TIDMPCTN 
 
23 June 2020 
 
                        PICTON PROPERTY INCOME LIMITED 
                   ("Picton", the "Company" or the "Group") 
                           LEI: 213800RYE59K9CKR4497 
 
                          Preliminary Annual Results 
 
Picton announces its annual results for the year ending 31 March 2020. 
 
 
Financial highlights 
 
  * Profit after tax of GBP22.5 million 
  * Net assets of GBP509 million, or 93p per share 
  * Total return of 4.5% 
  * Earnings per share of 4.1p 
  * Dividend cover of 105% 
 
Strengthened balance sheet 
 
  * 14% reduction in total debt outstanding to GBP167.5 million 
  * Loan to value ratio reduced to 22% 
  * Raised GBP7 million of non-dilutive equity 
  * New GBP50 million revolving credit facility completed post year end 
  * Further tax savings as result of REIT regime 
 
Outperforming property portfolio 
 
  * Total property return of 5.3%, outperforming MSCI UK Quarterly Property 
    Index of -0.5% 
  * Portfolio top quartile outperformance against MSCI over one, three, five 
    and ten years 
  * Like-for-like valuation increase of 1.4% 
  * Like-for-like rental income increase of 1.2% 
  * Like-for-like estimated rental value increase of 1.3% 
  * Occupancy at 89% 
  * 104 asset management transactions completed including: 
 
  * 20 rent reviews, 10% ahead of ERV 
  * 31 lease renewals or regears, 12% ahead of ERV 
  * 35 lettings or agreements to lease, 2% ahead of ERV 
  * Two asset disposals for GBP34.1 million, 15% ahead of March 2019 valuations 
  * GBP9 million invested into refurbishment projects 
 
Responsible stewardship 
 
  * Embedded sustainability into corporate strategy, completing materiality 
    assessment review 
  * Improved portfolio EPC ratings 
  * Incorporated energy efficiency measures into building refurbishments 
  * Further developed occupier and employee engagement programmes 
 
Balance Sheet                                           31 March    31 March    31 March 
                                                            2020        2019        2018 
 
Property valuation                                         GBP665m       GBP685m       GBP684m 
 
Net assets                                                 GBP509m       GBP499m       GBP487m 
 
EPRA NAV per share                                           93p         93p         90p 
 
 
 
Income Statement                                      Year ended  Year ended  Year ended 
                                                        31 March    31 March    31 March 
                                                            2020        2019        2018 
 
Profit after tax                                          GBP22.5m      GBP31.0m      GBP64.2m 
 
EPRA earnings                                             GBP19.9m      GBP22.9m      GBP22.6m 
 
Earnings per share                                          4.1p        5.7p       11.9p 
 
EPRA earnings per share                                     3.7p        4.3p        4.2p 
 
Total return                                                4.5%        6.5%       14.9% 
 
Total shareholder return                                    3.6%       10.1%        4.8% 
 
Total dividend per share                                    3.5p        3.5p        3.4p 
 
Dividend cover                                              105%        122%        122% 
 
Post year end and Covid-19 update 
91% of March 2020 rent has been collected or is subject to agreed payment 
plans, with less than 1% currently subject to write off. We are continuing to 
work with our occupiers to find appropriate solutions for the balance 
outstanding as the lockdown starts to ease. 
 
Post year end, we have concluded two new lettings in line with the March 2020 
ERV; four lease extensions 13% above the March 2020 ERV; and two rent reviews 
22% above the March 2020 ERV. Together these transactions add GBP0.3 million to 
the annualised rent roll. 
 
In terms of pipeline, a further six lettings (including four relocations), for 
a combined annual rent of GBP0.5 million, and seven lease extensions, for a 
combined annual rent of GBP1 million, are agreed in principle and subject to 
legal documentation. 
 
Picton Chairman, Nicholas Thompson, commented: 
"Despite the challenges posed by Brexit and latterly the Covid-19 pandemic, 
these are another solid set of results from Picton, showing an increase in net 
asset value and upper quartile performance against the MSCI UK Quarterly 
Property Index. As well as managing the portfolio, we have also focused this 
year on sustainability, embedding this into our corporate strategy. Looking 
ahead, we believe the business and the portfolio is well-positioned with low 
gearing, a covered dividend and access to GBP50 million through our new revolving 
credit facility." 
 
Michael Morris, Chief Executive of Picton, commented: 
"This year we have invested into the portfolio, upgrading assets and have 
either completed or are well progressed on several important asset management 
projects that will enable us to improve occupancy and rental income across the 
portfolio. As lockdown restrictions are eased and the investment market reopens 
we will also be focused on future opportunities. In the meantime, we will 
continue to work in a collaborative way with our occupiers to best manage 
current market conditions." 
 
This announcement contains inside information. 
 
For further information: 
Tavistock 
Jeremy Carey/James Verstringhe, 020 7920 3150, 
james.verstringhe@tavistock.co.uk 
 
Picton 
Michael Morris, 020 7011 9980, michael.morris@picton.co.uk 
 
Note to Editors 
Picton, established in 2005, is a UK REIT. It owns and actively manages a GBP665 
million diversified UK commercial property portfolio, invested across 47 assets 
and with around 350 occupiers (as at 31 March 2020). Through an occupier 
focused, opportunity led approach to asset management, Picton aims to be one of 
the consistently best performing diversified UK focused property companies 
listed on the main market of the London Stock Exchange. 
 
For more information please visit: www.picton.co.uk 
 
 
Chairman's Statement 
 
I am pleased to report another successful year, delivering a profit after tax 
of GBP23 million, despite the uncertain political and economic backdrop created 
by Brexit and the effects of the Covid-19 pandemic. 
 
Further to the actions taken last year, we are in a strong position with low 
gearing of 22%, a healthy balance sheet and over 80% of the portfolio invested 
in the industrial and office sectors which have been less impacted by the 
lockdown. 
 
Throughout the year we have been operating in a UK property market 
characterised by fewer investment transactions and an occupational market where 
activity has slowed. Many companies were already in 'wait and see' mode 
awaiting an outcome on Brexit, and have now moved into temporary lockdown as a 
result of Covid-19, although Government support has helped mitigate a very 
difficult situation. 
 
Covid-19 impact and response 
The defensive positioning of the Company over the last 12 months has meant that 
we are in a relatively strong position and able to withstand the unprecedented 
shock of the Covid-19 pandemic. We have the lowest loan to value ratio since 
the inception of the business, as well as fully undrawn loan facilities 
totalling GBP50 million. 
 
Our short-term targets are focused around reducing the impact on our business 
and working with our occupiers to get through this difficult situation. We 
recognise both the short and longer-term effects on the business and the 
importance of adapting our strategy to reflect the changing habits and needs of 
our occupiers. We have achieved good rent collection figures compared to the 
market and have been working with occupiers as required to help them through 
this crisis. Recognising the two components of property returns are not only 
income but capital performance, we believe this is also the best approach to 
achieving long-term value for shareholders. 
 
As the lockdown starts to gradually ease, our attention is turning to the 
reoccupation of our buildings, the restarting of refurbishment projects and 
leasing space, ensuring all of these activities are managed safely. 
 
Performance 
The property portfolio has again delivered upper quartile performance against 
the MSCI UK Quarterly Property Index over the year. Likewise, our shareholder 
total return for the period was in the upper quartile range compared to our 
peers. 
 
Our total return was 4.5% over the year. Whilst this is relatively modest for 
Picton, it compares favourably to the negative market return, as measured by 
MSCI. 
 
EPRA earnings were lower for the year, which is in part a reflection of the 
operating environment that has hindered progress with our pipeline of lettings 
and refurbishments. Equally, debt reduction through asset sales to protect the 
longer-term income profile has also had a short-term impact on earnings. 
 
We are cognisant of the discount to net asset value that has emerged since the 
year end and believe that there is a clear disconnect between the performance 
of the Group and the share price. A focus of the Board will be to ensure that 
we reduce this discount over the coming year. 
 
Purpose and strategy 
During the year, the Board has reviewed the purpose and strategy of the Group 
to ensure Picton, as a UK REIT, continues to deliver attractive income and 
capital returns to its shareholders over the long-term. As a result we have 
redefined our purpose as: 
 
"Through our occupier focused, opportunity led approach, we aim to be one of 
the consistently best performing diversified UK REITs. To us this means being a 
responsible owner of commercial real estate, helping our occupiers succeed and 
being valued by all our stakeholders." 
 
We have in place three distinct strategic pillars: Portfolio Performance, 
Operational Excellence and Acting Responsibly. These will ensure we are able to 
deliver on our purpose. 
 
I think it is also important to highlight the progress we have been making on 
sustainability and we have this year formally embedded this into our corporate 
strategy. 
 
Property portfolio 
The outperformance of our property portfolio was driven by several factors. It 
is well positioned with over 80% in the better performing industrial and office 
sectors. The best performing subsector according to MSCI was South East 
industrial, which is where over 35% of our portfolio is invested. 
 
Key themes during the year were reinvestment into the portfolio and upgrading 
of assets. This activity has delivered letting successes and retained occupiers 
across the portfolio. We have achieved considerable success working with 
existing occupiers to extend income. During the year we saw a significant 
number of transactions aimed at mitigating income risk due to materialise in 
2020/21. This included income with four of our largest occupiers. 
 
We made two disposals at a healthy premium to the March 2019 valuation, which 
enabled us to capture upside that had been created through asset management. 
There were no acquisitions during the year. 
 
While we have grown like-for-like passing rent over the period, we would have 
liked to make further progress and have two key voids to fill: one in Rugby, 
where the refurbishment completed in February, and another at Stanford Building 
in Covent Garden, where the refurbishment has been delayed due to Government 
lockdown restrictions. These, along with other vacancies, provide scope for us 
to increase occupancy and income going forwards. 
 
Capital structure 
Our strategic approach in recent years has meant that we have entered the 
Covid-19 crisis in a position of strength. 
 
We further reduced our loan to value ratio over the course of the year through 
a combination of asset sales, debt repayment and a small non-dilutive equity 
raise last June. 
 
Since the year end, we have completed a new single revolving credit facility 
for an initial three-year term, replacing two existing facilities that were due 
to expire in 2021. This gives the Company access to up to GBP50 million of 
undrawn facilities, providing us with a lower cost of debt and even greater 
headroom and flexibility. 
 
Dividends 
We are acutely aware that the provision of income is important to investors, so 
our recent decision to reduce the dividend, even if temporary, was not taken 
lightly. While Picton is in a much better place than most of its peers, we are 
not immune to the impact that Covid-19 is having on our occupiers. 
 
The additional flexibility that this extra headroom provides will enable us to 
support our occupiers where appropriate, and will help us to protect as far as 
possible both income and capital over the longer-term. This was a prudent 
decision taken in the long-term interest of all our stakeholders. 
 
Governance and Board composition 
I had expected to write this report as Chairman for the last time as I was due 
to retire from the Board in June of this year. Covid-19 has created all sorts 
of unforeseen circumstances and my proposed successor, Nicholas Wiles, has had 
to step down from the Board following his recent and unexpected appointment as 
Chief Executive at PayPoint Plc, having previously been Chairman. We have 
recommenced the process to find a suitable successor, but it is vitally 
important in these times that continuity is provided, so at the request of the 
Board I have agreed and confirmed my commitment to remain in position until a 
new Chair is in place. 
 
We have also started the process to appoint a successor for Roger Lewis, 
currently Chair of the Property Valuation Committee, and we hope to be able to 
make a further announcement in that regard shortly. 
 
Outlook 
Whilst our focus remains very much around short-term issues and mitigating the 
impact of Covid-19, we recognise that we must also be thinking strategically 
about the changing long-term trends and demand for commercial property. We 
think these recent events have accelerated embedded trends in several areas, 
including online retail, flexible working, digital and technological disruption 
to name but a few. In addition, a growing sense of environmental impact and the 
need for change has been self-evident in lockdown. We had already been 
considering disruptive trends and whilst we believe the portfolio is well 
positioned, this situation is evolving and continues to be kept under constant 
review. I believe our purpose, strategy and business model ensure we are well 
placed to respond to both the challenges and opportunities that lie ahead. 
 
Nicholas Thompson 
Chairman 
 
Our Marketplace 
 
Economic backdrop 
For much of the year Brexit weighed heavily on the UK economy. 
 
The lack of clarity surrounding the nature and timing of the UK's exit from the 
European Union was responsible for widespread political and economic 
uncertainty. Weaker productivity growth came as a result of reduced business 
investment and the redirection of resources to prepare for possible Brexit 
outcomes. 
 
Despite Brexit, economic indicators remained reasonably robust. In 2019 Gross 
Domestic Product (GDP) grew by 1.4%. To put this into an international context, 
the G7 Major Advanced Economies had an average GDP growth of 1.6% per annum for 
the group, with the UK in third place behind the USA and Canada. 
 
For the three months leading up to March 2020, the UK's unemployment rate was 
at a near record low of 3.9%, and annual growth in average weekly earnings was 
2.4%. In real terms, annual pay growth has been positive since February 2018. 
The 12-month Consumer Price Index (CPI) was 1.3% in December 2019, rising to 
1.5% in March 2020. 
 
Today, the Covid-19 global pandemic has changed priorities and the economic 
outlook dramatically. Despite the UK easing the lockdown, social distancing 
will change habits for some months to come, and uncertainty and volatility will 
continue to impact the economy with potentially long-lasting consequences. 
 
Recent data shows the dramatic impact the lockdown is having on the UK economy, 
with GDP recording its weakest ever monthly decline at -20.4% in April. 
 
Although the UK will be in recession in the second quarter of 2020 as the 
lockdown eases, the magnitude of the economic impact and speed of recovery are 
not easily gauged. The Office for Budget Responsibility has forecast an annual 
decline of 12.8% for 2020, with unemployment rising from 4.0% to 7.3% in the 
final three months of the year. 
 
In response to the pandemic, the Bank of England dropped the bank rate twice in 
March, from 0.75% to 0.25% and then again to 0.1%. The extent to which these 
low interest rates can support consumer spending and jobs in the coming months 
is yet to be determined. 
 
UK property market 
According to the MSCI UK Quarterly Property Index, commercial property 
delivered a total return of -0.5% for the year ended March 2020. The negative 
total return is attributable to the downturn experienced in the final quarter 
ending March 2020. Until then, quarterly total returns were positive. 
 
The reduction relative to last year was driven by capital value falls of -4.8% 
and an income return of 4.5%. Capital growth was negative quarter-on-quarter 
but worsened considerably in the three months to March 2020. By comparison, for 
the year to March 2019, capital growth was 0.1% and the income return was 4.4%. 
 
Industrial was the top performing sector for the year to March 2020, showing 
good signs of rental and capital growth. The industrial sector 12-month total 
return was 5.7%, comprising 1.3% capital growth and 4.3% income return. 
Industrial ERV growth for the period was 2.7%, with a range of 1.7% to 4.2% 
within subsectors. Capital growth ranged from -0.5% to 4.2% within subsectors. 
Equivalent yields for industrial property now stand at 5.3%. 
 
The office sector produced a total return of 3.3% for the year to March 2020, 
comprising -0.5% capital growth and 3.8% income return. Whilst capital values 
showed a decline in the final quarter, for the nine months to December 2019 
MSCI capital growth for All Offices was 0.4%. For the year to March 2020, 
central London and the South East office markets were the only subsectors to 
produce positive capital growth. All Office annual rental growth was 1.4%, 
ranging from 0.5% to 2.3% within subsectors. The range of capital growth by 
subsector was from -3.2% to 1.8%. Equivalent yields for office property now 
stand at 5.6%. 
 
It was a very difficult year for the retail sector, with challenging trading 
conditions leading to a high number of retail failures. The situation has been 
significantly impacted by the Covid-19 lockdown starting in March 2020. The 
retail sector produced a total return of -9.8% for the year to March 2020. This 
comprised capital growth of -14.5% and income return of 5.4%. Rental values 
fell -5.7% over the period and were negative across all subsectors, ranging 
from -8.2% to -1.7%. Retail subsector capital growth ranged from -22.6% to 
-1.0%. Equivalent yields for retail property now stand at 6.4%. 
 
The impact of the Covid-19 pandemic is not fully reflected in the above 
numbers. The MSCI UK Monthly Property Index showed for the two-month April - 
May 2020 period, that overall capital values for All Property have declined 
-2.9% and ERVs are down -0.6%. 
 
For the same period, capital values in the industrial sector saw a decline of 
-1.6% and ERVs grew by 0.1%. In the office sector capital values declined -2.1% 
and ERVs -0.1%. The retail sector is the worst affected with capital values 
showing a decline of -5.0% and ERVs down -2.0%. 
 
According to Property Data, the total investment volume for the year to March 
2020 was GBP56.5 billion, an 8.3% decrease from the year to March 2019. The 
volume of investment by overseas investors in the year to March 2020 was GBP30.5 
billion, accounting for 53.9% of all transactions. Illustrating the liquidity 
issues within the retail sector, it had investment transactions of just GBP5.0 
billion, accounting for only 8.9% of all transactions. 
 
During the Covid-19 lockdown it has been extremely difficult to buy or sell 
property and the impact on investment volumes and pricing is yet to be fully 
realised. Despite lowering investment returns available elsewhere, the risk 
premium attached to property looks set to increase, reflecting greater income 
risk in the short-term. 
 
