Preliminary Annual Results

About this update from Picton Property Income Limited

  12 June 2026       PICTON PROPERTY INCOME LIMITED ('Picton', the 'Company' or the 'Group')   Preliminary Annual Results     Picton announces its annual results for the year ending 31 March 2026.   Chair of Picton, Francis Salway, commented: "These results reflect a year of progress, where we have delivered a total return of 6.1% alongside a total shareholder return of 12.6%. Despite macroeconomic conditions, occupational markets are proving more resilient, against a backdrop of limited new development. We remain well-positioned, with a high quality portfolio and a disciplined approach to capital allocation, which this year, has been focused on reducing office exposure, investing into the portfolio and share buybacks. At the start of 2026, we initiated a Strategic Review to explore options to maximise value for shareholders which has resulted in a Proposed Offer being announced on 12 May 2026. The Board remains focused on shareholder value and is committed to engaging with stakeholders through this process."   Michael Morris, Chief Executive of Picton, commented: "We have delivered solid operational performance, with NAV and ERV growth over the year. This included 5% rental growth across the portfolio driven by lettings, lease renewals and investment into upgrading the portfolio. This approach has delivered our thirteenth consecutive year of outperformance against the MSCI UK Quarterly Property Index. Two key industrial lease events have reduced occupancy in the second half of the year, but with an encouraging leasing pipeline and significant reversion of £13.2 million above the current contracted rent, we are well placed to grow earnings through leasing activity, resetting rents to ERV and targeted investment in the portfolio."   Robust financial performance delivering positive total and shareholder returns ‒      Net assets of £522 million, or 102p per share (2025: 100p per share) ‒      Profit after tax of £25.9 million, or 5.0p per share (2025: 6.9p per share) ‒      EPRA earnings of £20.9 million, or 4.0p per share (2025: 4.2p per share) ‒      Dividends paid during the financial year of 3.8p per share, a 2.7% increase (2025: 3.7p per share) ‒      Total return of 6.1% (2025: 8.1%) ‒      Total shareholder return of 12.6% (2025: 16.0%) ‒      Share buybacks of £17.3 million at an average price of 77p per share, 25% below the March NAV of 102p per share   Outperforming property portfolio ‒      Continued MSCI outperformance for 13 consecutive years with a total property return of 5.9% for the year (MSCI UK Quarterly Property Index: 5.4%) ‒      Delivered upper quartile outperformance against the MSCI UK Quarterly Property Index since launch in 2005 ‒      Portfolio weighted towards industrial sector 67%, office 21% and retail and leisure 12% ‒      1.7% like-for-like increase in property valuation, or 0.7% after capital expenditure ‒      Disposal of highest value office asset for £34.5 million at a 1% premium to March 2025 valuation ‒      4.8% like-for-like increase in estimated rental value (ERV) ‒      Portfolio occupancy of 84%, impacted by two key lease events in the latter half of the year ‒      Weighted average unexpired lease term (WAULT) increased to 5.4 years to first break (2025: 4.9 years) ‒      Captured rental growth through:   ‒      33 lettings, totalling £3.9 million per annum, 4% ahead of March 2025 ERV   ‒      43 lease renewals or regears, totalling £4.7 million per annum, 4% ahead of March 2025 ERV   ‒      17 rent reviews securing uplift of £0.4 million per annum, 4% ahead of March 2025 ERV ‒      Portfolio with significant reversionary potential of £13.2 million, 11% above the March 2026 contracted rent with:   ‒      £8.8 million from letting vacant space (47% industrial, 50% office and 3% retail and leisure)   ‒      £4.4 million where market rent is higher than contracted rent   Valuable long-term debt structure ‒      Total borrowings of £208 million, with 100% at fixed rates and a weighted average interest rate of 3.7% ‒      Loan to value ratio (LTV) of 24% (2025: 24%) ‒      £50 million undrawn revolving credit facility ‒      EPRA Net Disposal Value (NDV) of 107p per share, reflecting fair value of debt   Positive sustainable progress ‒      £8.8 million invested across the portfolio ‒      85% of assets in office portfolio either fully or partly decarbonised ‒      Improvement in portfolio EPC ratings, with 86% now rated A-C (2025: 83%) ‒      Annual reduction in Scope 1 and 2 emissions of 23%   Activity post year-end ‒      Positive leasing interest in vacant space across all sectors, with proposals made or negotiations ongoing on over £5 million of ERV (1) ‒      This includes our second largest void, where negotiations are well advanced to upsize an existing occupier, subject to landlord works and planning consent (1) ‒      Additionally, lettings have completed in the office and industrial sectors with an ERV of £0.6 million, 2% ahead of the March 2026 ERV ‒      Completed disposal of residual Cardiff asset for £1.2 million, 30% ahead of the March 2026 valuation   Strategic Review ‒      On 12 May 2026, a non-binding indicative all-share offer ('Proposed Offer') from LondonMetric Property Plc and Schroder Real Estate Investment Trust Limited was announced. The Company is engaging with all stakeholders and due diligence is ongoing. Further announcements will be made as appropriate   (1) There is no certainty that terms will be agreed in respect of these transactions     31 March 2026 31 March 2025 31 March 2024 Property valuation £701m £723m £745m Net assets £522m £533m £524m EPRA NTA per share 102p 100p 96p   Year ended 31 March 2026 Year ended 31 March 2025 Year ended 31 March 2024 Profit/(loss) for the year £25.9m £37.3m £(4.8)m EPRA earnings £20.9m £22.8m £21.7m Earnings per share 5.0p 6.9p (0.9)p EPRA earnings per share 4.0p 4.2p 4.0p Total return 6.1% 8.1% (0.9)% Total shareholder return 12.6% 16.0% (1.0)% Total dividend per share 3.8p 3.7p 3.5p Dividend cover 103% 113% 114%   THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE UK MARKET ABUSE REGULATION   For further information: Tavistock James Verstringhe 020 7920 3150, [email protected]   James Whitmore 07740 931042, [email protected]   Olivia Rhodes-Thompson 07760 790610, [email protected]   Picton Kathy Thompson, Company Secretary 020 7011 9988, [email protected]   About Picton Established in 2005, Picton is listed on the main market of the London Stock Exchange and is a constituent of a number of EPRA indices