021. TheRemunerationCommitteehasreviewedthecontinuedappropriatenessofthecurrentPolicyrelativetoourstrategic priorities,governancerequirementsandevolvingmarketpractice.InputwassoughtfromtheChiefExecutiveandFinance Directorwhilstensuringthatconflictsofinterestweresuitablymitigated.Anexternalperspectivewasprovidedbyour independentadvisers,Deloitte,andpreviousfeedbackfromshareholders. ShareholderapprovalwillbesoughtattheforthcomingAnnualGeneralMeetingfortheupdatedPolicyandkeychanges tothePolicyaresummarisedbelowwiththefullPolicysetoutonpages116–119.Subjecttoshareholderapproval,the updatedPolicywilltakeeffectimmediatelyaftertheAnnualGeneralMeetingandwillapplytothe2024/25financialyear. Current Policy Proposed changes and why Base salary Basesalariesarenormallyreviewedannuallywithchanges effectiveon1April. Nochanges Benefits Thisprincipallycomprisesprivatemedicalinsurance,life assuranceandpermanenthealthinsurance,andother benefitsmaybeprovidedasappropriate. Nochanges Pension contributions TheCompanyhasestablisheddefinedcontributionpension arrangementsforallemployees.Aconsistentrateofpension provisionof15%appliestoallemployees,including ExecutiveDirectors. Nochanges Annual bonus Theannualbonusisbasedonarangeoftargets(measured overaperiodofuptooneyear)setbytheCommittee.The maximumbonuspermittedunderthePolicywillbe175%of basesalary.Atleast50%oftheannualbonuswillbepaidin theCompany’ssharesanddeferredfortwoyears,although theCommitteehasdiscretiontoamendtherequiredlevel ofdeferralupwardsordownwards. Nochanges LTIP AwardsundertheLTIParegrantedannuallyusuallyinthe formofaconditionalshareawardandwillvestafterthree yearssubjecttomeetingperformanceconditions, determinedbytheCommittee.Themaximumvalueof awardsis150%ofbasesalary.Afurtherholdingperiodof twoyearsaftervestingisnormallyapplied. Nochanges Non- Executive Directors fees AnnualfeefortheChair,andannualbasefeesforother Non-ExecutiveDirectors.AdditionalfeesforthoseDirectors chairingaBoardCommittee. Additionalfeesmayalsobepaidfor actingasSeniorIndependentDirector orwherethereisasignificantadditional timecommitment. TheannuallimitforNon-ExecutiveDirectors’ remunerationwillincreaseto£425,000, subjecttoapprovalbyshareholders attheAnnualGeneralMeeting. Shareholding guidelines ExecutiveDirectorsareexpectedtobuildupand maintainaminimumshareholdingequivalentto200% ofbasesalary,andremaincompliantforaperiodoftwo yearspost-employment. Nochanges ![]() P e r s o n a l a n d c o r p o r a t e o b j e c t i v e s F i n a n c i a l c o n d i t i o n s F i n a n c i a l c o n d i t i o n s 30% 30% 8% 8% 6% 4% 4% 4% 4% 2% Picton Property Income Limited / Annual Report 2024114 Benefits Pensioncontributions Base salary Remuneration Report / Continued #### Remuneration at a glance The components of remuneration for 2023/24 are: Fixed pay Variable pay The annual bonus for 2023/24 is determined by: The LTIP is based on three financial metrics, each measured over three years: Annual (anddeferred) bonus 55%oftheannualbonus isdeferredintoshares whichwillvestintwo years’time 33% 33% 33% Long-term IncentivePlan (LTIP) Readmoreonpages120–126 See page 121forPerformanceconditions andassessment Personal and corporate objectives  Improvenetincome  Identifyandevaluate growth opportunities Make progress against netzerocarbonpathway  Reduceportfoliovoid Make asset disposals Positive stakeholder engagement  SuccessfulCFO successionplanning and transition  Successfulinternalisation ofcompanysecretarial function Financial conditions Total return Total property return  GrowthinEPRA earnings per share Total shareholder return Backtocontents ![]() 100% 55% 34% 11% 33% 41% 26% 29% 36% 23% 12% £441K £806K £1,348K £1,526K 100% 61% 39% 44% 56% 44% 56% £276K £450K £624K £624K 57 296 145 441441 380 4 39 201 87 259 4 302288 x x x x 1 9 8 7 287 Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 115 #### The single figure of remuneration for the Directors for the year 2023/24 (in £ thousands) is: 882 590 294 The potential remuneration of the Executive Directors, excluding buy-out awards, for the year to 31 March 2025 is: Chief Executive The following charts show the composition of the Executive Directors’ remuneration atthree performance levels: / Fixedpay–basesalaryfrom1April2024, benefitsandpensionsalarysupplement of15%ofbasesalary / Ontarget–fixedpayplustargetvesting fortheannualbonus(at50%ofmaximum opportunityforillustrativepurposes) andthresholdvestingfortheLTIP (at25%ofmaximumaward) / Maximum–fixedpayplusmaximum vestingforboththeannualbonus (145%ofbasesalary)andtheLTIP (93.75%(ChiefExecutive)ofbasesalary) / Maximumwithsharepricegrowth– maximumscenarioincorporating assumptionof50%sharepricegrowth duringLTIPvestingperiod Otherthanwherestated,thechartsdonot incorporatesharepricegrowthordividend equivalentawards. Finance Director Chief Executive Non-Executive Directors Chief Financial Officer Salary  Benefits Pension Annual bonus  Long-term incentivepay(LTIP)  Totalfixed Total variable  Totalfixed Annual bonus  Long-term incentivepay(LTIP) Share growth ![]() Picton Property Income Limited / Annual Report 2024116 Remuneration Report / Continued #### Directors’ #### Remuneration Policy ThecurrentDirectors’RemunerationPolicywasapprovedbyourshareholdersattheAnnualGeneralMeetingin2021. Subjecttoshareholderapproval,theupdatedRemunerationPolicywilltakeeffectimmediatelyaftertheAnnualGeneral Meetingandwillapplytothe2024/25financialyear. TheupdatedPolicyisessentiallyconsistentwiththePolicyapprovedin2021. ThenewPolicycontainsflexibilitytopayadditionalfeestoNon-ExecutiveDirectorsforadditionalresponsibilitiessuchas SeniorIndependentDirectororiftheirresponsibilitiesincursignificantadditionaltimecommitment.Subjecttoshareholder approval,theannuallimitforNon-ExecutiveDirectorfeeswillbeincreasedforthefirsttimesince2012to£425,000. Principles TheobjectiveoftheGroup’sRemunerationPolicyistohaveasimpleandtransparentremunerationstructurealignedwith theGroup’sstrategy. TheGroupaimstoprovidearemunerationpackagewhichwillretainDirectorswhopossesstheskillsandexperience necessarytomanagetheGroupandmaximiseshareholdervalueonalong-termbasis.TheRemunerationPolicyaims toincentiviseDirectorsbyrewardingperformancethroughenhancedshareholdervalue. Executive Directors’ Remuneration Policy Table Base salary Purpose AbasesalarytoattractandretainExecutivesofappropriatequalitytodelivertheGroup’sstrategy. Operation Basesalariesarenormallyreviewedannuallywithchangeseffectiveon1April.Whensettingbase salariestheCommitteewillconsiderrelevantmarketdata,aswellasthescopeoftheroleandthe individual’sskillsandexperience. Maximum NoabsolutemaximumhasbeensetforExecutiveDirectorbasesalaries. 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nogreaterthantheaverageemployeesalaryincrease / 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complexityoftheGroup) / LargerincreasesmayalsobeconsideredappropriateifaDirectorhasbeeninitiallyappointed totheBoardatalowerthantypicalsalary Performance measures None Clawback None Pension Purpose Partofcompetitiveremunerationpackage. Operation TheCompanyhasestablisheddefinedcontributionpensionarrangementsforallemployees.For ExecutiveDirectorstheCompanycurrentlypaysamonthlysalarysupplementinlieuofCompany pensioncontributions,althoughretainsdiscretiontoalternativelyofferthedefinedcontribution arrangements. Maximum Aconsistentrateofpensionprovisionappliestoallemployees,includingExecutiveDirectors. In2024/25,thisis15%ofbasesalary. Performance measures None Clawback None Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 117 Benefits Purpose Partofacompetitiveremunerationpackage. Operation Thisprincipallycomprises: / Privatemedicalinsurance / Lifeassurance / Permanenthealthinsurance TheCommitteemayagreetoprovideotherbenefitsasitconsidersappropriate. Maximum Benefitsareprovidedatmarketrates. Performance measures None Clawback None Annual bonus Purpose Ashort-termincentivetorewardExecutiveDirectorsonmeetingtheCompany’sannualfinancial andstrategictargetsandontheirpersonalperformance. Operation Atleast50%oftheannualbonuswillbepaidintheCompany’ssharesanddeferredfortwoyears. TheCommitteehasdiscretiontoamendtherequiredlevelofdeferralupwardsordownwardsas appropriateincludingdiscretiontowaivetherequirementfordeferralforadepartingExecutive Directorasoutlinedinthelossofofficesectionorwheredealingrestrictionspreventshareawards beinggranted.Anyuseofthisdiscretionwouldbeclearlydisclosedandexplainedintherelevant RemunerationReport.Dividendequivalentswillbepaidattheendofthedeferralperiod(inthe formofsharesorcash). Maximum ThemaximumbonuspermittedunderthePolicywillbe175%ofbasesalary.Thelevelofbonus opportunitywithinthismaximumwillbedeterminedbytheCommitteeeachyear.In2024/25, themaximumopportunitywillbelimitedto145%ofbasesalary. Performance measures Theannualbonusisbasedonarangeoffinancial,strategic,ESG,operationalandindividual targets(measuredoveraperiodofuptooneyear)setbytheCommittee.Theweightingswill alsobedeterminedannuallytoensurealignmentwiththeCompany’sstrategicpriorities, althoughatleast50%oftheawardwillusuallybeassessedoncorporatefinancialmeasures. Forcorporatefinancialmeasures,50%ofthemaximumbonusopportunitywillbepayablefor on-targetperformanceand,ifapplicable,upto25%forthresholdperformance. 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 financialresults,anerrorinassessingaperformancecondition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holderoracorporatefailure. Long-term Incentive Plan Purpose ALong-termIncentivePlantoalignExecutiveDirectors’interestswiththoseofshareholdersand topromotethelong-termsuccessoftheCompany. Operation Awardsaregrantedannuallyusuallyintheformofaconditionalshareawardornilcostoption. Awardswillnormallyvestattheendofathree-yearperiodsubjecttomeetingtheperformance conditionsandcontinuingemployment. TheRemunerationCommitteemayawarddividendequivalents(intheformofsharesorcash) onawardsthatvest. TheCommitteewillusuallyapplyaholdingperiodofafurthertwoyearstoawardsthatvest. Maximum Annualawardswithamaximumvalueofupto150%ofbasesalarymaybemade. Performance measures Vestingwillbesubjecttoperformanceconditions,alignedtothecorporatestrategy,as determinedbytheCommitteeonanannualbasis.In2024/25,therewillbethreeequallyweighted performanceconditions,eachusuallymeasuredoverathree-yearperformanceperiod.The Committeehastheflexibilitytovarythenumberofconditionsandtheirweightingforeachaward. Forthresholdlevelsofperformanceupto25%oftheawardvests,risingusuallyonastraight-line basisto100%formaximumperformance. Clawback Malusandclawbackprovisionsmaybeappliedintheevent(withinfiveyearsofgrant)ofamaterial misstatementoftheauditedfinancialresults,anerrorinassessingaperformancecondition 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 holderoracorporatefailure. ![]() Picton Property Income Limited / Annual Report 2024118 Shareholding guidelines Purpose ToalignExecutiveDirectorswiththeinterestsofshareholders. Operation Whilstinemployment,ExecutiveDirectorsareexpectedtobuildupandthereaftermaintain aminimumshareholdingequivalentto200%ofbasesalary. TheCommitteewillreviewprogresstowardstheguidelineonanannualbasisandhasthe discretiontoadjusttheguidelineinwhatitfeelsareappropriatecircumstances. ExecutiveDirectorswillalsobeexpectedtoremaincompliantwiththeaboveguidelinefora periodoftwoyearspost-employment.Thisrequirementappliestosharesfromincentiveawards releasedsubsequenttothe2021AnnualGeneralMeeting.TheCommitteeretainsdiscretion towaivethisguidelineifitisnotconsideredappropriateinthespecificcircumstances. Maximum Notapplicable Performance measures Notapplicable Clawback Notapplicable Non-Executive Directors’ Policy Table Fees Purpose ToprovidecompetitiveDirectorfees. Operation AnnualfeefortheChair,andannualbasefeesforotherNon-ExecutiveDirectors. AdditionalfeesforthoseDirectorswithadditionalresponsibilitiessuchaschairingaBoard Committee,actingasSeniorIndependentDirectororwhereaDirectorincurssignificantadditional timecommitment.AdditionalfeeswouldalsobepayableintheeventaNon-ExecutiveDirector temporarilytookonanExecutiveDirectorrole.Allfeeswillbepayablemonthlyinarrearsincash. Feeswillusuallybereviewedindependentlyeverythreeyears. TheindependentNon-ExecutiveDirectorsarenoteligibletoreceiveshareoptionsorother performance-relatedelementsorreceiveanyotherbenefitsotherthanwheretraveltothe Company’sregisteredofficeisrecognisedasataxablebenefitinwhichcaseaNon-Executive Directormayreceivethegrossed-upcostsoftravelasabenefit.Non-ExecutiveDirectorsare entitledtoreimbursementofreasonableexpenses. Maximum TheCompany’sArticlessetanannuallimitforthetotalofNon-ExecutiveDirectors’remuneration of£425,000,subjecttotheapprovalofshareholdersatthe2024AnnualGeneralMeeting. Performance measures None Clawback None Notes to table: 1. TheCommitteemayamendorsubstituteanyperformancecondition(s)ifoneormoreeventsoccurwhichcauseittodeterminethatanamendedorsubstitutedperformance conditionwouldbemoreappropriate,providedthatanysuchamendedorsubstitutedperformanceconditionwouldnotbemateriallylessdifficulttosatisfythantheoriginal condition(initsopinion).TheCommitteemayadjustthecalculationofperformancetargetsandvestingoutcomes(forinstance,formaterialacquisitions,disposalsor investmentsandeventsnotforeseenatthetimethetargetswereset)toensuretheyremainafairreflectionofperformanceovertherelevantperiod.TheCommitteealso retainsdiscretiontomakedownwardorupwardadjustmentsresultingfromtheapplicationoftheperformancemeasuresifitconsidersthatanadjustmentisappropriate (forexample,iftheoutcomesarenotdeemedbytheCommitteetobeafairandaccuratereflectionofbusinessperformance).IntheeventthattheCommitteewastomake anadjustmentofthissort,afullexplanationwouldbeprovidedinthenextRemunerationReport. 2. Performancemeasures–annualbonus.Theannualbonusmeasuresarereviewedannuallyandchosentofocusexecutiverewardsondeliveryofkeyfinancialtargets fortheforthcomingyearaswellaskeystrategicoroperationalgoalsrelevanttoanindividual.Specifictargetsforbonusmeasuresaresetatthestartofeachyearbythe RemunerationCommitteebasedonarangeofrelevantreferencepoints,includingforGroupfinancialtargets,andtheCompany’sbusinessplanandaredesignedtobe appropriatelystretching. 3. TheCommitteemayamendthetermsofawardsgrantedundertheshareschemesreferredtoaboveinaccordancewiththerulesoftherelevantplans.Thisincludesthe flexibilitytosettleequityawardsincash. 4. Performancemeasures–LTIP.TheLTIPperformancemeasureswillbechosentoprovidealignmentwithourlonger-termstrategyofgrowingthebusinessinasustainable mannerthatwillbeinthebestinterestsofshareholdersandotherkeystakeholdersintheCompany.TargetsareconsideredaheadofeachgrantofLTIPawardsbythe RemunerationCommitteetakingintoaccountrelevantexternalandinternalreferencepointsandaredesignedtobeappropriatelystretching. 5. TheCommitteereservestherighttomakeanyremunerationpaymentsand/orpaymentsforlossofoffice(includingexercisinganydiscretionsavailabletoitinconnectionwith suchpayments)notwithstandingthattheyarenotinlinewiththePolicysetoutabovewherethetermsofthepaymentwereagreed(i)beforethePolicysetoutabovecame intoeffect,providedthatthetermsofthepaymentwereconsistentwiththeshareholder-approvedRemunerationPolicyinforceatthetimetheywereagreed;or(ii)atatime whentherelevantindividualwasnotaDirectoroftheCompanyand,intheopinionoftheCommittee,thepaymentwasnotinconsiderationfortheindividualbecominga DirectoroftheCompany.Forthesepurposes‘payments’includestheCommitteesatisfyingawardsofvariableremunerationand,inrelationtoanawardovershares,theterms ofthepaymentare‘agreed’atthetimetheawardisgranted. 6. TheCommitteemaymakeminoramendmentstotheRemunerationPolicyforregulatory,exchangecontrol,taxoradministrativepurposesortotakeaccountofachange inlegislation,withoutobtainingshareholderapprovalforthatamendment. 