Chief Executive's Review 
 
Alongside running the business in these extraordinary market conditions, this 
year we have also focused on reviewing our strategy to ensure it reflects 
emerging trends. 
 
The three key pillars of our strategy are Portfolio Performance, Operational 
Excellence and Acting Responsibly. These do not dramatically change the 
direction of the business, but better define our areas of focus through the 
more detailed priorities and ensure we are best placed to deliver on our 
purpose. 
 
The impact of Covid-19 has in the short-term led to an almost complete shutdown 
in both the commercial leasing and investment markets. This makes it harder 
than usual for valuers to provide a valuation or estimates of market price when 
there is no market itself. 
 
This uncertainty has led to the suspension of open-ended property funds, and 
significant volatility within listed property company shares. There is 
currently a clear arbitrage between pricing listed and unlisted property 
vehicles. We think there will be renewed selling pressure from these open-ended 
structures when they reopen, which may in itself create opportunistic buying 
opportunities for those that are well capitalised. 
 
Looking back, the primary concern last year was about the impact of Brexit on 
trade and occupational demand. The uncertainty created by the political process 
led many companies to delay occupancy decisions and whilst these risks have not 
yet gone away, in January we were starting to see positive signals and an 
increase in occupational and investment demand following the General Election 
result and the certainty that provided. 
 
Last year we made no acquisitions and where we made disposals we used the 
proceeds to repay debt and reduce our gearing. We are well positioned, with a 
high exposure to industrial, warehouse and logistics, alongside the regional 
office market. It is likely, however, that any prolonged lockdown will change 
habits and occupational requirements. As the impact becomes clearer we will 
have to ensure our portfolio approach remains relevant to maintain our track 
record of outperformance. 
 
Covid-19 response 
We continue to operate effectively and all of our employees have been working 
remotely since mid-March. We have not needed to furlough any members of our 
team or access any form of Government support. The health and safety of our 
employees, our occupiers and service providers is paramount and our actions to 
date have been effective in ensuring this. This shutdown has affected our 
occupiers to varying degrees, but it is encouraging to see buildings being 
re-occupied, albeit in line with social distancing measures, and we are working 
to establish proper protocols as the lockdown is gradually eased. Central 
London, with its reliance on public transport, would appear less ready to 
return to work than other parts of the UK, but a safe and steady approach is 
sensible under the circumstances and this matches the feedback we are receiving 
from our occupiers. 
 
Whilst the March rent collection number stands at 82%, which is lower than last 
year, we recognise that there will be a short-term impact as a result of the 
lockdown. We think it is appropriate to look at individual circumstances and be 
creative to protect value and also provide support to occupiers as required. We 
do however have to strike the right balance between occupier and shareholder, 
recognising these are difficult circumstances for all. We are fortunate to have 
already established good relationships with our occupiers well ahead of this 
crisis, so we have a good understanding of their business needs. We will look 
at circumstances on a case-by-case basis and prioritise needs across the 
portfolio. Equally, we need to find creative solutions to this problem and by 
offering short-term cash flow assistance we may well be able to protect or 
enhance capital values, by virtue of longer lease commitments, stepped rents or 
agreeing future rent increases. The recently announced dividend reduction will 
enable us to deliver the best outcomes in this regard. 
 
Portfolio Performance 
We have again continued to outperform the MSCI UK Quarterly Property Index. Our 
track record now means we have outperformed that Index since inception and over 
the last one, three, five and ten years. Recognising the diversified nature of 
the portfolio, where there will always be outperforming and underperforming 
elements, our positioning against the retail and leisure sector in favour of 
industrial and regional offices has been advantageous for some time. 
 
We have made significant progress in enhancing our assets this year. Our 
refurbishment programme totalled GBP9 million, which is a substantial increase on 
preceding years. We have also had considerable success working with our 
occupiers, enabling them to have space that meets their needs. We have 
undertaken some key transactions, extending income, de-risking our cash flow, 
and these are detailed in the subsequent case studies. Although we have grown 
the passing rent on a like-for-like basis, the strategy to keep gearing low 
does have an impact on overall income, and with debt costs generally lower than 
property yields, there is still a trade-off between capital and income returns. 
 
It has been frustrating that we have not grown occupancy over the year, which 
currently stands at 89%. Ultimately these vacancies provide a significant 
element of the future income upside potential. 
 
Against a difficult backdrop, the leasing markets have not been easy and a 
number of refurbishment projects took longer to complete and consequently 
delayed letting prospects. We also sold income producing assets to de-risk the 
balance sheet which has had a negative impact on income and occupancy, but 
equally have protected our capital position and crystallised gains. 
 
Operational Excellence 
We have undertaken and implemented several measures aimed at increasing the 
efficiency within the business. During the year we introduced an asset 
management system, Coyote, to better manage our assets, as well as a new IT 
system. Both systems are working well as we continue to work remotely. 
 
We have recruited a Head of Occupier Services to strengthen our property 
management service delivery, a further commitment to our occupier focused 
approach. We continue to have an agile and flexible business and the speed with 
which we were able to adapt to remote working is testament to this. 
 
From an income perspective our EPRA earnings are lower, reflecting activity 
referred to in the Portfolio Performance section above. We have reduced our 
gearing over the year, concerned about risks associated with Brexit, but this 
has proved timely recognising the adverse impact of Covid-19. 
 
Our net asset growth has been more muted than in previous years, but this is 
not unexpected recognising market conditions. We believe our assets, our team 
and our strategy will continue to drive our success. Growth, be that organic or 
through acquisition, will be considered so long as it creates value for 
shareholders. 
 
Acting Responsibly 
We have made significant progress strengthening relationships with occupiers 
this year and this is borne out by the portfolio activity and projects we have 
undertaken. 
 
The work we have done this year to promote and deliver our Picton Promise - 
focused on Action, Community, Technology, Support and Sustainability - has many 
overlapping features and we believe our occupiers, and indeed future occupiers, 
will want to work and engage with a landlord that shares similar values on not 
only reducing emissions but a broader array of sustainability issues. 
 
We provide regular shareholder updates and through Edison provide regular 
updates and video interviews. Through our brokers JP Morgan, Stifel and 
specifically in the regional wealth management community with Kepler, we have 
regular engagement with both existing and prospective shareholders. 
 
Whilst sustainability has been a focus of ours for many years, the introduction 
of a Responsibility Committee in 2018 further integrated this within our 
business model and sustainability now forms part of our corporate strategy. We 
have engaged with occupiers and investors this year to review and better 
understand material issues in order to progress our sustainability initiatives. 
We were awarded EPRA Gold for our separate Sustainability Report last year and 
we are part of GRESB. 
 
We have maintained our company values, positive working culture and alignment 
of the team throughout the year. We specifically undertook an employee survey 
last year and the results of this were fed back to the Board via our 
Non-Executive Director responsible for employee engagement. 
 
Outlook 
Recognising our newly defined purpose and that property returns are driven by 
both income and capital, our focus is currently two-fold. In the short-term we 
need to work through lockdown and help our occupiers get their businesses back 
up and running. Workplace protocols, lease restructurings and financial 
assistance are all aspects that will protect value for shareholders. 
 
We are also focused on the future and how this short-term disruption may well 
change future occupational requirements and consequently create opportunities. 
We need to own assets where there is continued occupational demand, enabling a 
growing income profile, and in turn capital appreciation. 
 
There is significant embedded upside in the portfolio income profile from the 
current occupancy level. Once markets reopen, finding occupiers for this vacant 
space is an absolute priority. 
 
Our strategy, which offers a diverse approach and allows us the flexibility to 
adjust the portfolio to better performing sectors, ensures we are not 
constrained to a single sector strategy, with limited ways to exit, as has been 
the case for some of the REIT specialists in recent years. We continue to 
manage the business through these events so we come out the other side in a 
strong position. We will continue to provide updates as we make progress this 
year. 
 
Picton has low leverage and significant operational headroom against covenants. 
The majority of the portfolio is invested in sectors that have been less 
impacted through Covid-19, and likely to rebound more quickly. It is clear that 
the digital transformation will continue apace, be that increased home working 
or further spend online and our portfolio will need to continue to adapt to 
these changes. 
 
Our focus is to control what we can, manage risks and focus on future 
opportunities. 
 
Michael Morris 
Chief Executive 
 
Portfolio Review 
 
Sector weightings 
 
Industrial weighting                                                             47.9% 
 
South East                                                                       35.4% 
 
Rest of UK                                                                       12.5% 
 
 
 
Office weighting                                                                 33.8% 
 
South East                                                                       17.4% 
 
Rest of UK                                                                       12.2% 
 
City & West End                                                                   4.2% 
 
 
 
Retail and Leisure weighting                                                     18.3% 
 
Retail Warehouse                                                                  7.3% 
 
High Street South East                                                            5.2% 
 
High Street Rest of UK                                                            4.1% 
 
Leisure                                                                           1.7% 
 
We have had a number of considerable successes across the portfolio despite it 
being such a difficult year in which to operate. We ended the year with a 
like-for-like increase in the portfolio valuation, rental income and Estimated 
Rental Value (ERV). We have had one of the busiest years in terms of portfolio 
transactions, up 30% on the previous year. 
 
We have invested heavily back into the portfolio enhancing the quality and 
lettability of space, and we have been able to de-risk and extend our income 
profile. We have further strengthened our relationships with occupiers and our 
focus on our key commitments of Action, Community, Technology, Support and 
Sustainability, appears increasingly helpful in light of the Covid-19 impact. 
 
Performance 
Our portfolio now comprises 47 assets, with around 350 occupiers, and is valued 
at GBP664.6 million with a net initial yield of 4.9% and reversionary yield of 
6.4%. Our asset allocation, with 48% in industrial, 34% in office and 18% in 
retail and leisure, combined with investment disposals and transactional 
activity, has enabled us again to outperform the MSCI UK Quarterly Property 
Index on a total return basis over one, three, five and ten years. 
 
Overall the like-for-like valuation was up 1.4%, with the industrial sector up 
6%, offices delivering growth of 3% and retail and leisure declining -12%. This 
compares with the MSCI index recording capital declines of -4.8% over the 
period. 
 
The industrial assets continue to perform better than the other sectors, 
primarily due to our allocation to South East multi-let estates which account 
for over 73% of our industrial exposure. In addition we have extended income 
with three of our largest occupiers at three of our distribution warehouses. 
Conversely, and despite active management to mitigate downside risk, our retail 
assets have delivered negative returns. Pleasingly, rental transactions have 
been generally very close to or higher than independent ERVs rather than 
significantly below, which we understand is happening elsewhere in the market. 
 
The overall passing rent is GBP36.2 million, an increase from the prior year of 
1.2% on a like-for-like basis. This was a result of the industrial portfolio 
rents growing by 6%, offset by the office and retail rents decreasing by 2% and 
3% respectively. The regional offices saw growth of 1%, which was offset by 
declines in London and in particular at Angel Gate, Islington which is being 
adversely affected by the serviced office sector. We are countering the effect 
by offering fully fitted suites and flexible leasing terms. 
 
The March 2020 ERV of the portfolio is GBP45.2 million, with the positive growth 
in the industrial sector of 4.4% and office sector of 3.5% offset by the 
negative growth in the retail sector of -8.0%. We have set out the principal 
activity in each of the sectors in which we are invested and believe our 
strategy and proactive occupier engagement will continue to assist us in 
managing the portfolio during the current business climate. 
 
The industrial and regional office occupational markets have remained 
resilient. Conversely, retail demand has not improved, and we expect it to 
worsen over the next year, particularly recognising the additional impact 
Covid-19 will have on occupational demand. 
 
Activity 
We have had an exceptionally good year in respect of active management 
transactions. We completed 20 rent reviews, 10% ahead of ERV, 31 lease renewals 
or regears, 12% ahead of ERV and 35 lettings or agreements to lease, 2% ahead 
of ERV. 
 
Two assets were sold for gross proceeds of GBP34.1 million, 15% ahead of the 
March 2019 valuation. Citylink, Croydon was sold following the early surrender 
of two leases, generating GBP0.6 million of additional income. The property was 
sold for GBP18.2 million reflecting a net initial yield of 4.8%. 
 
We also sold 3220 Magna Park, Lutterworth following active management where we 
extended the lease by a further three years to December 2022 and settled a 2019 
rent review securing an 11% uplift to GBP1 million per annum, achieving one of 
the highest rents at the Park. The property was sold for GBP15.9 million 
reflecting a net initial yield of 5.8%. 
 
Both sales crystallise the upside from the active management activity and, 
noting the age of the buildings and oversupply in these locations, avoid 
potential future capital expenditure and extended void periods. 
 
Over the year we have invested GBP9 million into the portfolio across 20 separate 
projects. These have all been aimed at enhancing space to attract occupiers and 
grow income. Whilst a number of key projects are still to be completed, we are 
now well placed to attract occupiers and our refurbishment pipeline is 
substantially reduced, having completed the majority of the projects. 
 
Our largest void is Stanford Building on Long Acre in Covent Garden, accounting 
for over a third of the total vacancy rate. Work on site paused due to the 
lockdown and will now complete in the summer. The building will provide 
best-in-class retail, office and residential accommodation. 
 
This investment across the portfolio has enabled us to create high quality 
space and help to future- proof assets from a sustainability perspective. We 
have also worked with occupiers to achieve their occupational aims and thereby 
create value through additional leasing or extending income. 
 
Although no acquisitions were made, the net effect of the above is that the 
average lot size of the portfolio was GBP14.1 million, in line with last year. 
 
Outlook 
If activity for most of the year was tempered by Brexit, towards the end of the 
year it has been impacted by the Covid-19 pandemic and consequential lockdown 
on 23 March 2020. This has led to a far more uncertain business environment and 
our focus has been on delivering our Picton Promise, focusing particularly on 
our commitments of Action, Community and Support to help our occupiers who need 
assistance. 
 
New requirements from potential occupiers have slowed and social distancing 
measures make viewings difficult to conduct. We are, however, embracing new 
technologies, creating virtual tours and thinking more laterally as to how we 
can market our buildings. 
 
Our focus remains on working with our occupiers during this period of business 
uncertainty, whilst continuing to proactively manage the existing portfolio. At 
31 March the portfolio has GBP9 million of reversionary upside, GBP5 million from 
letting the void, GBP3 million from expiring rent free and GBP1 million from 
reversionary leases. 
 
We are seeing better demand for our industrial properties, which account for 
48% of the total portfolio by value, and we believe this sector will continue 
to outperform. 
 
Businesses continue to seek best- in-class space in the office sector, hence 
our investment over the year into nine buildings, and this, combined with our 
flexible offering, makes our properties attractive to current and new 
occupiers. 
 
The retail and leisure sector will need to evolve, especially following the 
current lockdown, but with this sector only making up 18% of our portfolio, we 
will work with occupiers to ensure we can assist them where appropriate to 
maintain income. 
 
The work done over the year to lease space and extend income, together with our 
portfolio weightings, has put us in a strong position to weather this storm. In 
line with our occupier focused, opportunity led approach, we continue to 
proactively engage with our occupiers, which we believe assists occupier 
retention and adds value. 
 
Top ten assets 
The largest assets as at 31 March 2020, ranked by capital value, represent 54% 
of the total portfolio valuation and are detailed below. 
 
Assets                            Acquisition   Property    Tenure Approximate    No. of Occupancy 
                                         date       type              area (sq occupiers  rate (%) 
                                                                           ft) 
 
Parkbury Industrial Estate,           03/2014 Industrial  Freehold     336,700        21       100 
Radlett, Herts. 
 
River Way Industrial Estate,          12/2006 Industrial  Freehold     454,800        10        98 
Harlow, Essex 
 
Angel Gate, City Road, London EC1     10/2005     Office  Freehold      64,500        22        74 
 
Stanford Building, Long Acre,         05/2010     Retail  Freehold      19,700         0         0 
London WC2 
 
Tower Wharf, Cheese Lane, Bristol     08/2017     Office  Freehold      70,800         5        83 
 
50 Farringdon Road, London EC1        10/2005     Office Leasehold      31,000         5       100 
 
Shipton Way, Rushden, Northants.      07/2014 Industrial Leasehold     312,900         1       100 
 
Datapoint, Cody Road, London E16      05/2010 Industrial Leasehold      55,500         5        88 
 
Lyon Business Park, Barking,          09/2013 Industrial  Freehold      99,400         9       100 
Essex 
 
Colchester Business Park,             10/2005     Office Leasehold     150,700        22        99 
Colchester 
 
Top ten occupiers 
The largest occupiers, based as a percentage of contracted rent, as at 31 March 
2020, are as follows: 
 
 
Occupier                                                              Contracted       % 
                                                                            rent 
                                                                            (GBPm) 
 
Public sector                                                                1.7     4.3 
 
Belkin Limited                                                               1.7     4.2 
 
B&Q Plc                                                                      1.2     3.1 
 
The Random House Group Limited                                               1.2     3.0 
 
Snorkel Europe Limited                                                       1.1     2.8 
 
XMA Limited                                                                  1.0     2.4 
 
Portal Chatham LLP                                                           0.8     2.0 
 
TK Maxx                                                                      0.7     1.8 
 
Canterbury Christ Church University                                          0.7     1.7 
 
DHL Supply Chain Limited                                                     0.6     1.5 
 
Total                                                                       10.7    26.8 
 
Longevity of income 
As at 31 March 2020, expressed as a percentage of contracted rent, the average 
length of the leases to the first termination was increased to 5.5 years (2019: 
5.1 years). This is summarised as follows: 
 
 
                                                                                     % 
 
0 to 1 year                                                                        8.8 
 
1 to 2 years                                                                      14.1 
 
2 to 3 years                                                                      11.0 
 
3 to 4 years                                                                      12.6 
 
4 to 5 years                                                                      12.3 
 
5 to 10 years                                                                     31.6 
 
10 to 15 years                                                                     8.2 
 
15 to 25 years                                                                     0.1 
 
25 years and over                                                                  1.3 
 
Total                                                                            100.0 
 
Retention rates and occupancy 
Over the year, total ERV at risk due to lease expiries or break options 
totalled GBP6.6 million, compared to GBP6.9 million for the year to March 2019. 
 
