Financial Statements/Continued
Notes to the consolidated financial statements/Continued
25. Risk management/ Continued Tenant debtors consist of a large number of occupiers, spread across diverse industries and geographical areas. Ongoing credit evaluations are performed on the financial condition of tenant debtors and, where appropriate, credit guarantees or rent deposits are acquired. As at 31 March 2023 tenant rent deposits held by the Group’s managing agents in segregated bank accounts totalled £2.6 million (2022: £2.4 million). The Group does not have access to these rent deposits unless the occupier defaults under its lease obligations. Rent collection is outsourced to managing agents who report regularly on payment performance and provide the Group with intelligence on the continuing financial viability of occupiers. The Group does not have any significant concentration risk whether in terms of credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The credit risk on liquid funds is limited because the counterparties are banks with strong credit ratings assigned by international credit rating agencies. The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the Group’s maximum exposure to credit risk. The Board continues to monitor the Group’s overall exposure to credit risk. The Group has a panel of banks with which it makes deposits, based on credit ratings assigned by international credit rating agencies and with set counterparty limits that are reviewed regularly. The Group’s main cash balances are held with National Westminster Bank Plc (‘NatWest’), Nationwide International Limited (‘Nationwide’) and Lloyds Bank Plc (‘Lloyds’). Insolvency or resolution of the bank holding cash balances may cause the Group’s recovery of cash held by them to be delayed or limited. The Group manages its risk by monitoring the credit quality of its bankers on an ongoing basis. NatWest, Nationwide and Lloyds are rated by all the major rating agencies. If the credit quality of any of these banks were to deteriorate, the Group would look to move the relevant short-term deposits or cash to another bank. Procedures exist to ensure that cash balances are split between banks to minimise exposure. At 31 March 2023 and at 31 March 2022, Standard & Poor’s short-term credit rating for each of the Group’s bankers was A-1. There has been no change in the fair values of cash or receivables as a result of changes in credit risk in the current or prior periods, due to the actions taken to mitigate this risk, as stated above. Liquidity risk Ultimate responsibility for liquidity risk management rests with the Board, which has put in place an appropriate liquidity risk management framework for the management of the Group’s short, medium and long-term funding and liquidity management requirements. The Group’s liquidity risk is managed on an ongoing basis by senior management and monitored on a quarterly basis by the Board by maintaining adequate reserves and loan facilities, continuously monitoring forecasts, loan maturity profiles and actual cash flows and matching the maturity profiles of financial assets and liabilities for a period of at least 12 months. The table below has been drawn up based on the undiscounted contractual maturities of the financial assets/(liabilities), including interest that will accrue to maturity.
More than 5 years £000
1 to 5 years £000
Less than 1 year £000 20,652 4,023
Total £000
31 March 2023
– –
– –
20,652 4,023
Cash and cash equivalents
Debtors
304 (185) (9,262) (690)
785 (740)
614 1,703
Capitalised finance costs Obligations under head leases Fixed interest rate loans Floating interest rate loans
(8,898)
(9,823)
(37,049) (233,629) (279,940)
(12,696)
– –
(13,386)
(9,035) (9,035) 5,807 (49,700) (241,913) (285,806) –
Creditors and accruals
More than 5 years £000
1 to 5 years £000
Less than 1 year £000 38,547 5,483
Total £000
31 March 2022
Cash and cash equivalents
– –
– –
38,547 5,483
Debtors
Capitalised finance costs Obligations under head leases Fixed interest rate loans Floating interest rate loans
304 (185)
934 (740)
765 2,003
(9,083)
(10,008)
(8,524) (113) (9,101)
(37,049) (5,031)
(242,891) (288,464)
– –
(5,144)
Creditors and accruals
– (9,101) 26,411 (41,886) (251,209) (266,684)
The Group expects to meet its financial liabilities through the various available liquidity sources, including a secure rental income profile, asset sales, undrawn committed borrowing facilities and, in the longer-term, debt refinancing.
Picton Property Income Limited
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