7. TheNon-ExecutiveDirectors’feecaphasnotbeenadjustedsince2012. Remuneration Report / Continued Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 119 Policy for payment on loss of office Oncessationofemploymentofan ExecutiveDirector,theCommitteewill honouranycontractualarrangements inplace.TheCommitteemaymake anyotherpaymentsinconnection withlossofofficeindischargeoflegal obligationsorbywayofacompromise orsettlementofanyclaimarising. Thismayincludereasonableamounts foroutplacementassistanceand professionalorlegaladvice.Insome cases,adepartingDirectormay receiveamodestleavinggift. TheCommitteemay,atitsdiscretion, makeanannualbonuspayment fortheyearofcessationdepending onthereasonforleaving.The Committeewilltakeintoconsideration appropriateperformancemeasures whichmayincludetheindividual’s performanceandcontribution duringtheyear,andtheGroup’s financialresults.Thebonuswould usuallybetimepro-ratedand maybesettledwhollyincash. Thetreatmentofoutstandingdeferred bonusandLong-termIncentive Plan awards will be governed by the relevantplanrules.Inbothcases unvestedawardswillnormallylapse unlesstheparticipantisdetermined tobeagoodleaver.Thevesting dateforagoodleaver’sawardswill normallybetheoriginalvestingdate, buttheCommitteehastheflexibility todeterminethatawardsmayvest atanearlierdate.TheCommittee’s determinationoftheextenttowhich agoodleaver’sLTIPawardsshould vestwilltakeintoaccounttheextent towhichperformanceconditionsare meteitheratthedateofcessationof employmentortheendoftheoriginal performanceperiodand,unlessthe Committeedeterminesotherwise, willbeadjustedonatimepro-rated basis.Whereanindividualleavesafter thevestingdatebutbeforetheend ofanyholdingperiod,theywillretain theirLTIPawardsunlesssummarily dismissedwithawardsbeing releasedatthenormaldateunless theCommitteedeterminesthatthey shouldbereleasedatanearlierdate. WhereanExecutiveDirectorisan internalpromotion,thenormalpolicy isthatanylegacyarrangements would be honoured in line with theoriginaltermsandconditions. Similarly,ifanExecutiveDirectoris appointedfollowingtheCompany’s acquisitionoformergerwith anothercompany,legacytermsand conditionswouldbehonoured. Remunerationarrangementsfora newNon-ExecutiveDirectorwould beconsistentwiththeabovePolicy. IntheeventthataNon-Executive Directorisrequiredtotemporarilytake ontheroleofanExecutiveDirector, theirremunerationmayincludeany oftheelementslistedinthePolicy TableforExecutiveDirectors. TheCommitteemayagreetomake compensatorypaymentsforany remunerationarrangementssubject toforfeitonleavingaprevious employer.Thiswouldbeconsidered foreachspecificcase,takinginto accountanyrelevantfactorsrelating totherecruitment.Thereisnolimiton suchpayments,buttheCommittee wouldnotintendtopaymorethan thecommercialvalueforfeited.If necessary,theCommitteemaygrant suchawardsunderListingRule9.4.2R. Policy for other employees Remunerationforotheremployees broadlyfollowsthesameprinciplesas forExecutiveDirectors.Asignificant elementofremunerationislinked toperformancemeasures.All employeesusuallyparticipatein theLong-termIncentivePlanandin theannualbonus.Theweightingof individualandcorporatemeasuresis dependentonanindividual’srole. TheCommitteedoesnotformally consultwithemployeeswhen determiningExecutiveDirectorpay. However,theCommitteeiskept informedofgeneralmanagement decisionsmadeinrelationto employeepayandisconsciousof theimportanceofensuringthat itspaydecisionsforExecutive Directorsareregardedasfairand reasonablewithinthebusiness. Service contracts ExecutiveDirectorswillhave servicecontracts,comprisingthe remunerationelementssetoutwithin thisPolicy.Therewillbenofixed lengthofservicebutthecontracts canbeterminatedbyeitherpartyby givingtheothernoticeinwritingfor aperiodnotexceeding12months. Onterminationtheapplicable paymentsforeachelementof remunerationaresetoutbelow. TheExecutiveDirectorservice contractswillbeavailablefor inspectionattheCompany’s registeredoffice. Letters of appointment EachindependentNon-Executive Directorhasaletterofappointment whichsetsoutthetermsand conditions.Theyhaveasix-month noticeperiodandtheirappointment wouldterminatewithout compensationifnotre-electedat theAnnualGeneralMeeting.The independentDirectorshaveno servicecontractsorinterestsinany materialcontractswiththeGroup. Recruitment Theremunerationpackageforanew ExecutiveDirectorwouldfollow,asfar aspracticable,theabovePolicyTable. Salarieswouldreflecttheskillsand experienceoftheindividualandmay be set at a level to allow progression andperformanceintherole.The structureofthevariableremuneration elementswouldreflectthoseinthe PolicyTable.However,theCommittee mayflexthebalancebetweenannual andlong-termincentivesandthe measuresusedtoassessperformance. Ifappropriate,differentmeasures andtargetsmaybeappliedtoa newappointment’sannualbonus and/orLTIPintheiryearofjoining. Variablepaywouldbesubjecttothe maximumssetoutinthePolicyTable. WherenecessarytheCommittee mayapprovethepaymentof relocationexpensestofacilitate recruitment,andflexibilityisretained topayforlegalfeesandother costsincurredbytheindividual inrelationtotheirappointment. ![]() Picton Property Income Limited / Annual Report 2024120 #### Annual Report #### on Remuneration ThetablebelowsetsoutthetotalremunerationreceivablebyeachoftheDirectorswhoheldofficeduringtheyearto 31March2024,withacomparisontothepreviousfinancialyear: Salary/fees £000 Benefits £000 Pension salary supplement £000 Total fixed £000 Annual bonus £000 Deferred bonus £000 Long-term Incentive Plan £000 Total variable £000 Total £000 Executive MichaelMorris 2024 380 4 57 441 133 163 145 441 882 2023 331 3 50 384 157 236 125 518 902 Andrew Dewhirst 2024 259 4 39 302 90 111 87 288 590 2023 225 3 34 262 107 160 75 342 604 Non-Executive LenaWilson 2024 122 6 – 128 – – – – 128 2023 117 5 – 122 – – – – 122 Mark Batten 2024 55 – – 55 – – – – 55 2023 53 – – 53 – – – – 53 Maria Bentley 2024 55 1 – 56 – – – – 56 2023 53 – – 53 – – – – 53 RichardJones 2024 55 – – 55 – – – – 55 2023 53 – – 53 – – – – 53 Total (audited) 2024 926 15 96 1,037 223 274 232 729 1,766 2023 832 11 84 927 264 396 200 860 1,787 BenefitsfortheExecutiveDirectorscompriseprivatemedicalinsuranceandlifeassurance.Non-ExecutiveDirectors arereimbursedexpensesincurredinconnectionwithtravelandattendanceatBoardmeetings.Theseexpensesare taxablewherethemeetingstakeplaceattheCompany’smainoffice.TheCompanysettlesthetaxonbehalfofthe Non-ExecutiveDirectors. ExecutiveDirectorsreceiveasalarysupplementof15%ofbasesalaryinlieuofCompanypensioncontributions. Theabovefiguresfor2023fortheExecutiveDirectorsforannualbonusandLTIPawardshavebeenre-stated.Theestimated figuresforannualbonusincludedinlastyear’sreportwere£301,000(MichaelMorris)and£205,000(AndrewDewhirst).The estimatesincludedanoutcomeof0%fortherelativetotalreturnmetric.Thefinaloutcomewasdeterminedtobe60%and theawardswereadjustedto£393,000(MichaelMorris)and£267,000(AndrewDewhirst).TheCompany’stotalreturnforthe yearof(13.9)%wasabovethemedianreturnof(14.2)%butbelowtheupperquartilereturnof(11.6)%.Theabove2023LTIP figuresfortheExecutiveDirectorshavebeenrestatedtoreflecttheactualsharepriceatvesting(65.5pence)ratherthanthe averageforthequarterended31March2023(74.41pence).Thisrestatementrepresentsadecreaseinthevalueofthe2023 LTIPawardsof£12,000forMichaelMorrisandof£7,000forAndrewDewhirst. ThevalueofLTIPawardsfor2024isbasedonthenumberofsharestobeawardedtotheExecutiveDirectorsinrespect oftheJune2021LTIPawardsandtheaveragesharepriceoverthequarterended31March2024of62.63pence,andthe estimatedvalueofdividendequivalents. Remuneration Report / Continued Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 121 Annual bonus for 2023/24 Theannualbonusfortheyearended31March2024fortheExecutiveDirectorswasbasedonacombinationoffinancial metrics(60%)andcorporateobjectives(40%). Thetargetssetfortheyearended31March2024andtheassessmentofactualperformanceachievedaresetoutinthe tablebelow. Thefinancialmetricscomprisedtwoequallyweightedcomponents:totalreturnrelativetoacomparatorgroupofsimilar companies,setoutlaterinthisreport;andtotalpropertyreturncomparedtotheMSCIUKQuarterlyPropertyIndex. Atthedateofthisreport,notallofthecompaniesinthetotalreturncomparatorgrouphadannouncedtheirresults to31March2024andtheCommitteehasestimated,basedontheresultstodate,thatthisconditionwillnotbemet, resultinginanawardof0%.TheCommitteewilldeterminetheactualoutcomeofthisconditiononceallcompanies havereported,andanyadjustmentrequiredbetweentheestimateandactualwillbemadeinnextyear’sRemuneration Report.Therewillbenopayoutofthebonusuntilafinalisedresultcanbeconfirmed. Performance condition 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% Not yet available (0.1)% 0% (estimate) 0% (estimate) Total property return versusMSCIIndex Bonus weighting: 30% Lessthanmedian–0% Equaltomedian–50% Equaltoupperquartile–100% Median0.1% Upperquartile1.9% 1.6% 92.1% 40.1% ThecorporateobjectivesfortheExecutiveDirectorsfortheyearto31March2024weredeterminedbytheRemuneration Committeeandaccountedfor40%ofthemaximumaward. ThecorporateobjectivesapplyingtobothExecutives,andtheassessmentofperformanceagainstthese,areasfollows: Performance condition Assessment Awarded (% of maximum) Awarded (% of salary) Improvenetincome Bonus weighting: 8% Anumberofkeyincomemetricsmovedpositivelyovertheyear. Therewere3%increasesinbothpassingandcontractedrent,andERV growth.Netpropertyincomegrewby4.5%comparedtothepreviousyear. Howeveroperatingcostsroseby21%,albeitincludingmanyone-offitems. EPRAearningsincreasedby2%. 60% 7.0% Identifyandevaluategrowth opportunities Bonus weighting: 8% Anumberofopportunitieswereconsideredduringtheyearand extensiveduediligenceperformed.Theproposedmergerwithanother UKREITprogressedsignificantlytoapointwherebothBoardswereina positiontorecommendittoshareholders.However,asannouncedon 21November2023,thelargestshareholderofthecounterpartydidnot supportthetransaction. 50% 5.8% Makeprogressagainstnetzero carbonpathway Bonus weighting: 6% Significantprogresswasmadeinrespectoftheroll-outofsolar installationswithanincreaseincapacityof184%,withnewinstallationsat fiveproperties.Datacollectioniscontinuingbuthasnotreachedlastyear’s level.Like-for-likeScope1emissionshavereducedcomparedtotheprevious year,althoughabsoluteScope1emissionshaverisenduetotheimpactof oneassetacquiredduring2022. 60% 5.2% Reduceportfoliovoid Bonus weighting: 4% Theoverallvoidrateat31March2024hasremainedat91%.Thishasreduced subsequenttotheyear-endfollowingthesaleofAngelGateOfficeVillage, andwillreducefurtherwhentheagreedsaleofLongcross,Cardiff completes.Excludingthesetwopropertiesthevoidratewouldbe93%. 25% 1.5% Make asset disposals Bonus weighting: 4% ThekeydisposalsidentifiedwerethoseofAngelGateOfficeVillage andLongcross,Cardiff,inordertoprogressthealternativeusestrategy. Bothsalesexchangedcontractspriortotheyear-end,withAngelGate completingshortlyafterwardsandLongcrossduetocompletelaterin2024, subjecttoplanningconsent. 95% 5.5% Positive stakeholder engagement Bonus weighting: 4% All resolutions at the 2023 Annual General Meeting were passed with a minimumof94%infavour.Theemployeesatisfactionscorehasincreased from82%to86%.Staffturnoverwasverylowfortheyear.Howevertheshare pricediscounttonetassetshaswidenedovertheyear.Feedbackfromthe occupiersurveyswaspositive,andsatisfactionhigherthanthepreviousyear. 70% 4.1% SuccessfulCFOsuccession planning and transition Bonus weighting: 4% AnewChiefFinancialOfficerwasidentifiedfollowingasuitablerecruitment process.Asuccessfulandorderlytransitionhastakenplaceinrespectofthis keyposition. 100% 5.8% Successfulinternalisationof companysecretarialfunction Bonus weighting: 2% Thetransferofthisfunctiontookplaceon1October.Aswellasidentification andappointmentofnewGuernseybasedproviders,thetransitionwasalso dependentonobtaininglenderconsentacrossthreefacilitiesforthechange ofTrustee. 100% 2.9% ![]() Picton Property Income Limited / Annual Report 2024122 AsdiscussedintheCommitteeChair’sstatementonpages109to112,theCommitteeconsideredtheformulaicbonus outcomeinthecontextoftheGroup’soverallperformancefortheyearandconcludedthatitwassatisfiedthattheformulaic bonusoutcomewasafairreflectionofoverallGroupperformanceduringtheyear.TheCommitteewasalsosatisfiedthatthe aboveperformancewasachievedwithinanacceptableriskprofile,asconfirmedbytheAuditandRiskCommittee. Subjecttotheestimatedtotalreturncomponentnotedabove,theoverallannualbonusoutcomefortheExecutive Directorsis,therefore,asfollows: Financial metrics (out of maximum 60%) Corporate objectives (out of maximum 40%) Overall bonus % of maximum Bonus % of salary Total bonus £ MichaelMorris 27.6 26.0 53.6 7 7.8 295,700 Andrew Dewhirst 27.6 26.0 53.6 77.8 201,100 Thisyear,theCommitteehasdeterminedthattheproportionofthebonusdeferredbesetat55%oftheannualbonuses awardedtotheExecutiveDirectorsandpayableinsharesintwoyears’time.Dividendequivalentswillaccrueonthe sharesandthesewillbepaidincashwhentheawardsvest. Long-term Incentive Plan TheLTIPawardsgrantedon22June2021weresubjecttoperformanceconditionsforthethreeyearsended31March 2024.Theperformanceconditionsandtheactualperformanceforthesewereasfollows: Performance condition 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% Median–(2.1)% Upperquartile–17.8% (15.7)% 33.3% 0% Total property return versus MSCIIndex Lessthanmedian–0% Equaltomedian–25% Equaltoupperquartile–100% Median–1.8% Upperquartile–3.5% 4.9% (aboveupper quartile) 33.3% 100% GrowthinEPRAEPS Lessthan3.85pencepersharefor theyearended31March2024–0% Equalto3.85pencepershareforthe yearended31March2024–25% Equalorgreaterthan4.25penceper sharefortheyearended31March 2024–100% 3.97p 33.3% 47.5% TheCommitteewassatisfiedthattheaboveperformancewasachievedwithinanacceptableriskprofile.Asdiscussed intheCommitteeChair’sstatementonpages109to112,theCommitteeconsideredtheformulaicLTIPoutcomeinthe contextoftheGroup’soverallperformanceovertheperformanceperiodandconcludedthatitwassatisfiedtheformulaic outcomewasafairreflectionofoverallGroupperformanceduringtheperiod.Basedonthevestingpercentageabove, thesharesawardedandtheirestimatedvalues,usinganaveragesharepriceof62.63penceforthequarterended 31March2024,are: Director Maximum number of shares at grant Number of shares vesting Number of lapsed shares Estimated value 1,2 £ MichaelMorris 403,339 198,321 205,018 145,000 Andrew Dewhirst 241,358 118,675 122,683 86,800 1. TheestimatedvalueincludesdividendequivalentawardswhichwillbemadeinrelationtovestedLTIPawardsatthepointofvesting.Thevalueofthedividendequivalent awardsis£20,820(MichaelMorris)and£12,500(AndrewDewhirst). 2. Theaveragesharepriceforthequarterended31March2024islowerthanthesharepriceatgrantsotherehasbeennosharepricegrowthintheestimatedvalueoftheawards. ThefollowingawardsintheLong-termIncentivePlanweregrantedtotheExecutiveDirectorson14June2023: Number of shares Basis (% of salary) Face value per share (£) Award face value (£) Performance period Threshold vesting MichaelMorris 456,408 93.75% 0.7810 356,450 1April2023to31March2026 25% Andrew Dewhirst 273,114 82.5% 0.7810 213,300 1April2023to31March2026 25% Thefacevalueisbasedonaweightedaveragepricepershare,beingtheaverageoftheclosingsharepricesoverthe threebusinessdaysimmediatelyprecedingtheawarddate.Awardswillvestafterthreeyearssubjecttocontinuedservice andtheachievementofthreeequallyweightedperformanceconditions(relativetotalshareholderreturn,relativetotal propertyreturnandEPRAEPS).ThevestingschedulefortherelativemeasureswillbeasappliedtotheJune2021LTIPset outabove.TheEPSelementwillvestat25%forachievementofEPRAEPSof4.20penceintheyearended31March2026 increasingonastraight-linebasisto100%vestingforEPRAEPSof4.55pence. AnyLTIPvestingwillalsobesubjecttotheRemunerationCommitteeconfirmingthat,initsassessment,thevesting outturnwasachievedwithinanacceptableriskprofile. Remuneration Report / Continued Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 123 TheExecutiveDirectorshavethefollowingoutstandingshareawardsundertheLong-termIncentivePlanandDeferred Bonus Plan: Date of grant Performance period Market value on date of grant At 1 April 2023 Granted inyear Exercised inyear Lapsed in year As at 31 March 2024 Michael Morris 2020LTIP 29 June 2020 1 April 2020 to 31March2023 70.73p 309,275 – (162,524) (146,751) – 2021LTIP 22 June 2021 1 April 2021 to 31March2024 89.10p 403,339 – – – 403,339 2022LTIP 17 June 2022 1 April 2022 to 31March2025 94.47p 437,473 – – – 437,473 2023LTIP 14 June 2023 1 April 2023 to 31March2026 78.10p – 456,408 – – 456,408 2021 DBP 22 June 2021 1 April 2020 to 31March2021 89.10p 186,666 – (186,666) – – 2022 DBP 17 June 2022 1 April 2021 to 31March2022 94.47p 159,555 – – – 159,555 2023 DBP 14 June 2023 1 April 2022 to 31March2023 78.10p – 301,997 – – 301,997 1,496,308 758,405 (349,190) (146,751) 1,758,772 Andrew Dewhirst 2020LTIP 29 June 2020 1 April 2020 to 31March2023 70.73p 185,070 – (97,254) (87,816) – 2021LTIP 22 June 2021 1 April 2021 to 31March2024 89.10p 241,358 – – – 241,358 2022LTIP 17 June 2022 1 April 2022 to 31March2025 94.47p 261,784 – – – 261,784 2023LTIP 14 June 2023 1 April 2023 to 31March2026 78.10p – 273,114 – – 273,114 2021 DBP 22 June 2021 1 April 2020 to 31March2021 89.10p 126,933 – (126,933) – – 2022 DBP 17 June 2022 1 April 2021 to 31March2022 94.47p 108,498 – – – 108,498 2023 DBP 14 June 2023 1 April 2022 to 31March2023 78.10p – 205,359 – – 205,359 923,643 478,473 (224,187) (87,816) 1,090,113 AwardsundertheLong-termIncentivePlannormallyvestthreeyearsafterthegrantdateandaresubjecttoafurther two-yearholdingperiod.AwardsundertheDeferredBonusPlannormallyvesttwoyearsafterthegrantdate. ![]() Picton Property Income Limited / Annual Report 2024124 Comparator group TheCommitteehasagreedthatthefollowingcompanieswillbeusedasacomparatorgroupforthetotalshareholder returnandtotalreturnmetricsindeterminingvariableremunerationfor2024/25awards.Asmallergroupisusedforthe totalreturnmetricduetothedifferentreportingperiodsofsomecompanies. Company Total shareholder return Total return abrdnPropertyIncomeTrustLimited AEWUKREITplc BalancedCommercialPropertyTrustLimited CustodianREITplc NewRiverREITPLC RegionalREITLimited SchroderRealEstateInvestmentTrustLimited SupermarketIncomeREITPLC UrbanLogisticsREITplc WarehouseREITplc WorkspaceGroup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; / McKaySecuritiesPLCwasincludedinthegroupforawardsmadeuptoandincluding2021; / CTPropertyTrustLimited,EdistonPropertyInvestmentCompanyPLCandUKCommercialPropertyREITLimitedwere additionallyincludedinthegroupforawardsmadeuptoandincluding2023;and / LondonMetricPropertyPLCandRDIREITplcwereadditionallyincludedinthegroupforawardsmadeuptoand including2020. Statement