Excluding asset disposals, we retained 53% of total ERV at risk in the year to 
March 2020. This comprised 32% on lease expiries and 21% on break options. 
 
In addition to units at risk due to lease expiries or break options during the 
year, a further GBP5.5 million of ERV was retained by either removing future 
breaks or extending future lease expiries ahead of the lease event. 
 
Occupancy has reduced slightly during the year, primarily reflecting the timing 
of lease events, ongoing challenges in the retail sector and some specific 
asset management surrenders we have initiated. At the year end 62% of our 
vacant buildings were being refurbished, so only 38% were available to lease 
immediately. 
 
Occupancy has decreased from 90% to 89%, which is behind the MSCI IRIS 
Benchmark of 93% at March 2020. On a look-through basis we have 57% of our 
total void in offices, 28% in retail, primarily at a flagship store in Covent 
Garden, and only 15% of our void is in industrial, reflecting the stronger 
occupational market. 
 
Industrial 
 
Key metrics 
 
                                                                     2020           2019 
 
Value                                                             GBP318.3m        GBP312.8m 
 
Internal area                                                  2.6m sq ft     2.7m sq ft 
 
Annual rental income                                               GBP16.0m         GBP16.0m 
 
Estimated rental value                                             GBP18.6m         GBP18.7m 
 
Occupancy                                                             96%            98% 
 
Number of assets                                                       16             17 
 
The industrial portfolio, which accounts for 48% of the portfolio, again 
delivered the strongest sector performance of the year. This was the result of 
active management extending income on our distribution assets, combined with 
continued occupational demand for the smaller units, resulting in further 
rental growth, especially in London and the South East. 
 
Through asset management activity we have been able to capture rental growth 
and extend income. This, combined with continued strength in the investment 
market, has resulted in another strong year for this element of the portfolio. 
 
On a like-for-like basis, our industrial portfolio value increased by GBP18.1 
million or 6.0% to GBP318.3 million, and the annual rental income increased by GBP 
0.9 million or 6.0% to GBP16.0 million. The portfolio has an average weighted 
lease length of 5.1 years and GBP2.6 million of reversionary potential. 
 
We have seen rental growth of 4.4% across the portfolio and are experiencing 
demand across all of our estates. Occupancy is 96%, with the key void being our 
unit in Rugby which has recently been refurbished. In respect of the multi-let 
estates we only have three vacant units out of 127, one of which is under 
offer. 
 
We extended income on three of our distribution units, one of which we 
subsequently sold, and we completed the refurbishment of our unit in Rugby, 
which is now being marketed. 
 
Portfolio activity 
At Shipton Way, Rushden, in what would have been our largest single income risk 
in 2020, we extended a lease with the existing occupier, Belkin, to facilitate 
a pre-letting of the entire building to Whistl UK Limited. Whistl will take a 
new ten-year lease, subject to break in 2025, at an annual rent of GBP1.6 
million, in line with ERV, and become our largest single occupier from October 
2020, when Belkin vacates. 
 
At Parkbury, Radlett, we extended a lease with the largest occupier on the 
estate which was due to expire in November 2020. This secures a new ten-year 
reversionary lease, subject to break in 2025, with stepped rental increases to 
GBP1.0 million per annum, 42% ahead of ERV. In addition, we let four units for a 
combined GBP0.4 million per annum, 8% ahead of ERV, renewed one lease for GBP0.2 
million per annum, 5% ahead of ERV, and settled four rent reviews achieving a GBP 
0.3 million uplift in rent to GBP1 million per annum, 19% ahead of ERV. 
 
At Trent Road, Grantham, we extended the lease that was due to expire in 2023 
until 2029, subject to break in 2026, at GBP1.2 million per annum, in line with 
ERV. 
 
At 3220 Magna Park in Lutterworth, we restructured the lease and secured a 
further three years term certain until an occupier break option in December 
2022. As part of the same transaction, the December 2019 rent review was 
settled, securing an 11% uplift to GBP1 million per annum, 6% ahead of ERV, 
achieving one of the highest rents at the Park. The unit was subsequently sold 
for GBP15.9 million. 
 
At Datapoint in London E16, following the completion of a rent review, we 
achieved a 98% uplift in rent to GBP0.1 million per annum, 15% ahead of ERV. Two 
leases were surrendered on the estate, securing a premium of GBP0.2 million, and 
were subsequently refurbished by March. 
 
One has been let, two weeks after completion, for a minimum term of ten years 
at a rent of GBP0.2 million per annum, 24% ahead of ERV and 82% ahead of the 
previous passing rent. We have good interest in the other unit. 
 
At Nonsuch Industrial Estate in Epsom, the active management strategy to 
combine units resulted in a letting to Topps Tiles and we also completed three 
further lettings during the period, for a combined GBP0.2 million per annum, 2% 
ahead of ERV. Two leases were renewed, the passing rent increasing by 22% to a 
combined GBP0.1 million per annum, 5% ahead of ERV. 
 
Our largest void in the industrial portfolio is Swiftbox, the 99,500 sq ft unit 
in Rugby, where we completed a comprehensive refurbishment in February. This is 
one of the few cross-docked units available in the 'Golden Triangle' and we 
expect good interest. 
 
Outlook 
The full impact of the Covid-19 pandemic remains to be seen, but Brexit 
concerns have had a limited impact to date. 
 
Demand remains strong for sub-100,000 sq ft units, with occupiers being more 
discerning about the age and specification of the larger distribution units. We 
see continued rental growth, albeit at a slower rate, in respect of the smaller 
units especially in Greater London and the South East, where there remains a 
lack of supply and a limited development pipeline. We do not expect rental 
growth to come through on the larger units, due to a strong development 
pipeline, although there is a short-term demand spike due to Covid-19 from 
supermarkets and other retailers with increased storage requirements. 
 
The focus going forward is the leasing of Rugby and both capturing the rental 
growth on the smaller units and working proactively with our occupiers to 
facilitate their business needs. We have 16 lease events in the coming year, 
the overall ERV for these units is 16.5% higher than the current passing rent 
of GBP0.7 million. This provides us with the opportunity to grow income further. 
 
Office 
 
Key metrics 
 
                                                                     2020           2019 
 
Value                                                             GBP224.6m        GBP235.0m 
 
Internal area                                                  0.8m sq ft     0.9m sq ft 
 
Annual rental income                                               GBP12.9m         GBP14.2m 
 
Estimated rental value                                             GBP17.4m         GBP18.1m 
 
Occupancy                                                             88%            88% 
 
Number of assets                                                       14             15 
 
The office portfolio, which accounts for 34% of the portfolio, delivered the 
second strongest performance of the year. This was a result of our investment 
into the buildings to make them more attractive to existing and new occupiers, 
combined with continued occupational demand, especially in the regions. 
 
Through working with our occupiers and actively managing our properties, we 
have been able to retain and attract occupiers, which in turn enables us to 
capture rental growth, particularly in markets with a shortage of Grade A 
space, such as Bristol and Milton Keynes. 
 
On a like-for-like basis, our office portfolio value increased by GBP6.6 million 
or 3.0% to GBP224.6 million, and the annual rental income decreased marginally by 
GBP0.3 million or 2.2% to GBP12.9 million. The portfolio has an average weighted 
lease length of 4.0 years and GBP4.5 million of reversionary potential. 
 
Occupational demand has been stronger in the regions than in London. We have 
seen rental growth of 3.5% across the portfolio and occupancy is 88%, primarily 
due to key voids at Angel Gate, London and Pembroke Court, Chatham. We invested 
GBP2.7 million into our office assets during the period and disposed of one 
asset, detailed below. 
 
Portfolio activity 
At Tower Wharf, Bristol, following completion of works to upgrade the reception 
and the installation of additional shower facilities, we agreed to upsize an 
existing occupier and extended their lease which was due to expire in May 2020. 
This increased their floor space by 73% and secured a new 15-year lease, 
subject to break in 2030, at a rent of GBP0.5 million per annum, which was 5% 
ahead of the ERV and GBP0.3 million ahead of the previous passing rent. In 
addition, we moved out an occupier's break option by three years and settled a 
rent review, achieving a 29% uplift to GBP0.4 million per annum, 4% ahead of ERV. 
 
At Grafton Gate, Milton Keynes, we comprehensively refurbished the common areas 
and, working with an occupier, upgraded their office, installing energy 
efficient LED lighting and creating an up-to-date working environment. These 
works meant the building's EPC rating improved from an E to a C, 
future-proofing it in respect of the Minimum Energy Efficiency Standards. As 
part of the office upgrade works, we settled a rent review, securing a 52% 
uplift to GBP0.6 million per annum, 30% ahead of ERV. 
 
At Metro, Salford Quays, where a lease event created a vacant floor, we 
comprehensively refurbished the common areas for the benefit of our occupiers 
and to make the building more attractive. The floor was let to HM Government 
within six months of the refurbishment completing on a 20-year lease subject to 
break in 2030, at GBP0.4 million per annum, which was 2% ahead of ERV. 
 
At Waterside House, Leeds, following upgrade works, we upsized our existing 
occupier, HM Government, into the whole building on a ten-year lease at a rent 
of GBP0.3 million per annum, which was 16% ahead of ERV. 
 
At Citylink, Croydon, we restructured two leases after occupiers actioned break 
clauses. This resulted in an early surrender for a premium and a simultaneous 
new short-term letting. The property was subsequently sold for GBP18.2 million. 
 
Our largest office void is the office element at Stanford Building WC2 which is 
classed as a retail property and is detailed in the retail section. 
 
The offices will provide fibre-enabled Grade A accommodation with original 
warehouse features, commissionaire, occupier amenities and environmental 
improvements. We expect good interest due to the quality of the accommodation 
on offer and size of the suites. 
 
Occupancy remained stable over the period at 88%, with the letting activity 
offset by space coming back in Chatham and London. 
 
Outlook 
Generally, the regions continue to outperform London with occupiers looking for 
high specification buildings, which is why we have carried out significant 
refurbishments at eight of our regional buildings, investing GBP2.5 million to 
improve common areas, adding occupier amenity space and future-proofing them in 
respect of sustainability. 
 
The longer-term impact of the Covid-19 pandemic may well lead to more remote 
working which is likely to change the way physical office space is used. 
 
We have countered the impact of serviced offices by offering flexibility 
through our 'rightsizing' approach as well as our high quality contemporary 
space and occupier amenities, meaning our buildings remain attractive to 
businesses who want control of their own space. Looking forward, we will build 
on the upgrade work completed across the office portfolio to actively manage it 
to attract occupiers. 
 
We have 33 lease events in the coming year, the current ERV for these units is 
13.2% higher than the current passing rent of GBP2.0 million and a 12% void. This 
provides us with the opportunity to grow income further. 
 
Retail and Leisure 
 
Key metrics 
 
                                                                     2020           2019 
 
Value                                                             GBP121.7m        GBP137.5m 
 
Internal area                                                  0.8m sq ft     0.8m sq ft 
 
Annual rental income                                                GBP7.3m          GBP7.5m 
 
Estimated rental value                                              GBP9.2m         GBP10.0m 
 
Occupancy                                                             75%            77% 
 
Number of assets                                                       17             17 
 
The retail and leisure portfolio, which accounts for 18% of the portfolio, 
delivered the weakest performance of the year. This was a result of ongoing 
changes in shopping patterns and weak occupational demand resulting in negative 
rental growth in a lot of markets. 
 
Stanford Building in Covent Garden, which has both retail and office use, is 
our largest element of the retail portfolio at 28%, of the balance 40% is in 
the retail warehouse sector, 22% in high street retail and 10% in hotel and 
leisure assets. 
 
Our investment into the retail parks in Bury and Swansea has enabled us to 
retain and attract new occupiers. 
 
By working with our occupiers and through active management, we have been able 
to temper the declines in value over the period by extending income, letting 
space and achieving rents overall very close to the ERV. 
 
On a like-for-like basis, our retail and leisure portfolio value decreased by GBP 
15.8 million or 11.5% to GBP121.7 million, and the annual rental income decreased 
marginally by GBP0.2 million or 2.6% to GBP7.3 million. The portfolio has an 
average weighted lease length of 8.9 years and GBP1.9 million of reversionary 
potential to GBP9.2 million per annum. 
 
Occupational demand has been weaker in the retail warehouse and restaurant 
sector, with high street shops and London seeing slightly better demand. We 
have seen negative rental growth of 8.0% across the portfolio and occupancy is 
75%, primarily due to key voids at Stanford Building, London and Angouleme 
Retail Park, Bury. We invested GBP3.3 million into the retail portfolio during 
the period. 
 
Portfolio activity 
At Parc Tawe Retail Park, Swansea we carried out a comprehensive refurbishment 
of the park to include new signage, modernisation of the units and 
environmental improvements, for example changing to LED lighting. This has 
created an improved shopping environment for customers and enabled us to 
attract new occupiers. Once we completed enabling works, Lidl relocated to the 
former Homebase unit and, following practical completion of refurbishment 
works, we completed a new 15-year lease at their former unit to Farmfoods at a 
stepped rent to GBP0.1 million per annum, 14% below ERV. We also agreed to extend 
Pets at Home's lease, expiring in 2022, by a further five years and rebased 
their rent to GBP0.1 million per annum from completion, a reduction of 18%, but 
10% ahead of the preceding ERV. We have one unit available to lease, accounting 
for 13% of the park by floor area. 
 
At Angouleme Way Retail Park, Bury we carried out a comprehensive refurbishment 
to update the park for customers and to enable us to attract new occupiers and 
retain existing ones. Argos renewed on a ten-year lease at a rent of GBP0.2 
million per annum, which was 16% ahead of ERV. Another unit was let to a 
regional occupier on a five-year lease, subject to a break in three years, at a 
stepped rent to GBP0.1 million per annum, in line with ERV. We have two units 
available to lease, accounting for 40% of the park by floor area. 
 
At the Crown & Mitre complex in Carlisle, we settled the hotel rent review, 
securing a 42% uplift to GBP0.2 million per annum, 8% ahead of ERV. There is a 
historic lane adjacent to the property, with small shops and local occupiers. 
Working with our occupiers, we refurbished the lane to create a significantly 
better environment in keeping with the Grade II property and attracting higher 
footfall for our occupiers. 
 
At Scots Corner, Birmingham we renewed HM Government's lease for a further ten 
years, subject to break in 2024, at a rent of GBP0.1 million per annum, in line 
with ERV. Towards the end of the year, we got two adjoining shop units back due 
to insolvencies, securing a payment on one of them. These are currently being 
reconfigured and one of the units is under offer. 
 
Our largest retail void is the unit at Stanford Building WC2 where the 
refurbishment of the whole building is currently underway and is due to 
complete in the summer. The unit is in a prime location and provides unique 
space arranged over three floors. It is the first time the unit has been 
available to lease in over 100 years and we expect good interest in due course. 
 
Outlook 
 
The retail and leisure sector continues to undergo structural change due to 
evolving shopping habits, which have resulted in an oversupply in most markets 
with occupiers being able to negotiate lower rents and higher incentives. The 
Covid-19 pandemic has considerably worsened the outlook, and it is likely that 
a number of less resilient businesses will not survive, further increasing the 
supply of floorspace. 
 
We are working on a number of schemes where we envisage changing the use from 
retail or leisure to other uses and we will resume with progressing these plans 
once restrictions are lifted. 
 
We are working with our occupiers to assist them where we can, by for example 
postponing rental payments or providing upfront incentives to remove future 
break options and/or extend leases. The lockdown has caused significant cash 
flow issues to a lot of businesses in this sector and until shops, gyms, hotels 
and restaurants are allowed to open we cannot see an improvement outside of the 
supermarket sector. The full impact of the Covid-19 pandemic remains to be seen 
and this reinforces our portfolio positioning. 
 
Financial Review 
 
In the context of uncertain and difficult market conditions, our results for 
the year were positive. The total profit recorded was GBP22.5 million, compared 
to GBP31.0 million for 2019, reduced due to lower valuation movements, 
particularly in the final quarter of the year. Our EPRA earnings declined to GBP 
19.9 million, and we maintained a covered dividend. Earnings per share were 4.1 
pence overall (3.7 pence on an EPRA basis), and the total return based on these 
results was 4.5% for the year. 
 
The Covid-19 pandemic is having a significant impact on businesses throughout 
the UK. For Picton, like many commercial landlords, the first tangible 
consequence was on the March rent collection date. We received 82% of the rent 
due, and this is discussed more fully below, along with the actions being 
taken. We also experienced a decline in the portfolio valuation at the end of 
March, principally on the retail assets. We expect these themes to continue 
through the course of the pandemic. 
 
