Picton Property Income Limited Annual Report 2021

Operational

9

People

Risk trend

Strategic Pillar

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 experiencemay result in poor decisionmaking and underperformance.

Mitigation The Board has a remuneration policy in place which incentivises performance and is aligned with shareholders’ interests. There is a Non-Executive Director responsible for employee engagement who provides regular feedback to the Board.

Commentary No employees were furloughed during the pandemic. The team has continued to work effectively from home, although a gradual return to the office is envisaged. Feedback from the employee engagement survey was positive.

Connected KPIs F H L

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3

2

Financial

10

Finance strategy

Risk trend

Strategic Pillar

Risk The Group has a number of loan facilities to finance its activities. Failure to comply with covenants or tomanage refinancing events could lead to a funding shortfall for operational activities.

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 against financial covenants. The Audit and Risk Committee considers the going concern status of the Group biannually.

Commentary The Group has significant headroom against its loan covenants. No additional borrowing has been incurred during the pandemic, and the Group’s revolving credit facility remains undrawn.

Connected KPIs C D E

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3

2

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.

Risk trend

Strategic Pillar

Mitigation The Board regularly reviews its gearing strategy and debt maturity profile, at least annually, in light of changing market conditions.

Commentary The Group’s gearing level has remained relatively low during the pandemic, and property values have been stable, reducing this risk.

Connected KPIs

A C E G H

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3

2

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