of Directors’ shareholdings DirectorsandemployeesareencouragedtomaintainashareholdingintheCompany’ssharestoprovidealignment withinvestors. ThenumbersofsharesbeneficiallyheldbyeachDirector(includingconnectedpersons)asat31March2024were asfollows: Beneficial holding 2024 Beneficial holding 2023 Holding as a % of salary Outstanding LTIP awards Outstanding DBP awards MichaelMorris 925,454 740,717 159 1,297,220 461,552 Andrew Dewhirst 590,364 471,758 149 776,256 313,857 LenaWilson 30,000 30,000 Mark Batten 38,000 – Maria Bentley 74,436 74,436 RichardJones 53,845 53,845 ThepercentageholdingfortheExecutiveDirectorsisbasedonbasesalariesasat31March2024andasharepriceof £0.652.Thebeneficialholdingsofsharesincludeanyheldbyconnectedpersons. ExecutiveDirectorsarerequiredtomaintainashareholdingof200%ofbasesalaryandbothDirectorsarecurrentlyinthe processofbuildinguptothatlevel.TheExecutiveDirectorsintendtoretainatleast50%ofanyshareawards(post-tax) untiltheguidelinesaremet. Therehavebeennochangesintheseshareholdingsbetweentheyear-endandthedateofthisreport. Payments to past Directors or payments for loss of office TherewerenopaymentstopastDirectorsorpaymentsforlossofofficetoDirectorsduringtheyearended31March2024. AndrewDewhirstretiredfromtheBoardon31March2024.HehasbeenretainedbytheCompanyonashort-term employmentcontractuntil30June2024,toensureanorderlytransitionwithSairaJohnston.Attheendofthiscontract, assumingallconditionsaresatisfied,hewillreceiveafinalpaymentof£30,000ascompensationforterminationofhis employmentandnootherpaymentsinrelationtohisoutstandingnoticeperiod.TheRemunerationCommitteehas determinedthathisoutstandingshareawards,assetoutintheabovetable,willvestinaccordancewiththegoodleaver provisionsintherelevantPlanrules.Hewillalsoreceivecostsrelatingtolegalexpensesofupto£750(plusVAT). Remuneration Report / Continued Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 125 Historical total shareholder return performance ThegraphbelowshowstheCompany’stotalshareholderreturn(TSR)since31March2014asrepresentedbyshareprice growthwithdividendsreinvested,againsttheFTSEAll-ShareIndexandtheFTSEEPRANAREITUKIndex.Theseindices havebeenchosenastheyprovidecomparisonagainstrelevantsectoralandpan-sectoralbenchmarks. TSR chart Picton FTSE EPRA NAREIT UK FTSE All-Share 50 100 150 200 250 300 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 Sep 2023 Mar 2024 Key: ThetablebelowshowstheremunerationoftheChiefExecutiveforthepastsixyears,togetherwiththeannualbonus percentageandLTIPvestinglevel.TheCompanyhasonlyhadaChiefExecutivesince1October2018andthereforethe tablebelowshowshisremunerationforthepastsixyears. Total remuneration (£000) Annual bonus (% of maximum) LTIP vesting (% of maximum award) 2024 882 54% 49% 2023 902 77% 52% 2022 816 64% 54% 2021 836 76% 67% 2020 769 70% 67% 2019 920 79% 83% Relative importance of spend on pay Thetablebelowshowstheexpenditureandpercentagechangeinstaffcostscomparedtootherkeyfinancialindicators. 31 March 2024 £000 31 March 2023 £000 % change Employeecosts 4,191 3,487 20.2% Dividends 19,089 19,091 0% EPRAearnings 21,745 21,285 2.2% ![]() Picton Property Income Limited / Annual Report 2024126 Implementation of Remuneration Policy in 2024/25 Change from prior year Executive Directors Base salaries MichaelMorris(ChiefExecutive)–£380,219 SairaJohnston(ChiefFinancialOfficer)–£240,000 ThereisnochangeintheExecutiveDirector basesalariesfor2024/25.Theaverageincrease fortherestoftheworkforceis3.2%. Pension and benefits 15%salarysupplementinlieuofpensionplusstandard otherbenefits. Nochange.AllemployeesreceiveCompany pensioncontributionsattherateof15%ofbase salaryor15%salarysupplementinlieuof Companycontributions. Annual bonus\* Maximumbonusof145%ofsalarywithatleast50%ofanybonus deferredinsharesfortwoyears. 60%ofbonustobedeterminedbycorporatefinancialmetricsof relativetotalreturnandrelativetotalpropertyreturn(usingthe sameperformancetargetrangesasin2023/24)withtheremaining 40%determinedbycorporateandpersonalmeasures. Nochange.Themaximumbonuspotentialfor theExecutiveDirectorswillremainat145%. LTIP\* Awardofsharesworth: / MichaelMorris(ChiefExecutive)93.75%ofsalary / SairaJohnston(ChiefFinancialOfficer)0%ofsalary Sharesreleasedafterthree-yearperformanceandtwo-yearholding period.Vestingofsharesbasedequallyonrelativetotalshareholder return,relativetotalpropertyreturnandgrowthinEPRAearnings persharemeasures.Targetrangesfortherelativemeasuresareas setoutonpage122. TargetsfortheEPSmeasurefortheyearended31March2027are: Lessthan4.20pencepershare–0% Equalto4.20pencepershare–25% Greaterthan4.60pencepershare–100% Aresultbetween4.20penceand4.60pencewillbecalculated onastraight-linebasisbetween25%and100%. ThereisnochangeintheawardtoMichael Morris.SairaJohnston,whobecameaDirector on1April2024,doesnotreceiveanLTIPaward thisyearasexplainedintheannualstatement. Non-Executive Directors Fees Chair–£124,500 Director–£48,000 SupplementaryfeeforCommitteeChairsandfortheSenior IndependentDirector–£8,000 Thefeespayablefrom1April2024have increasedbyanaverageof2.0%. \*TheRemunerationCommitteehasdiscretiontooverridetheformulaicoutcomesinboththeannualbonusandLTIP. TheCommitteealsoconfirmsthatperformancehasbeenachievedwithinanacceptableriskprofilebeforepayoutsare made.Incentivepayoutsaresubjecttomalusandclawbackprovisions. Remuneration Report / Continued Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 127 Percentage change in remuneration ThetablebelowshowsthepercentagechangeintotalremunerationforeachoftheDirectorscomparedtotheaverage remunerationoftheemployeesoftheGroup. Change from 31/3/23 to 31/3/24 Change from 31/3/22 to 31/3/23 Salary/fees Benefits Bonus Salary/fees Benefits Bonus MichaelMorris 15.0% 15.0% (24.8)% 15.0% 16.0% 30.4% Andrew Dewhirst 15.0% 15.0% (24.8)% 15.0% 16.4% 30.4% LenaWilson 4.5% – – 0.0% – – Mark Batten 4.8% – – 0.0% – – Maria Bentley 4.8% – – 0.0% – – RichardJones 4.8% – – 0.0% – – Averageofallotheremployees 10.1% 12.5% (15.6)% 8.8% 21.1% (5.9)% Change from 31/3/21 to 31/3/22 Change from 31/3/20 to 31/3/21 Salary/fees Benefits Bonus Salary/fees Benefits Bonus MichaelMorris 15.0% 15.8% (9.4)% 0.0% 0.6% 9.2% Andrew Dewhirst 15.0% 16.1% (9.4)% 0.0% 0.8% 3.6% LenaWilson 11.2% – – N/A N/A N/A Mark Batten 10.5% – – 0.0% – – Maria Bentley 16.7% – – 0.0% – – RichardJones 16.7% – – N/A N/A N/A Averageofallotheremployees 6.4% 15.0% 13.2% 4.6% 8.1% 20.7% 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7September2023,representing58%oftheissuedsharecapitaloftheCompany,andalsofor theRemunerationPolicy,whichwasapprovedbyshareholdersattheAnnualGeneralMeetingheldon17November2021, representing63%oftheissuedsharecapitaloftheCompany. Remuneration Report Remuneration Policy Votes cast % Votes cast % For 306,662,660 97.0 333,280,593 96.5 Against 9,455,133 3.0 12,044,009 3.5 Votes cast 316,117,793 100.0 345,324,602 100.0 Withheld 2,151,871 304,835 Maria Bentley ChairoftheRemunerationCommittee 22 May 2024 ![]() Picton Property Income Limited / Annual Report 2024128 TheDirectorsofPictonProperty IncomeLimitedpresenttheAnnual Reportandauditedfinancial statementsfortheyearended 31March2024. TheCompanyisregisteredunder theprovisionsoftheCompanies (Guernsey)Law,2008. 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 intheConsolidatedStatement ofComprehensiveIncome. TheCompanyisaUKRealEstate InvestmentTrust(REIT)andmust distribute to its shareholders at least90%oftheprofitsonits propertyrentalbusinessforeach accountingperiodasaProperty IncomeDistribution(PID). As set out in Note 10 to the consolidatedfinancialstatements, theCompanyhaspaidfour interimdividendsintheyearat 0.875pencepershare,makinga totaldividendfortheyearended 31March2024of3.5pencepershare (2023:3.5pence).Allfourinterim dividendswerepaidasPIDs. Directors TheDirectorsoftheCompanywho served throughout the year are: / LenaWilson / Maria Bentley / Mark Batten / Andrew Dewhirst / RichardJones / MichaelMorris Andrew Dewhirst resigned as aDirectoron31March2024. Hissuccessor,SairaJohnston,was appointed to the Board on 1 April 2024 andaresolutionproposingherelection totheBoardwillbeputforwardatthe AnnualGeneralMeeting. TheDirectors’interestsinthesharesof theCompanyasat31March2024are setoutintheRemunerationReport. LenaWilson,MarkBatten,Richard JonesandMichaelMorriswilloffer themselvesforre-electionatthe forthcomingAnnualGeneralMeeting. 2018 UK Corporate Governance Code Compliance Statement TheBoardconfirmsthatfortheyear ended31March2024theprinciplesof goodcorporategovernancecontained inthe2018UKCorporateGovernance Codehavebeenconsistentlyapplied. TheCompanyisfullycompliantwith theCode. Listing TheCompanyislistedonthemain marketoftheLondonStockExchange. Share capital Theissuedsharecapitalofthe Companyasat31March2024was 547,605,596(2023:547,605,596) ordinarysharesofnoparvalue, including1,642,440ordinaryshares whichareheldbytheTrusteeofthe Company’sEmployeeBenefitTrust (2023:2,388,694ordinaryshares). TheDirectorshaveauthoritytobuy backupto14.99%oftheCompany’s ordinarysharesinissue,subjectto therenewalofthisauthorityfrom shareholdersateachAnnualGeneral Meeting.Anybuy-backofordinary sharesis,andwillbe,madesubject toGuernseylaw,andthemaking andtimingofanybuy-backsareat theabsolutediscretionoftheBoard. Noordinaryshareswerepurchased underthisauthorityduringtheyear. At the 2023 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1August2022)withouthavingto firstofferthosesharestoexisting shareholders.Noordinaryshareshave beenissuedunderthisauthority, whichexpiresatthisyear’sAnnual General Meeting and resolutions willbeproposedforitsrenewal. Shares held in the Employee Benefit Trust TheTrusteeofthePictonProperty IncomeLimitedLong-termIncentive Planholds1,642,440ordinary sharesintheCompanyinatrust tosatisfyawardsmadeunderthe Long-termIncentivePlanandthe DeferredBonusPlan.TheTrustee haswaiveditsrighttoreceive dividendsonthesharesitholds. Statement of going concern TheDirectorshavefocusedon assessingwhetherthegoingconcern basisremainsappropriateforthe preparationofthefinancialstatements fortheyearended31March2024. Inmakingtheirassessmentthe Directorshaveconsideredthe principalandemergingrisksrelating totheGroup,itsloancovenants, accesstofundingandliquidity position.Theyhavealsoconsidered anumberofscenarios,inparticular regardingtheimpactofdifferent levelsofrentcollectionacrossthe portfolioandovervaryingtimescales, andthepotentialconsequences onfinancialperformance,asset values,capitalprojectsandloan covenants.Leasingandinvestment transactionshavebeenassumed tobecurtailedthroughoutthe assessmentperiod.Futurelease eventsovertheassessmentperiod havebeenconsideredonacase-by- casebasistodeterminetherangeof mostlikelyoutcomes.Moredetails regardingtheGroup’sbusiness activities,togetherwiththefactors affectingperformance,investment activitiesandfuturedevelopment, aresetoutintheStrategicReport. Furtherinformationonthefinancial positionoftheGroup,includingits liquidityposition,borrowingfacilities anddebtmaturityprofile,issetout intheFinancialReviewandinthe consolidatedfinancialstatements. Underallofthesescenariosthe Grouphassufficientcashresources tocontinueitsoperations,andremain withinitsloancovenants,foraperiod ofatleast12monthsfromthedate ofthesefinancialstatements. Directors’ Report #### Directors’ Report Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 129 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financialstatements. Viability assessment and statement TheUKCorporateGovernance CoderequirestheBoardtomakea ‘viability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periodoftheirassessment. TheBoardconductedthisreviewover afive-yeartimescale,consideredtobe themostappropriateforlong-term investmentincommercialproperty. 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,future performance,financingandliquidity. Themajorrisksidentifiedwere thoserelatingtomarketriskin relationtopersistentinflation,high interestrates,otherrecessionary pressures and the lead up to a generalelectionovertheperiodof theassessmentaswellasfinancing, liquidityandotheroperationalrisks. Intheordinarycourseofbusiness, theBoardreviewsquarterlyforecasts, includingforecastmarketreturns. Theforecastsincludeassumptions regardingleaseexpiries,breaksand incentivesandcapitalexpenditure. Forthepurposesoftheviability assessmentoftheGroup,themodel coversafive-yearperiodandisstress testedundervariousscenarios. TheBoardconsideredanumber ofscenariosandtheirimpacton theGroup’spropertyportfolioand financialposition.Thesescenarios includeddifferentlevelsofrent collection,occupierdefaults,void periodsandincentiveswithinthe portfolio,andtheconsequential impactonpropertycostsandloan covenants.Allleaseeventsand assumptionswerereviewedoverthe periodunderthedifferentscenarios, includingtheirimpactonrevenue andcashflow.Forecastmovements incapitalvalues,basedoninput fromexternaleconomicconsultants, wereincludedinthesescenarios, includingtheirpotentialimpact ontheGroup’sloancovenants.The Group’slong-termloanfacilitiesare contractedtobeinplacethroughout theassessmentperiod,whilethe BoardhasassumedthattheGroup willcontinuetohaveaccessto, butisnotrelianton,itsrevolving creditfacilitywhichexpiresin2025. TheBoardconsideredtheimpact ofthesescenariosonitsabilityto continuetopaydividendsatdifferent ratesovertheassessmentperiod. Thesematterswereassessed overtheperiodto31March2029 andwillcontinuetobeassessed overrollingfive-yearperiods. TheDirectorsconsiderthatthe scenariotestingperformedwas sufficientlyrobustandthateven understressedconditionsthe Companyremainsviable. 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 five-yearperiodto31March2029. Substantial shareholdings Basedonnotificationsreceived andoninformationprovided bytheCompany’sbrokers,the Companyunderstandsthefollowing shareholdersheldabeneficialinterest of3%ormoreoftheCompany’s issuedsharecapitalasat3May2024. % of issued share capital RathbonesGroupplc 17.7 ColumbiaThreadneedle Investments 9.0 BlackRockInc. 5.8 TheVanguardGroupInc. 4.6 PremierMitonInvestors(UK) 3.6 RBCBrewinDolphinLimited 3.4 GoldmanSachsInternational(UK) 3.3 Disclosure of information to auditor TheDirectorswhoheldofficeatthe dateofapprovalofthisDirectors’ Reportconfirm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isawareofthatinformation. Auditor KPMGChannelIslandsLimited(the ‘Auditor’)hasexpresseditswillingness tocontinueinofficeastheCompany’s auditor and a resolution proposing itsreappointmentwillbesubmitted attheAnnualGeneralMeeting. ![]() Picton Property Income Limited / Annual Report 2024130 Directors’ Report / Continued Statement of Directors’ responsibilities TheDirectorsareresponsiblefor preparing the Annual Report and the financialstatementsinaccordance withapplicablelawandregulations. CompanylawrequirestheDirectors topreparefinancialstatementsfor eachfinancialyear.Underthatlaw theyarerequiredtopreparethe financialstatementsinaccordance withInternationalFinancial ReportingStandards,asissuedby theIASB,andapplicablelaw. UndercompanylawtheDirectors mustnotapprovethefinancial statementsunlesstheyaresatisfied thattheygiveatrueandfairviewof thestateofaffairsoftheCompany andofitsprofitorlossforthatperiod. Inpreparingthesefinancialstatements, theDirectorsarerequiredto: / Selectsuitableaccountingpolicies andthenapplythemconsistently; / Makejudgementsandestimates thatarereasonable,relevant andreliable; / Statewhetherapplicableaccounting standardshavebeenfollowed, subjecttoanymaterialdepartures disclosedandexplainedinthe financial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alternativebuttodoso. TheDirectorsareresponsiblefor keepingproperaccountingrecords thataresufficienttoshowandexplain theCompany’stransactionsand disclosewithreasonableaccuracyat anytimethefinancialpositionofthe Companyandenablethemtoensure thatitsfinancialstatementscomply withtheCompanies(Guernsey)Law, 2008.Theyareresponsibleforsuch internalcontrolsastheydetermineare necessarytoenablethepreparation ofthefinancialstatementsthatare free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otherirregularities. TheDirectorsareresponsibleforthe maintenanceandintegrityofthe corporateandfinancialinformation includedontheCompany’swebsite, andforthepreparationand disseminationoffinancialstatements. Legislation in Guernsey governing thepreparationanddissemination offinancialstatementsmaydiffer fromlegislationinotherjurisdictions. Directors’ responsibility statement in respect of the Annual Report and financial statements Weconfirmthattothebest ofourknowledge: / Thefinancialstatements,prepared inaccordancewiththeapplicableset ofaccountingstandards,giveatrue andfairviewoftheassets,liabilities, financialpositionandprofitorloss oftheCompany;and / 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theyface. 