Net asset value 
The net assets of the Group increased to GBP509.3 million, largely following the 
equity raise in the year. The chart below shows the components of this increase 
over the year. The EPRA net asset value remained at 93 pence. 
 
                                                                                    GBPm 
 
March 2019 net asset value                                                       499.4 
 
Income profit                                                                     19.9 
 
Valuation movement                                                               (0.9) 
 
Profit on asset disposals                                                          3.5 
 
Issue of ordinary shares                                                           7.0 
 
Share-based awards                                                                 0.3 
 
Purchase of shares                                                               (0.9) 
 
Dividends paid                                                                  (19.0) 
 
March 2020 net asset value                                                       509.3 
 
The following table reconciles the net asset value calculated in accordance 
with International Financial Reporting Standards (IFRS) with that of the 
European Public Real Estate Association (EPRA). 
 
                                                                   2020    2019    2018 
                                                                     GBPm      GBPm      GBPm 
 
Net asset value - EPRA and IFRS                                   509.3   499.4   487.4 
 
Fair value of debt                                               (29.6)  (24.8)  (21.1) 
 
EPRA triple net asset value                                       479.7   474.6   466.3 
 
Net asset value per share (pence)                                    93      93      90 
 
EPRA net asset value per share (pence)                               93      93      90 
 
EPRA triple net asset value per share (pence)                        88      88      87 
 
Income statement 
Total revenue from the property portfolio for the year was GBP45.7 million. On a 
like-for-like basis, rental income on an EPRA basis has reduced compared to the 
previous year. Throughout the year we have been carrying out a number of 
refurbishment projects aimed at improving the quality of space at those assets 
and so improving letting prospects. This is discussed further in the Portfolio 
Review, but the impact on this year's results is lower net property income. 
 
The table below sets out the rent collection statistics for the March quarter, 
analysed by sector. The greatest impact, not unexpectedly, is in the retail 
sector. 
 
Rent due                                          Industrial    Office    Retail     Total 
25 March to 1 April                                      (%)       (%)       and       (%) 
                                                                         Leisure 
                                                                             (%) 
 
Collected                                                 84        89        67        82 
 
Moved to monthly                                           1         1         8         2 
 
Deferred                                                   6         5         8         6 
 
Concessions agreed                                         -         1         -         - 
 
Active management                                          -         -         4         1 
 
Outstanding                                                9         4        13         9 
 
The rent demanded on the March quarter day is in advance, up to the June 2020 
quarter day. We have, however, made increased provisions against our tenant 
debtors in this financial year, and this has impacted our rental income by GBP0.5 
million. 
 
Administrative expenses for the year were GBP5.6 million, so slightly lower than 
the GBP5.8 million in 2019. These include the one-off costs of REIT conversion. 
 
Realised and unrealised valuation gains on the portfolio were GBP2.6 million for 
the year, lower than the gains of GBP11.3 million reported last year. This is 
very much a reflection of the commercial property market, and particularly the 
sentiment in the retail sector, where there have been well publicised issues of 
retail failures. 
 
Interest payable is lower this year compared to 2019, at GBP8.3 million. This 
reflects a full year's saving following the Canada Life repayment in 2018, and 
also the repayment of the current revolving credit facilities. 
 
This is the first full year that we have reported as a UK REIT. All of the 
profits from the property rental business are exempt from UK tax. We must, as a 
REIT, distribute at least 90% of these profits to shareholders as Property 
Income Distributions. Based on our initial submitted tax returns to date, we 
have fully complied with this requirement. This year we have received a small 
tax repayment, an adjustment arising from previous years. 
 
EPRA earnings for the year were GBP19.9 million, lower than the GBP22.9 million 
stated in 2019, principally for the reasons stated above. 
 
Dividends 
The annual dividend rate has remained at 3.5 pence, with total dividends paid 
out of GBP19.0 million. Dividend cover for the full year was lower than last year 
at 105%. 
 
Following the year end we have announced a 29% reduction in the dividend rate, 
which was applied to the dividend paid in May, due to the uncertainty caused by 
the Covid-19 pandemic. 
 
Investment properties 
The appraised value of our investment property portfolio was GBP664.6 million at 
31 March 2020, down from GBP685.3 million a year previously. This year we have 
disposed of two buildings, for net proceeds of GBP33.1 million, realising a 
combined gain of GBP3.5 million compared to last year's valuation. GBP8.9 million 
of capital expenditure was invested back into the existing portfolio. The 
overall revaluation movement was a small loss of GBP0.9 million, principally 
arising in the final quarter of the year, as the impact of the Covid-19 
pandemic was felt. With the reduction in investment market activity and less 
evidence available, the independent valuers included a 'material uncertainty' 
clause in the March valuation. 
 
At 31 March 2020 the portfolio comprised 47 assets, with an average lot size of 
GBP14.1 million. 
 
A further analysis of capital expenditure, in accordance with EPRA Best 
Practices Recommendations, is set out in the EPRA Disclosures section. 
 
Borrowings 
Total borrowings were GBP167.5 million at 31 March 2020, with the loan to value 
ratio having reduced to 21.7%. The weighted average interest rate on our 
borrowings has increased slightly to 4.2%, while the average loan duration is 
now 9.9 years. 
 
Our senior loan facility with Aviva reduced by the regular amortisation of GBP1.2 
million in the year. 
 
The Group remained fully compliant with the loan covenants throughout the year. 
 
During the year we repaid all the outstanding amounts drawn under our revolving 
credit facilities, leaving GBP49 million undrawn at the year end. The year-end 
interest rate payable on these loans was around 2.7%. 
 
Subsequent to the year end, we have completed a new single revolving credit 
facility, replacing the two existing ones. The new GBP50 million facility is for 
an initial term of three years, until May 2023, with two one-year extensions 
available. Interest is payable at 150 basis points over LIBOR, which is at a 
lower rate than the facilities it replaces. 
 
Loan arrangement costs are capitalised and are amortised over the terms of the 
respective loans. At 31 March 2020, the unamortised balance of these costs 
across all facilities was GBP2.3 million. 
 
The fair value of our borrowings at 31 March 2020 was GBP197.0 million, higher 
than the book amount. Lending margins have remained broadly in line with the 
previous year, but gilt rates have fallen in comparison. 
A summary of our borrowings is set out below: 
 
                                                                   2020    2019    2018 
 
Fixed rate loans (GBPm)                                             167.5   168.7   203.5 
 
Drawn revolving facilities (GBPm)                                       -    26.0    10.5 
 
Total borrowings (GBPm)                                             167.5   194.7   214.0 
 
Borrowings net of cash (GBPm)                                       143.9   169.5   182.5 
 
Undrawn facilities (GBPm)                                            49.0    25.0    40.5 
 
Loan to value ratio (%)                                            21.7    24.7    26.7 
 
Weighted average interest rate (%)                                  4.2     4.0     4.1 
 
Average duration (years)                                            9.9     9.8    10.3 
 
Cash flow and liquidity 
The cash flow from our operating activities was GBP13.5 million this year, down 
from the 2019 figure. Proceeds from asset sales were used to finance the net 
reduction in borrowings. Dividend payments of GBP19.0 million were made in the 
year. Our cash balance at the year end stood at GBP23.6 million. 
 
Share capital 
During the year the Company issued 7,551,936 new ordinary shares of no par 
value, for gross proceeds of GBP7.1 million, bringing the total shares in issue 
to 547,605,596. 
 
The Company's Employee Benefit Trust acquired a further 954,000 shares, at a 
cost of GBP0.8 million, during the year to satisfy the future vesting of awards 
made under the Long-term Incentive Plan, and now holds a total of 2,103,683 
shares. As the Trust is consolidated into the Group's results, these shares are 
effectively held in treasury and therefore have been excluded from the net 
asset value and earnings per share calculations, from the date of purchase. 
 
Andrew Dewhirst 
Finance Director 
22 June 2020 
 
 
Principal Risks 
 
Managing Risk 
The Board recognises that there are risks and uncertainties that could have a 
material impact on the Group's results. 
 
Risk management provides a structured approach to the decision making process 
such that the identified risks can be identified, measured, managed, mitigated 
and reported and the uncertainty surrounding expected outcomes can be reduced. 
The Board has developed a risk management policy which it reviews on a regular 
basis. 
 
The Audit and Risk Committee carries out a detailed assessment of all risks, 
whether investment or operational, and considers the effectiveness of the risk 
management and internal control processes. 
 
The Executive Committee is responsible for implementing strategy within the 
agreed risk management policy, as well as identifying and assessing risk in 
day-to-day operational matters. The management committees support the Executive 
Committee in these matters. 
 
The small number of employees and relatively flat management structure allow 
risks to be quickly identified and assessed. 
 
The Group's risk appetite will vary over time and during the course of the 
property cycle. The principal risks - those with potential to have a material 
impact on performance and results - are set out below, together with mitigating 
controls. The UK Corporate Governance Code requires the Board to make a 
Viability Statement. This considers the Company's current position and 
principal 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 statement is set out below. 
 
Covid-19 
The current global Covid-19 pandemic is causing an unprecedented level of 
disruption to the global economy. Many governments, including the UK, have 
imposed lockdowns, giving rise to the closure of some businesses. It is not 
clear how long the restrictions will last nor what the impact on the UK economy 
will be. Some of our occupiers are facing financial difficulties and we are 
working with them to find solutions that both help them and mitigates any 
impact on our capital values and cash flow. 
 
The risks associated with this pandemic fall across many of the principal risks 
set out here, and in many cases increase the potential impact significantly. 
There has already been an impact on the Group's cash flow, and it is considered 
likely that this will continue in at least the short-term. 
 
Picton has a diverse portfolio spread across the UK, with around 350 occupiers 
in a wide range of businesses. The cash flow arising from our occupiers 
underpins our business model. We are continuing to let space, although a number 
of transactions have been put on hold since the pandemic began to affect the UK 
economy. There are few investment transactions taking place to provide 
comparable evidence for valuations, and as a result our external valuers have 
added a material valuation uncertainty clause to their report as at 31 March 
2020, in line with market practice. 
 
We have considered in our Viability Statement the potential impact of various 
scenarios resulting from Covid-19 on the business. 
 
Brexit 
Although the UK has now left the EU and is in the transition period, there is 
still uncertainty regarding a future trading relationship. The transition 
period ends on 31 December 2020 and in the absence of any agreement being 
reached there could be further disruption to the UK economy. 
 
We have considered the potential impact from a disruptive Brexit in a number of 
scenarios included in our Viability Statement. 
 
Emerging risks 
During the year the Board has considered themes where emerging risks or 
disrupting events may impact the business. These may arise from behavioural 
changes, political or regulatory changes, advances in technology, environmental 
factors, economic conditions or demographic changes. As noted above Covid-19 
may also have an impact on a number of these themes. Some are already 
considered to be principal risks in their own right such as the impact of 
climate change, others are reviewed as part of the ongoing risk management 
process. 
 
Corporate Strategy 
 
1 
 
Political and economic                                     Risk trend: Up 
 
Risk                          Mitigation                   Commentary 
Uncertainty in the UK         The Board considers economic The risks around the UK 
economy, whether arising from conditions and market        economy have increased with 
political events or           uncertainty when setting     the Covid-19 pandemic. 
otherwise, brings risks to    strategy, considering the    Although there is more 
the property market and to    financial strategy of the    certainty regarding Brexit, 
occupiers' businesses. This   business and in making       no future deal with the EU 
can result in lower           investment decisions.        has yet been agreed and this 
shareholder returns, lower                                 may lead to further 
asset liquidity and increased                              uncertainty later in 2020. 
occupier failure. 
 
 
 
2 
 
Market cycle                                              Risk trend: Up 
 
Risk                         Mitigation                   Commentary 
The property market is       The Board reviews the        There may be increased 
cyclical and returns can be  Group's strategy and         volatility in the property 
volatile. There is an        business objectives on a     market as a result of the 
ongoing risk that the        regular basis and considers  current economic 
Company fails to react       whether any change is        restrictions. Official 
appropriately to changing    needed, in light of current  forecasts indicate a 
market conditions, resulting and forecast market          substantial fall in UK GDP 
in an adverse impact on      conditions.                  this year. The impact of 
shareholder returns.                                      Covid-19 may also cause 
                                                          businesses to review their 
                                                          existing operating models 
                                                          (e.g. future need for office 
                                                          space). 
 
 
 
3 
 
Regulatory and tax                                         Risk trend: Same 
 
Risk                          Mitigation                   Commentary 
The Group could fail to       The Board and senior         There are no significant 
comply with legal, fiscal,    management receive regular   changes expected to the 
health and safety or          updates on relevant laws and regulatory environment in 
regulatory matters which      regulations.                 which the Group operates. 
could lead to financial loss, 
reputational damage or loss   The Group is a member of the 
of REIT status.               BPF and EPRA, and management 
                              attend industry briefings. 
 
 
 
4 
 
Climate change                                            Risk trend: Up 
 
Risk                         Mitigation                   Commentary 
Failure to react to climate  Sustainability is embedded   Climate change is now 
change could lead to the     within the Group's business  considered to be a principal 
Group's assets becoming      model and strategy.          risk given its increasing 
obsolete and unable to                                    importance and the impact of 
attract occupiers.           All refurbishment projects   real estate on the 
                             include environmental        environment. 
                             considerations to ensure 
                             buildings are maintained to 
                             current standards. 
 
Property 
 
5 
 
Portfolio strategy                                         Risk trend: Up 
 
Risk                          Mitigation                   Commentary 
The Group has an              The Group maintains a        Continued divergence of 
inappropriate portfolio       diversified portfolio in     returns across sectors, 
strategy, as a result of poor order to minimise exposure   coupled with the impact of 
sector or geographical        to any one geographical area Covid-19 particularly on 
allocations, or holding       or market sector.            retail and leisure assets, 
obsolete assets, leading to                                have increased this risk. 
lower shareholder returns. 
 
 
 
6 
 
Investment                                                 Risk trend: Same 
 
Risk                          Mitigation                   Commentary 
Investment decisions may be   The Executive Committee must There is no change to this 
flawed as a result of         approve all investment       risk. 
incorrect assumptions, poor   transactions over a 
research or incomplete due    threshold level, and 
diligence, leading to         significant transactions 
financial loss.               require Board approval. 
 
                              A formal appraisal and due 
                              diligence process is carried 
                              out for all potential 
                              purchases. 
 
                              A review of each acquisition 
                              is performed within two 
                              years of completion. 
 
 
 
7 
 
Asset management                                           Risk trend: Up 
 
Risk                          Mitigation                   Commentary 
Failure to properly execute   Management prepare business  The importance of effective 
asset business plans or poor  plans for each asset which   asset management has been 
asset management could lead   are reviewed regularly.      heightened by the Covid-19 
to longer void periods,                                    pandemic and its impact on 
higher occupier defaults,     The Executive Committee must occupiers' businesses. 
higher arrears and low        approve all investment 
occupier retention, all       transactions over a 
having an adverse impact on   threshold level, and 
earnings and cash flow.       significant transactions 
                              require Board approval. 
 
                              Management maintain close 
                              contact with occupiers and 
                              have oversight of the 
                              Group's Property Manager. 
 
 
 
8 
 
Valuation                                                 Risk trend: Up 
 
Risk                         Mitigation                   Commentary 
A fall in the valuation of   The Group's property assets  The current economic 
the Group's property assets  are valued quarterly by an   situation could lead to 
could lead to lower          independent valuer with      negative sentiment and see 
investment returns and a     oversight by the Property    further falls in asset 
breach of loan covenants.    Valuation Committee. Market  values. 
                             commentary is provided 
                             regularly by the independent 
                             valuer. 
 
                             The Board reviews financial 
                             forecasts for the Group on a 
                             regular basis, including 
                             sensitivity against 
                             financial covenants. 
 
Operational 
 
9 
 
People                                                    Risk trend: Same 
 
Risk                         Mitigation                   Commentary 
The Group relies on a small  The Board has a remuneration The Group has a stable and 
team to implement the        policy in place which        aligned team in place. 
strategy and run the         incentivises performance and 
day-to-day operations.       is aligned with              Significant efforts have 
Failure to retain or recruit shareholders' interests.     been, and will continue to 
key individuals with the                                  be made to ensure the safety 
right blend of skills and    There is a Non-Executive     and well-being of the 
experience may result in     Director responsible for     Group's employees through 
poor decision making and     employee engagement who      the course of the Covid-19 
underperformance.            provides regular feedback to pandemic. 
                             the Board. 
 
Financial 
 
10 
 
Finance strategy                                          Risk trend: Up 
 
Risk                         Mitigation                   Commentary 
The Group has a number of    The Group's property assets  Although the Group has 
loan facilities to finance   are valued quarterly by an   headroom against its loan 
its activities. Failure to   independent valuer with      covenants, significant falls 
comply with covenants or to  oversight by the Property    in valuations or income 
manage re-financing events   Valuation Committee. Market  during the current Covid-19 
could lead to a funding      commentary is provided       crisis could lead to pressure 
shortfall for operational    regularly by the independent on covenants. However, a 
activities.                  valuer.                      number of stress tests have 
                                                          been conducted to assess the 
                             The Board reviews financial  potential risk, which the 
                             forecasts for the Group on a Board will continue to 
                             regular basis, including     monitor. 
                             sensitivity against 
                             financial covenants. 
 
                             The Audit and Risk Committee 
                             considers the going concern 
                             status of the Group 
                             biannually. 
 