including the FTSE EPRA Nareit Global Index. Picton owns and actively manages a £701 million UK commercial property portfolio, invested across 46 assets and with around 300 occupiers (as at 31 March 2026). Through an occupier focused, opportunity led approach, Picton aims to be the consistently best performing diversified UK REIT and has delivered upper quartile outperformance and a consistently higher income return than the MSCI UK Quarterly Property Index since launch. With a portfolio strategically positioned to capture income and capital growth, currently weighted towards the industrial sector, Picton's agile business model provides flexibility to adapt to evolving market trends over the long-term. Picton has a responsible approach to business and is committed to being net zero carbon by 2045. For more information please visit: www.picton.co.uk   LEI: 213800RYE59K9CKR4497   Rule 29 of the Takeover Code (the 'Code') Following the publication of the Company's Strategic Review and Commencement of Formal Sale Process on 13 January 2026, the Company is in an offer period for the purposes of the Code. The portfolio valuation of £701 million (the 'Portfolio Valuation') referred to in this announcement constitutes asset valuations in accordance with Rule 29.1 of the Code. The Company has agreed with the Takeover Panel that in the event of a firm offer being announced for the Company, a valuation report in accordance with Rule 29 of the Code on the 31 March 2026 NAV or the Portfolio Valuation or any subsequent net asset value or portfolio valuation published by the Company prior to date of such offer will be published in due course and by no later than the publication of any offer document or scheme document in relation to such offer.   Publication on website In accordance with Rule 26.1 of the Code, a copy of this announcement will be made available (subject to certain restrictions relating to persons resident in restricted jurisdictions) on the Company's website: www.picton.co.uk promptly following its publication and in any event no later than 12 noon (London time) on the business day following the release of this announcement. Neither the content of any website referred to in this announcement nor the content of any website accessible from hyperlinks is incorporated into, or forms part of, this announcement.     Chief Executive's Review Our focus on total return and shareholder value continues to deliver positive results.   During the year, we marked our 20-year anniversary and I am now pleased to report a profit of £26 million for the financial year. Our net assets have grown to over 102 pence per share and we have paid dividends of £20 million, fully covered by EPRA earnings. This has been set against a backdrop of both international and domestic economic uncertainty and volatility. Despite reducing interest rates in the UK, and an improving inflation outlook for most of the year, this was offset by the impact of higher taxes and weaker business sentiment, but also a delayed 2025 UK Budget. Recent events in the Middle East have provided another shock to financial markets, particularly through the impact of higher energy prices and the inflationary and interest rate outlook. A year ago we set out a plan to reduce exposure to lower yielding assets, rebalance the portfolio to grow earnings, invest into our portfolio to support future occupancy and earnings growth, make prudent use of leverage and unlock shareholder value with our share buyback programme, using proceeds from asset disposals. We have made progress against all of these objectives, albeit a continued share price discount to net asset value has led to greater use of share buybacks relative to new asset acquisitions. I am particularly pleased that, alongside a total return of over 6%, our total shareholder return has been over double that at 13%, reflecting much of the above activity. Performance We have seen NAV per share growth of 2%, driven in part by portfolio revaluation gains, but also the positive impact of our share buyback programme. Overall profitability was lower, reflecting the more subdued property market, with earnings per share of 5.0 pence, compared with 6.9 pence in the prior year. Similarly, our EPRA earnings was 4.0 pence compared with 4.2 pence in the prior year, principally reflecting the change in occupancy over the year. Portfolio performance Our property portfolio, as measured against the MSCI UK Quarterly Property Index, has continued to outperform, now for the thirteenth consecutive year. We have delivered upper quartile total property return performance since launch on an annualised basis. Our property total return this year was 5.9%, which compares to the MSCI All Property total return of 5.4%. I am encouraged by the like-for-like ERV growth of close to 5% driven in part by both the underlying growth in our industrial assets and also the positive impact of capital investment into office assets, enabling us to facilitate leasing and regear transactions. We sold our largest office asset by value during the year, 1% above the preceding valuation, reducing our office exposure to 21% from 36% five years ago. The majority of the proceeds were used to continue our share buyback programme as well as our ongoing reinvestment programme into our portfolio to create high quality assets that meet occupiers' expectations. Whilst we have seen 27% more leasing transactions relative to last year, and ERV growth of close to 5%, we have also seen a reduction in occupancy. The decrease in occupancy is a result of our lease expiry profile rather than a long-term structural trend, and reflects a few key lease events primarily within our industrial assets in the final half of the year. These lease events at Radlett and Rushden, which are high quality, well-located assets, make up over 40% of our vacancy and represent the two largest opportunities to capture reversionary upside in the portfolio and will drive income growth looking forward. We have received positive leasing interest in both these assets. Operational excellence Recognising our conservative balance sheet we have continued to use proceeds from asset disposals to extend our share buyback programme alongside ongoing reinvestment into the portfolio. We continue to operate with a very strong debt book, with long-term fixed rate debt, priced below market rates. We refinanced our revolving credit facility at the start of the year but it was not drawn during the period, reflecting the improved cash position from asset disposals. We are pleased to have maintained a cost ratio of 