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modelandstrategy. ByOrderoftheBoard Saira Johnston 22 May 2024 Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 131 #### Independent Auditor’s Report to the Members of Picton Property #### Income Limited Financial Statements / Arepreparedinaccordancewith InternationalFinancialReporting Standards;and / 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 aredescribedbelow.Wehavefulfilled 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 haveobtainedisasufficientand appropriatebasisforouropinion. Our opinion is unmodified Wehaveauditedtheconsolidated financialstatementsofPictonProperty IncomeLimited(the‘Company’)and itssubsidiaries(together,the‘Group’), whichcomprisetheconsolidated balancesheetasat31March2024, theconsolidatedstatementsof comprehensiveincome,changesin equityandcashflowsfortheyear thenended,andnotes,comprising materialaccountingpoliciesand otherexplanatoryinformation. In our opinion, the accompanying consolidated financial statements: / Giveatrueandfairviewofthe financialpositionoftheGroupasat 31March2024,andoftheGroup’s financialperformanceandcashflows fortheyearthenended; Valuation of Investment Properties within non-current assets The risk Our response £688million (2023:£746million) Refertopage105ofthe AuditandRiskCommittee Report,Note2material accountingpoliciesand Note13investment propertiesdisclosures. Basis: TheGroup’sinvestmentproperties accountedfor89%(2023:94%)ofthe Group’stotalassetsasat31March2024. Thefairvalueofinvestmentpropertiesat 31March2024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Valuertakesintoaccountproperty specificinformationsuchasthecurrent tenancyagreementsandrentalincome andapplyassumptionsforyieldsand estimatedmarketrent,whichare influencedbyprevailingmarketyieldsand comparablemarkettransactions,toarrive atthefinalvaluation. Risk: ThevaluationoftheGroup’sinvestment propertiesisconsideredasignificantarea ofourauditinviewofthesignificanceof the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propertyspecificfactorswhichinclude, butare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consistencywithotherauditfindings. WeverifiedthatthefairvaluesasderivedbytheValuerfor theentirepropertyportfoliowerecorrectlyincludedinthe financialstatements. Assessing disclosures: WealsoconsideredtheGroup’sinvestmentproperty valuationpoliciesandtheirapplicationasdescribedin thenotestotheconsolidatedfinancialstatementsfor compliancewithIFRSin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judgment, wereofmostsignificanceinthe auditoftheconsolidatedfinancial statementsandincludethemost significantassessedrisksofmaterial misstatement(whetherornotdue tofraud)identifiedbyus,including thosewhichhadthegreatesteffect on:theoverallauditstrategy;the allocationofresourcesintheaudit; anddirectingtheeffortsofthe engagementteam.Thesematters wereaddressedinthecontextofour auditoftheconsolidatedfinancial 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2023): ![]() Picton Property Income Limited / Annual Report 2024132 Financial Statements / Continued #### Independent Auditor’s Report to the Members of Picton Property #### Income Limited / Continued Going concern TheDirectorshavepreparedthe consolidatedfinancialstatementson thegoingconcernbasisastheydonot intendtoliquidatetheGrouporthe Companyortoceasetheiroperations, andastheyhaveconcludedthatthe GroupandtheCompany’sfinancial positionmeansthatthisisrealistic. Theyhavealsoconcludedthatthere arenomaterialuncertaintiesthatcould havecastsignificantdoubtovertheir abilitytocontinueasagoingconcern foratleastayearfromthedateof approvaloftheconsolidatedfinancial statements(the‘goingconcernperiod’). InourevaluationoftheDirectors’ conclusions,weconsideredthe inherent risks to the Group and the Company’sbusinessmodeland analysedhowthoserisksmight affecttheGroupandtheCompany’s financialresourcesorabilityto continueoperationsoverthegoing concernperiod.Therisksthatwe consideredmostlikelytoaffectthe GroupandtheCompany’sfinancial resourcesorabilitytocontinue operations over this period were: / Availabilityofcapitaltomeet operatingcostsandotherfinancial commitments; / Theabilitytosuccessfullyrefinance orrepaydebt;and / TheabilityoftheCompanyto complywithdebtcovenants; Weconsideredwhethertheserisks couldplausiblyaffecttheliquidity inthegoingconcernperiodby comparingsevere,butplausible downsidescenariosthatcould arisefromtheserisksindividually andcollectivelyagainstthelevelof availablefinancialresourcesindicated bytheCompany’sfinancialforecasts. Weconsideredwhetherthegoing concerndisclosureinNote2tothe financialstatementsgivesafulland accuratedescriptionoftheDirectors’ assessmentofgoingconcern. Ourconclusionsbasedonthiswork: / WeconsiderthattheDirectors’ useofthegoingconcernbasisof accountinginthepreparationofthe consolidatedfinancialstatements isappropriate; Our application of materiality and an overview of the scope of our audit Materialityfortheconsolidated financialstatementsasawhole wassetat£7.74million,determined withreferencetoabenchmark ofgrouptotalassetsof£773.9 million,ofwhichitrepresents approximately1.0%(2023:1.0%). Inlinewithourauditmethodology, ourproceduresonindividualaccount balancesanddisclosureswere performedtoalowerthreshold, performancemateriality,soasto reducetoanacceptablelevelthe riskthatindividuallyimmaterial misstatementsinindividualaccount balancesadduptoamaterial amountacrosstheconsolidated financialstatementsasawhole. Performancematerialityforthe Groupwassetat75%(2023:75%) ofmaterialityfortheconsolidated financialstatementsasawhole,which equatesto£5.8million.Weapplied thispercentageinourdetermination ofperformancematerialitybecause wedidnotidentifyanyfactors indicatinganelevatedlevelofrisk. WereportedtotheAuditCommittee anycorrectedoruncorrected identifiedmisstatements exceeding£387,000,inaddition tootheridentifiedmisstatements that warranted reporting onqualitativegrounds. OurauditoftheGroupwas undertakentothemateriality levelspecifiedabove,which hasinformedouridentification ofsignificantrisksofmaterial misstatementandtheassociated auditproceduresperformedin thoseareasasdetailedabove. Thegroupteamperformedthe auditoftheGroupasifitwasa singleaggregatedsetoffinancial information.Theauditwas performedusingthemateriality levelsetoutaboveandcovered 100%oftotalgrouprevenue,total groupprofitbeforetax,andtotal groupassetsandliabilities. / Wehavenotidentified,andconcur withtheDirectors’assessmentthat thereisnot,amaterialuncertainty relatedtoeventsorconditionsthat, individuallyorcollectively,maycast significantdoubtontheGroupand theCompany’sabilitytocontinueasa goingconcernforthegoingconcern period;and / Wehavenothingmaterialtoaddor draw attention to in relation to the Directors’statementinthenotesto theconsolidatedfinancialstatements ontheuseofthegoingconcernbasis ofaccountingwithnomaterial uncertaintiesthatmaycastsignificant doubt over the Group and the Company’suseofthatbasisforthe goingconcernperiod,andthat statementismateriallyconsistentwith theconsolidatedfinancialstatements andourauditknowledge. However,aswecannotpredictall futureeventsorconditionsandas subsequenteventsmayresultin outcomesthatareinconsistentwith judgementsthatwerereasonableat thetimetheyweremade,theabove conclusionsarenotaguarantee thattheGroupandtheCompany willcontinueinoperation. Fraud and breaches of laws and regulations – ability to detect Identifying and responding to risks of material misstatement due to fraud Toidentifyrisksofmaterial misstatementduetofraud(‘fraud risks’)weassessedeventsorconditions thatcouldindicateanincentiveor pressuretocommitfraudorprovide anopportunitytocommitfraud.Our riskassessmentproceduresincluded: / Enquiringofmanagementastothe Group’spoliciesandproceduresto preventanddetectfraudaswellas enquiringwhethermanagementhave knowledgeofanyactual,suspectedor allegedfraud; / Readingminutesofmeetingsof thosechargedwithgovernance;and / Usinganalyticalproceduresto identifyanyunusualorunexpected relationships. Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 133 TheGroupissubjecttoother laws and regulations where the consequencesofnon-compliance couldhaveamaterialeffecton amountsordisclosuresinthe consolidatedfinancialstatements, forinstancethroughtheimposition offinesorlitigationorimpactson theGroupandtheCompany’sability tooperate.Weidentifiedfinancial servicesregulationasbeingthearea mostlikelytohavesuchaneffect, recognisingtheregulatednatureof theGroup’sactivitiesanditslegal form.Auditingstandardslimitthe requiredauditprocedurestoidentify non-compliancewiththeselawsand regulationstoenquiryofmanagement andinspectionofregulatoryandlegal correspondence,ifany.Thereforeif abreachofoperationalregulations isnotdisclosedtousorevident fromrelevantcorrespondence,an auditwillnotdetectthatbreach. Context of the ability of the audit to detect fraud or breaches of law or regulation Owingtotheinherentlimitations ofanaudit,thereisanunavoidable riskthatwemaynothavedetected somematerialmisstatementsinthe consolidatedfinancialstatements, even though we have properly plannedandperformedour auditinaccordancewithauditing standards.Forexample,thefurther removednon-compliancewithlaws andregulationsisfromtheevents andtransactionsreflectedinthe consolidatedfinancialstatements, thelesslikelytheinherentlylimited proceduresrequiredbyauditing standardswouldidentifyit. Inaddition,aswithanyaudit, thereremainsahigherriskofnon- detectionoffraud,asthismay involvecollusion,forgery,intentional omissions,misrepresentations,or theoverrideofinternalcontrols.Our auditproceduresaredesignedto detectmaterialmisstatement.Weare notresponsibleforpreventingnon- complianceorfraudandcannotbe expectedtodetectnon-compliance withalllawsandregulations. Asrequiredbyauditingstandards, weperformprocedurestoaddress theriskofmanagementoverrideof controls,inparticulartheriskthat managementmaybeinaposition tomakeinappropriateaccounting entries.Onthisauditwedonotbelieve thereisafraudriskrelatedtorevenue recognitionbecausetheGroup’s revenuestreamsaresimpleinnature withrespecttoaccountingpolicy choice,andareeasilyverifiableto externaldatasourcesoragreements withlittleornorequirementfor estimationfrommanagement.Wedid notidentifyanyadditionalfraudrisks. Weperformedproceduresincluding / Identifyingjournalentriesand otheradjustmentstotestbased onriskcriteriaandcomparingany identifiedentriestosupporting documentation;and / Incorporatinganelementof unpredictabilityinourauditprocedures. Identifying and responding to risks of material misstatement due to non-compliance with laws and regulations Weidentifiedareasoflawsand regulationsthatcouldreasonably beexpectedtohaveamaterial effectontheconsolidatedfinancial statementsfromoursectorexperience andthroughdiscussionwith management(asrequiredbyauditing standards),andfrominspectionof theGroup’sregulatoryandlegal correspondence,ifany,anddiscussed withmanagementthepoliciesand proceduresregardingcompliancewith lawsandregulations.AstheGroup isregulated,ourassessmentofrisks involved gaining an understanding ofthecontrolenvironmentincluding theentity’sproceduresforcomplying withregulatoryrequirements. TheGroupissubjecttolawsand regulationsthatdirectlyaffectthe consolidatedfinancialstatements includingfinancialreporting legislationandtaxationlegislationand weassessedtheextentofcompliance with these laws and regulations aspartofourproceduresonthe relatedfinancialstatementitems. Other information TheDirectorsareresponsible fortheotherinformation.The otherinformationcomprisesthe informationincludedintheannual reportbutdoesnotincludethe consolidatedfinancialstatements andourauditor’sreportthereon. Ouropinionontheconsolidated financialstatementsdoesnotcover theotherinformationandwedonot expressanauditopinionoranyform ofassuranceconclusionthereon. Inconnectionwithourauditofthe consolidatedfinancialstatements, our responsibility is to read the other informationand,indoingso,consider whethertheotherinformationis materiallyinconsistentwiththe consolidatedfinancialstatementsor ourknowledgeobtainedintheaudit, orotherwiseappearstobematerially misstated.If,basedontheworkwe haveperformed,weconcludethat thereisamaterialmisstatement ofthisotherinformation,weare requiredtoreportthatfact.Wehave nothingtoreportinthisregard. Disclosures of emerging and principal risks and longer term viability Wearerequiredtoperform procedurestoidentifywhether thereisamaterialinconsistency betweentheDirectors’disclosures inrespectofemergingandprincipal risksandtheviabilitystatement, andtheconsolidatedfinancial statementsandourauditknowledge wehavenothingmaterialtoaddor draw attention to in relation to: / TheDirectors’confirmationwithin theViabilityassessmentand statement(page129)thattheyhave carriedoutarobustassessmentofthe emergingandprincipalrisksfacing theGroup,includingthosethatwould threatenitsbusinessmodel,future performance,solvencyorliquidity; / Theemergingandprincipalrisks disclosuresdescribingtheserisksand explaininghowtheyarebeing managedormitigated; ![]() Picton Property Income Limited / Annual Report 2024134 Financial Statements / Continued #### Independent Auditor’s Report to the Members of Picton Property #### Income Limited / Continued Wearerequiredtoreviewthepart ofCorporateGovernanceStatement relatingtotheCompany’scompliance withtheprovisionsoftheUK CorporateGovernanceCodespecified bytheListingRulesforourreview.We havenothingtoreportinthisrespect. 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 accountingrecords;or / Theconsolidatedfinancial statementsarenotinagreementwith theaccountingrecords;or / 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audit. Respective responsibilities Directors’ responsibilities Asexplainedmorefullyintheir statementsetoutonpage130,the Directorsareresponsiblefor:the preparationoftheconsolidated financialstatementsincludingbeing satisfiedthattheygiveatrueandfair view;suchinternalcontrolasthey determineisnecessarytoenable thepreparationofconsolidated financialstatementsthatarefree frommaterialmisstatement,whether duetofraudorerror;assessing theGroupandCompany’sability tocontinueasagoingconcern, disclosing,asapplicable,matters relatedtogoingconcern;and usingthegoingconcernbasisof accountingunlesstheyeitherintend toliquidatetheGrouportheCompany ortoceaseoperations,orhaveno realisticalternativebuttodoso. / TheDirectors’explanationinthe Viabilityassessmentandstatement (page129)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 qualificationsorassumptions. Wearealsorequiredtoreviewthe Viabilityassessmentandstatement, set out on page 129 under the Listing Rules.Basedontheaboveprocedures, wehaveconcludedthattheabove disclosuresaremateriallyconsistent withtheconsolidatedfinancial statementsandourauditknowledge. Corporate governance disclosures Wearerequiredtoperformprocedures toidentifywhetherthereisamaterial inconsistencybetweentheDirectors’ corporategovernancedisclosures andtheconsolidatedfinancial statementsandourauditknowledge. Basedonthoseprocedures,we haveconcludedthateachofthe followingismateriallyconsistent withtheconsolidatedfinancial statementsandourauditknowledge: / TheDirectors’statementthatthey considerthattheannualreportand consolidatedfinancial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 andstrategy; / Thesectionoftheannualreport describingtheworkoftheAudit Committee,includingthesignificant issuesthattheauditcommittee consideredinrelationtothefinancial statements,andhowtheseissues wereaddressed;and / Thesectionoftheannualreport thatdescribesthereviewofthe effectivenessoftheCompany’s riskmanagementandinternal controlsystems. Auditor’s responsibilities Ourobjectivesaretoobtain reasonableassuranceaboutwhether theconsolidatedfinancialstatements asawholearefreefrommaterial misstatement,whetherduetofraud orerror,andtoissueouropinion inanauditor’sreport.Reasonable assuranceisahighlevelofassurance, but does not guarantee that an auditconductedinaccordance withISAs(UK)willalwaysdetecta materialmisstatementwhenitexists. Misstatementscanarisefromfraud orerrorandareconsideredmaterial if,individuallyorinaggregate,they couldreasonablybeexpectedto influencetheeconomicdecisions ofuserstakenonthebasisofthe consolidatedfinancialstatements. Afullerdescriptionofour responsibilities is provided on the FRC’swebsiteatwww.frc.org.uk/ auditorsresponsibilities. 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Companies(Guernsey)Law, 2008.Our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purpose.Tothefullest extent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wehaveformed. Steven Stormonth ForandonbehalfofKPMGChannel IslandsLimited CharteredAccountantsand RecognisedAuditors Guernsey 22 May 2024 Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 135 #### Consolidated statement of comprehensive income fortheyearended31March2024 | | | | | | --- | --- | --- | --- | | | | 2024 | 2023 | | | Notes | £000 | £000 | | Income | | | | | Revenuefromproperties | 3 | 5 4,690 | 5 1, 816 | | Propertyexpenses | 4 | (16 ,79 9) | (1 5,56 6) | | Net property income | | 37 ,891 | 36 , 250 | | Expenses | | | | | Administrativeexpenses | 6 | (7, 2 1 9) | (5,955) | | Total operating expenses | | (7, 2 1 9) | (5,9 55) | | Operating profit before movement on investments | | 30,67 2 | 30, 295 | | Investments | | | | | Revaluationofowner-occupiedproperty | 14 | 223 | (382) | | Investmentpropertyvaluationmovements | 13 | (26,757) | (110, 433) | | Total loss on investments | | (2 6 , 53 4) | (1 10,8 15) | | Operating profit/(loss) | | 4,138 | (8 0, 520) | | Financing | | | | | Interestincome | 8 | 604 | 24 | | Interestexpense | 8 | (9, 5 31) | (9,0 3 4) | | Total finance costs | | (8, 92 7) | (9,010) | | Loss before tax | | (4 ,789) | (89, 5 30) | | Tax | 9 | – | – | | Loss after tax | | (4 ,789) | (89, 5 30) | | Other comprehensive income | | | | | Revaluationofowner-occupiedproperty | 14 | – | (4 34) | | Total other comprehensive loss for the year | | – | (43 4) | | Total comprehensive loss for the year | | (4 ,789) | (89, 96 4) | | Earnings per share | | | | | Basic | 11 | (0. 