 
 
11 
 
Capital structure                                         Risk trend: Up 
 
Risk                         Mitigation                   Commentary 
The Group operates a geared  The Board regularly reviews  Although the Group has a 
capital structure, which     its gearing strategy and     modest level of gearing, 
magnifies returns from the   debt maturity profile, at    falls in capital values will 
portfolio, both positive and least annually, in light of  be magnified by the impact 
negative. An inappropriate   changing market conditions.  of gearing. 
level of gearing relative to 
the property cycle could 
lead to lower investment 
returns. 
 
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 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 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 the current Covid-19 pandemic 
and a disruptive Brexit and their potential impact on the UK economy and 
commercial property market 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. 
 
In the context of both the current Covid-19 pandemic and a disruptive Brexit, 
the Board considered a number of scenarios around 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 and their impact on revenue and cash flow. Future 
letting activity was assumed to be severely curtailed during the initial period 
of the assessment. Significant falls in capital values were included in these 
scenarios, including the potential impact on the Group's loan covenants. The 
Group's long-term loan facilities are in place throughout the assessment 
period, while the Board assumed that the Group would continue to have access to 
its short-term facilities. 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 2025 and will continue 
to be assessed over five-year rolling periods. 
 
The Directors consider that the stress testing performed was sufficiently 
robust 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 2025. 
 
Statement of Directors' responsibilities 
The Directors are responsible for preparing the Annual Report and the financial 
statements in accordance with applicable law and regulations. 
 
Company law requires the Directors to prepare financial statements for each 
financial year. Under that law they have elected to prepare the financial 
statements in accordance with International Financial Reporting Standards, as 
issued by the IASB, and applicable law. 
 
Under company law the Directors must not approve the financial statements 
unless they are satisfied that they give a true and fair view of the state of 
affairs of the Company and of its profit or loss for that period. 
 
In preparing these financial statements, the Directors are required to: 
 
  * select suitable accounting policies and then apply them consistently; 
  * make judgements and estimates that are reasonable, relevant and reliable; 
  * state whether applicable accounting standards have been followed, subject 
    to any material departures disclosed and explained in the financial 
    statements; 
  * assess the Group's ability to continue as a going concern, disclosing, as 
    applicable, matters related to going concern; and 
  * use the going concern basis of accounting unless they either intend to 
    liquidate the Group or to cease operations, or have no realistic 
    alternative but to do so. 
 
The Directors are responsible for keeping proper accounting records that are 
sufficient to show and explain the Company's transactions and disclose with 
reasonable accuracy at any time the financial position of the Company and 
enable them to ensure that its financial statements comply with the Companies 
(Guernsey) Law, 2008. They are responsible for such internal controls as they 
determine are necessary to enable the preparation of the financial statements 
that are free from material misstatement, whether due to fraud or error, and 
have a general responsibility for taking such steps as are reasonably open to 
them to safeguard the assets of the Company and to prevent and detect fraud and 
other irregularities. 
 
The Directors are responsible for the maintenance and integrity of the 
corporate and financial information included on the Company's website, and for 
the preparation and dissemination of financial statements. Legislation in 
Guernsey governing the preparation and dissemination of financial statements 
may differ from legislation in other jurisdictions. 
 
Directors' responsibility statement in respect of the Annual Report and 
financial statements 
 
We confirm that to the best of our knowledge: 
 
  * the financial statements, prepared in accordance with the applicable set of 
    accounting standards, give a true and fair view of the assets, liabilities, 
    financial position and profit or loss of the Group; and 
  * the Strategic Report includes a fair review of the development and 
    performance of the business and the position of the Group, together with a 
    description of the principal risks and uncertainties that it faces. 
 
We consider the Annual Report and accounts, taken as a whole, are fair, 
balanced and understandable and provide the information necessary for 
shareholders to assess the Group's position and performance, business model and 
strategy. 
 
By Order of the Board 
 
Andrew Dewhirst 
Director 
22 June 2020 
 
 
 
Financial Statements 
Consolidated statement of comprehensive income 
for the year ended 31 March 2020 
 
                                                                Notes      2020      2019 
                                                                          Total     Total 
                                                                           GBP000      GBP000 
 
Income 
 
Revenue from properties                                             3    45,664    47,733 
 
Property expenses                                                   4  (12,027)   (9,433) 
 
                                                                         33,637    38,300 
Net property income 
 
Expenses 
 
Administrative expenses                                             6   (5,563)   (5,842) 
 
                                                                        (5,563)   (5,842) 
Total operating expenses 
 
Operating profit before movement on investments                          28,074    32,458 
 
Investments 
 
Profit on disposal of investment properties                        13     3,478       379 
 
Investment property valuation movements                            13     (882)    10,909 
 
                                                                          2,596    11,288 
Total profit on investments 
 
Operating profit                                                         30,670    43,746 
 
Financing 
 
Interest received                                                             9        38 
 
Interest paid                                                       8   (8,295)   (9,126) 
 
Debt prepayment fees                                                          -   (3,245) 
 
                                                                        (8,286)  (12,333) 
Total finance costs 
 
Profit before tax                                                        22,384    31,413 
 
Tax                                                                 9       124     (458) 
 
                                                                         22,508    30,955 
Profit and total comprehensive income for the period 
 
Earnings per share 
 
Basic                                                              11      4.1p      5.7p 
 
Diluted                                                            11      4.1p      5.7p 
 
All items in the above statement derive from continuing operations. 
 
All of the profit and total comprehensive income for the year is attributable 
to the equity holders of the Company. 
 
Notes 1 to 26 form part of these consolidated financial statements. 
 
 
Consolidated statement of changes in equity 
for the year ended 31 March 2020 
 
                                                Notes    Share Retained    Other    Total 
                                                       capital earnings reserves     GBP000 
                                                          GBP000     GBP000     GBP000 
 
Balance as at 31 March 2018                            157,449  330,157    (251)  487,355 
 
Profit for the year                                          -   30,955        -   30,955 
 
Dividends paid                                     10        - (18,860)        - (18,860) 
 
Share-based awards                                  7        -        -      363      363 
 
Purchase of shares held in trust                    7        -        -    (398)    (398) 
 
                                                       157,449  342,252    (286)  499,415 
Balance as at 31 March 2019 
 
Profit for the year                                          -   22,508        -   22,508 
 
Dividends paid                                     10        - (19,039)        - (19,039) 
 
Issue of ordinary shares                           19    7,137        -        -    7,137 
 
Issue costs of shares                                    (186)        -        -    (186) 
 
Vesting of shares held in trust                              -     (54)       54        - 
 
Share-based awards                                  7        -        -      292      292 
 
Purchase of shares held in trust                    7        -        -    (844)    (844) 
 
                                                       164,400  345,667    (784)  509,283 
Balance as at 31 March 2020 
 
Notes 1 to 26 form part of these consolidated financial statements. 
 
 
Consolidated balance sheet 
as at 31 March 2020 
 
 
                                                                Notes      2020      2019 
                                                                           GBP000      GBP000 
 
Non-current assets 
 
Investment properties                                              13   654,486   676,102 
 
Tangible assets                                                              20        25 
 
                                                                        654,506   676,127 
Total non-current assets 
 
 
Current assets 
 
Accounts receivable                                                14    17,601    14,309 
 
Cash and cash equivalents                                          15    23,567    25,168 
 
                                                                         41,168    39,477 
Total current assets 
 
                                                                        695,674   715,604 
Total assets 
 
 
Current liabilities 
 
Accounts payable and accruals                                      16  (19,438)  (22,400) 
 
Loans and borrowings                                               17     (888)     (833) 
 
Obligations under leases                                           21     (108)     (109) 
 
                                                                       (20,434)  (23,342) 
Total current liabilities 
 
 
Non-current liabilities 
 
Loans and borrowings                                               17 (164,248) (191,136) 
 
Obligations under leases                                           21   (1,709)   (1,711) 
 
                                                                      (165,957) (192,847) 
Total non-current liabilities 
 
                                                                      (186,391) (216,189) 
Total liabilities 
 
                                                                        509,283   499,415 
Net assets 
 
 
Equity 
 
Share capital                                                      19   164,400   157,449 
 
Retained earnings                                                       345,667   342,252 
 
Other reserves                                                            (784)     (286) 
 
                                                                        509,283   499,415 
Total equity 
 
                                                                   22       93p       93p 
Net asset value per share 
 
These consolidated financial statements were approved by the Board of Directors 
on 22 June 2020 and signed on its behalf by: 
 
Andrew Dewhirst 
Director 
22 June 2020 
 
Notes 1 to 26 form part of these consolidated financial statements. 
 
 
Consolidated statement of cash flows 
for the year ended 31 March 2020 
 
                                                                Notes      2020      2019 
                                                                           GBP000      GBP000 
 
Operating activities 
 
Operating profit                                                         30,670    43,746 
 
Adjustments for non-cash items                                     20   (2,295)  (10,918) 
 
Interest received                                                             9        38 
 
Interest paid                                                           (7,952)   (8,668) 
 
Tax received/(paid)                                                         123     (845) 
 
(Increase)/decrease in accounts receivable                              (4,078)       396 
 
(Decrease)/increase in accounts payable and accruals                    (2,936)     1,532 
 
                                                                         13,541    25,281 
Cash inflows from operating activities 
 
 
Investing activities 
 
Capital expenditure on investment properties                       13   (8,861)   (1,559) 
 
Disposal of investment properties                                        33,859    11,837 
 
Purchase of tangible assets                                                 (4)      (27) 
 
                                                                         24,994    10,251 
Cash inflows from investing activities 
 
 
Financing activities 
 
Borrowings repaid                                                  17  (33,204)  (34,871) 
 
Borrowings drawn                                                   17     6,000    15,500 
 
Debt prepayment fees                                                          -   (3,245) 
 
Issue of ordinary shares                                           19     7,137         - 
 
Issue costs of ordinary shares                                            (186)         - 
 
Purchase of shares held in trust                                    7     (844)     (398) 
 
Dividends paid                                                     10  (19,039)  (18,860) 
 
                                                                       (40,136)  (41,874) 
Cash outflows from financing activities 
 
                                                                        (1,601)   (6,342) 
Net decrease in cash and cash equivalents 
 
Cash and cash equivalents at beginning of year                           25,168    31,510 
 
                                                                   15    23,567    25,168 
Cash and cash equivalents at end of year 
 
Notes 1 to 26 form part of these consolidated financial statements. 
 
 
Notes to the consolidated financial statements 
for the year ended 31 March 2020 
 
1. General information 
 
Picton Property Income Limited (the 'Company' and together with its 
subsidiaries the 'Group') was established on 15 September 2005 as a closed 
ended Guernsey investment company and entered the UK REIT regime on 1 October 
2018. The consolidated financial statements are prepared for the year ended 31 
March 2020 with comparatives for the year ended 31 March 2019. 
 
2. Significant accounting policies 
 
Basis of accounting 
 
The financial statements have been prepared on a going concern basis and adopt 
the historical cost basis, except for the revaluation of investment properties. 
Historical cost is generally based on the fair value of the consideration given 
in exchange for the assets. The financial statements, which give a true and 
fair view, are prepared in accordance with International Financial Reporting 
Standards (IFRS) as issued by the IASB and are in compliance with the Companies 
(Guernsey) Law, 2008. 
 
Given the impact of the current Covid-19 pandemic on the UK economy, the 
Directors have focused on assessing whether the going concern basis remains 
appropriate for the preparation of the financial statements. They have reviewed 
the Group's principal risks, its loan facilities, access to funding and 
liquidity position and then considered a number of scenarios including 
different levels of rent collection over varying timescales, and the potential 
consequences on financial performance, asset values, capital projects and loan 
covenants. Under all of these scenarios the Group has sufficient 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. 
 
The financial statements are presented in pounds sterling, which is the 
Company's functional currency. All financial information presented in pounds 
sterling has been rounded to the nearest thousand, except when otherwise 
indicated. 
 
New or amended standards issued 
 
The accounting policies adopted are consistent with those of the previous 
financial period, as amended to reflect the adoption of new standards, 
amendments and interpretations which became effective in the year as shown 
below. 
 
  * IFRS 16 Leases 
 
The adoption of this standard has had no material effect on the consolidated 
financial statements of the Group. 
 
At the date of approval of these financial statements there are a number of new 
and amended standards in issue but not yet effective for the financial year 
ended 31 March 2020 and thus have not been applied by the Group. 
 
  * Amendments to IFRS 3 (Business Combinations) is effective for financial 
    years commencing on or after 1 January 2020. The amendment relates to 
    changes in the criteria for determining whether an acquisition is a 
    business combination or an asset acquisition. These amendments will be 
    applied to any future business combinations. 
  * Amendments to IFRS 9 (Financial Instruments) is effective for financial 
    years commencing on or after 1 January 2020. The amendments offer relief in 
    meeting the criteria for hedge accounting on the transition from LIBOR to 
    IBOR. The adoption of these amendments is not considered to have a material 
    impact on the financial statements of the Group. 
  * Amendments to References to the Conceptual Framework are effect for 
    financial years commencing on or after 1 January 2020. The adoption of 
    these amendments is not considered to have a material impact on the 
    financial statements of the Group. 
  * Amendments to IAS 8 (Accounting Policies, Changes in Accounting Estimates 
    and Errors) are also effective for financial years commencing on or after 1 
    January 2020. The amendment will be applied to any future changes in 
    Accounting Policy, Accounting Estimates or Errors. 
 
Use of estimates and judgements 
 
The preparation of financial statements in conformity with IFRS requires 
management to make judgements, estimates and assumptions that affect the 
application of policies and the reported amounts of assets, liabilities, income 
and expenses. The estimates and associated assumptions are based on historical 
experience and various other factors that are believed to be reasonable under 
the circumstances, the results of which form the basis of making estimates 
about the carrying values of assets and liabilities that are not readily 
apparent from other sources. Actual results may differ from these estimates. 
The estimates and underlying assumptions are reviewed on an ongoing basis. 
 
Significant estimates 
 
The critical estimates and assumptions relate to the investment property 
valuations applied by the Group's independent valuer and this is described in 
more detail in Note 13. Revisions to accounting estimates are recognised in the 
year in which the estimate is revised if the revision affects only that year, 
or in the year of the revision and future years if the revision affects both 
current and future years. 
 
Significant judgements 
 
Critical judgements, where made, are disclosed within the relevant section of 
the financial statements in which such judgements have been applied. Key 
judgements relate to the treatment of business combinations, lease 
classifications, or employee benefits where different accounting policies could 
be applied. These are described in more detail in the accounting policy notes 
below, or in the relevant notes to the financial statements. 
 
Basis of consolidation 
 
The consolidated financial statements incorporate the financial statements of 
the Company and entities controlled by the Company at the reporting date. The 
Group controls an entity when it is exposed to, or has rights to, variable 
returns from its involvement with the entity and has the ability to affect 
these returns through its power over the entity. 
 
Subsidiaries are consolidated from the date on which control is transferred to 
the Group and cease to be consolidated from the date on which control is 
transferred out of the Group. These financial statements include the results of 
the subsidiaries disclosed in Note 12. All intra-group transactions, balances, 
income and expenses are eliminated on consolidation. 
 
Fair value hierarchy 
 
The fair value measurement for the assets and liabilities are categorised into 
different levels in the fair value hierarchy based on the inputs to valuation 
techniques used. The different levels have been defined as follows: 
 
Level 1: quoted prices (unadjusted) in active markets for identical assets or 
liabilities that the Group can access at the measurement date. 
 
Level 2: inputs other than quoted prices included within Level 1 that are 
observable for the asset or liability, either directly or indirectly. 
 
Level 3: unobservable inputs for the asset or liability. 
 
The Group recognises transfers between levels of the fair value hierarchy as of 
the end of the reporting period during which the transfer has occurred. 
 
Investment properties 
 
Freehold property held by the Group to earn income or for capital appreciation, 
or both, is classified as investment property in accordance with IAS 40 
'Investment Property'. Property held under head leases for similar purposes is 
also classified as investment property. Investment property is initially 
recognised at purchase cost plus directly attributable acquisition expenses and 
subsequently measured at fair value. The fair value of investment property is 
based on a valuation by an independent valuer who holds a recognised and 
relevant professional qualification and who has recent experience in the 
location and category of the investment property being valued. 
 
The fair value of investment properties is measured based on each property's 
highest and best use from a market participant's perspective and considers the 
potential uses of the property that are physically possible, legally 
permissible and financially feasible. 
 
The fair value of investment property generally involves consideration of: 
 
  * Market evidence on comparable transactions for similar properties; 
  * The actual current market for that type of property in that type of 
    location at the reporting date and current market expectations; 
  * Rental income from leases and market expectations regarding possible future 
    lease terms; 
  * Hypothetical sellers and buyers, who are reasonably informed about the 
    current market and who are motivated, but not compelled, to transact in 
    that market on an arm's length basis; and 
  * Investor expectations on matters such as future enhancement of rental 
    income or market conditions. 
 
Gains and losses arising from changes in fair value are included in the 
Consolidated Statement of Comprehensive Income in the year in which they arise. 
Purchases and sales of investment property are recognised when contracts have 
been unconditionally exchanged and the significant risks and rewards of 
ownership have been transferred. 
 
An investment property is derecognised for accounting purposes upon disposal or 
when no future economic benefits are expected to arise from the continued use 
of the asset. Any gain or loss arising on derecognition of the asset 
(calculated as the difference between the net disposal proceeds and the 
carrying amount of the item) is included in the Consolidated Statement of 
Comprehensive Income in the year the asset is derecognised. Investment 
properties are not depreciated. 
 
