Strategic Report
Financial Statements
Additional Information
Governance
This financial year has seen a significant rebound in the economy, with UK GDP returning above pre-pandemic levels by the end of March 2022. However the conflict in Ukraine has tempered the outlook, with rising inflation expected to restrain growth in the short-term. The total profit for the year was £147.4 million, up from £33.8 million in 2021. Both income and capital elements were ahead of the previous year’s position. On the capital side, we saw very strong growth in our industrial and retail warehouse assets, with the overall valuation movement of £130 million for the year. The like-for-like gain in the valuation of the property portfolio was 21%. Our EPRA earnings, comprising the operating results and net interest expense, increased to £21.2 million for the year, an increase of 5.5%. As discussed below, property revenue rose by over £3 million compared to 2021, or over 7%. With the new acquisitions made in the year, plus the one recently announced post year-end, we expect revenue to move forward again next year. We have raised the level of dividend twice in the year, and this is now back to the pre-pandemic level. The total return for the year was 28%, significantly improving upon the 6.6% recorded last year. Net asset value The net assets of the Group increased to £657.1 million, or 120 pence per share, which was a rise of 24.4% over the year. The chart below shows the components of this increase. £m March 2021 net asset value 528.2 Income profit 21.2 Valuation movement 130.2 Debt prepayment fees (4.0) Share-based awards 0.6 Purchase of shares (0.7) Dividends paid (18.4) March 2022 net asset value 657.1
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). 2022 £m 2021 £m 2020 £m Net asset value – IFRS and EPRA NTA 657.1 528.2 509.3 Fair value of debt (6.7) (21.0) (29.6) EPRA NDV asset value 650.4 507.2 479.7 Net asset value per share (pence) 120 97 93
EPRA net tangible asset value per share (pence) EPRA net disposal value per share (pence)
120
97
93
119
93
88
Income statement As noted above our results for the year are very strong. Valuation gains are at a record level, but there has also been growth in EPRA earnings, with an increase in property income. Total revenue from the property portfolio for the year was £46.5 million, up from £43.3 million last year. Rental income has increased by 9.8% compared to 2021, as a result of the new acquisitions made during the year, as well as the increased occupancy and reduced bad debt provisions. On a like-for-like basis, rental income increased by 9.5% compared to the previous year, on an EPRA basis. Rent collection has largely returned to pre-pandemic levels. Property operating and void costs are slightly higher than the previous year, at £4.9 million compared to £4.6 million. Although occupancy has increased, following a number of lettings towards the end of the year, void holding costs are higher this year, impacted by general inflationary pressure. Administrative expenses for the year were £5.8 million, compared to £5.4 million in 2021. Staff costs are some 6% higher compared to the previous year, reflecting higher variable remuneration provisions as well as the new fee and salary rates agreed for 2021/22. There have been other additional costs this year relating to developing the net zero carbon pathway and other sustainability related issues. Interest costs for this year are £8.5 million. This includes the additional amortisation this year of costs associated with the original Canada Life facility from 2012, which, as set out below, has been extended this year. We have also made drawdowns under our revolving credit facility, although these were largely repaid within the year. As a result of resetting the interest rate on our Canada Life facility our cost of debt will be lower going forward.
We have raised the level of dividend twice in the year. Andrew Dewhirst Finance Director
Picton Property Income Limited Annual Report 2022
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