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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 £000
2023 £000
227,533 773,916
Total borrowings
224,467 792,556
Gross assets
Gearing ratio (must not exceed 65%) 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 29.4%
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 £000
2023 £000
249,441 (19,773) 229,668 524,475
Total liabilities
244,932 (20,050) 224,882 547,624
Less: cash and cash equivalents
Net debt
Total equity
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 assets and liabilities at amortised cost £000
Held at fair value through profit or loss £000
Total £000
31 March 2024
Notes
Financial assets Tenant debtors
– – –
5,279 5,279 19,773 19,773 25,052 25,052
15 16
Cash and cash equivalents
Financial assets and liabilities at amortised cost £000
Held at fair value through profit or loss £000
Total £000
31 March 2023
Notes
Financial assets Tenant debtors
15 16
– – –
2,855 2,855 20,050 20,050
Cash and cash equivalents
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.
Picton Property Income Limited / Annual Report 2024 154
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