9)p | (16 .5)p | | Diluted | 11 | (0. 9)p | (16 .5)p | Allitemsintheabovestatementderivefromcontinuingoperations. AllofthelossandtotalcomprehensivelossfortheyearisattributabletotheequityholdersoftheCompany. Notes1to27formpartoftheseconsolidatedfinancialstatements. ![]() Picton Property Income Limited / Annual Report 2024136 Financial Statements / Continued #### Consolidated statement of changes in equity fortheyearended31March2024 | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | | Share | Retained | Other | Revaluation | | | | | capital | earnings | reserves | reserve | Total | | | Notes | £000 | £000 | £000 | £000 | £000 | | Balance as at 31 March 2022 | | 164, 400 | 493,0 27 | (7 31) | 43 4 | 657,1 30 | | Lossfortheyear | | – | (89, 530) | – | – | (89, 530) | | Dividends paid | 10 | – | (19,091) | – | – | (19,0 91) | | Share-based awards | | – | – | 6 75 | – | 675 | | Purchaseofsharesheldintrust | 7 | – | – | (1 ,126) | – | (1 ,1 26) | | Othercomprehensivelossfortheyear | 14 | – | – | – | (43 4) | (43 4) | | Balance as at 31 March 2023 | | 164, 400 | 384,406 | (1,182) | – | 5 4 7, 6 2 4 | | Lossfortheyear | | – | (4 ,789) | – | – | (4 ,789) | | Dividends paid | 10 | – | (19 ,089) | – | – | (19,0 89) | | Share-based awards | | – | – | 729 | – | 729 | | Balance as at 31 March 2024 | | 164, 400 | 360, 52 8 | (453) | – | 5 2 4 , 475 | Notes1to27formpartoftheseconsolidatedfinancialstatements. Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 137 #### Consolidated balance sheet asat31March2024 | | | | | | --- | --- | --- | --- | | | | 2024 | 2023 | | | Notes | £000 | £000 | | Non-current assets | | | | | Investmentproperties | 13 | 688, 310 | 74 6 , 3 4 2 | | Property,plantandequipment | 14 | 3 , 499 | 3, 41 5 | | Total non-current assets | | 691, 809 | 749 ,7 5 7 | | Current assets | | | | | Investmentpropertiesheldforsale | 13 | 35 ,73 3 | – | | Accountsreceivable | 15 | 26,601 | 2 2 , 749 | | Cashandcashequivalents | 16 | 19,7 7 3 | 20,0 50 | | Total current assets | | 82 ,107 | 42 ,79 9 | | Total assets | | 773 ,916 | 792 , 556 | | Current liabilities | | | | | Accountspayableandaccruals | 17 | (20,622) | (1 9, 47 1) | | Loans and borrowings | 18 | (1, 19 4) | (1 ,129) | | Obligations under leases | 22 | (1 1 4) | (11 4) | | Total current liabilities | | (2 1, 930) | (20,714) | | Non-current liabilities | | | | | Loans and borrowings | 18 | (224,940) | (2 21 ,6 35) | | Obligations under leases | 22 | (2 , 571) | (2 , 583) | | Total non-current liabilities | | (2 2 7, 5 1 1) | (224 , 2 18) | | Total liabilities | | (2 49, 4 41) | (24 4 ,932) | | Net assets | | 52 4 , 47 5 | 547,624 | | Equity | | | | | Sharecapital | 20 | 164, 400 | 164 ,400 | | Retained earnings | | 360, 52 8 | 384,40 6 | | Other reserves | | (453) | (1 ,182) | | Revaluation reserve | | – | – | | Total equity | | 52 4 , 475 | 547,624 | | Net asset value per share | 23 | 9 6p | 100p | These consolidated financial statements were approved by the Board of Directors on 22 May 2024 and signed on its behalf by: Saira Johnston Chief Financial Officer 22 May 2024 Notes1to27formpartoftheseconsolidatedfinancialstatements. ![]() Picton Property Income Limited / Annual Report 2024138 Financial Statements / Continued #### Consolidated statement of cash flows fortheyearended31March2024 | | | | | | --- | --- | --- | --- | | | | 2024 | 2023 | | | Notes | £000 | £000 | | Operating activities | | | | | Operatingprofit/(loss) | | 4,138 | (8 0, 520) | | Adjustmentsfornon-cashitems | 21 | 2 7, 4 0 6 | 111 ,655 | | Interestreceived | | 102 | 24 | | Interestpaid | | (9,0 85) | (7, 9 3 7) | | (Increase)/decreaseinaccountsreceivable | | (3, 350) | 101 | | Increase/(decrease)inaccountspayableandaccruals | | 996 | (291) | | Cash inflows from operating activities | | 20,207 | 2 3 ,032 | | Investing activities | | | | | Purchaseofinvestmentproperties | 13 | – | (20,613) | | Capitalexpenditureoninvestmentproperties | 13 | (4, 45 8) | (6,135) | | Purchaseofproperty,plantandequipment | 14 | (4) | (13) | | Cash outflows from investing activities | | (4, 462) | (26 , 761) | | Financing activities | | | | | Borrowings repaid | 18 | (1,4 33) | (6, 36 8) | | Borrowings drawn | 18 | 4,500 | 12,000 | | Financingcosts | 18 | – | (183) | | Purchaseofsharesheldintrust | 7 | – | (1 ,1 26) | | Dividends paid | 10 | (1 9,0 89) | (19,091) | | Cash outflows from financing activities | | (16,022) | (14 ,76 8) | | Net decrease in cash and cash equivalents | | (27 7) | (1 8 , 497) | | Cashandcashequivalentsatbeginningofyear | | 20,050 | 38 , 5 47 | | Cash and cash equivalents at end of year | 16 | 19,7 7 3 | 20,0 50 | Notes1to27formpartoftheseconsolidatedfinancialstatements. Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 139 #### Notes to the consolidated financial statements fortheyearended31March2024 1. General information Picton Property Income Limited (the ‘Company’ and together with its subsidiaries the ‘Group’) was established in Guernsey on 15 September 2005. It has a premium listing on the London Stock Exchange as a commercial company and entered the UK REIT regime on 1 October 2018. The consolidated financial statements are prepared for the year ended 31 March 2024 with comparatives for the year ended 31 March 2023. 2. Material accounting policies Basis of accounting The financial statements have been prepared on a going concern basis and adopt the historical cost basis, except for the revaluation of investment properties, share-based awards and property, plant and equipment. Historical cost is generally based on the fair value of the consideration given in exchange for the assets. The financial statements, which give a true and fair view, are prepared in accordance with International Financial Reporting Standards (IFRS Accounting Standards) as issued by the IASB and the Companies (Guernsey) Law, 2008. The Directors have assessed whether the going concern basis remains appropriate for the preparation of the financial statements. They have reviewed the Group’s principal and emerging risks, existing loan facilities, access to funding and liquidity position and then considered different adverse scenarios impacting the portfolio and the potential consequences on financial performance, asset values, dividend policy, capital projects and loan covenants. Under all these scenarios the Group has sufficient resources to continue its operations, and remain within its loan covenants, for the foreseeable future and in any case for a period of at least 12 months from the date of these financial statements. 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 financial statements. The financial statements are presented in pounds sterling, which is the Company’s functional currency. All financial information presented in pounds sterling has been rounded to the nearest thousand, except when otherwise indicated. New or amended standards issued The accounting policies adopted are consistent with those of the previous financial period, as amended to reflect the adoption of new standards, amendments and interpretations which became effective in the year as shown below. / IFRS 17 Insurance Contracts / Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) / Definition of Accounting Estimates (Amendments to IAS 8) / Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction – Amendments to IAS 12 Income Taxes The adoption of these standards has had no material effect on the consolidated financial statements of the Group. At the date of approval of these financial statements, there are a number of new and amended standards in issue but not yet effective for the financial year ended 31 March 2024 and thus have not been applied by the Group. / Lease Liability in a Sale and Leaseback (Amendments to IFRS 16) / Non-current Liabilities with Covenants (Amendments to IAS 1) / Sale or Contributions of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28) / Amendments to IAS 7 and IFRS 7 – Supplier Finance Arrangements / Amendments to IAS 21 – Lack of Exchangeability / IFRS 18 Presentation and Disclosure in Financial Statements / IFRS 19 Subsidiaries without Public Accountability The adoption of these new and amended standards, together with any other IFRSs or IFRIC interpretations that are not yet effective, are not expected to have a material impact on the financial statements of the Group other than IFRS 18 (Presentation and Disclosure in Financial Statements) that the Group is in the process of assessing. Use of estimates and judgements The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates 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. ![]() Picton Property Income Limited / Annual Report 2024140 Financial Statements / Continued #### Notes to the consolidated financial statements / Continued 2. Material accounting policies / Continued Significant judgements and estimates Judgements made by management in the application of IFRSs that have a significant effect on the financial statements 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 financial statements incorporate the financial statements of the Company and entities controlled 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 which control is transferred out of the Group. These financial statements 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 hierarchy based on the inputs to valuation techniques used. The different levels have been defined as 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 property held by the Group to earn income or for capital appreciation, 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 property. Investment property is initially recognised 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 an independent valuer who holds a recognised and relevant professional qualification and who has recent 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 financially feasible. The fair value of investment property generally involves consideration of: / Market evidence on comparable transactions for similar properties; / The actual current market for that type of property in that type of location at the reporting date and current market expectations; / Rental income from leases and market expectations regarding possible 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 market 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 unconditionally exchanged and the significant risks and rewards of ownership have been transferred. Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 141 2. Material accounting policies / Continued An investment property is derecognised for accounting purposes upon disposal or when no future economic benefits 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 majority of the investment properties are charged by way of a first ranking mortgage as security for the loans made to the Group; see Note 18. 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 property is used. Any gain arising on this remeasurement is recognised in profit or loss to the extent that it reverses a previous impairment loss on the specific property, with any remaining gain recognised in other comprehensive income and presented in the revaluation reserve. Any loss is recognised in profit or loss. However, to the extent that 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 estimated useful lives are between three and five years. 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 payments are apportioned between the finance charge and the reduction of the outstanding liability so 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 is a lease other than a finance lease. A finance lease is one where substantially 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 termination of a lease, the profit, net of dilapidations and non-recoverable outgoings relating to the lease concerned, is immediately reflected in revenue from properties if there are no relevant conditions 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 insignificant risk of change 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 separately in Notes 3 and 4 to reflect that, notwithstanding this money is held on behalf of occupiers, the ultimate risk for paying and recovering these costs rests with the property owner. ![]() Picton Property Income Limited / Annual Report 2024142 Financial Statements / Continued #### Notes to the consolidated financial statements / Continued 2. Material accounting policies / Continued Employee benefits Defined contribution plans A defined contribution plan is a retirement benefit plan under which the Company pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an expense in the Consolidated Statement of Comprehensive Income in the periods during which services are rendered by employees. Short-term benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing 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 which the related non-market performance conditions 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 subject to market conditions, the grant date fair value of the share-based awards is measured to reflect such conditions and there is no adjustment between expected and actual outcomes. The cost of the Company’s shares held by the Employee Benefit Trust is deducted from equity in the Consolidated 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 IFRS 9 simplified approach to measuring expected credit losses, which uses a lifetime expected impairment provision for all applicable accounts receivable. Bad debts are written off when 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 discount or premium on settlement. Gains and losses are recognised in profit or loss in the Consolidated 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 as control over the properties is still retained over the period end. 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. Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 143 2. Material accounting policies / Continued Share capital Ordinary shares are classified as equity. Revaluation reserve Any surplus or deficit arising from the revaluation of owner-occupied property is taken to the revaluation reserve. A revaluation deficit is only taken to retained earnings when there is no previous revaluation surplus to reverse. Taxation The Group elected to be treated as a UK REIT with effect from 1 October 2018. The UK REIT rules exempt 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. 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 operating activities, investing activities and financing activities. The net result has been adjusted for amounts 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 | | | | | --- | --- | --- | | | 2024 | 2023 | | | £000 | £000 | | Rents receivable (adjusted for lease incentives) | 43,910 | 42,964 | | Surrender premiums | 102 | 147 | | Dilapidation receipts | 952 | 170 | | Other income | 124 | 107 | | Service charge income | 9,602 | 8,428 | | | 54,690 | 51,816 | Rents receivable have been adjusted for lease incentives recognised of £nil (2023: £1.2 million). 4. Property expenses | | | | | --- | --- | --- | | | 2024 | 2023 | | | £000 | £000 | | Property operating costs | 3,075 | 3,491 | | Property void costs | 4,122 | 3,647 | | Recoverable service charge costs | 9,602 | 8,428 | | | 16,799 | 15,566 | 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 IFRS. Therefore, no reconciliation is required between the measure of profit or loss used by the Board and that contained in the financial statements. 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 portfolio consists of 49 commercial properties, which are in the industrial, office, retail and leisure sectors. ![]() Picton Property Income Limited / Annual Report 2024144 Financial Statements / Continued #### Notes to the consolidated financial statements / Continued 6. Administrative expenses | | | | | --- | --- | --- | | | 2024 | 2023 | | | £000 | £000 | | Director and staff costs | 4,191 | 3,487 | | Auditor’s remuneration | 248 | 195 | | Other administrative expenses | 2,780 | 2,273 | | | 7,219 | 5,955 | Auditor’s remuneration comprises: 2024 £000 2023 £000 Audit fees: Audit of Group financial statements 120 92 Audit of subsidiaries’ financial statements 103 87 Audit-related fees: | | | | --- | --- | | Review of interim financial statements 25 | 16 | | 248 | 195 | 7. Director and staff costs | | | | | --- | --- | --- | | | 2024 | 2023 | | | £000 | £000 | | Wages and salaries | 2,422 | 1,879 | | Non-Executive Directors’ fees | 287 | 275 | | Social security costs | 435 | 425 | | Other pension costs | 47 | 34 | | Share-based payments – cash settled | 189 | 142 | | Share-based payments – equity settled | 811 | 732 | | | 4,191 | 3,487 | 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 exception of Executive Directors, awards are cash settled and vest after two years. 