Governance
Financial Statements
Additional Information
Strategic Report
Our industrial weighting has supported a net property income increase of £1.6 million to £37.9 million Saira Johnston Chief Financial Officer
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.
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
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.
£m
March 2023 net asset value
547.6
EPRA earnings
21.7
Valuation movement Share-based awards
(26.5)
0.8
Dividends paid
(19.1)
March 2024 net asset value
524.5
Picton Property Income Limited / Annual Report 2024
39
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