1.3% and managed our cost base in line with the prior year, excluding costs in relation to the Strategic Review. Acting responsibly During the year we revised our net zero strategy to reflect the progress made on the decarbonisation of our assets since 2019 and to ensure this aligns with our business objectives. We aim to reduce our Scope 1 and 2 emissions to net zero by 2035, whilst allowing more time to achieve an overall net zero target by 2045. The latter reflects the need for our own occupiers and suppliers to be part of the solution and the longer term engagement that this will require. This compares to a previous overall net zero target of 2040. We have made very good progress decarbonising our office assets and recognising projects on-site currently, we expect 85% by value to have been fully or partially decarbonised and running on all electric systems by the end of this year. We now have 86% of the portfolio with EPC ratings A-C. To mark our 20-year anniversary, we raised over £20,000 for The Royal Marsden Cancer Charity, which was particularly poignant as Jay Cable had been treated there over the past few years. We have sadly lost a great colleague and wonderful individual far too soon. Equity capital markets For some time the Board has been seeking to address the impact of the discount between share price and net asset value. Throughout the course of the last year, real estate equities continued to trade at material discounts to their underlying asset value. The volatility in the market has been very sensitive to movements in interest rates, particularly as a result of instability in the wider financial markets. Through our share buyback programme, we have prioritised investment into our own equity above new acquisitions and this has delivered a positive impact. Strategic Review As announced on 13 January, the Board launched a Strategic Review to consider all further options to maximise value for shareholders, therefore suspending our share buyback programme. On 12 May 2026, a non-binding indicative all-share offer ('Proposed Offer') from LondonMetric Property Plc and Schroder Real Estate Investment Trust Limited was announced. The Company is engaging with all stakeholders, with negotiations and due diligence ongoing. Further details will be communicated in due course. Outlook Our portfolio, weighted to industrial, warehouse and logistics assets continues to be supported by a diverse occupier base, limited new supply pipeline, low obsolescence and low capital investment relative to other sectors. Our portfolio has a current rent roll of £37.0 million, with additional rent frees and stepped rents accounting for £6.1 million. We have a further £8.8 million of vacancy, with the two largest industrial voids accounting for over 40% of that upside. In addition, there is £4.4 million of reversion across the portfolio where we can reset rents to market levels at future lease events. The majority of this upside comes from our industrial portfolio, where we remain confident in the sector fundamentals. The Board has agreed to maintain the current dividend level and will review future increases following leasing progress within the portfolio. The year ahead is a key one. Notwithstanding macroeconomic factors, the drivers of our future performance relate to an improvement in occupancy and delivering on asset management initiatives. We expect to end the year with a marked improvement in occupancy, with leasing success following asset upgrades and capturing the reversionary potential across the portfolio. This will all provide a significant platform for future earnings growth.   Michael Morris Chief Executive 11 June 2026     Our Marketplace Macroeconomic conditions remain uncertain despite a backdrop of reducing interest rates.   Economic backdrop The first two months of 2026 were beginning to show signs of improvement across key economic indicators, but this was abruptly disrupted by the outbreak of conflict in Iran on 28 February. The initial shock triggered market volatility and a surge in oil and gas prices, increasing inflation expectations and renewing cost of living pressures. Interest rate cuts are now expected to be paused or even reversed, keeping mortgage rates and borrowing costs elevated. There is now increased risk of weakened business confidence and slower economic growth, but this will depend on how long the conflict lasts. The UK is particularly exposed given the reliance on imported oil and energy. Slower growth and higher borrowing requirements from the UK Government was already a challenging fiscal environment and having a bearing on the risk-free rate, a key determinant of commercial property yields. On the day before the conflict began the ten-year gilt yield was 4.3%. By the end of March it was 4.9% and has continued to experience volatility in reaction to the news cycle. The rising uncertainty within the UK Labour Government contributed to additional upward pressure pushing the ten-year gilt yield to over 5% for the first time since 2008. Inflation has fallen significantly from its 2022 peak of 11.1% but is still above target. In March the ONS reported that annual CPI increased to 3.3%, driven primarily by higher motor fuel prices. By April, annual CPI had eased to 2.8%, but is expected to increase further during 2026 due to higher energy costs and other underlying price pressures. The Bank of England has reduced the base rate by 150 basis points, from its August 2023 peak of 5.25% to 3.75% by December 2025. In April 2026, the Monetary Policy Committee decided to hold the base rate at 3.75%. The labour market has softened, with vacancies falling and wage growth slowing. Annual wage growth in real terms was 0.3% for regular pay and 1.0% for total pay from January 2026 to March 2026. The unemployment rate for the same period was 5.0% compared to 4.5% a year ago. Retail sales saw a temporary boost in March due to Easter and food-related spending which was reversed in April, with the British Retail Consortium recording a year-on-year decline of 3.4%. Increased uncertainty and concerns over higher living costs are causing consumers to be selective about discretionary spending. Cautious consumer behaviour is also reflected in the household savings ratio, which at 9.9% is high by historic standards. However, this also indicates that there is potential for consumer demand to support a sustained recovery when uncertainty eases. Despite the outlook being more challenging than it appeared at the start of the year, the UK has several underlying strengths that give reason for cautious optimism. Inflation