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 14 June 2023, awards of 834,885 notional shares were made which vest in June 2025 (2023: 500,905 notional shares). The next awards are due to be made in June 2024 for vesting in June 2026. 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. | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Units at | Units | Units | Units | Units at | Units | Units | Units | Units at | | | 31 March | granted | cancelled | redeemed | 31 March | granted | cancelled | redeemed | 31 March | | Vesting date | 2022 | in the year | in the year | in the year 2023 | | in the year | in the year | in the year 2024 | | | 29 June 2022 | 599,534 | – | – | (589,779) | 9,755 | – | – | (9,755) | – | | 22 June 2023 | 531,108 | – | – | – | 531,108 | – | – | (391,152) | 139,956 | | 17 June 2024 | – | 500,905 | – | – | 500,905 | – | (2,117) | – | 498,788 | | 14 June 2025 | – | – | – | – | – | 834,885 | (2,305) | – | 832,580 | | | 1,130,642 | 500,905 | – | (589,779) | 1,041,768 | 834,885 | (4,422) | (400,907) | 1,471,324 | 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 14 June 2023, awards for a maximum of 1,219,010 shares were granted to employees in respect of the three-year period ending on 31 March 2026. In the previous year, awards of 1,174,589 shares were made on 17 June 2022 for the period ending 31 March 2025. Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 145 7. Director and staff costs / Continued The metrics are: / Total shareholder return (TSR) of Picton Property Income Limited, compared to a comparator group of similar listed companies; / 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 | 14 June 2023 | 17 June 2022 | | Share price at date of grant | 76.2p | 92.6p | | Exercise price | Nil | Nil | | Expected term | 3 years | 3 years | | Risk-free rate – TSR condition | 4.8% | 2.28% | | Share price volatility – TSR condition | 27.4% | 28.3% | | Median volatility of comparator group – TSR condition | 27.2% | 32.4% | | Correlation – TSR condition | 38.6% | 25.0% | | TSR performance at grant date – TSR condition | 7.0% | (2.5)% | | Median TSR performance of comparator group at grant date – TSR condition | 2.3% | 2.2% | | Fair value – TSR condition (MonteCarlo method) | 35.0p | 46.0p | | Fair value – TPR condition (Black-Scholesmodel) | 76.2p | 92.6p | | Fair value – EPS condition (Black-Scholes model) | 76.2p | 92.6p | The Trustee of the Company’s Employee Benefit Trust did not acquire any ordinary shares during the year (2023: 1,250,000 shares for £1,126,000). The Group employed 12 members of staff at 31 March 2024 (2023: ten). The average number of people employed by the Group for the year ended 31 March 2024 was 11 (2023: nine). 8. Interest expense and interest income | | | | | --- | --- | --- | | | 2024 | 2023 | | Interest paid | £000 | £000 | | Interest payable on loans | 9,146 | 8,576 | | Interest on obligations under finance leases | 174 | 175 | | Non-utilisation fees | 211 | 283 | | | 9,531 | 9,034 | The loan arrangement costs incurred to 31 March 2024 are £3,328,000 (2023: £3,328,000). These are amortised over the duration of the loans with £304,000 amortised in the year ended 31 March 2024 and included in interest payable on loans (2023: £304,000). Interest income of £604,000 (2023: £24,000) includes £502,000 received from managing agents in respect of interest earned on client monies in respect of the current and previous financial periods. ![]() Picton Property Income Limited / Annual Report 2024146 Financial Statements / Continued #### Notes to the consolidated financial statements / Continued 9. Tax The charge for the year is: | | | | | --- | --- | --- | | | 2024 | 2023 | | | £000 | £000 | | Tax expense in year | – | – | | Total tax charge | – | – | A reconciliation of the tax charge applicable to the results at the statutory tax rate to the charge for the year is as follows: | | | | | --- | --- | --- | | | 2024 | 2023 | | | £000 | £000 | | Loss before taxation | (4,789) | (89,530) | | Expected tax (credit)/charge on ordinary activities at the standard rate of taxation of 25% (2023: 19%) | (1,197) | (17,011) | | Less: | | | | UK REIT exemption on net income | (5,437) | (4,044) | | Revaluation movement not taxable | 6,634 | 21,055 | | Total tax charge | – | – | As a UK REIT, the income profits of the Group’s UK property rental business are exempt 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 prevailing rate. As the principal company of the REIT, the Company is required to distribute 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 affairs such that these conditions continue to be met for the foreseeable future. Accordingly, deferred tax is no longer recognised on temporary differences relating to the property rental business. 10. Dividends | | | | | --- | --- | --- | | | 2024 | 2023 | | | £000 | £000 | | Declared and paid: | | | | Interim dividend for the period ended 31 March 2022: 0.875 pence | – | 4,774 | | Interim dividend for the period ended 30 June 2022: 0.875 pence | – | 4,775 | | Interim dividend for the period ended 30 September 2022: 0.875 pence | – | 4,771 | | Interim dividend for the period ended 31 December 2022: 0.875 pence | – | 4,771 | | Interim dividend for the period ended 31 March 2023: 0.875 pence | 4,771 | – | | Interim dividend for the period ended 30 June 2023: 0.875 pence | 4,770 | – | | Interim dividend for the period ended 30 September 2023: 0.875 pence | 4,771 | – | | Interim dividend for the period ended 31 December 2023: 0.875 pence | 4,777 | – | | | 19,089 | 19,091 | The interim dividend of 0.925 pence per ordinary share in respect of the period ended 31 March 2024 has not been recognised as a liability as it was declared after the year-end. This dividend of £5,050,000 will be paid on 31 May 2024. 11. Earnings per share Basic and diluted earnings per share is calculated by dividing the net loss for the year attributable to ordinary 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 Trust for the year. The diluted number of shares also reflects the contingent shares to be issued under the Long-term Incentive Plan. The following reflects the loss and share data used in the basic and diluted profit per share calculation: | | | | | | --- | --- | --- | --- | | | 2024 | 2023 | | | Net loss attributable to ordinary shareholders of the Company from continuing operations (£000) | (4,789) | (89,964) | | | Weighted average number of ordinary shares for basic earnings per share | 545,437,264 | 545,378,286 | | | Weighted average number of ordinary shares for diluted earnings per share | 547,092,154 | 546,856,4 | 50 | Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 147 12. Investments in subsidiaries The Company had the following principal subsidiaries as at 31 March 2024 and 31 March 2023: | | | | | --- | --- | --- | | 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 consolidated within the Group financial 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 reconciliation of the opening and closing amounts of investment properties classified as Level 3 recorded at fair value. | | | | | --- | --- | --- | | | 2024 | 2023 | | | £000 | £000 | | Fair value at start of year | 746,342 | 830,027 | | Capital expenditure on investment properties | 4,458 | 6,135 | | Acquisitions | – | 20,613 | | Unrealised movement on investment properties | (26,757) | (110,433) | | Fair value at the end of the year | 724,043 | 746,342 | | Historic cost at the end of the year | 685,576 | 681,118 | The fair value of investment properties reconciles to the appraised value as follows: | | | | | --- | --- | --- | | | 2024 | 2023 | | | £000 | £000 | | Current | | | | Appraised value of properties held for sale | 35,900 | – | | Lease incentives held as debtors of properties held for sale | (167) | – | | Non-current | 35,733 | – | | Appraised value | 708,740 | 766,235 | | Valuation of assets held under head leases | 2,046 | 2,081 | | Owner-occupied property | (3,391) | (3,248) | | Lease incentives held as debtors | (19,085) | (18,726) | | | 688,310 | 746,342 | | Fair value at the end of the year | 724,043 | 746,342 | As at 31 March 2024, contracts have been exchanged to sell Angel Gate, London EC1 and Longcross, Cardiff so these assets have been classified as assets held for sale, net of lease incentives. The sale of Angel Gate completed in April 2024 and the sale of Longcross is due to complete towards the end of the year. As at 31 March 2023, there were no assets classified as held for sale. The investment properties were valued by independent valuers, CBRE Limited, Chartered Surveyors, as at 31 March 2024 and 31 March 2023 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. ![]() Picton Property Income Limited / Annual Report 2024148 Financial Statements / Continued #### Notes to the consolidated financial statements / Continued 13. Investment properties / Continued 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. 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 from the Group’s financial and property systems and is subject to the Group’s overall control 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 Board will also consider whether circumstances at specific investment properties, such as alternative uses and issues with occupational tenants, are appropriately reflected in the valuations. 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 financially feasible. As at 31 March 2024 and 31 March 2023, all of the Group’s properties, including owner-occupied property, are Level 3 in the fair value hierarchy as it involves use of significant judgement. There were no transfers between 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 significant unobservable inputs per sector of investment properties is disclosed as follows: | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | | 2024 | | | 2023 | | | | Office | Industrial | Retail and Leisure | Office | Industrial | Retail and Leisure | | Appraised value (£000) | 224,885 | 439,945 | 79,810 | 245,260 | 439,570 | 81,405 | | Area (sq ft, 000s) | 874 | 3,240 | 692 | 877 | 3,240 | 692 | | Range of unobservable inputs: | | | | | | | | Gross ERV (sq ft per annum) | | | | | | | | –range | £6.00 to | £3.79 to | £3.35 to | £11.00 to | £3.30 to | £3.23 to | | | £87.81 | £27.95 | £21.53 | £84.12 | £27.83 | £26.05 | | –weighted average | £38.26 | £13.37 | £11.63 | £35.33 | £13.16 | £11.66 | | Net initial yield | | | | | | | | –range | –4.85% to | 2.30% to | 6.80% to | –0.68% to | 2.28% to | 3.51% to | | | 10.73% | 7.75% | 42.40% | 11.65% | 7.75% | 30.85% | | –weighted average | 5.22% | 4.63% | 9.17% | 5.32% | 4.30% | 8.56% | | Reversionary yield | | | | | | | | –range | 5.09% to | 4.82% to | 7.00% to | 4.76% to | 4.83% to | 6.87% to | | | 15.01% | 8.05% | 12.72% | 13.55% | 8.17% | 12.18% | | –weighted average | 8.81% | 5.86% | 8.20% | 7.87% | 5.78% | 7.98% | | True equivalent yield | | | | | | | | –range | 4.85% to | 4.75% to | 7.25% to | 4.57% to | 4.75% to | 7.00% to | | | 10.83% | 8.00% | 12.25% | 10.38% | 7.98% | 12.17% | | –weighted average | 7.75% | 5.66% | 8.29% | 7.2 3% | 5.51% | 8.11% | 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 | 2024 | Impact on valuation | 2023 | Impact on valuation | | Industrial | Increase of 50 basis points | | Decrease of £35.7m | | Decrease of £36.7m | | | Decrease of 50 basis points | | Increase of £43.1m | | Increase of £44.5m | | Office | Increase of 50 basis points | | Decrease of £14.6m | | Decrease of £16.1m | | | Decrease of 50 basis points | | Increase of £16.5m | | Increase of £18.0m | | Retail and Leisure | Increase of 50 basis points | | Decrease of £4.3m | | Decrease of £4.5m | | | Decrease of 50 basis points | | Increase of £4.9m | | Increase of £5.1m | Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 149 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 2024. | | | | | | --- | --- | --- | --- | | | Owner | | | | | Occupied | Plant and | | | | Property | equipment | Total | | | £000 | £000 | £000 | | At 1 April 2022 | 4,168 | 215 | 4,383 | | Additions | – | 13 | 13 | | Depreciation | (104) | (61) | (165) | | Revaluation | (816) | – | (816) | | At 31 March 2023 | 3,248 | 167 | 3,415 | | Additions | – | 4 | 4 | | Depreciation | (80) | (63) | (143) | | Revaluation | 223 | – | 223 | | At 31 March 2024 | 3,391 | 108 | 3,499 | 15. Accounts receivable | | | | | --- | --- | --- | | | 2024 | 2023 | | | £000 | £000 | | Tenant debtors (netofprovisions for bad debts) | 5,279 | 2,855 | | Lease incentives | 19,252 | 18,726 | | Other debtors | 2,070 | 1,168 | | | 26,601 | 22,749 | The estimated fair values of receivables are the discounted amount of the estimated future cash flows expected 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 2024, tenant debtors of £193,000 (2023: £92,000) were considered impaired and provided for. 16. Cash and cash equivalents | | | | | --- | --- | --- | | | 2024 | 2023 | | | £000 | £000 | | Cash at bank and in hand | 19,747 | 20,045 | | Short-term deposits | 26 | 5 | | | 19,773 | 20,050 | Cash at bank and in hand earns interest at floating rates based on daily bank deposit rates. Short-term deposits 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 value. 17. Accounts payable and accruals | | | | | --- | --- | --- | | | 2024 | 2023 | | | £000 | £000 | | Accruals | 4,839 | 4,712 | | Deferred rental income | 7,963 | 8,654 | | VAT liability | 1,899 | 1,782 | | Trade creditors | 631 | 515 | | Other creditors | 5,290 | 3,808 | | | 20,622 | 19,471 | ![]() Picton Property Income Limited / Annual Report 2024150 Financial Statements / Continued #### Notes to the consolidated financial statements / Continued 18. Loans and borrowings | | | | | | --- | --- | --- | --- | | | | 2024 | 2023 | | | Maturity | £000 | £000 | | Current | | | | | Aviva facility | – | 1,497 | 1,433 | | Capitalised finance costs | – | (303) | (304) | | Non-current | | 1,194 | 1,129 | | Canada Life facility | 24 July 2031 | 129,045 | 129,045 | | Aviva facility | 24 July 2032 | 80,591 | 82,089 | | NatWest revolving credit facility | 26 May 2025 | 16,400 | 11,900 | | Capitalised finance costs | – | (1,096) | (1,399) | | | | 224,940 | 221,635 | | | | 226,134 | 222,764 | The following table provides a reconciliation of the movement in loans and borrowings to cash flows arising from financing activities. | | | | | --- | --- | --- | | | 2024 | 2023 | | | £000 | £000 | | Balance at start of year | 222,764 | 216,832 | | Changes from financing cash flows | | | | Proceeds from loans and borrowings | 4,500 | 12,000 | | Repayment of loans and borrowings | (1,433) | (6,368) | | Financing costs paid | – | (183) | | | 3,067 | 5,449 | | Other changes | | | | Amortisation of financing costs | 303 | 304 | | Change in accrued financing costs | – | 179 | | | 303 | 483 | | Balance as at 31 March | 226,134 | 222,764 | The Group has a £129.0 million loan facility with Canada Life which matures in July 2031. Interest 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 £348.1 million (2023: £353.2 million). 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 accordance with a scheduled amortisation profile. The Group has repaid £1.4 million in the year (2023: £1.4 million). Interest on the loan is fixed at 4.38% per annum over the life of the loan. The facility has 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 £184.3 million (2023: £193.6 million). The Group also has a £50.0 million revolving credit facility (RCF) with National Westminster Bank Plc which matures in May 2025. As at 31 March there was £16.4 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 £138.7 million (2023: £143.4 million). The fair value of the drawn loan facilities at 31 March 2024, estimated as the present value of future cash flows discounted at the market rate of interest at that date, was £202.8 million (2023: £201.7 million). The fair value of the drawn loan facilities is classified as Level 2 under the hierarchy 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 2024 was 3.9% (2023: 3.8%). Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 151 19. Contingencies and capital commitments The Group has entered into contracts for the refurbishment of eight properties with commitments outstanding at 31 March 2024 of approximately £4.2 million (2023: £2.9 million). No further obligations to construct or develop investment property or for repairs, maintenance or enhancements were in place as at 31 March 2024 (2023: £nil). 