Picton Property Income Limited Annual Report 2022

Financial Review continued

Capital gains on the portfolio were £130.2 million for the year, including the gains on owner-occupied property. There were strong valuation gains across the portfolio, with the industrial and retail warehouse assets performing particularly well. One disposal of a retail asset was made during the year, realising a small gain compared to the March 2021 valuation. The total profit for the year was £147.4 million, up by over 300% compared to 2021. Dividends As the restrictions caused by the pandemic have eased and our rent collection rate has risen, we have been able to increase the quarterly dividend twice over the course of the year, and have now returned to the pre-pandemic rate of 0.875 pence per share. The full dividend for the year was 3.375 pence per share, with total dividends paid out of £18.4 million, compared to £15.0 million last year, an increase of 23%. Dividend cover for the full year was 115%. Investment properties The appraised value of our investment property portfolio was £849.3 million at 31 March 2022, up from £682.4 million a year previously. We have made two acquisitions this year, for a total consideration of £25.0 million, as well as a disposal of one small retail property, for net proceeds of £0.7 million. The two industrial acquisitions are discussed in more detail in the Portfolio Review section. This year we have invested £9.6 million of capital expenditure in the portfolio. There have been a number of key refurbishment projects undertaken this year, principally at Regency Wharf, Birmingham, Longcross, Cardiff and at 50 Farringdon Road, London. There were significant portfolio valuation gains totalling £130.2 million this year, principally in the industrial and retail warehouse sectors. As last year, the value of the floor that we occupy at Stanford Building, London, has been excluded from the value of Investment Properties and included separately with Property, Plant and Equipment. Any gains arising from the revaluation of this element of the property are shown within Other Comprehensive Income. At 31 March 2022 the portfolio comprised 47 assets, with an average lot size of £18.1 million. A further analysis of capital expenditure, in accordance with EPRA Best Practices Recommendations, is set out in the Supplementary Disclosures section. Borrowings Total borrowings are now £218.8 million at 31 March 2022, with the loan to value ratio at 21.2%. The weighted average interest rate on our borrowings has reduced to 3.7%, while the average loan duration is now 9.6 years. In March, we extended and amended our Canada Life facility. Previously the outstanding £80 million loan had a maturity date of July 2027, which we have moved out to July 2031. We have also borrowed an additional £49 million under this facility, increasing the principal to £129 million, and at the same time reducing the interest rate payable on the full amount to 3.25%. As a result of resetting the rate on the original principal we have incurred one-off prepayment fees of £4.0 million.

Our senior loan facility with Aviva reduced by the regular amortisation, £1.3 million in the year. The Group remained fully compliant with its loan covenants throughout the year. During the year we utilised our revolving credit facility to acquire the two industrial assets mentioned above. Much of this has been repaid using the proceeds from the new Canada Life borrowings. At 31 March 2022 we had £4.9 million drawn under the revolving credit facility, which had been used to fund capital expenditure projects. The revolving credit facility, originally for an initial term of three years, was extended by a further year in 2021/22, and a further one-year extension has now been granted, taking the maturity to 2025. The fair value of our borrowings at 31 March 2022 was £225.6 million, higher than the book amount. Lending margins have fallen slightly compared to the previous year, but gilt rates have risen more significantly. A summary of our borrowings is set out below: 2022 2021 2020 Fixed rate loans (£m) 213.9 166.2 167.5 Drawn revolving facility (£m) 4.9 – – Total borrowings (£m) 218.8 166.2 167.5 Borrowings net of cash (£m) 180.3 142.8 143.9 Undrawn facilities (£m) 45.1 50.0 49.0 Loan to value ratio (%) 21.2 20.9 21.7 Weighted average interest rate (%) 3.7 4.2 4.2 Average duration (years) 9.6 8.9 9.9 Cash flow and liquidity Our overall cash position increased by £15.1 million over the year. This was partly due to the additional borrowings that were received in March 2022, but additionally the cash flow from operating activities was higher this year at £20.0 million. Cash outflows from investing activities was £33.8 million for the year, being the consideration paid for the two new assets, plus £9.6 million of capital expenditure. Dividends paid increased to £18.4 million. Our cash balance at the year-end stood at £38.5 million, compared to the previous year’s balance of £23.4 million. Share capital No new ordinary shares were issued during the year. The Company’s Employee Benefit Trust acquired a further 750,000 shares, at a cost of £0.7 million, or 97 pence per share, during the year. This was to satisfy the future vesting of awards made under the Long-term Incentive Plan and Deferred Bonus Plan, and now holds a total of 1,974,253 shares. As the Trust is consolidated into the Group’s results these shares are effectively held in treasury and therefore have been excluded from the net asset value and earnings per share calculations, from the date of purchase. Andrew Dewhirst Finance Director 25 May 2022

Picton Property Income Limited Annual Report 2022

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