The majority of the investment properties are charged by way of a first ranking 
mortgage as security for the loans made to the Group; see Note 17. 
 
Leases 
 
Head leases, which transfer to the Group substantially all the risks and 
benefits incidental to ownership of the leased asset, are capitalised at the 
inception of the lease at the fair value of the leased asset or, if lower, the 
present value of the minimum lease payments. Lease payments are apportioned 
between finance charges and a reduction of the lease liability to achieve a 
constant rate of interest on the remaining balance of the liability. Finance 
charges are charged directly to the Consolidated Statement of Comprehensive 
Income. 
 
Lease income is recognised in income on a straight-line basis over the lease 
term. Direct costs incurred in negotiating and arranging an operating lease are 
added to the carrying amount of the leased asset and recognised as an expense 
over the lease term on the same basis as the lease income. Premiums received on 
the surrender of leases are recorded as income immediately if there are no 
relevant conditions attached to the surrender. 
 
Cash and cash equivalents 
 
Cash includes cash in hand and cash with banks. Cash equivalents are 
short-term, highly liquid investments that are readily convertible to known 
amounts of cash with original maturities in three months or less and that are 
subject to an insignificant risk of change in value. 
 
Income and expenses 
 
Income and expenses are included in the Consolidated Statement of Comprehensive 
Income on an accruals basis. All of the Group's income and expenses are derived 
from continuing operations. 
 
Revenue is recognised to the extent that it is probable that the economic 
benefit will flow to the Group and the revenue can be reliably measured. 
 
Lease incentive payments are amortised on a straight-line basis over the period 
from the date of lease inception to the lease end. Upon receipt of a surrender 
premium for the early termination of a lease, the profit, net of dilapidations 
and non-recoverable outgoings relating to the lease concerned, is immediately 
reflected in revenue from properties. 
 
Property operating costs include the costs of professional fees on letting and 
other non-recoverable costs. 
 
The income charged to occupiers for property service charges and the costs 
associated with such service charges are shown separately in Notes 3 and 4 to 
reflect that, notwithstanding this money is held on behalf of occupiers, the 
ultimate risk for paying and recovering these costs rests with the property 
owner. 
 
Employee benefits 
 
Defined contribution plans 
 
A defined contribution plan is a post-employment benefit plan under which the 
Company pays fixed contributions into a separate entity and will have no legal 
or constructive obligation to pay further amounts. Obligations for 
contributions to defined contribution pension plans are recognised as an 
expense in the Consolidated Statement of Comprehensive Income in the periods 
during which services are rendered by employees. 
 
Short-term benefits 
 
Short-term employee benefit obligations are measured on an undiscounted basis 
and are expensed as the related service is provided. A liability is recognised 
for the amount expected to be paid under short-term cash bonus or 
profit-sharing plans if the Company has a present legal or constructive 
obligation to pay this amount as a result of past service provided by the 
employee and the obligation can be estimated reliably. 
 
Share-based payments 
 
The fair value of the amounts payable to employees in respect of the Deferred 
Bonus Plan, when settled in cash, is recognised as an expense with a 
corresponding increase in liabilities, over the period that the employees 
become unconditionally entitled to payment. Where the awards are equity 
settled, the fair value is recognised as an expense, with a corresponding 
increase in equity. The liability is remeasured at each reporting date and at 
settlement date. Any changes in the fair value of the liability are recognised 
under the category staff costs in the Consolidated Statement of Comprehensive 
Income. 
 
The grant date fair value of awards to employees made under the Long-term 
Incentive Plan is recognised as an expense, with a corresponding increase in 
equity, over the vesting period of the awards. The amount recognised as an 
expense is adjusted to reflect the number of awards for which the related 
non-market performance conditions are expected to be met, such that the amount 
ultimately recognised is based on the number of awards that meet the related 
non-market performance conditions at the vesting date. For share-based payment 
awards with market conditions, the grant date fair value of the share-based 
awards is measured to reflect such conditions and there is no adjustment 
between expected and actual outcomes. 
 
The cost of the Company's shares held by the Employee Benefit Trust is deducted 
from equity in the Group Balance Sheet. Any shares held by the Trust are not 
included in the calculation of earnings or net assets per share. 
 
Dividends 
 
Dividends are recognised in the period in which they are declared. 
 
Accounts receivable 
 
Accounts receivable are stated at their nominal amount as reduced by 
appropriate allowances for estimated irrecoverable amounts. The Group applies 
the IFRS 9 simplified approach to measuring expected credit losses, which uses 
a lifetime expected impairment provision for all applicable accounts 
receivable. Bad debts are written off when identified. 
 
Loans and borrowings 
 
All loans and borrowings are initially recognised at cost, being the fair value 
of the consideration received net of issue costs associated with the borrowing. 
After initial recognition, loans and borrowings are subsequently measured at 
amortised cost using the effective interest method. Amortised cost is 
calculated by taking into account any issue costs, and any discount or premium 
on settlement. Gains and losses are recognised in profit or loss in the 
Consolidated Statement of Comprehensive Income when the liabilities are 
derecognised for accounting purposes, as well as through the amortisation 
process. 
 
Assets classified as held for sale 
 
Any investment properties on which contracts for sale have been exchanged but 
which had not completed at the period end are disclosed as properties held for 
sale. Investment properties included in the held for sale category continue to 
be measured in accordance with the accounting policy for investment properties. 
 
Other assets and liabilities 
 
Other assets and liabilities, including trade creditors and accruals, trade and 
other debtors and creditors, and deferred rental income, which are not interest 
bearing are stated at their nominal value. 
 
Share capital 
 
Ordinary shares are classified as equity. Incremental costs directly 
attributable to the issue of ordinary shares are recognised as a deduction from 
equity. 
 
Taxation 
 
The Group elected to be treated as a UK REIT with effect from 1 October 2018. 
The UK REIT rules exempt the profits of the Group's UK property rental business 
from UK corporation and income tax. Gains on UK properties are also exempt from 
tax, provided they are not held for trading. The Group is otherwise subject to 
UK corporation tax. 
 
As a REIT, the Company is required to pay Property Income Distributions equal 
to at least 90% of the Group's exempted net income. To remain a UK REIT there 
are a number of conditions to be met in respect of the principal company of the 
Group, the Group's qualifying activity and its balance of business. The Group 
continues to meet these conditions. 
 
Principles for the Consolidated Statement of Cash Flows 
 
The Consolidated Statement of Cash Flows has been drawn up according to the 
indirect method, separating the cash flows from operating activities, investing 
activities and financing activities. The net result has been adjusted for 
amounts in the Consolidated Statement of Comprehensive Income and movements in 
the Consolidated Balance Sheet which have not resulted in cash income or 
expenditure in the relating period. 
 
The cash amounts in the Consolidated Statement of Cash Flows include those 
assets that can be converted into cash without any restrictions and without any 
material risk of decreases in value as a result of the transaction. 
 
3. Revenue from properties 
 
                                                                           2020    2019 
                                                                           GBP000    GBP000 
 
Rents receivable (adjusted for lease incentives)                         37,780  40,942 
 
Surrender premiums                                                          603     682 
 
Dilapidation receipts                                                       471     269 
 
Other income                                                                 81     122 
 
Service charge income                                                     6,729   5,718 
 
                                                                         45,664  47,733 
 
Rents receivable includes lease incentives recognised of GBP1.3 million (2019: GBP 
0.8 million). 
 
4. Property expenses 
 
                                                                           2020    2019 
                                                                           GBP000    GBP000 
 
Property operating costs                                                  2,293   2,342 
 
Property void costs                                                       3,005   1,373 
 
Recoverable service charge costs                                          6,729   5,718 
 
                                                                         12,027   9,433 
 
5. Operating segments 
 
The Board is responsible for setting the Group's business model and strategy. 
The key measure of performance used by the Board to assess the Group's 
performance is the total return on the Group's net asset value. As the total 
return on the Group's net asset value is calculated based on the net asset 
value per share calculated under IFRS as shown at the foot of the Balance 
Sheet, assuming dividends are reinvested, the key performance measure is that 
prepared under IFRS. Therefore, no reconciliation is required between the 
measure of profit or loss used by the Board and that contained in the financial 
statements. 
 
The Board has considered the requirements of IFRS 8 'Operating Segments'. The 
Board is of the opinion that the Group, through its subsidiary undertakings, 
operates in one reportable industry segment, namely real estate investment, and 
across one primary geographical area, namely the United Kingdom, and therefore 
no segmental reporting is required. The portfolio consists of 47 commercial 
properties, which are in the industrial, office, retail and leisure sectors. 
 
6. Administrative expenses 
 
                                                                           2020    2019 
                                                                           GBP000    GBP000 
 
Director and staff costs                                                  3,273   3,672 
 
Auditor's remuneration                                                      191     157 
 
Other administrative expenses                                             2,099   2,013 
 
                                                                          5,563   5,842 
 
One-off REIT conversion costs of GBP215,000 were incurred during the year ended 
31 March 2019, which are included within other administrative expenses. 
 
Auditor's remuneration comprises:                                          2020    2019 
                                                                           GBP000    GBP000 
 
Audit fees: 
 
Audit of Group financial statements                                          92      72 
 
Audit of subsidiaries' financial statements                                  67      43 
 
Audit-related fees: 
 
Review of half-year financial statements                                     16      15 
 
                                                                            175     130 
 
Non-audit fees: 
 
Additional controls testing                                                  16      15 
 
Liquidators' fees                                                             -       7 
 
Tax compliance                                                                -       5 
 
                                                                             16      27 
 
                                                                            191     157 
 
7. Director and staff costs 
 
                                                                           2020    2019 
                                                                           GBP000    GBP000 
 
Wages and salaries                                                        1,688   1,654 
 
Non-Executive Directors' fees                                               250     257 
 
Social security costs                                                       394     623 
 
Other pension costs                                                          45      48 
 
Share-based payments - cash settled                                         473     727 
 
Share-based payments - equity settled                                       423     363 
 
                                                                          3,273   3,672 
 
The emoluments of the Directors are set out in detail within the Remuneration 
Committee report. 
 
Employees participate in two share-based remuneration arrangements: the 
Deferred Bonus Plan and the Long-term Incentive Plan (the 'LTIP'). 
 
For all employees, a proportion of any discretionary annual bonus will be an 
award under the Deferred Bonus Plan. With the exception of Executive Directors, 
awards are cash settled and vest after two years. The final value of awards are 
determined by the movement in the Company's share price and dividends paid over 
the vesting period. For Executive Directors, awards are equity settled and also 
vest after two years. On 19 June 2019 awards of 441,322 units were made which 
vest in June 2021 (2019: 572,389 units). The next awards are due to be made in 
June 2020 for vesting in June 2022. 
 
The table below summarises the awards made under the Deferred Bonus Plan. 
Employees have the option to defer the vesting date of their awards for a 
maximum of seven years. The units which vested at 31 March 2020, and were not 
deferred, were paid out subsequent to the year end at a cost of GBP210,000 (2019: 
GBP925,000). 
 
Vesting date         Units   Units     Units       Units    Units   Units     Units     Units    Units 
                        at granted cancelled redeemed in       at granted cancelled  redeemed       at 
                  31 March  in the    in the    the year 31 March  in the    in the    in the 31 March 
                      2018    year      year                 2019    year      year      year     2020 
 
31 March 2016       65,198       -         -    (65,198)        -       -         -         -        - 
 
31 March 2017      127,916       -         -   (127,916)        -       -         -         -        - 
 
31 March 2018      127,234       -         -   (127,234)        -       -         -         -        - 
 
31 March 2019      950,890       -  (14,331)   (936,559)        -       -         -         -        - 
 
31 March 2020            - 572,389   (7,785)           -  564,604       -   (2,616) (319,479)  242,509 
 
31 March 2021            -       -         -           -        - 441,322   (2,415)         -  438,907 
 
                 1,271,238 572,389  (22,116) (1,256,907)  564,604 441,322   (5,031) (319,479)  681,416 
 
The Group also has a Long-term Incentive Plan for all employees which is equity 
settled. Awards are made annually and vest three years from the grant date. 
Vesting is conditional on three performance metrics measured over each 
three-year period. Awards to Executive Directors are also subject to a further 
two-year holding period. On 19 June 2019 awards for a maximum of 878,164 shares 
were granted to employees in respect of the three-year period ending on 31 
March 2022. In the previous year, awards of 1,006,938 shares were made on 8 
June 2018 for the period ending 31 March 2021. 
 
The three performance metrics are: 
 
  * Total shareholder return (TSR) of Picton Property Income Limited, compared 
    to a comparator group of similar listed companies; 
  * Total property return (TPR) of the property assets held within the Group, 
    compared to the MSCI UK Quarterly Property Index; and 
  * Growth in EPRA earnings per share (EPS) of the Group. 
 
The fair value of option grants is measured using a combination of a Monte 
Carlo model for the market conditions (TSR) and a Black-Scholes model for the 
non-market conditions (TPR and EPS). The fair value is recognised over the 
expected vesting period. For the awards made during this year and the previous 
year the main inputs and assumptions of the models, and the resulting fair 
values, are: 
 
Assumptions 
 
Grant date                                                         19 June 8 June 2018 
                                                                      2019 
 
Share price at date of grant                                         95.0p       90.9p 
 
Exercise price                                                         Nil         Nil 
 
Expected term                                                      3 years     3 years 
 
Risk-free rate - TSR condition                                       0.84%       0.83% 
 
Share price volatility - TSR condition                               18.7%       18.4% 
 
Median volatility of comparator group - TSR condition                18.1%       18.1% 
 
Correlation - TSR condition                                          27.1%       33.2% 
 
TSR performance at grant date - TSR condition                         7.5%        7.6% 
 
Median TSR performance of comparator group at grant date - TSR        3.0%        3.1% 
condition 
 
Fair value - TSR condition (Monte Carlo method)                      51.5p       42.9p 
 
Fair value - TPR condition (Black-Scholes model)                     95.0p       90.9p 
 
Fair value - EPS condition (Black-Scholes model)                     95.0p       90.9p 
 
The Trustee of the Company's Employee Benefit Trust acquired 954,000 ordinary 
shares during the year for GBP844,000 (2019: 472,000 shares for GBP398,000). 
 
The Group employed nine members of staff at 31 March 2020 (2019: ten). The 
average number of people employed by the Group for the year ended 31 March 2020 
was ten (2019: 11). 
 
8. Interest paid 
 
                                                                           2020    2019 
                                                                           GBP000    GBP000 
 
Interest payable on loans at amortised cost                               7,562   8,117 
 
Interest on obligations under finance leases                                114     114 
 
Non-utilisation fees                                                        248     220 
 
Amortisation of finance costs                                               371     675 
 
                                                                          8,295   9,126 
 
The loan arrangement costs incurred to 31 March 2020 are GBP4,534,000 (2019: GBP 
4,534,000). These are amortised over the duration of the loans with GBP371,000 
amortised in the year ended 31 March 2020 (2019: GBP675,000). 
 
9. Tax 
 
The charge for the year is: 
 
                                                                           2020    2019 
                                                                           GBP000    GBP000 
 
Current UK income tax                                                         -     324 
 
Income tax adjustment to provision for prior year                          (68)      25 
 
                                                                           (68)     349 
 
Current UK corporation tax                                                    -     121 
 
UK corporation tax adjustment to provision for prior year                  (56)    (12) 
 
                                                                           (56)     109 
 
Total tax (credit)/charge                                                 (124)     458 
 
A reconciliation of the tax charge applicable to the results at the statutory 
tax rate to the charge for the year is as follows: 
 
                                                                           2020    2019 
                                                                           GBP000    GBP000 
 
Profit before taxation                                                   22,384  31,413 
 
Expected tax charge on ordinary activities at the standard rate of        4,253   6,283 
taxation of 19% (2019: 20%) 
 
Less: 
 
UK REIT exemption on net income                                         (3,760) (2,315) 
 
Revaluation movement not taxable                                            168 (2,182) 
 
Gains on disposal not taxable                                             (661)    (76) 
 
Income not taxable, including interest receivable                             -   (163) 
 
Expenditure not allowed for tax purposes                                      -     985 
 
Losses utilised                                                               -     (2) 
 
Capital allowances and other allowable deductions                             - (2,291) 
 
Losses carried forward to future years                                        -      85 
 
Total tax charge                                                              -     324 
 
For the year ended 31 March 2020 there was an income tax credit of GBP68,000 in 
respect of the Group (2019: GBP349,000 charge) and a corporation tax credit of GBP 
56,000 (2019: GBP109,000 charge). 
 
As a UK REIT, the income profits of the Group's UK property rental business are 
exempt from corporation tax, as are any gains it makes from the disposal of its 
properties, provided they are not held for trading. The Group is otherwise 
subject to UK corporation tax at the prevailing rate. 
 
As the principal company of the REIT, the Company is required to distribute at 
least 90% of the income profits of the Group's UK property rental business. 
There are a number of other conditions that are also required to be met by the 
Company and the Group to maintain REIT tax status. These conditions were met in 
the year and the Board intends to conduct the Group's affairs such that these 
conditions continue to be met for the foreseeable future. Accordingly, deferred 
tax is no longer recognised on temporary timing differences relating to the 
property rental business. 
 