20. Share capital and other reserves | | | | | --- | --- | --- | | | 2024 | 2023 | | | £000 | £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 2023: 547,605,596) | – | – | | Share premium | 164,400 | 164,400 | The Company has 547,605,596 ordinary shares in issue of no par value (2023: 547,605,596). No new ordinary shares were issued during the year ended 31 March 2024. | | | | | --- | --- | --- | | | 2024 | 2023 | | | Number of shares | Number of shares | | Ordinary share capital | 547,605,596 | 547,605,596 | | Number of shares held in Employee Benefit Trust | (1,642,440) | (2,388,694) | | Number of ordinary shares | 545,963,156 | 545,216,902 | The fair value of awards made under the Long-term Incentive Plan is recognised in other reserves. Subject to the solvency test contained in the Companies (Guernsey) Law, 2008 being satisfied, ordinary shareholders 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. The Trustee of the Company’s Employee Benefit Trust has waived its right to receive dividends on the 1,642,440 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 | | | | | --- | --- | --- | | | 2024 | 2023 | | | £000 | £000 | | Movement in investment property valuation | 26,757 | 110,433 | | Revaluation of owner-occupied property | (223) | 382 | | Share-based provisions | 729 | 675 | | Depreciation of tangible assets | 143 | 165 | | | 27,406 | 111,655 | ![]() Picton Property Income Limited / Annual Report 2024152 Financial Statements / Continued #### Notes to the consolidated financial statements / Continued 22. Obligations under leases The Group has entered into a number of head leases in relation to its investment properties. These leases 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: | | | | | --- | --- | --- | | | 2024 | 2023 | | | £000 | £000 | | Future minimum payments due: | | | | Within one year | 185 | 185 | | In the second to fifth years inclusive | 740 | 740 | | After five years | 8,712 | 8,898 | | | 9,637 | 9,823 | | Less: finance charges allocated to future periods | (6,952) | (7,126) | | Present value of minimum lease payments | 2,685 | 2,697 | The present value of minimum lease payments is analysed as follows: | | | | | --- | --- | --- | | | 2024 | 2023 | | | £000 | £000 | | Current | | | | Within one year | 114 | 114 | | | 114 | 114 | | Non-current | | | | In the second to fifth years inclusive | 409 | 405 | | After five years | 2,162 | 2,178 | | | 2,571 | 2,583 | | | 2,685 | 2,697 | 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 rentals): | | | | | --- | --- | --- | | | 2024 | 2023 | | | £000 | £000 | | Within one year | 43,818 | 43,824 | | One to two years | 38,530 | 39,548 | | Two to three years | 33,085 | 34,806 | | Three to four years | 28,687 | 29,506 | | Four to five years | 24,411 | 25,454 | | After five years | 98,539 | 105,675 | | | 267,070 | 278,813 | These properties are measured under the fair value model as the properties are held to earn rentals. Commercial property leases typically have lease terms between five and ten years and include clauses 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 lease 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 Employee Benefit Trust at the year-end; see Note 20. Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 153 24. Financial instruments The Group’s financial instruments comprise cash and cash equivalents, accounts receivable, secured loans, obligations under head leases and accounts payable that arise from its operations. The Group does not have exposure to any derivative financial instruments. Apart from the secured loans, as disclosed in Note 18, the fair value of the financial assets and liabilities is not materially different from their carrying value in the financial statements. Categories of financial instruments | | | | | | | --- | --- | --- | --- | --- | | | | | Financial | | | | | Held at fair | assets and | | | | | value | liabilities at | | | | | through | amortised | | | | | profit or loss | cost | Total | | 31 March 2024 | Notes | £000 | £000 | £000 | | Financial assets | | | | | | Debtors | 15 | – | 7,349 | 7,349 | | Cash and cash equivalents | 16 | – | 19,773 | 19,773 | | | | – | 27,122 | 27,122 | | Financial liabilities | | | | | | Loans and borrowings | 18 | – | 226,134 | 226,134 | | Obligations under head leases | 22 | – | 2,685 | 2,685 | | Creditors and accruals | 17 | – | 10,760 | 10,760 | | | | – | 239,579 | 239,579 | | | | | | | | --- | --- | --- | --- | --- | | | | | Financial | | | | | Held at fair | assets and | | | | | value | liabilities at | | | | | through | amortised | | | | | profit or loss | cost | Total | | 31 March 2023 | Notes | £000 | £000 | £000 | | Financial assets | | | | | | Debtors | 15 | – | 4,023 | 4,023 | | Cash and cash equivalents | 16 | – | 20,050 | 20,050 | | | | – | 24,073 | 24,073 | | Financial liabilities | | | | | | Loans and borrowings | 18 | – | 222,764 | 222,764 | | Obligations under head leases | 22 | – | 2,697 | 2,697 | | Creditors and accruals | 17 | – | 9,035 | 9,035 | | | | – | 234,496 | 234,496 | 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 monitor and review all the risks 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 so as to maintain investor, creditor and market confidence and to sustain the future development of the business. 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 primarily 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 2024154 Financial Statements / Continued #### Notes to the consolidated financial statements / Continued 25. Risk management / Continued At the reporting date the gearing ratios were as follows: | | | | | --- | --- | --- | | | 2024 | 2023 | | | £000 | £000 | | Total borrowings | 227,533 | 224,467 | | Gross assets | 773,916 | 792,556 | | Gearing ratio (must not exceed 65%) | 29.4% | 28.3% | The Board of Directors monitors the return on capital as well as the level of dividends to ordinary shareholders. The Group has managed its financing 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 greater flexibility in managing the level of borrowings. The Group’s net debt to equity ratio at the reporting date was as follows: | | | | | | --- | --- | --- | --- | | | 2024 | 2023 | | | | £000 | £000 | | | Total liabilities | 249,441 | 244,932 | | | Less: cash and cash equivalents | (19,773) | (20,050) | | | Net debt | 229,668 | 224,882 | | | Total equity | 524,475 | 5 | 47,624 | | Net debt to equity ratio at end of year | 0.44 | | 0.41 | Credit risk The following tables detail the balances held at the reporting date that may be affected by credit risk: | | | | | | | --- | --- | --- | --- | --- | | | | | Financial | | | | | Held at fair | assets and | | | | | value | liabilities at | | | | | through | amortised | | | | | profit or loss | cost | Total | | 31 March 2024 | Notes | £000 | £000 | £000 | | Financial assets | | | | | | Tenant debtors | 15 | – | 5,279 | 5,279 | | Cash and cash equivalents | 16 | – | 19,773 | 19,773 | | | | – | 25,052 | 25,052 | | | | | | | | --- | --- | --- | --- | --- | | | | | Financial | | | | | Held at fair | assets and | | | | | value | liabilities at | | | | | through | amortised | | | | | profit or loss | cost | Total | | 31 March 2023 | Notes | £000 | £000 | £000 | | Financial assets | | | | | | Tenant debtors | 15 | – | 2,855 | 2,855 | | Cash and cash equivalents | 16 | – | 20,050 | 20,050 | | | | – | 22,905 | 22,905 | Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. Tenant debtors consist of a large number of occupiers, spread across diverse industries and geographical areas. Ongoing credit evaluations are performed on the financial condition of tenant debtors and, where appropriate, credit guarantees or rent deposits are acquired. As at 31 March 2024, tenant rent deposits held by the Group’s managing agents in segregated bank accounts totalled £2.5 million (2023: £2.6 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 performance and provide the Group with intelligence on the continuing financial viability of occupiers. The Group does not have any significant concentration risk whether in terms of credit risk exposure to any 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. Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 155 25. Risk management / Continued The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents 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), Santander plc (Santander) 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 limited. The Group manages its risk by monitoring the credit quality of its bankers on an ongoing basis. NatWest, Nationwide, Santander 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 reduce overall exposure to credit risk. At 31 March 2024 and at 31 March 2023, 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 forecasts, loan maturity profiles and actual cash flows and matching the maturity profiles of financial assets and liabilities for a period of at least 12 months. The table below has been drawn up based on the undiscounted contractual maturities of the financial assets/(liabilities), including interest that will accrue to maturity. | | | | | | | --- | --- | --- | --- | --- | | | Less than | 1 to | More than | | | | 1 year | 5 years | 5 years | Total | | 31 March 2024 | £000 | £000 | £000 | £000 | | Cash and cash equivalents | 20,366 | – | – | 20,366 | | Debtors | 7,349 | – | – | 7,349 | | Obligations under head leases | (185) | (740) | (8,712) | (9,637) | | Fixed interest rate loans | (9,262) | (37,049) | (224,367) | (270,678) | | Floating interest rate loans | (1,117) | (16,571) | – | (17,688) | | Creditors and accruals | (10,760) | – | – | (10,760) | | | 6,391 | (54,360) | (233,079) | (281,048) | | | | | | | | --- | --- | --- | --- | --- | | | Less than | 1 to | More than | | | | 1 year | 5 years | 5 years | Total | | 31 March 2023 | £000 | £000 | £000 | £000 | | Cash and cash equivalents | 20,652 | – | – | 20,652 | | Debtors | 4,023 | – | – | 4,023 | | Obligations under head leases | (185) | (740) | (8,898) | (9,823) | | Fixed interest rate loans | (9,262) | (37,049) | (233,629) | (279,940) | | Floating interest rate loans | (690) | (12,696) | – | (13,386) | | Creditors and accruals | (9,035) | – | – | (9,035) | | | 5,503 | (50,485) | (242,527) | (287,509) | The Group expects to meet its financial liabilities through the various available liquidity sources, including a secure rental income profile, asset sales, undrawn committed borrowing facilities and, in the longer-term, debt refinancing. ![]() Picton Property Income Limited / Annual Report 2024156 Financial Statements / Continued #### Notes to the consolidated financial statements / Continued 25. Risk management / Continued Market risk The Group’s activities are primarily within the real estate market, exposing it to very specific industry risks. The yields available from investments in real estate depend primarily on the amount of revenue earned and capital appreciation generated by the relevant properties, as well as expenses incurred. If properties do not generate 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 Group’s revenue would be adversely affected if a significant number of occupiers were unable to pay rent or its properties could not be rented on favourable terms. Certain significant expenditure associated with investment in real estate (such as external financing costs and maintenance costs) is generally not reduced when circumstances cause a reduction in revenue from properties. By diversifying in regions, sectors, risk categories and occupiers, senior management expects to mitigate the risk profile of the portfolio effectively. The Board continues to oversee the profile of the portfolio to ensure these 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 £37.2 million (2023: £38.3 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 interest rates over the terms of the loans. The amount drawn under the revolving credit facility makes up a small proportion of the overall debt; the Group therefore has limited exposure to interest rate risk on its borrowings and no sensitivity is presented. The Group manages its interest rate risk by entering into long-term fixed rate debt facilities. Interest rate risk The following table sets out the carrying amount, by maturity, of the Group’s financial assets/(liabilities). | | | | | | | --- | --- | --- | --- | --- | | | Less than | 1 to | More than | | | | 1 year | 5 years | 5 years | Total | | 31 March 2024 | £000 | £000 | £000 | £000 | | Floating | | | | | | Cash and cash equivalents | 19,773 | – | – | 19,773 | | Secured loan facilities | – | (16,400) | – | (16,400) | | Fixed | | | | | | Secured loan facilities | (1,497) | (6,686) | (202,950) | (211,133) | | Obligations under leases | (114) | (409) | (2,162) | (2,685) | | | 18,162 | (23,495) | (205,112) | (210,445) | | | | | | | | --- | --- | --- | --- | --- | | | Less than | 1 to | More than | | | | 1 year | 5 years | 5 years | Total | | 31 March 2023 | £000 | £000 | £000 | £000 | | Floating | | | | | | Cash and cash equivalents | 20,050 | – | – | 20,050 | | Secured loan facilities | – | (11,900) | – | (11,900) | | Fixed | | | | | | Secured loan facilities | (1,433) | (6,401) | (204,733) | (212,567) | | Obligations under leases | (114) | (405) | (2,178) | (2,697) | | | 18,503 | (18,706) | (206,911) | (207,114) | Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 157 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 3.6% 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 £287,000 (2023: £275,000). As at 31 March 2024, the Group owed £nil to the Non-Executive Directors (2023: £nil). The remuneration of the Executive Directors is set out in Note 7 and in the table on page 120 in the Annual Remuneration Report. Picton Property Income Limited has no controlling parties. 27. Events after the Balance Sheet date The sale of Angel Gate, London EC1 completed on 16 April 2024 for £29,600,000. The £16,400,000 drawn under the revolving credit facility with National Westminster Bank Plc was repaid in full on 18 April 2024. A dividend of £5,050,000 (0.925 pence per share) was approved by the Board on 30 April 2024 and will be paid on 31 May 2024. ![]() Picton Property Income Limited / Annual Report 2024158 Additional Information 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 Definition for EPRA measure 2024 2023 EPRAearnings Earningsfromcoreoperationalactivities. £21.7m £21.3m EPRAearningspershare EPRAearningsperweightednumberofordinaryshares. 4.0p 3.9p EPRAnetreinstatementvalue(NRV) Assumesassetsareneversoldandaimstorepresentthevaluerequiredto rebuildtheentity. 105p 110p EPRAnettangibleassets(NTA) Assumesentitiesbuyandsellassets,therebycrystallisingcertainlevelsof deferredtaxliability. 96p 100p EPRAnetdisposalvalue(NDV) Representstheshareholders’valueunderadisposalscenario. 101p 105p 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. 5.4% 5.0% 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). 5.9% 5.5% EPRAvacancyrate EstimatedMarketRentalValue(ERV)ofvacantspacedividedbyERVofthe wholeportfolio. 9.2% 9.5% EPRAcostratio Administrative&operatingcosts(includingcostsofdirectvacancy)dividedby grossrentalincome. 32.4% 29.9% Administrative&operatingcosts(excludingcostsofdirectvacancy)dividedby grossrentalincome. 23.0% 21.3% EPRALTV Debtdividedbymarketvalueoftheproperty. 28.2% 27.0% 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 operationalactivities. 2024 £000 2023 £000 2022 £000 (Loss)/profitfortheyearaftertaxation (4,789) (89,530) 146,986 Exclude: Investmentpropertyvaluationmovement 26,757 110,433 (129,801) Gainsondisposalofinvestmentproperties – – (42) Revaluationofowner-occupiedproperty (223) 382 – Debtprepaymentfees – – 4,045 EPRA earnings 21,745 21,285 21,188 Weightedaveragenumberofsharesinissue(000s) 545,437 545,378 545,904 EPRA earnings per share 4.0p 3.9p 3.9p EPRA NRV per share TheEPRAnetreinstatementvaluemeasurehighlightsthevalueofnetassetsonalong-termbasis.Assetsandliabilities thatarenotexpectedtocrystalliseinnormalcircumstances,suchasthefairvalueoffinancialderivativesanddeferred taxesonpropertyvaluationsurpluses,arethereforeexcluded.Sincetheaimofthemetricistoalsoreflectwhatwould beneededtorecreatetheCompanythroughtheinvestmentmarketbasedonitscurrentcapitalandfinancingstructure, relatedcostssuchasrealestatetransfertaxesshouldbeincluded. 2024 £000 2023 £000 2022 £000 BalanceSheetnetassets 524,475 547,624 657,130 Purchasers’costs 50,287 52,759 57,449 Fairvalueofdebt – – – Deferredtax – – – EPRA NRV 574,762 600,383 714,579 Sharesinissue(000s) 545,963 545,217 545,631 EPRA NRV per share 105p 110p 131p #### EPRA BPR and supplementary disclosures (unaudited) fortheyearended31March2024 Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 159 EPRA NTA per share TheEPRAnettangibleassetscalculationassumesentitiesbuyandsellassets,therebycrystallisingcertainlevelsof deferredtaxliability.EPRANTAisregardedasthemostrelevantmetricforthebusinessasthisfocusesonreflecting acompany’stangibleassets. 2024 £000 2023 £000 2022 £000 BalanceSheetnetassets 524,475 547,624 657,130 Fairvalueoffinancialinstruments – – – Deferredtax – – – EPRA NTA 524,475 547,624 657,130 Sharesinissue(000s) 545,963 545,217 545,631 EPRA NTA per share 96p 100p 120p 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. 2024 £000 2023 £000 2022 £000 BalanceSheetnetassets 524,475 547,624 657,130 Fairvalueofdebt 24,714 22,793 (6,766) EPRA NDV 549,189 570,417 650,364 Sharesinissue(000s) 545,963 545,217 545,631 EPRA NDV per share 101p 105p 119p 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. 