Picton Property Income Limited Annual Report 2023

Directors’ Report/Continued

Under all of these scenarios the Group has sufficient cash resources to continue its operations, and remain within its loan covenants, for a period of at least 12 months from the date of these financial statements. Based on their assessment and knowledge of the portfolio and market, the Directors have therefore continued to adopt the going concern basis in preparing the financial statements. Viability assessment and statement The UK Corporate Governance Code requires the Board to make a ‘viability statement’ which considers the Company’s current position and principal and emerging risks and uncertainties combined with an assessment of the future prospects for the Company, in order that the Board can state that the Company will be able to continue its operations over the period of their assessment. The Board conducted this review over a five-year timescale, considered to be the most appropriate for long-term investment in commercial property. The assessment has been undertaken taking into account the principal and emerging risks and uncertainties faced by the Group which could impact its investment strategy, future performance, loan covenants and liquidity.

The major risks identified were those relating to high inflation, rising interest rates, other recessionary pressures and the lead up to a general election over the period of the assessment. In the ordinary course of business, the Board reviews a detailed financial model on a quarterly basis, including forecast market returns. This model allows for different assumptions regarding lease expiries, breaks and incentives. For the purposes of the viability assessment of the Group, the model covers a five-year period and is stress tested under various scenarios. The Board considered a number of scenarios and their impact on the Group’s property portfolio and financial position. These scenarios included different levels of rent collection, occupier defaults, void periods and incentives within the portfolio, and the consequential impact on property costs and loan covenants. All lease events and assumptions were reviewed over the period under the different scenarios, including their impact on revenue and cash flow. Forecast movements in capital values were included in these scenarios, including their potential impact on the Group’s loan covenants. The Group’s long- term loan facilities are contracted to be in place throughout the assessment period, while the Board has assumed that the Group will continue to have access to its short- term facilities which expire in 2025. The Board considered the impact of these scenarios on its ability to continue to pay dividends at different rates over the assessment period.

These matters were assessed over the period to 31 March 2028 and will continue to be assessed over rolling five-year periods. The Directors consider that the stress testing performed was sufficiently robust and that even under extreme conditions the Company remains viable. Based on their assessment, and in the context of the Group’s business model and strategy, the Directors expect that the Group will be able to continue in operation and meet its liabilities as they fall due over the five-year period to 31 March 2028. Substantial shareholdings Based on notifications received and on information provided by the Company’s brokers, the Company understands the following shareholders held a beneficial interest of 3% or more of the Company’s issued share capital as at 5 May 2023. % of issued share capital Investec Wealth & Investment Limited 16.2 Thames River Capital LLP 10.8 BlackRock Inc. 5.6 The Vanguard Group Inc. 4.6 Evelyn Partners 3.9 RBC Brewin Dolphin Limited 3.3 Alder Investment Management Limited UK 3.0


Picton Property Income Limited Annual Report 2023

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