Governance
Financial Statements
Additional Information
Strategic Report
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.
Awarded (% of maximum)
Awarded (% of salary) 0% (estimate)
Performance condition
Basis of calculation
Range
Actual (0.1)%
Total return versus comparator group Bonus weighting: 30% Total property return versus MSCI Index Bonus weighting: 30%
Less than median – 0% Equal to median – 50% Equal to upper quartile – 100% Less than median – 0% Equal to median – 50% Equal to upper quartile – 100%
Not yet available
0% (estimate)
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:
Awarded (% of maximum)
Awarded (% of salary)
Performance condition Improve net income Bonus weighting: 8%
Assessment
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%. 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. 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. 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%. 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. 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. 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. 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.
60%
7.0%
Identify and evaluate growth opportunities Bonus weighting: 8%
50%
5.8%
Make progress against net zero carbon pathway Bonus weighting: 6%
60%
5.2%
Reduce portfolio void Bonus weighting: 4%
25%
1.5%
Make asset disposals Bonus weighting: 4%
95%
5.5%
Positive stakeholder engagement Bonus weighting: 4%
70%
4.1%
Successful CFO succession planning and transition Bonus weighting: 4% Successful internalisation of company secretarial function Bonus weighting: 2%
100%
5.8%
100%
2.9%
Picton Property Income Limited / Annual Report 2024
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