2024 £000 2023 £000 2022 £000 Investmentpropertyvaluation 744,640 766,235 849,325 Allowanceforestimatedpurchasers’costs 50,284 52,759 57,449 Gross up property portfolio valuation 794,924 818,994 906,774 Annualisedcashpassingrentalincome 44,745 43,336 38,676 Property outgoings (1,669) (2,125) (1,721) Annualised net rents 43,076 41,211 36,955 EPRA net initial yield 5.4% 5.0% 4.1% 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). 2024 £000 2023 £000 2022 £000 EPRANIYannualisednetrents 43,076 41,211 36,955 Annualisedcashrentthatwillapplyatexpiryofleaseincentives 3,947 4,057 6,415 Topped-up annualised net rents 47,023 45,268 43,370 EPRA ‘topped-up’ NIY 5.9% 5.5% 4.8% ![]() Picton Property Income Limited / Annual Report 2024160 Additional Information / Continued EPRA vacancy rate TheEPRAvacancyrateistheestimatedrentalvalue(ERV)ofvacantspacedividedbytheERVofthewholeproperty, expressedasapercentage.TherearenosignificantdistortingfactorsinfluencingtheEPRAvacancyrate. 2024 £000 2023 £000 2022 £000 Annualisedpotentialrentalvalueofvacantpremises 5,276 5,311 3,594 Annualisedpotentialrentalvalueforthecompletepropertyportfolio 57,578 55,774 49,776 EPRA vacancy rate 9.2% 9.5% 7.2% EPRA cost ratio TheEPRAcostratioreflectstheoverheadsandoperatingcostsasapercentageofthegrossrentalincome. 2024 £000 2023 £000 2022 £000 Propertyoperatingcosts 3,075 3,491 2,477 Propertyvoidcosts 4,122 3,647 2,409 Administrativeexpenses 7,219 5,955 5,755 Less: Groundrentcosts (257) (376) (283) EPRA costs (including direct vacancy costs) 14,159 12,717 10,358 Propertyvoidcosts (4,122) (3,647) (2,409) EPRA costs (excluding direct vacancy costs) 10,037 9,070 7,949 Grossrentalincome 43,910 42,964 40,133 Lessgroundrentcosts (257) (376) (283) Gross rental income 43,653 42,588 39,850 EPRA cost ratio (including direct vacancy costs) 32.4% 29.9% 26.0% EPRA cost ratio (excluding direct vacancy costs) 23.0% 21.3% 19.9% 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 Thetablebelowsetsoutthecapitalexpenditureincurredoverthefinancialyear,inaccordancewithEPRABest PracticesRecommendations. 2024 2023 Group £000 Joint ventures £000 Total Group £000 Group £000 Joint ventures £000 Total Group £000 Acquisitions – – – 20,613 – 20,613 Development – – – – – – Investmentproperties Incrementallettablespace – – – – – – Noincrementallettablespace 4,458 – 4,458 6,135 – 6,135 Tenantincentives – – – – – – Othermaterialnon-allocatedtypesofexpenditure – – – – – – Total capital expenditure 4,458 – 4,458 26,748 – 26,748 Conversionfromaccrualtocashbasis – – – – – – Total capital expenditure on cash basis 4,458 – 4,458 26,748 – 26,748 #### EPRA BPR and supplementary disclosures (unaudited) / Continued fortheyearended31March2024 Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 161 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 2024 £000 Rental income from like-for-like portfolio 2023 £000 Like-for-like rental growth £000 Like-for-like rental growth % Industrial 23,047 20,706 2,341 11.3 Office 15,910 17,098 (1,188) (6.9) Retail and Leisure 7,869 7,781 88 1.1 Total 46,826 45,585 1,241 2.7 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£744.6million(2023:£766.2million). EPR A LTV EPRAloantovalue’saimistoassessthegearingoftheshareholderequitywithinarealestatecompany. 2024 £000 2023 £000 2022 £000 Loans and borrowings 226,134 222,764 216,832 Less: Cashandcashequivalents (19,773) (20,050) (38,547) Net debt 206,361 202,714 178,285 Investmentproperties(excludingheadleaserightofuseasset) 721,997 744,261 827,790 Property,plantandequipment 3,499 3,415 4,383 Netreceivable 1 5,979 3,278 3,712 Total property value 731,475 750,954 835,885 EPRA LTV 28.2% 27.0% 21.3% 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. 2024 £000 2023 £000 2022 £000 Total borrowings 227,533 224,467 218,835 Less: Cashandcashequivalents (19,773) (20,050) (38,547) Total net borrowings 207,760 204,417 180,288 Investmentpropertyvaluation 744,640 766,235 849,325 Loan to value 27.9% 26.7% 21.2% Cost ratio Thecostratio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. 2024 £000 2023 £000 2022 £000 Administrativeexpenses 7,219 5,955 5,755 Less: Internalisationofcompanysecretarialfunction (296) – – Abortivecorporateactivity (194) – – CFOtransitioncosts (89) – – Total 6,640 5,955 5,755 Average net asset value over the year 531,921 602,822 598,022 Cost ratio 1.2% 1.0% 1.0% ![]() Picton Property Income Limited / Annual Report 2024162 Additional Information / Continued Properties valued in excess of £100 million / ParkburyIndustrialEstate,Radlett,Herts. Properties valued between £50 million and £75 million / RiverWayIndustrialEstate,RiverWay,Harlow,Essex Properties valued between £30 million and £50 million / StanfordBuilding,LongAcre,LondonWC2. Properties valued between £20 million and £30 million / Datapoint,CodyRoad,LondonE16 / ExpressBusinessPark,ShiptonWay,Rushden,Northants. / AngelGate,CityRoad,LondonEC1 / LyonBusinessPark,Barking,Essex / SundonBusinessPark,DencoraWay,Luton,Beds. / TowerWharf,CheeseLane,Bristol / 50FarringdonRoad,LondonEC1 Properties valued between £10 million and £20 million / GranthamBookServices,TrentRoad,Grantham,Lincs. / 30&50PembrokeCourt,Chatham,Kent / TheBusinessCentre,MollyMillarsLane,Wokingham,Berks. / ColchesterBusinessPark,TheCrescent,Colchester,Essex / 180WestGeorgeStreet,Glasgow / MadleazeTradingEstate,BristolRoad,Gloucester / B&Q,QueensRoad,Sheffield / 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 / Metro,SalfordQuays,Manchester / CharlotteTerrace,99–119HammersmithRoad, LondonW14 / MillPlaceTradingEstate,BristolRoad,Gloucester / EasterCourt,EuropaBoulevard,Warrington / Units1&2,KettlestringLane,York / Swiftbox,HaynesWay,Rugby,Warwickshire / 401GraftonGateEast,MiltonKeynes,Bucks. Properties valued between £5 million and £10 million / Units1&2,WesternIndustrialEstate,DownmillRoad, Bracknell,Berks. / AngoulemeRetailPark,GeorgeStreet,Bury, GreaterManchester / Longcross,NewportRoad,Cardiff / Queen’sHouse,StVincentPlace,Glasgow / RegencyWharf,BroadStreet,Birmingham / ThistleExpress,TheMall,Luton,Beds. / 109–117HighStreet,Cheltenham Properties valued under £5 million / Crown&MitreComplex,EnglishStreet,Carlisle,Cumbria / AbbeyBusinessPark,MillRoad,Newtownabbey,Belfast / ScotsCorner,HighStreet,KingsHeath,Birmingham / TridentHouse,VictoriaStreet,StAlbans,Herts. / SentinelHouse,HarvestCrescent,Fleet,Hants. / AtlasHouse,ThirdAvenue,Marlow,Bucks. / WatersideHouse,KirkstallRoad,Leeds / MagnetTradeCentre,6KingstreetLane,Reading / 53–57Broadmead,Bristol / 78–80Briggate,Leeds / 17–19Fishergate,Preston,Lancs. / 7–9WarrenStreet,Stockport / 72–78Murraygate,Dundee / 6–12ParliamentRow,Hanley,Staffs. #### Property portfolio Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 163 2024 2023 2022 2021 2020 Income statements Netpropertyincome 37.9 36.3 35.4 33.5 33.6 Administrativeexpenses (7.2) (6.0) (5.7) (5.4) (5.6) 30.7 30.3 29.7 28.1 28.0 Netfinancecosts (8.9) (9.0) (8.5) (8.0) (8.2) Income profit before tax 21.8 21.3 21.2 20.1 19.8 Tax – – – – 0.1 Income profit 21.8 21.3 21.2 20.1 19.9 Property gains and losses (26.8) (110.4) 129.8 13.7 2.6 Revaluationofowner-occupiedproperty 0.2 (0.8) 0.4 – – Debtprepaymentfee – – (4.0) – – Profit/loss after tax (4.8) (89.9) 147.4 33.8 22.5 Dividends paid 19.1 19.1 18.4 15.0 19.0 2024 2023 2022 2021 2020 Balance Sheets Investmentproperties 724.0 746.3 830.0 665.4 654.5 Borrowings (226.1) (222.8) (216.8) (166.2) (167.5) Other assets and liabilities 26.6 24.1 43.9 29.0 22.3 Net assets 524.5 547.6 657.1 528.2 509.3 Netassetvaluepershare(pence) 96 100 120 97 93 EPRAnettangibleassetpershare(pence) 96 100 120 97 93 Earningspershare(pence) (0.9) (16.5) 27.0 6.2 4.1 Dividendspershare(pence) 3.5 3.5 3.4 2.8 3.5 Dividendcover(%) 114 112 115 134 105 Shareprice(pence) 65.2 69.3 98.3 85.8 89.0 Allfiguresarein£millionunlessotherwisestated. #### Five year financial summary ![]() Picton Property Income Limited / Annual Report 2024164 Additional Information / Continued Asset IQ ACBREproductthatmonitorstheuseofbuildingsystems. Better Buildings Partnership (BBP) AcollaborationofUKcommercialpropertyownersworkingtoimprovesustainabilityofbuildingstock. BMS (Building Management System) Acomputer-basedcontrolsysteminstalledinbuildingsthatcontrolandmonitorthebuilding’s mechanicalandelectricalequipmentsuchasventilation,lighting,powersystems,firesystemsand securitysystems. BREEAM (Building Research Establishment Environmental Assessment Method) 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 CO 2 (carbon dioxide) Themostabundantgreenhousegasinourplanet’satmosphere.Itisoftenthebenchmarkgas measuredfordefiningacompany’semissions. Contracted rent Thecontractedgrossrentreceivablewhichbecomespayableafteralltheoccupierincentivesinthe lettinghaveexpired. Cost ratio Totaloperatingexpenses,excludingone-offcosts,asapercentageoftheaveragenetassetvalue overtheperiod. CRREM (Carbon Risk Real Estate Monitor) Providestherealestateindustrywithtransparent,science-baseddecarbonisationpathwaysaligned withtheParisClimateGoalsoflimitingglobaltemperatureriseto2°C,withambitiontowards1.5°C. Dividend cover EPRAearningsdividedbydividendspaid. DTR DisclosureGuidanceandTransparencyRules,issuedbytheUnitedKingdomListingAuthority. Earnings per share (EPS) Profitfortheperiodattributabletoequityshareholdersdividedbytheaveragenumberofsharesin issueduringtheperiod. EPC (Energy Performance Certificate) Acertificatewhichprovidesaratingbasedonsetcriteriatomeasuretheenergyefficiencyofa 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. ESG (Environmental, Social, Governance) 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. Estimated rental value (ERV) 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. EUI (Energy Use Intensity) Amountofenergyusedpersquarefootannually. EV (electric vehicle) Avehiclepoweredusingabattery,solarpanels,fuelcellsorelectricgenerator. Fair value 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. Fair value movement Anaccountingadjustmenttochangethebookvalueofanassetorliabilitytoitsfairvalue. FRI lease 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. GHG absolute TotalGHGemissions. GHG intensity 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. GRESB (Global Real Estate Sustainability Benchmarking) 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 Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 165 Grid decarbonisation 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. Group PictonPropertyIncomeLimitedanditssubsidiaries. IASB InternationalAccountingStandardsBoard. IFRS InternationalFinancialReportingStandards. Initial yield 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. ISO (International Organization for Standardization) 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. kg/CO 2 /m 2 Ameasureofemissionsintensity. kWh (kilowatt hour) Astandardunitformeasuringelectricityconsumption. kWh/m 2 /year 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. Lease incentives Incentivesofferedtooccupierstoenterintoalease.Typicallythiswillbeaninitialrent-freeperiod, oracashcontributiontofit-out.Underaccountingrulesthevalueoftheleaseincentivesis amortisedthroughtheIncomeStatementonastraight-linebasisuntiltheleaseexpiry. LED (light emitting diode) Anenergyefficienttypeoflightbulb. MEES (Minimum Energy Efficiency Standards) ApieceoflegislationsetbytheUKGovernment.FromApril2018alandlordisunabletorenewor grantanewtenancy(oversixmonths)ifthepropertyhasanEnergyPerformanceCertificate(EPC) ratingofForG. MSCI Anorganisationsupplyingindependentmarketindicesandportfoliobenchmarkstothe propertyindustry. MWp (megawatt peak) Aunitofmeasurementfortheoutputofpowerfromasourcesuchassolarorwindwherethe outputmayvary. NABERS Acommercialenergyratingsystemthatmeasuresandassessestheperformanceofabuilding. NAV NetassetvalueistheequityattributabletoshareholderscalculatedunderIFRS. Net zero carbon Thepointatwhichtheamountofcarbonbeingreleasedintotheatmosphereisequaltothe amountremovedfromtheatmosphere. Offsetting Theprocessofremovingcarbonfromtheatmospheretobalanceemissionsintotheatmosphere. Over-rented SpacewherethepassingrentisabovetheERV. Passing rent TheannualrentalincomecurrentlyreceivableasattheBalanceSheetdate.Excludesrentalincome wherearent-freeperiodisinoperation. PIR (passive infrared sensor) Adeviceusedtoallowautomaticlightingcontrol. PRI (Principles for Responsible Investment) Aglobalproponentofresponsibleinvestmentthatsupportsaninternationalnetworkofinvestors toincorporateESGfactorsintotheirinvestmentandownershipdecisions. Property income return TheungearedincomereturnoftheportfolioascalculatedbyMSCI. PV (photovoltaic) Photovoltaic(PV)materialsanddevicesthatconvertsunlightintoelectricalenergy. RAAC ReinforcedAutoclavedAeratedConcrete(RAAC)isaformoflightweightconcreteusedin constructioninmanybuildingsbetweenthe1950sand1990s. RCP (Representative Concentration Pathway) Fourpathwaysdevelopedfortheclimatemodellingcommunitytoassessanumberofdifferent climatescenarios. REGO (Renewable Energy Guarantees of Origin) Aschemewhichdemonstratesthatelectricityhasbeengeneratedfromrenewablesources. ![]() Picton Property Income Limited / Annual Report 2024166 Additional Information / Continued Reversionary yield Theestimatedrentalvalueasapercentageofthegrosspropertyvalue. Scope 1 emissions Directemissionsfromownedorcontrolledsources,forexamplefromgasandoil. Scope 2 emissions Scope2emissionsareindirectemissionsfromthegenerationofpurchasedenergy,forexample fromelectricity. Scope 3 emissions 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). TCFD (Task Force on Climate- related Financial Disclosures) Aframeworktohelppubliccompaniesdiscloseclimate-relatedrisks. tCO 2 e 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 2 .Itiscalculatedbymultiplyingthegreenhouse gas’semissionsbyits100-yearglobalwarmingpotential. Total property return Combinedincomeandcapitalreturnfromthepropertyportfolio. Total return ThechangeintheGroup’snetassetvalue,inaccordancewithIFRS,plusdividendspaid. Total shareholder return Measuresthechangeinsharepriceovertheyearplusdividendspaid. UKGBC (UK Green Building Council) Acharitylaunchedbytheconstructionindustrytopromotesustainabilityacrossthebuilt environmentvaluechain. Weighted average debt maturity 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. Weighted average interest rate TheGrouploaninterestperannumattheperiodend,dividedbytotalGroupdebtinissue attheperiodend. Weighted average lease term Theaverageleasetermremainingtofirstbreak,orexpiry,acrosstheportfolioweighted bycontractedrentalincome. #### Glossary / Continued Backtocontents ![]() Picton Property Income Limited / Annual Report 2024 FinancialStatements AdditionalInformationGovernance StrategicReport 167 Annualresultsannounced 23 May 2024 Annual results posted to shareholders June 2024 June2024NAVannouncement July 2024 Annual General Meeting 30 July 2024 2024half-yearresultstobeannounced November2024 December2024NAVannouncement January 2025 Dividendpaymentdates August/November/February/May #### Financial calendar ![]() Picton Property Income Limited / Annual Report 2024168 Additional Information / Continued Directors LenaWilson(Chair) Mark Batten Maria Bentley Saira Johnston RichardJones MichaelMorris Registered office 1st & 2nd Floors Elizabeth House Les Ruettes Brayes St Peter Port Guernsey GY1 1EW RegisteredNumber:43673 UK office StanfordBuilding 27A Floral Street London WC2E9EZ T: 020 7628 4800 E:enquiries@picton.co.uk Company Secretary KathyThompson StanfordBuilding 27A Floral Street London WC2E9EZ T: 020 7011 9988 E:kathy.thompson@picton.co.uk Registrar 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 Corporate brokers JPMorganSecuritiesLimited 25 Bank Street London E145JP StifelNicolausEuropeLimited 150 Cheapside London EC2V6ET Independent auditor KPMGChannelIslandsLimited Glategny Court GlategnyEsplanade St Peter Port Guernsey GY11WR Media TavistockCommunications 18StSwithin’sLane London EC4N8AD T: 020 7920 3150 E:james.verstringhe@tavistock.co.uk Solicitors As to English law Norton Rose Fulbright LLP 3 More London Riverside London SE12AQ As to English property law DLAPiperUKLLP Suite 3 ThePlaza Old Hall Street Liverpool L3 9QJ As to Guernsey law Carey Olsen POBox98 Carey House LesBanques St Peter Port Guernsey GY1 4BZ Property valuer CBRELimited Henrietta House HenriettaPlace London W1G0NB Tax adviser Deloitte LLP Hill House 1 Little New Street London EC4A3TR Shareholder enquiries Allenquiriesrelatingtoholdingsin PictonPropertyIncomeLimited, includingnotificationofchangeof address,queriesregardingdividend paymentsorthelossofacertificate, should be addressed to the Company’sregistrars. Website TheCompanyhasacorporatewebsite whichcontainsmoredetailed informationabouttheGroup. www.picton.co.uk #### Shareholder information Backtocontents ![]() CBP00019082504183028 Printed by a CarbonNeutral ® CompanycertifiedtoISO14001 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vegetableoilbased,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 StanfordBuilding 27A Floral Street London WC2E9EZ 020 7628 4800 www.picton.co.uk