The Group is exempt from Guernsey taxation under the Income Tax (Exempt Bodies) 
(Guernsey) Ordinance, 1989. 
 
10. Dividends 
 
                                                                           2020    2019 
                                                                           GBP000    GBP000 
 
Declared and paid: 
 
Interim dividend for the period ended 31 March 2018: 0.875 pence              -   4,716 
 
Interim dividend for the period ended 30 June 2018: 0.875 pence               -   4,716 
 
Interim dividend for the period ended 30 September 2018: 0.875 pence          -   4,716 
 
Interim dividend for the period ended 31 December 2018: 0.875 pence           -   4,712 
 
Interim dividend for the period ended 31 March 2019: 0.875 pence          4,712       - 
 
Interim dividend for the period ended 30 June 2019: 0.875 pence           4,781       - 
 
Interim dividend for the period ended 30 September 2019: 0.875 pence      4,773       - 
 
Interim dividend for the period ended 31 December 2019: 0.875 pence       4,773       - 
 
                                                                         19,039  18,860 
 
The interim dividend of 0.625 pence per ordinary share in respect of the period 
ended 31 March 2020 has not been recognised as a liability as it was declared 
after the year end. This dividend of GBP3,409,000 was paid on 29 May 2020. 
 
11. Earnings per share 
 
Basic and diluted earnings per share is calculated by dividing the net profit 
for the year attributable to ordinary shareholders of the Company by the 
weighted average number of ordinary shares in issue during the year, excluding 
the average number of shares held by the Employee Benefit Trust for the year. 
The diluted number of shares also reflects the contingent shares to be issued 
under the Long-term Incentive Plan. 
 
The following reflects the profit and share data used in the basic and diluted 
profit per share calculation: 
 
                                                                      2020        2019 
 
Net profit attributable to ordinary shareholders of the             22,508      30,955 
Company from continuing operations (GBP000) 
 
Weighted average number of ordinary shares for basic profit    544,192,866 538,815,550 
per share 
 
Weighted average number of ordinary shares for diluted profit  546,227,914 541,035,348 
per share 
 
12. Investments in subsidiaries 
 
The Company had the following principal subsidiaries as at 31 March 2020 and 31 
March 2019: 
 
Name                                                             Place of     Ownership 
                                                            incorporation    proportion 
 
Picton UK Real Estate Trust (Property) Limited                   Guernsey          100% 
 
Picton (UK) REIT (SPV) Limited                                   Guernsey          100% 
 
Picton (UK) Listed Real Estate                                   Guernsey          100% 
 
Picton UK Real Estate (Property) No 2 Limited                    Guernsey          100% 
 
Picton (UK) REIT (SPV No 2) Limited                              Guernsey          100% 
 
Picton Capital Limited                                    England & Wales          100% 
 
Picton (General Partner) No 2 Limited                            Guernsey          100% 
 
Picton (General Partner) No 3 Limited                            Guernsey          100% 
 
Picton No 2 Limited Partnership                           England & Wales          100% 
 
Picton No 3 Limited Partnership                           England & Wales          100% 
 
Picton Financing UK Limited (established on 14 February   England & Wales          100% 
2020) 
 
Picton Property No 3 Limited                                     Guernsey          100% 
 
The results of the above entities are consolidated within the Group financial 
statements. 
 
Picton UK Real Estate Trust (Property) Limited and Picton (UK) REIT (SPV) 
Limited own 100% of the units in Picton (UK) Listed Real Estate, a Guernsey 
Unit Trust (the 'GPUT'). The GPUT holds a 99.9% interest in both Picton No 2 
Limited Partnership and Picton No 3 Limited Partnership, the remaining balances 
are held by Picton (General Partner) No 2 Limited and Picton (General Partner) 
No 3 Limited respectively. 
 
13. Investment properties 
 
The following table provides a reconciliation of the opening and closing 
amounts of investment properties classified as Level 3 recorded at fair value. 
 
                                                                            2020     2019 
                                                                            GBP000     GBP000 
 
Fair value at start of year                                              676,102  674,524 
 
Capital expenditure on investment properties                               8,861    1,559 
 
Disposals                                                               (33,073) (11,269) 
 
Realised gains on disposal                                                 3,478      379 
 
Unrealised movement on investment properties                               (882)   10,909 
 
Fair value at the end of the year                                        654,486  676,102 
 
Historic cost at the end of the year                                     629,932  648,044 
 
The fair value of investment properties reconciles to the appraised value as 
follows: 
 
                                                                            2020     2019 
                                                                            GBP000     GBP000 
 
Appraised value                                                          664,615  685,335 
 
Valuation of assets held under head leases                                 1,489    1,565 
 
Lease incentives held as debtors                                        (11,618) (10,798) 
 
Fair value at the end of the year                                        654,486  676,102 
 
The investment properties were valued by independent valuers, CBRE Limited, 
Chartered Surveyors, as at 31 March 2020 and 31 March 2019 on the basis of fair 
value in accordance with the version of the RICS Valuation - Global Standards 
(incorporating the International Valuation Standards) and the UK national 
supplement (the Red Book) current as at the valuation date. The total fees 
earned by CBRE Limited from the Group are less than 5% of their total UK 
revenue. 
 
The fair value of the Group's investment properties has been determined using 
an income capitalisation technique, whereby contracted and market rental values 
are capitalised with a market capitalisation rate. The resulting valuations are 
cross-checked against the equivalent yields and the fair market values per 
square foot derived from comparable market transactions on an arm's length 
basis. 
 
In addition, the Group's investment properties are valued quarterly by CBRE 
Limited. The valuations are based on: 
 
Information provided by the Group including rents, lease terms, revenue and 
capital expenditure. Such information is derived from the Group's financial and 
property systems and is subject to the Group's overall control environment. 
 
Valuation models used by the valuers, including market-related assumptions 
based on their professional judgement and market observation. 
 
The assumptions and valuation models used by the valuers, and supporting 
information, are reviewed by senior management and the Board through the 
Property Valuation Committee. Members of the Property Valuation Committee, 
together with senior management, meet with the independent valuer on a 
quarterly basis to review the valuations and underlying assumptions, including 
considering current market trends and conditions, and changes from previous 
quarters. The Board will also consider where circumstances at specific 
investment properties, such as alternative uses and issues with occupational 
tenants, are appropriately reflected in the valuations. The fair value of 
investment properties is measured based on each property's highest and best use 
from a market participant's perspective and considers the potential uses of the 
property that are physically possible, legally permissible and financially 
feasible. 
 
The outbreak of Covid-19, declared by the World Health Organization as a 
'Global Pandemic' on 11 March 2020, has impacted global financial markets. 
Travel restrictions have been implemented by many countries. Market activity is 
being impacted in many sectors. As at the valuation date, the external valuers 
consider that they can attach less weight to previous market evidence for 
comparison purposes, to inform opinions of value. The current response to 
Covid-19 means that external valuers are faced with an unprecedented set of 
circumstances on which to base a judgement. The valuations across all asset 
classes are therefore reported on the basis of "material valuation uncertainty" 
as per VPS 3 and VPGA 10 of the RICS Red Book Global. 
 
Consequently, less certainty - and a higher degree of caution - should be 
attached to the valuations provided than would normally be the case. The 
external valuers have confirmed that the inclusion of the 'material valuation 
uncertainty' declaration does not mean that valuations cannot be relied upon. 
Rather, the phrase is used in order to be clear and transparent with all 
parties, in a professional manner, that - in the current extraordinary 
circumstances - less certainty can be attached to valuations than would 
otherwise be the case. 
 
As at 31 March 2020 and 31 March 2019 all of the Group's properties are Level 3 
in the fair value hierarchy as it involves use of significant inputs. There 
were no transfers between levels during the year and the prior year. Level 3 
inputs used in valuing the properties are those which are unobservable, as 
opposed to Level 1 (inputs from quoted prices) and Level 2 (observable inputs 
either directly, i.e. as prices, or indirectly, i.e. derived from prices). 
 
Information on these significant unobservable inputs per sector of investment 
properties is disclosed as follows: 
 
                                           2020                           2019 
 
                                 Office Industrial    Retail    Office Industrial    Retail 
                                                         and                            and 
                                                     Leisure                        Leisure 
 
Appraised value (GBP000)          224,620    318,330   121,665   235,035    312,790   137,510 
 
Area (sq ft, 000s)                  808      2,570       829       856      2,731       829 
 
Range of unobservable inputs: 
 
Gross ERV (sq ft per annum) 
 
- range                       GBP11.00 to GBP3.54 to GBP  GBP3.46 to  GBP9.52 to GBP3.54 to GBP  GBP3.88 to 
                                 GBP53.59      19.58    GBP81.77    GBP51.78      17.70    GBP84.11 
 
- weighted average               GBP27.92      GBP9.79    GBP32.13    GBP27.33      GBP8.91    GBP31.50 
 
Net initial yield 
 
- range                        0.00% to  -2.54% to -0.18% to  2.48% to   0.00% to -0.17% to 
                                  7.59%      8.16%    25.27%     8.59%      8.25%    15.36% 
 
- weighted average                4.89%      4.63%     5.25%     5.15%      4.78%     5.11% 
 
Reversionary yield 
 
- range                        5.47% to   4.46% to  4.36% to  5.32% to   4.60% to  4.63% to 
                                 10.80%     10.17%    11.97%    10.70%      9.99%    12.11% 
 
- weighted average                7.04%      5.40%     6.63%     7.01%      5.55%     6.37% 
 
True equivalent yield 
 
- range                        5.33% to   4.39% to  3.97% to  5.24% to   4.63% to  4.09% to 
                                  9.80%      9.65%    11.95%     9.49%      9.48%    10.86% 
 
- weighted average                6.97%      5.40%     7.17%     6.88%      5.59%     6.75% 
 
The property valuations reflect the external valuers' assessment of the impact 
of Covid-19 at the valuation date. An increase/decrease in ERV will increase/ 
decrease valuations, while an increase/decrease to yield decreases/increases 
valuations. In light of this material valuation uncertainty we have reviewed 
the ranges used in assessing the impact of changes in unobservable inputs on 
the fair value of the Group's property portfolio and concluded these were still 
reasonable. The table below sets out the sensitivity of the valuation to 
changes of 50 basis points in yield. 
 
Sector                              Movement                  2020                  2019 
                                               Impact on valuation   Impact on valuation 
 
Industrial              Increase of 50 basis    Decrease of GBP29.3m    Decrease of GBP28.7m 
                                      points 
 
                        Decrease of 50 basis    Increase of GBP36.1m    Increase of GBP34.7m 
                                      points 
 
Office                  Increase of 50 basis    Decrease of GBP17.5m    Decrease of GBP18.7m 
                                      points 
 
                        Decrease of 50 basis    Increase of GBP20.5m    Increase of GBP21.3m 
                                      points 
 
Retail and Leisure      Increase of 50 basis    Decrease of GBP10.9m    Decrease of GBP12.6m 
                                      points 
 
                        Decrease of 50 basis    Increase of GBP13.9m    Increase of GBP15.8m 
                                      points 
 
14. Accounts receivable 
 
                                                                           2020    2019 
                                                                           GBP000    GBP000 
 
Tenant debtors (net of provisions for bad debts)                          5,197   2,594 
 
Lease incentives                                                         11,618  10,798 
 
Other debtors                                                               786     917 
 
                                                                         17,601  14,309 
 
The estimated fair values of receivables are the discounted amount of the 
estimated future cash flows expected to be received and the approximate of 
their carrying amounts. 
 
Amounts are considered impaired using the lifetime expected credit loss method. 
Movement in the balance considered to be impaired has been included in the 
Consolidated Statement of Comprehensive Income. As at 31 March 2020, tenant 
debtors of GBP1,676,000 (2019: GBP918,000) were considered impaired and provided 
for. 
 
15. Cash and cash equivalents 
 
                                                                           2020    2019 
                                                                           GBP000    GBP000 
 
Cash at bank and in hand                                                 23,564  24,454 
 
Short-term deposits                                                           3     714 
 
                                                                         23,567  25,168 
 
Cash at bank and in hand earns interest at floating rates based on daily bank 
deposit rates. Short-term deposits are made for varying periods of between one 
day and one month depending on the immediate cash requirements of the Group, 
and earn interest at the respective short-term deposit rates. The carrying 
amounts of these assets approximate their fair value. 
 
16. Accounts payable and accruals 
 
                                                                           2020    2019 
                                                                           GBP000    GBP000 
 
Accruals                                                                  5,263   6,596 
 
Deferred rental income                                                    7,817   8,381 
 
VAT liability                                                             1,685   1,994 
 
Income tax liability                                                          -      57 
 
Trade creditors                                                           1,058     230 
 
Other creditors                                                           3,615   5,142 
 
                                                                         19,438  22,400 
 
17. Loans and borrowings 
 
                                                               Maturity    2020    2019 
                                                                           GBP000    GBP000 
 
 
Current 
 
Aviva facility                                                        -   1,258   1,204 
 
Capitalised finance costs                                             -   (370)   (371) 
 
                                                                            888     833 
 
 
Non-current 
 
Santander revolving credit facility                             18 June       -  11,500 
                                                                   2021 
 
Santander revolving credit facility                             20 June       -  14,500 
                                                                   2021 
 
Canada Life facility                                            24 July  80,000  80,000 
                                                                   2027 
 
Aviva facility                                                  24 July  86,207  87,465 
                                                                   2032 
 
Capitalised finance costs                                             - (1,959) (2,329) 
 
                                                                        164,248 191,136 
 
                                                                        165,136 191,969 
 
The following table provides a reconciliation of the movement in loans and 
borrowings to cash flows arising from financing activities. 
 
                                                                            2020     2019 
                                                                            GBP000     GBP000 
 
Balance as at 1 April                                                    191,969  210,664 
 
 
Changes from financing cash flows 
 
Proceeds from loans and borrowings                                         6,000   15,500 
 
Repayment of loans and borrowings                                       (33,204) (34,871) 
 
                                                                        (27,204) (19,371) 
 
 
Other changes 
 
Amortisation of financing costs                                              371      676 
 
                                                                             371      676 
 
Balance as at 31 March                                                   165,136  191,969 
 
The Group has an GBP80 million term loan facility with Canada Life Limited which 
matures in July 2027. Interest is fixed at 4.08% over the life of the loan. The 
loan agreement has a loan to value covenant of 65% and an interest cover test 
of 1.75. The loan is secured over the Group's properties held by Picton No 2 
Limited Partnership and Picton UK Real Estate Trust (Property) No 2 Limited, 
valued at GBP307.5 million (2019: GBP292.4 million). 
 
Additionally, the Group has a GBP95.3 million term loan facility with Aviva 
Commercial Finance Limited which matures in July 2032. The loan is for a term 
of 20 years and was fully drawn on 24 July 2012 with approximately one-third 
repayable over the life of the loan in accordance with a scheduled amortisation 
profile. The Group has repaid GBP1.2 million in the year (2019: GBP1.2 million). 
Interest on the loan is fixed at 4.38% over the life of the loan. The facility 
has a loan to value covenant of 65% and a debt service cover ratio of 1.4. The 
facility is secured over the Group's properties held by Picton No 3 Limited 
Partnership and Picton Property No 3 Limited, valued at GBP189.0 million (2019: GBP 
230.3 million). 
 
As at 31 March 2020 the Group had two revolving credit facilities ('RCFs') with 
Santander Corporate & Commercial Banking which expired in June 2021. In total 
the Group had GBP49.0 million (2019: GBP51.0 million) available under both 
facilities; there is nothing drawn down under these facilities at the year end. 
Interest was payable on drawn balances at LIBOR plus margins of 175 or 190 
basis points. The facilities were secured on properties held by Picton (UK) 
REIT (SPV No 2) Limited and Picton (UK) Listed Real Estate, valued at GBP131.8 
million (2019: GBP133.7 million). Post year end, both RCFs were cancelled and 
replaced with a new GBP50.0 million RCF. 
 
The fair value of the drawn loan facilities at 31 March 2020, estimated as the 
present value of future cash flows discounted at the market rate of interest at 
that date, was GBP197.0 million (2019: GBP219.5 million). The fair value of the 
secured loan facilities is classified as Level 2 under the hierarchy of fair 
value measurements. 
 
There were no transfers between levels of the fair value hierarchy during the 
current or prior years. 
 
The weighted average interest rate on the Group's borrowings as at 31 March 
2020 was 4.2% (2018: 4.0%). 
 
18. Contingencies and capital commitments 
 
The Group has entered into contracts for the refurbishment of 11 properties 
with commitments outstanding at 31 March 2020 of approximately GBP4.5 million 
(2019: GBP1.4 million). No further obligations to construct or develop investment 
property or for repairs, maintenance or enhancements were in place as at 31 
March 2020 (2019: GBPnil). 
 
19. Share capital and other reserves 
 
                                                                           2020    2019 
                                                                           GBP000    GBP000 
 
Authorised: 
 
Unlimited number of ordinary shares of no par value                           -       - 
 
 
Issued and fully paid: 
 
547,605,596 ordinary shares of no par value 
 
(31 March 2019: 540,053,660)                                                  -       - 
 
Share premium                                                           164,400 157,449 
 
On 21 June 2019 the Company raised GBP7.1 million through the issue of 7,551,936 
new ordinary shares of no par value at 94.5 pence per share. The Company now 
has 547,605,596 ordinary shares in issue of no par value (31 March 2019: 
540,053,660). 
 