is well below the recent peak, wage growth remains positive in real terms and interest rates are significantly lower than the 2023 highs. These factors should help support business, consumer and investor confidence and lead to a gain in momentum once geopolitical pressures subside. UK property market UK real estate investment volumes have been at a reduced level since 2023, but from this lower base, strengthened in 2025, surpassing levels recorded in the previous two years. For the year ending March 2026, the total capital invested reached £61.4 billion. Overall, investment volumes increased 17% compared to the previous year but this was primarily driven by an increase in corporate rather than direct market activity. The fourth quarter of 2025 saw a marked acceleration, however, this momentum did not continue into the first quarter of 2026. By sector, industrial assets accounted for 24% of total activity and recorded a 32% year-on-year increase in investment volumes. Offices represented 23% of the total volume, rising 38% over the same period. Retail investment accounted for 14% of activity and declined 16% year-on-year. The MSCI UK Quarterly Property Index recorded an All Property total return of 5.4% for the year to March 2026, driven by 0.6% capital growth and a 4.8% income return. This compares to the 6.2% total return for the year to March 2025. Looking at the three main sectors, retail and industrial outperformed, achieving annual total returns of 7.6% and 6.1%, respectively. Meanwhile the office sector lagged, delivering an annual total return of 4.3%. The retail and industrial sector total returns were lower than the prior year, whereas the office sector saw a marked improvement. All Property ERV growth was 3.2% for the year to March 2026, compared to 4.0% in the previous year. The industrial sector saw the strongest rental growth at 4.2%, followed by offices at 3.6% and retail at 2.8%. 12 months to March 2026 All Property Industrial Office Retail Total return 5.4% 6.1% 4.3% 7.6% Income return 4.8% 4.4% 4.1% 5.8% Capital growth 0.6% 1.6% 0.3% 1.7% Number of positive segments 15 4 2 9 Number of negative segments 9 1 5 3 ERV growth 3.2% 4.2% 3.6% 2.8% Number of positive segments 22 5 7 10 Number of negative segments 2 0 0 2   Source: MSCI UK Quarterly Property Index     Portfolio Review   Industrial weighting 67% South East 47% Rest of UK 20%   Office weighting 21% London and South East 12% Rest of UK 9%   Retail and Leisure weighting 12% Retail Warehouse 8% High Street 2% Leisure 2%   Reducing low yielding office exposure, upgrading the portfolio and improving rental values.   Market backdrop The year to March 2026 has seen mixed economic signals. On the one hand we have seen lower inflation and interest rates, but set against this, the impact of successive UK Budgets have weakened business confidence, and more latterly the uncertainty of rising energy costs as a result of conflict in the Middle East. Occupational markets have been robust with a sense of improving demand through 2025. We have seen modest but positive rental growth in all three core markets. We continue to see leasing activity across all sectors, albeit asset specific factors, such as location and quality of accommodation, are key drivers of occupational demand with elevated levels of supply in some markets. The investment market has been more muted since 2023, however, we are now seeing improved liquidity for well-positioned assets. Overall property values have been relatively stable, with positive leasing and asset management activity providing momentum and offsetting adverse lease events. Performance For the year to March 2026, the total property return was 5.9%, outperforming the MSCI UK Quarterly Property Index which recorded a total return of 5.4%. We have outperformed the benchmark for 13 consecutive years and delivered upper quartile performance since launch, ranking in the 91 percentile. This outperformance was driven by both income return and capital growth. Our portfolio income return was 5.2%, outperforming the MSCI income return of 4.8%. Capital growth was 0.7%, outperforming MSCI at 0.6%. Portfolio summary 2026 2025 Like-for-like % change Assets 46 47   Area 4.6m sq ft 4.6m sq ft   Occupancy 84% 94%   Total property return 5.9% 7.3%   Capital     Valuation £700.8m £723.1m 1.7% Disposals £34.5m £51.0m   Acquisitions - £0.5m   Capital expenditure £8.8m £11.8m   Capital receipt £2.4m -   Equivalent yield 6.8% 6.8%   Income     Passing rent £37.0m £42.3m -9.9% Contracted rent £43.1m £48.2m -8.1% Void ERV £8.8m £3.4m 163% Rental uplift to ERV £4.4m £4.0m 26% ERV £56.4m £55.6m 4.8% Capital growth The portfolio valuation as at 31 March 2026 was £700.8 million, a like-for-like portfolio valuation increase of 1.7% or 0.7% after capital expenditure, underpinned by our industrial exposure. Capital expenditure in the year was £8.8 million across multiple projects. These were primarily focused on refurbishment upgrades ahead of re-leasing and decarbonisation works at our office assets in Bristol, Colchester and Milton Keynes. During the year we disposed of our lowest yielding office asset, Stanford Building, London, for £34.5 million, at a 1% premium to the March 2025 valuation, and acquired the freehold interest of our long leasehold Cardiff asset for £0.2 million which will tactically help unlock future redevelopment upside. Income At a headline level, portfolio rental income was lower this year than the previous year. This was impacted by our asset disposal and also a number of key lease events, which are detailed further below. We do not believe our lower occupancy to be structural. The majority of our vacancy is under six months old, but it does have a direct correlation to income, not only by virtue of rental income but associated void holding costs, be that business rates, service charges or security. In terms of portfolio activity, we have completed 27% more leasing transactions than the preceding year, and by rental value have completed 35% more lettings. Recognising tougher operating conditions, we continue to work with our occupiers in a collaborative way, and where we have had occupier defaults, we have re-let 36% of the space. As a result, over the year we have seen a reduction in like-for-like passing rental income of 9.9% to £37.0 million and a reduction in contracted rental income of 8.1% to £43.1 million, reflecting lower occupancy. Reversion Following our asset upgrades, transactional evidence and market rental growth, we have seen a 4.8% like-for-like increase in the estimated rental value to £56.4 