Picton Property Income Limited Annual Report 2022

Principal Risks continued

Operational

9

People

Risk trend

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 experience may result in poor

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 The team has remained stable throughout the year. The results of the employee engagement survey were again positive. Flexible working arrangements have been introduced following employee feedback.

Strategic Pillar

Connected KPIs F H L

3

1

2

decision making and underperformance.

Financial

10

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

Risk trend

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 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. by the independent valuer. The Board reviews financial

Commentary The Group has increased its borrowings during the year but still has good headroom under its lending covenants. The revolving credit facility has been extended for a further year.

Connected KPIs C D E

Strategic Pillar

3

1

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

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

Commentary Although borrowings have increased the Group’s loan to value ratio has remained low.

Connected KPIs A G C H E

Strategic Pillar

3

1

2

Picton Property Income Limited Annual Report 2022

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