Picton Property Income Limited Annual Report 2023

Financial Statements/Continued

Independent Auditor’s Report to the Members of Picton Property Income Limited Our opinion is unmodified We have audited the consolidated

‒ are prepared in accordance with International Financial Reporting Standards; and ‒ comply with the Companies (Guernsey) Law, 2008. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (‘ISAs (UK)’) and applicable law. Our responsibilities are described below. We have fulfilled our ethical responsibilities under, and are independent of the Company and Group in accordance with, UK ethical requirements including the FRC Ethical Standard as required by the Crown Dependencies’ Audit Rules and Guidance. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion.

Key audit matters: our assessment of the risks of material misstatement Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the consolidated financial statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In arriving at our audit opinion above, the key audit matter was as follows (unchanged from 2022):

financial statements of Picton Property Income Limited (the ‘Company’) and its subsidiaries (together, the ‘Group’), which comprise the consolidated balance sheet as at 31 March 2023, the consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising significant accounting policies and other explanatory information. In our opinion, the accompanying consolidated financial statements: ‒ give a true and fair view of the financial position of the Group as at 31 March 2023, and of the Group’s financial performance and cash flows for the year then ended;

Valuation of investment properties £746 million (2022: £830 million) Refer to page 102 of the Audit and Risk Committee Report, Note 2 significant accounting policies and Note 13 investment properties disclosures.

The risk

Our response

Our audit procedures included: Control Evaluation:

Basis: The Group’s investment properties accounted for 94% (2022: 93%) of the Group’s total assets as at 31 March 2023. The fair value of investment properties at 31 March 2023 was assessed by the Board of Directors based on independent valuations prepared by the Group’s third party independent valuer (the ‘Valuer’). The Valuer performed the valuations based on the Royal Institution of Chartered Surveyors (‘RICS’) Valuation – Global Standards and the requirements of IFRS. In determining the valuation of a property, the Valuer takes into account property specific information such as the current tenancy agreements and rental income and apply assumptions for yields and estimated market rent, which are influenced by prevailing market yields and comparable market transactions, to arrive at the final valuation. Risk: The valuation of the Group’s investment properties is considered a significant area of our audit in view of the significance of the estimates and judgements that may be involved in the determination of their fair value and given that it represents the majority of the total assets of the Group. The valuation is inherently subjective due to property specific factors which include, but are not limited to, the individual nature of the property, the location and condition of the property and the expected future rental streams for that particular property.

We assessed the design, implementation and operating effectiveness of controls over the valuation of investment properties including the capture and recording of information contained in the lease database for investment properties. Evaluating experts engaged by management: We assessed the competence, capabilities and objectivity of the Valuer. We also assessed the independence of the Valuer by considering the scope of their work and the terms of their engagement. Evaluating assumptions and inputs used in the valuation: With the assistance of our own Real Estate valuation specialist we assessed the valuations prepared by the Valuer by: – evaluating the appropriateness of the valuation methodologies and assumptions used – critically evaluating key subjective valuation inputs and assumptions, on a judgemental sample of properties, against market information such as industry benchmarks and our own knowledge and understanding of the property market. We also compared a sample of the key inputs used to calculate the valuations such as annual rent and tenancy contracts for consistency with other audit findings. We verified that the fair values as derived by the Valuer for the entire property portfolio were correctly included in the financial statements. Assessing disclosures: We also considered the Group’s investment property valuation policies and their application as described in the notes to the consolidated financial statements for compliance with IFRS in addition to the adequacy of disclosures in Note 13 in relation to fair value of the investment properties.


Picton Property Income Limited Annual Report 2023

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