million. The portfolio has reversionary potential of £19.3 million, of which £6.1 million is achieved through contractual rental uplifts, £4.4 million is from rental uplifts to ERV on lease events, and £8.8 million is from leasing our void units. Portfolio activity Our programme of targeted capital investment, a selective disposal and active leasing has generated a positive valuation movement and increased reversionary potential. We have completed 99 active management transactions, securing uplifted rents ahead of March 2025 ERV. ‒      33 lettings or agreements for lease, securing additional rent of £3.9 million, 4% ahead of ERV ‒      43 lease renewals or regears, securing £4.7 million per annum, an uplift of £0.4 million, 10% ahead of passing rent ‒      17 rent reviews, securing an uplift of £0.4 million per annum, 18% ahead of passing rent and 4% ahead of ERV ‒      Six lease variations to remove occupier break options, securing £0.6 million per annum and extending the average lease term by four years Occupancy Our occupancy over the year has reduced to 84% from 94% in March 2025. This compares with the MSCI UK Quarterly Property Index of 91%. Lower occupancy at the year-end reflected a concentration of lease events during 2025 and we do not believe this is a long-term structural trend. Re-leasing our two key industrial voids will see this position reverse and align with our five-year average occupancy which has been over 90%. The total void ERV is £8.8 million. Retention Over the year to March 2026, total ERV at risk due to lease expiries or break options totalled £11.3 million. This figure excludes the disposal during the year. We retained 35% of the ERV at risk, or 44% where leases were surrendered, principally in Chatham and Radlett. Of the ERV not retained, 9% (£1.0 million) was re-let to new occupiers during the year. In addition, £3.5 million of ERV was secured through lease extensions, break removals or back-to-back lease surrenders and re-lettings, where lease events were dated after the year end. Summary and outlook The commercial property market has been subdued, recognising both global and domestic headwinds. However, we have seen positive valuation movement and growth in rental values over the period. The occupational markets in particular, have shown resilience in the face of external pressures. Following the structural repricing over recent years of the retail and office sectors in particular, there has been a greater depth of investor demand across a variety of assets. As we look forward, inflation, interest rate movement and cost of capital will be the key drivers for market liquidity and capital values. At present, visibility on these remains unclear as a result of geopolitical events and impact on supply chains and capital flows. We expect supply levels and investment transaction volumes to remain muted until a clear pathway is established. In addition, increases in construction costs will further restrict the supply of new developments in an already constrained market. We expect occupational markets to continue to demonstrate resilience in the face of external pressures but demand will continue to focus on strong geographies and high quality assets that meet occupiers' requirements. Restricted supply of new developments will enable further rental growth for the best space across most markets and geographies. The portfolio has significant reversion, which we believe can be unlocked within the next 12 months and we remain focused on growing income and creating value. We are encouraged by leasing activity and the rents being achieved where we have invested capital to upgrade assets ahead of re-leasing, the proof of which has been demonstrated by the ERV growth during the year. We are on-site refurbishing space that became available during the year and have a good pipeline of leasing interest across all sectors within the portfolio.   Tim Hamlin Head of Asset Management 11 June 2026     Industrial Strong ERV growth driven by asset management activity.     2026 2025 Like-for-like % change Assets 19 19   Area 3.3m sq ft 3.2m sq ft   Occupancy 87% 99%   Total property return 5.5% 8.7%   Capital     Valuation £468.7m £463.2m 1.2% Disposal proceeds - -   Acquisitions - £0.5m   Capital expenditure £2.8m £3.0m   Equivalent yield 5.9% 5.6%   Income     Passing rent £21.0m £22.6m -7.1% Contracted rent £23.3m £25.7m -9.1% Void ERV £4.2m £0.4m 894% Rental uplift to ERV £3.7m £3.4m 9.8% ERV £31.2m £29.5m 5.9%   Market backdrop The industrial and logistics sector has seen modest capital growth throughout the year. However, the main driver of growth has again been movements in income as rents are reset on lease events. Overall, investment transaction volumes have been driven by a shortage of supply of suitable assets rather than a lack of demand. Occupational demand has been resilient with a noticeable improvement in demand in the latter half of the year. Speculative development remains restricted and areas of oversupply are starting to reduce as a consequence. Key activity Our industrial assets increased in value by 1.2% over the year, to £468.7 million. Contracted rent has reduced by 9.1% to £23.3 million and the ERV grew by 5.9% to £31.2 million. Occupancy has reduced from 99% to 87%. During the year, the occupier at Rushden exercised their break option and this represents the largest single reversionary opportunity within the portfolio with an ERV of more than 50% above the previous passing rent. We received a payment of £2.5 million in accordance with their lease terms and this will enable upgrade works to the building ahead of re-leasing. At Radlett, an occupier vacated a unit where we received £1.1 million in lease surrender and dilapidations payments and the ERV is more than 20% above the previous passing rent. Marketing has commenced for both units with good interest. Over the year we completed £6.5 million of lease transactions at an average of 4% ahead of the March 2025 ERV. Of these £1.8 million were new lettings, 6% ahead of ERV, £2.8 million were lease renewals or regears, 7% ahead of ERV and 32% ahead of the previous rents. A further £1.3 million of rent reviews were completed, securing a rental uplift of £0.3 million, 6% ahead of ERV and 31% ahead of the previous rent. In addition, we removed five break options securing £0.6 million. Key transactions in the year included: ‒      Harlow - lease regear with the largest occupier securing a ten-year term subject to breaks with penalty payments at £1.0 million, 25% ahead of the passing rent and 10% ahead of March 2025 ERV. We also