The balance of the Company's share premium account as at 31 March 2020 was GBP 
164,400,000 (31 March 2019: GBP157,449,000). 
 
                                                                      2020        2019 
                                                                 Number of   Number of 
                                                                    shares      shares 
 
Ordinary share capital                                         547,605,596 540,053,660 
 
Number of shares held in Employee Benefit Trust                (2,103,683) (1,542,000) 
 
Number of ordinary shares                                      545,501,913 538,511,660 
 
The fair value of awards made under the Long-term Incentive Plan is recognised 
in other reserves. 
 
Subject to the solvency test contained in the Companies (Guernsey) Law, 2008 
being satisfied, ordinary shareholders are entitled to all dividends declared 
by the Company and to all of the Company's assets after repayment of its 
borrowings and ordinary creditors. The Trustee of the Company's Employee 
Benefit Trust has waived its right to receive dividends on the 2,103,683 shares 
it holds but continues to hold the right to vote. Ordinary shareholders have 
the right to vote at meetings of the Company. All ordinary shares carry equal 
voting rights. 
 
The Directors have authority to buy back up to 14.99% of the Company's ordinary 
shares in issue, subject to the annual renewal of the authority from 
shareholders. Any buy back of ordinary shares will be made subject to Guernsey 
law, and the making and timing of any buy-backs will be at the absolute 
discretion of the Board. 
 
20. Adjustment for non-cash movements in the cash flow statement 
 
                                                                           2020     2019 
                                                                           GBP000     GBP000 
 
Profit on disposal of investment properties                             (3,478)    (379) 
 
Movement in investment property valuation                                   882 (10,909) 
 
Share-based provisions                                                      292      363 
 
Depreciation of tangible assets                                               9        7 
 
                                                                        (2,295) (10,918) 
 
21. Obligations under leases 
 
The Group has entered into a number of head leases in relation to its 
investment properties. These leases are for fixed terms and subject to regular 
rent reviews. They contain no material provisions for contingent rents, renewal 
or purchase options nor any restrictions outside of the normal lease terms. 
 
Lease liabilities in respect of rents payable on leasehold properties were 
payable as follows: 
 
                                                                           2020    2019 
                                                                           GBP000    GBP000 
 
Future minimum payments due: 
 
Within one year                                                             117     117 
 
In the second to fifth years inclusive                                      466     466 
 
After five years                                                          7,266   7,383 
 
                                                                          7,849   7,966 
 
Less: finance charges allocated to future periods                       (6,032) (6,146) 
 
Present value of minimum lease payments                                   1,817   1,820 
 
The present value of minimum lease payments is analysed as follows: 
 
                                                                           2020    2019 
                                                                           GBP000    GBP000 
 
Current 
 
Within one year                                                             108     109 
 
                                                                            108     109 
 
 
Non-current 
 
In the second to fifth years inclusive                                      388     392 
 
After five years                                                          1,321   1,319 
 
                                                                          1,709   1,711 
 
                                                                          1,817   1,820 
 
Operating leases where the Group is lessor 
 
The Group leases its investment properties under commercial property leases 
which are held as operating leases. 
 
At the reporting date, the Group's future income based on the unexpired lessor 
lease length was as follows (based on annual rentals): 
 
                                                                           2020    2019 
                                                                           GBP000    GBP000 
 
Within one year                                                          38,296  37,497 
 
In the second to fifth years inclusive                                  124,942 113,403 
 
After five years                                                        111,711  88,902 
 
                                                                        274,949 239,802 
 
These properties are measured under the fair value model as the properties are 
held to earn rentals. The majority of these non-cancellable leases have 
remaining lease terms of more than five years. 
 
22. Net asset value 
 
The net asset value per share calculation uses the number of shares in issue at 
the year end and excludes the actual number of shares held by the Employee 
Benefit Trust at the year end; see Note 19. 
 
23. Financial instruments 
 
The Group's financial instruments comprise cash and cash equivalents, accounts 
receivable, secured loans, obligations under head leases and accounts payable 
that arise from its operations. The Group does not have exposure to any 
derivative financial instruments. Apart from the secured loans, as disclosed in 
Note 17, the fair value of the financial assets and liabilities is not 
materially different from their carrying value in the financial statements. 
 
Categories of financial instruments 
 
31 March 2020                              Note       Held at     Financial         Total 
                                                   fair value    assets and          GBP000 
                                                      through   liabilities 
                                                    profit or  at amortised 
                                                         loss          cost 
                                                         GBP000          GBP000 
 
Financial assets 
 
Debtors                                      14             -         5,983         5,983 
 
Cash and cash equivalents                    15             -        23,567        23,567 
 
                                                            -        29,550        29,550 
 
 
Financial liabilities 
 
Loans and borrowings                         17             -       165,136       165,136 
 
Obligations under head leases                21             -         1,817         1,817 
 
Creditors and accruals                       16             -         9,936         9,936 
 
                                                            -       176,889       176,889 
 
 
 
31 March 2019                              Note       Held at     Financial         Total 
                                                   fair value    assets and          GBP000 
                                                      through   liabilities 
                                                    profit or  at amortised 
                                                         loss          cost 
                                                         GBP000          GBP000 
 
Financial assets 
 
Debtors                                      14             -         3,511         3,511 
 
Cash and cash equivalents                    15             -        25,168        25,168 
 
                                                            -        28,679        28,679 
 
 
Financial liabilities 
 
Loans and borrowings                         17             -       191,969       191,969 
 
Obligations under head leases                21             -         1,820         1,820 
 
Creditors and accruals                       16             -        11,968        11,968 
 
                                                            -       205,757       205,757 
 
24. Risk management 
 
The Group invests in commercial properties in the United Kingdom. The following 
describes the risks involved and the applied risk management. Senior management 
reports regularly both verbally and formally to the Board, and its relevant 
committees, to allow them to monitor and review all the risks noted below. 
 
Capital risk management 
 
The Group aims to manage its capital to ensure that the entities in the Group 
will be able to continue as a going concern while maximising the return to 
stakeholders through the optimisation of the debt and equity balance. The 
Board's policy is to maintain a strong capital base so as to maintain investor, 
creditor and market confidence and to sustain future development of the 
business. 
 
The capital structure of the Group consists of debt, as disclosed in Note 17, 
cash and cash equivalents and equity attributable to equity holders of the 
Company, comprising issued capital, reserves and retained earnings. The Group 
is not subject to any external capital requirements. 
 
The Group monitors capital on the basis of the gearing ratio. This ratio is 
calculated as the principal borrowings outstanding, as detailed under Note 17, 
divided by the gross assets. There is a limit of 65% as set out in the Articles 
of Association of the Company. Gross assets are calculated as non-current and 
current assets, as shown in the Consolidated Balance Sheet. 
 
At the reporting date the gearing ratios were as follows: 
 
                                                                           2020    2019 
                                                                           GBP000    GBP000 
 
Total borrowings                                                        167,465 194,669 
 
Gross assets                                                            695,674 715,604 
 
Gearing ratio (must not exceed 65%)                                       24.1%   27.2% 
 
The Board of Directors monitors the return on capital as well as the level of 
dividends to ordinary shareholders. The Group has managed its capital risk by 
entering into long-term loan arrangements which will enable the Group to manage 
its borrowings in an orderly manner over the long-term. The Group has two 
revolving credit facilities which provide greater flexibility in managing the 
level of borrowings. 
 
The Group's net debt to equity ratio at the reporting date was as follows: 
 
                                                                            2020     2019 
                                                                            GBP000     GBP000 
 
Total liabilities                                                        186,391  216,189 
 
Less: cash and cash equivalents                                         (23,567) (25,168) 
 
Net debt                                                                 162,824  191,021 
 
Total equity                                                             509,283  499,415 
 
Net debt to equity ratio at end of year                                     0.32     0.38 
 
Credit risk 
 
The following tables detail the balances held at the reporting date that may be 
affected by credit risk: 
 
31 March 2020                              Note       Held at     Financial         Total 
                                                   fair value    assets and          GBP000 
                                                      through   liabilities 
                                                    profit or  at amortised 
                                                         loss          cost 
                                                         GBP000          GBP000 
 
Financial assets 
 
Tenant debtors                               14             -         5,197         5,197 
 
Cash and cash equivalents                    15             -        23,567        23,567 
 
                                                            -        28,764        28,764 
 
 
 
31 March 2019                              Note       Held at     Financial         Total 
                                                   fair value    assets and          GBP000 
                                                      through   liabilities 
                                                    profit or  at amortised 
                                                         loss          cost 
                                                         GBP000          GBP000 
 
Financial assets 
 
Tenant debtors                               14             -         2,594         2,594 
 
Cash and cash equivalents                    15             -        25,168        25,168 
 
                                                            -        27,762        27,762 
 
Credit risk refers to the risk that a counterparty will default on its 
contractual obligations resulting in financial loss to the Group. The Group has 
adopted a policy of only dealing with creditworthy counterparties and obtaining 
sufficient collateral where appropriate, as a means of mitigating the risk of 
financial loss from defaults. The Group's exposure and credit ratings of its 
counterparties are continuously monitored and the aggregate value of 
transactions concluded is spread amongst approved counterparties. Credit 
exposure is controlled by counterparty limits that are reviewed regularly. 
 
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 are acquired. 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 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 high 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 exposure to credit 
risk. 
 
The Group has a panel of banks with which it makes deposits, based on credit 
ratings with set counterparty limits. The Group's main cash balances are held 
with National Westminster Bank plc ('NatWest'), Santander plc ('Santander'), 
Nationwide International Limited ('Nationwide') and The Royal Bank of Scotland 
plc ('RBS'). 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, Santander, Nationwide and RBS are rated by all the 
major rating agencies. If the credit quality of these banks deteriorates, the 
Group would look to move the 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 2020 and at 31 March 2019 Standard & Poor's 
credit rating for 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 built 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 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. 
 
31 March 2020                         Less than        1 to 5     More than         Total 
                                         1 year         years       5 years          GBP000 
                                           GBP000          GBP000          GBP000 
 
Cash and cash equivalents                23,567             -             -        23,567 
 
Debtors                                   5,983             -             -         5,983 
 
Capitalised finance costs                   370           912         1,047         2,329 
 
Obligations under head leases             (117)         (466)       (7,266)       (7,849) 
 
Fixed interest rate loans               (8,332)      (33,329)     (193,259)     (234,920) 
 
Creditors and accruals                  (9,936)             -             -       (9,936) 
 
                                         11,535      (32,883)     (199,478)     (220,826) 
 
 
 
31 March 2019                         Less than        1 to 5     More than         Total 
                                         1 year         years       5 years          GBP000 
                                           GBP000          GBP000          GBP000 
 
Cash and cash equivalents                25,177             -             -        25,177 
 
Debtors                                   3,511             -             -         3,511 
 
Capitalised finance costs                   371         1,062         1,267         2,700 
 
Obligations under head leases             (117)         (466)       (7,383)       (7,966) 
 
Fixed interest rate loans               (8,332)      (33,329)     (201,591)     (243,252) 
 
Floating interest rate loans              (360)      (26,869)             -      (27,229) 
 
Creditors and accruals                 (11,968)             -             -      (11,968) 
 
                                          8,282      (59,602)     (207,707)     (259,027) 
 
Market risk 
 
The Group's activities are primarily within the real estate market, exposing it 
to very specific industry risks. 
 
The yields available from investments in real estate depend primarily on the 
amount of revenue earned and capital appreciation generated by the relevant 
properties as well as expenses incurred. If properties do not generate 
sufficient revenues to meet operating expenses, including debt service and 
capital expenditure, the Group's revenue will be adversely affected. 
 
Revenue from properties may be adversely affected by the general economic 
climate, local conditions such as oversupply of properties or a reduction in 
demand for properties in the market in which the Group operates, the 
attractiveness of the properties to occupiers, the quality of the management, 
competition from other available properties and increased operating costs 
(including real estate taxes). 
 
In addition, the Group's revenue would be adversely affected if a significant 
number of occupiers were unable to pay rent or its properties could not be 
rented on favourable terms. This has increased given the Covid-19 pandemic and 
the resultant effect on tenants' ability to pay rent. Certain significant 
expenditure associated with each equity investment in real estate (such as 
external financing costs, real estate taxes and maintenance costs) is generally 
not reduced when circumstances cause a reduction in revenue from properties. By 
diversifying in regions, sectors, risk categories and occupiers, senior 
management expects to lower the risk profile of the portfolio. The Board 
continues to oversee the profile of the portfolio to ensure risks are managed. 
 
The valuation of the Group's property assets is subject to changes in market 
conditions. Such changes are taken to the Consolidated Statement of 
Comprehensive Income and thus impact on the Group's net result. A 5% increase 
or decrease in property values would increase or decrease the Group's net 
result by GBP33.2 million (2019: GBP34.3 million). 
 
Interest rate risk management 
 
Interest rate risk arises on interest payable on the revolving credit 
facilities only. The Group's senior debt facilities have fixed interest rates 
over the terms of the loans and thus the Group has limited exposure to interest 
rate risk on the majority of its borrowings and no sensitivity is presented. 
 
Interest rate risk 
 
The following table sets out the carrying amount, by maturity, of the Group's 
financial assets/(liabilities). 
 
31 March 2020                         Less than        1 to 5     More than         Total 
                                         1 year         years       5 years          GBP000 
                                           GBP000          GBP000          GBP000 
 
Floating 
 
Cash and cash equivalents                23,567             -             -        23,567 
 
 
Fixed 
 
Secured loan facilities                 (1,258)       (5,616)     (160,591)     (167,465) 
 
Obligations under leases                  (108)         (388)       (1,321)       (1,817) 
 
                                         22,201       (6,004)     (161,912)     (145,715) 
 
 
 
31 March 2019                         Less than        1 to 5     More than         Total 
                                         1 year         years       5 years          GBP000 
                                           GBP000          GBP000          GBP000 
 
Floating 
 
Cash and cash equivalents                25,168             -             -        25,168 
 
Secured loan facilities                       -      (26,000)             -      (26,000) 
 
 
Fixed 
 
Secured loan facilities                 (1,204)       (5,377)     (160,884)     (167,465) 
 
Obligations under leases                  (109)         (392)       (1,319)       (1,820) 
 
                                         23,855      (31,769)     (162,203)     (170,117) 
 
Concentration risk 
 
As discussed above, all of the Group's investments are in the UK and therefore 
it is exposed to macroeconomic changes in the UK economy. Furthermore, the 
Group has around 350 occupiers so does not place reliance on a limited number 
of occupiers for its rental income, with the single largest occupier accounting 
for 4.2% of the Group's annual contracted rental income. 
 
Currency risk 
 
The Group has no exposure to foreign currency risk. 
 
25. Related party transactions 
 
The total fees earned during the year by the Non-Executive Directors of the 
Company amounted to GBP250,000 (2019: GBP257,000). As at 31 March 2020 the Group 
owed GBPnil to the Non-Executive Directors (2019: GBPnil). The emoluments of the 
Executive Directors are set out in the Remuneration Report. 
 
Picton Property Income Limited has no controlling parties. 
 
26. Events after the balance sheet date 
 
A dividend of GBP3,409,000 (0.625 pence per share) was approved by the Board on 
27 April 2020 and was paid on 29 May 2020. 
 
On 27 May 2020 the Group entered into a new GBP50 million revolving credit 
facility; this replaces the existing facilities held with Santander Corporate & 
Commercial Banking which have been cancelled. 
 
Post Balance Sheet event disclosure 
 
The global outbreak of Covid-19 in 2020 has resulted in significant loss of 
life, adversely impacted commercial activity and contributed to significant 
volatility in certain equity and debt markets. The global impact of the 
outbreak evolved rapidly and, on 11 March 2020, the World Health Organization 
declared a pandemic. Many countries have reacted by instituting quarantines, 
prohibitions on travel and the closure of offices, businesses, schools, retail 
stores and other public venues. Businesses are also implementing similar 
precautionary measures. 
 
Such measures, as well as the general uncertainty surrounding the dangers and 
impact of Covid-19, are creating significant disruption in supply chains and 
economic activity and are having a particularly adverse impact on 
transportation, hospitality, tourism, entertainment and other industries. The 
impact of Covid-19 has led to significant volatility and declines in the global 
public equity markets and it is uncertain how long this volatility will 
continue. As Covid-19 continues to spread, the potential impacts, including a 
global, regional or other economic recession, are increasingly uncertain and 
difficult to assess. 
 
The outbreak of Covid-19 and the resulting financial and economic market 
uncertainty could have a significant adverse impact on the Group. Any future 
impact on the Group is likely to be in connection with the assessment of the 
fair value of investments and stability of rental income at future dates. At 
the date of reporting it is not possible to quantify the future financial 
impact of Covid-19 on the Company's investment properties or rental income with 
a degree of certainty. The Board will continue to closely analyse and review 
the impact of Covid-19 on the Company and will take appropriate action as 
required. 
 
 
 
ENDS 
 
 
 
END 
 

(END) Dow Jones Newswires

June 23, 2020 02:00 ET (06:00 GMT)

Picton Property Income Ld (LSE:PCTN)
Gráfica de Acción Histórica
De Jul 2020 a Ago 2020 Haga Click aquí para más Gráficas Picton Property Income Ld.
Picton Property Income Ld (LSE:PCTN)
Gráfica de Acción Histórica
De Ago 2019 a Ago 2020 Haga Click aquí para más Gráficas Picton Property Income Ld.