Picton Property Income Limited Annual Report 2022

Strategic Report

Financial Statements

Additional Information

Governance

Group performance and alignment We have set out on pages 28 to 31, the key performance indicators (KPIs) that we currently use to monitor the success of the business. In order to appropriately align executive remuneration with business performance we incorporate KPIs within our incentive schemes. In both 2021/22 and 2022/23 the KPIs that we are using to determine variable remuneration are set out below.

In order to appropriately align executive remuneration with business performance we incorporate KPIs within our incentive schemes. Maria Bentley Chair of the Remuneration Committee

Long-term Incentive Plan

Measure

Comparator

Annual bonus (30% weighting) (30% weighting)

Total return Relative to

comparator group Relative to MSCI UK Quarterly Property index Relative to comparator group

Total property return

(33% weighting)

Total shareholder return

(33% weighting)

Recognising these concerns, the Committee has carefully considered the Company’s and the Executive Directors’ performance in the last year to ensure that the approved Policy terms for 2022/23 remain appropriate. The key performance highlights noted by the Committee included: ‒ The Group’s profit for the year was £147 million, giving a total return of 28%, significantly higher than the previous year; ‒ The Group’s net asset value increased by 24% to £657 million, or 120 pence per share; ‒ The total property return was ahead of the MSCI UK Quarterly Property Index for the year, and our long-term record of outperformance has been maintained over one, three, five and ten years, and since inception; ‒ EPRA earnings rose by 5% compared to 2020/21, reflecting an increase in occupancy, reduced provisions against debtors and additional income from acquisitions; ‒ Dividends were increased twice during the year, returning to the pre-pandemic level; ‒ One of the loan facilities was re-financed, increasing the term and re-setting the interest to a lower rate; ‒ The net zero carbon pathway has been published; ‒ An assessment of the Group’s climate-related risks has been undertaken; ‒ The proportion of the portfolio’s EPC ratings (A to C) has increased to 71% from 64% last year; ‒ The number of green leases in place increased by 42 over the year, and ‒ Scope 1 and 2 greenhouse gas emissions fell by -27% compared to the 2019 baseline. The Committee is satisfied that it is appropriate for the second stage of the transition to proceed. Accordingly, as outlined in last year’s Remuneration Report, the base salaries of the Chief Executive and Finance Director will be increased by 15% to £330,625 and £224,825 respectively from 1 April 2022 and their annual bonus opportunity for 2022/23 will be reduced to 155% of salary (2021/22: 165%). The Committee will undertake a similar review next year ahead of the proposed final stage of the transitional plan.

EPRA EPS (33% weighting) The remaining 40% of the annual bonus is determined by corporate objectives. Annual bonus awards for 2021/22 Absolute target range The Executive Directors were set a number of challenging targets for this year, comprising a combination of financial measures and corporate and personal objectives. The two financial measures were total return and total property return. The actual outcomes are set out in the Annual Remuneration Report, but the overall result was that the Directors earned an estimated 46% of the maximum award available under these financial measures. The corporate objectives were set to ensure that specific key strategic targets were reached. These included targets relating to ESG matters, such as the publication of a net zero carbon pathway. The Committee considered that the Executive Directors had largely met the corporate objectives, evidenced by the record profit, growth in earnings and environmental progress. More detail is provided later in this Remuneration Report, but overall the Committee considered that outcomes of 90% of the maximum award for the two Executive Directors were merited against the corporate objectives. In aggregate, annual bonus awards for the two Executive Directors are 64% of the maximum award (2020/21 – 76% of maximum). The Committee considered the formulaic bonus outcome in the context of the Group’s overall performance for the year. The key highlights of performance for the year are set out earlier in this Statement. The Committee concluded that it was satisfied the formulaic bonus outcome was a fair reflection of overall Group performance during the past financial year.

 Picton Property Income Limited  Annual Report 2022

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