surrendered a lease and simultaneously re-let the unit for £0.6 million per annum, 5% ahead of the previous passing rent and 4% ahead of March 2025 ERV ‒      Radlett - lease renewal securing £0.3 million per annum, 64% ahead of the previous passing rent and 6% ahead of March 2025 ERV ‒      Additionally, we completed lettings in Radlett, Gloucester, Winnersh, Datapoint, London, Luton and Warrington for a combined £0.8 million per annum, 8% ahead of March 2025 ERV Outlook The industrial portfolio currently has £10.2 million of reversionary income potential: £2.3 million from contractual uplifts, £3.7 million from market reversion and £4.2 million from leasing void units. Demand at our multi-let industrial assets remains resilient, and we continue to capture reversionary potential at lease events with further rental growth over the period. Our vacancies at Rushden and Radlett comprise the largest income upside. We continue to see rental growth in the sector, albeit at a lower rate than in recent years.     Office Our asset upgrade programme has delivered leasing results with £1.8 million of new lettings ahead of ERV, and an encouraging pipeline.     2026 2025 Like-for-like % change Assets 13 14   Area 0.6m sq ft 0.7m sq ft   Occupancy 75% 86%   Total property return 5.3% 1.6%   Capital     Valuation £146.3m £175.3m 3.5% Disposal proceeds £34.5m £51.0m   Acquisitions - -   Capital expenditure £5.9m £8.1m   Equivalent yield 9.1% 8.2%   Income     Passing rent £10.4m £14.0m -18.1% Contracted rent £12.3m £14.9m -9.9% Void ERV £4.4m £2.6m 73% Rental uplift to ERV £0.9m £1.2m 32.2% ERV £17.6m £18.7m 4.3%   Market backdrop Office capital values continued to weaken during the year, albeit the rate of decline was significantly more muted relative to prior years. Investment transactions have been focused on either well-located, high quality assets or peripheral buildings more suited to alternative uses. There has been almost no new development in the majority of office markets outside of central London and other large regional cities. At the same time there remains an oversupply of secondary space relative to occupational demand which is leading to vacancy and downward rental pressures, whilst prime assets are still seeing leasing activity and rental growth. Key activity During the year we completed the disposal of a low yielding central London office asset (following the three office disposals last year) at a 1% premium to the March 2025 valuation, which has reduced our office exposure to 21%. The value of our office assets has increased on a like-for-like basis by 3.5% over the year to £146.3 million. We have continued to invest to improve the quality of our office space and deliver better occupier amenities. Our asset upgrades, leasing transactions and the impact of a market with a shortage of high quality space have driven rental growth which has seen the ERV increase by 4.3% to £17.6 million. Following an active management surrender at Chatham, and space becoming available at Farringdon, London and Metro, Manchester, our office occupancy fell to 75% from 86%. The passing rent on our retained office assets reduced by 18% to £10.4 million, and the contracted rent reduced by 10% to £12.3 million. Over the year we completed £4.4 million of lease transactions at an average 2% ahead of the March 2025 ERV. Of these, £1.8 million were new lettings, 3% ahead of ERV and £1.4 million were lease renewals or regears, 1% ahead of ERV and 9% ahead of the previous rent. We also settled five rent reviews securing an uplift of £0.1 million, 9% ahead of passing rent and 1% ahead of ERV. We have completed £1.8 million of leasing transactions as a direct result of our refurbishment upgrades, 3% ahead of March 2025 ERV. Key transactions in the year included: ‒      Colchester Business Park - leased three of the four suites at Building 200 at £0.5 million, 7% ahead of the March 2025 ERV ‒      Tower Wharf, Bristol - leased two suites at £0.3 million, in line with the March 2025 ERV ‒      Metro, Manchester - secured a renewal and new letting of £0.4 million, 4% ahead of the previous rent and 7% ahead of the March 2025 ERV Outlook Our office assets have a reversionary yield in excess of 11%. The reversionary potential is £7.2 million, with £1.9 million from contractual uplifts, £0.9 million from resetting to market rents and £4.4 million from leasing vacant space. Whilst pricing has stabilised, the sector remains polarised. We expect strong rental growth to continue at the best buildings and locations as new supply is likely to remain constrained. The weakest locations and buildings will continue to suffer from weak occupational demand requiring an alternative use.     Retail and Leisure We continue to see high levels of occupancy at our retail assets and have unlocked additional value via lease restructures.     2026 2025 Like-for-like % change Assets 14 14   Area 0.7m sq ft 0.7m sq ft   Occupancy 96% 94%   Total property return 10.1% 14.1%   Capital     Valuation £85.8m 84.6m 1.4% Disposal proceeds - -   Acquisitions - -   Capital expenditure £0.1m £0.7m   Capital receipt £2.4m -   Equivalent yield 7.9% 7.9%   Income     Passing rent £5.6m £5.7m -2.5% Contracted rent £7.5m £7.6m -1.7% Void ERV £0.3m £0.4m -28.8% Rental uplift to ERV -£0.2m -£0.6m 60.4% ERV £7.6m £7.4m 1.4%   Market backdrop Retail capital values have shown modest overall growth over the year, with selective rental growth in certain sub-markets including central London and retail parks in particular. Investment demand has focused on the retail warehouse sector which is supported by consumer behavioural patterns, and locally dominant high street and shopping locations. Occupationally, the sector shows remarkable resilience in the face of domestic political headwinds and broader cost pressures. However, some structural issues remain and the sector remains polarised between locations with strong footfall and disposable income that support rental growth, and more peripheral locations unable to attract customers. Rents in the sector have broadly rebased and we have seen rental growth at key high street locations. Occupier defaults have remained at fairly low levels, and notably much of the space returned has been absorbed by other operators, in some instances at higher rental levels. The sector offers opportunities but asset selection and the ability to maintain income is key. Key activity Our retail assets are predominantly retail warehouse, underpinned by value-led retailers, and make up 8% of the total portfolio. They consist of 19 units across four parks with two vacant units in Swansea. Our high yielding high street portfolio makes up 2% of the total portfolio, and leisure comprises 2%. Our retail assets increased in value by 1.4% over the year to £85.8 million, and the ERV grew by 1.4% to £7.6 million, mainly as a result of leasing transactions. Occupancy increased from 94% to 96%. The contracted rent reduced by 1.7% to £7.5 million, partly due to a lease restructure involving receipt of a capital payment of £2.4 million, and also the re-letting of space following the expiry of an over-rented lease. Over the year we completed £1.0 million of lease transactions at an average 2% ahead of the March 2025 ERV. Of these, £0.3 million were lettings, 4% ahead of ERV, £0.5 million were lease renewals or regears, 1% below ERV, three rent reviews at £0.2 million securing an uplift of 1% against the previous rent and a break removal. Key transactions in the year included: ‒      Bristol - leased a unit and renewed two leases at £0.3 million, 5% ahead of the March 2025 ERV ‒      Leeds - surrendered and simultaneously re-let a unit at £0.1 million, 64% ahead of the previous rent and 27% ahead of the March 2025 ERV ‒      Carlisle - restructured the hotel lease (lower rent, longer term), in return for a premium of £2.4 million Outlook Our retail and leisure assets have reversionary potential of £2.0 million, of which £1.9 million is contractual uplifts, £0.2 million of over-rented leases approaching expiry and £0.3 million of vacant units. The sector offers attractive income characteristics with growth potential. However, the ownership structure of many retailers magnifies the risks in the event of continued economic pressures. Investment demand is likely to focus on dominant, structurally supported locations, and strong covenant-backed cash flows.     Our top ten properties, which are each valued in excess of £20 million represent 58% of the portfolio value. Site Property type Approximate area (sq ft) Capital value (£m) Occupancy rate (%) EPC rating Parkbury Industrial Estate, Radlett Industrial 337,900 >100 82 A-D River Way Industrial Estate, Harlow Industrial 464,800 75-100 99 A-D Shipton Way, Rushden Industrial 312,900 30-50 0 C Datapoint, Cody Road, London E16 Industrial 55,100 30-50 90 B Lyon Business Park, Barking Industrial 99,400 20-30 100 B-D 50 Farringdon Road, London EC1 Office 31,300 20-30 61 B Tower Wharf, Cheese Lane, Bristol Office 70,600 20-30 90 B-C Sundon Business Park, Dencora Way, Luton Industrial 127,800 20-30 93 A-D Trent Road, Grantham Industrial 336,100 20-30 100 C The Business Centre, Wokingham Industrial 95,800 20-30 97 B-D     Diverse occupier base Companies House classification Contracted rent % Wholesale and retail trade 25% Manufacturing 14% Information and communication 11% Administrative and support service activities 10% Professional, scientific and technical activities 9% Transportation and storage 7% Public sector 4% Accommodation and food service activities 4% Arts, entertainment and recreation 3% Construction 3% Financial and insurance activities 3% Education 3% Other 4% Total 100%     Longevity of income This was improved over the year and, as at 31 March 2026, expressed as a percentage of contracted rent, the average length of leases to first termination was 5.4 years (2025: 4.9 years). This is summarised as follows:   % 0 to 1 year 14.9% 1 to 2 years 8.2% 2 to 3 years 13.9% 3 to 4 years 16.9% 4 to 5 years 11.8% 5 to 10 years 20.9% 10 to 15 years 12.0% 15 years or more 1.4% Total 100.0%     Financial Review This year we have delivered EPRA earnings of £21 million and a profit after tax of £26 million.   Our focus at the outset of the year was to reduce exposure to lower yielding assets and recycle capital from disposal proceeds into more attractive risk-adjusted investments, including share buybacks to deliver shareholder value. Earnings growth which supports an increasing, covered and sustainable dividend continues to be our main focus in a volatile and higher interest rate environment. This year we have delivered EPRA earnings of £20.9 million and a profit of £25.9 million. It has been a more challenging year to deliver earnings growth due to our lease expiry profile, however, we believe the portfolio is well-positioned in the medium to long-term as demonstrated by the reversionary potential and 5% ERV growth during the year. Whilst EPRA earnings are lower this year, we have seen continuing modest but positive valuation movements, as well as the disposal of our largest office asset for £34.5 million, 1% above March 2025 valuation. These disposal proceeds have been used to reinvest in the portfolio and return capital to shareholders through our share buyback programme which has been accretive, on a pence per share basis, to EPRA earnings and EPRA NTA. Our balance sheet remains robust and our financial position has been strengthened by the surplus cash from disposal proceeds, low loan to value ratio and £50 million undrawn revolving credit facility. EPRA earnings EPRA earnings decreased by 4% to 4 pence per share during the year as a result of lower occupancy impacting net property income. We were pleased to maintain the administration costs in line with the previous year, and only see a small increase in the net finance costs. This analysis is set out below. EPRA earnings 2026 £m 2025 £m Rental income 41.2 43.5 Property costs (7.5) (6.5) Other income 2.1 0.7 Net property income 35.8 37.7 Administration costs 1 (7.1) (7.1) Net finance costs (7.8) (7.7) EPRA earnings 20.9 22.9 EPRA earning per share (pps) 4.0 4.2 1.   Excluding accrued Strategic Review costs of £0.6 million. Net property income Net property income was £35.8 million, a decrease of 5% from the previous year due to: ‒      Industrial occupancy: our occupier in Rushden exercised their break in October 2025 resulting in reduced rental income, but represents the largest reversionary potential within the portfolio. We received a break penalty of £0.8 million to offset the lost income and acceleration of lease incentives. Excluding Rushden, we saw net property income growth of 5% across the remainder of the industrial portfolio ‒      Office occupancy: reduced occupancy at Farringdon Road, London, Chatham and Metro, Manchester, where the space has undergone, or is undergoing refurbishment for re-leasing ‒      Retail and leisure rent rebasing and the occupier lease regear at the hotel in Carlisle This analysis is set out below. Net property income analysis £m Net property income in the year to 31 March 2025 37.7 Impact of disposals - Rushden occupier break (1.2) Industrial net property income movement (excl. Rushden) 1.1 Office net property income movement (1.0) Retail and leisure net property income movement (0.8) Net property income in the year to 31 March 2026 35.8   Rent collection We continue to be focused on rent collection, with 99% received during the financial year. In recognition of a tougher trading environment for our occupiers, we have sought to agree payment plans where necessary and maintain a low arrears position. During the period we have written off arrears of £0.3 million where an occupier went into administration. Administration costs and cost ratio Administration costs, excluding the Strategic Review, have remained in line with the prior year. The Group cost ratio has been maintained at 1.3%. We remained focused on managing our cost base and sought to reduce costs wherever possible. Our EPRA cost ratio (excluding direct vacancy costs) has increased from 22% to 25% during the financial year in part due to the write-off of occupier incentives arising from reduced occupancy over the financial year. Net finance costs Our net financing costs have increased from £7.7 million to £7.8 million as a result of lower interest income during the year. Our interest expense is fixed, as 100% of the debt drawn is under our long-term fixed rate facilities. Dividends In May 2025, we announced an increase in the dividend to 3.8 pence per share, a 2.7% increase. Dividend cover is 103%. The Board recognises the importance of dividend growth and will continue to review the dividend level going forward.   Balance sheet Net asset value The Group's net asset value as at 31 March 2026 was £522 million, or 102 pence per share. This reflected an increase of 2% or 2 pence per share over the financial year. The analysis of the net asset value movement is set out below. Net asset value movement EPRA NTA £m EPRA NTA pence per share March 2025 net asset value 533.4 100.0 EPRA earnings 20.9 4.0 Portfolio valuation 6.6 1.3 Loss on disposals (1.0) (0.2) Strategic Review costs (0.6) (0.1) Employee share-based awards 0.7 0.2 Shares purchased by Employee Benefit Trust (0.9) (0.2) Share buyback (17.3) 1.0 Dividends paid (19.8) (3.8) March 2026 net asset value 522.0 102.2   The below table reconciles the net asset value calculated in accordance with International Financial Reporting Standards (IFRS) with that of EPRA. EPRA analysis 2026 £m 2025 £m 2024 £m Net assets - IFRS and EPRA net tangible asset value 522.0 533.4 524.5 Fair value of debt 21.9 26.1 24.7 EPRA net disposal value 543.9 559.5 549.2 Net asset value per share (pence) 102 100 96 EPRA net tangible asset value per share (pence) 102 100 96 EPRA net disposal value per share (pence) 107 105 101   Portfolio valuation The property valuation was £700.8 million, an increase of 1.7% on a like-for-like basis, excluding Stanford Building, London WC2, which was sold in the year. This equates to 0.7% including net capital expenditure, being £8.8 million of capital expenditure incurred less the £2.4 million premium received on the lease regear at the hotel in Carlisle. The lease regear resulted in a reclassification of the hotel in Carlisle from investment property to a finance lease receivable. During the year, we have continued to upgrade our portfolio with £8.8 million incurred principally on the office assets to increase occupier demand and unlock rental income increases and capital values over the medium to longer-term. Disposals We disposed of Stanford Building, London WC2, our largest office asset, for gross proceeds of £34.5 million, 1% above the March 2025 valuation, prior to sale costs and lease incentive adjustments. On completion of the sale, we simultaneously entered into a lease of the first floor which is now classified as a right of use asset, rather than owner occupied. The proceeds were released from the security pool in full and used to increase the share buyback programme and to reinvest in the portfolio. Financing Total borrowings were £208.1 million at 31 March 2026, with the loan to value ratio at 23.5%. The weighted average interest rate on our borrowings was 3.7% and the average loan duration was 5.7 years. The fair value of our drawn borrowings at 31 March 2026 was £186.2 million, lower than the book value by £21.9 million, or an additional 5 pence per share. Market financing rates continue to be higher relative to the fixed rates on our long-term loans. We have strong banking relationships with our lenders; the Group has remained fully compliant with its loan covenants and has made scheduled amortisation payments during the year of £1.6 million. Summary of borrowings   2026 2025 2024 Fixed rate loans (£m) 208.1 209.6 211.1 Drawn revolving facility (£m) - - 16.4 Total borrowings (£m) 208.1 209.6 227.5 Borrowings net of cash (£m) 164.8 174.3 207.7 Undrawn facilities (£m) 50.0 50.0 33.6 Loan to value ratio (%) 23.5 24.1 27.9 Weighted average interest rate (%) 3.7 3.7 3.9 Average duration (years) 5.7 6.7 7.2   Cash flow and liquidity During the year, our cash balances increased to £43.3 million, mainly due to the disposals during the year. The cash flow from operating activities this year was £21.6 million and dividends paid were £19.7 million. Net disposal proceeds of £33 million have primarily been used to repurchase and cancel shares (£17.3 million) and invest in the property portfolio (£8.8 million). The remaining proceeds will be used to fund future capital expenditure. Share buyback programme We continued with the share buyback programme announced on 30 January 2025. We increased the programme from £10 to £30 million during the year, with buybacks of £17.3 million, at an average discount of 25% to the March 2026 NAV. In total, 33.8 million shares were purchased and cancelled since the start of the programme, at a cost of £24.8 million, at an average price of 74 pence. This total equates to a 28% discount to the March 2026 NAV per share and has been accretive to both earnings and NAV, on a pence per share basis. The share buyback programme was suspended following the announcement of the Strategic Review in January 2026. Employee Benefit Trust The Company's Employee Benefit Trust (EBT) purchased 1,200,000 shares during the year and holds 3,119,446 shares as at 31 March 2026. Shares are held by the EBT to hedge awards outstanding under employee share schemes. 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.   Saira Johnston Chief Financial Officer 11 June 2026     Managing Risks The Board recognises that there is inherent risk that could have a material impact on the Group's operations and is committed to effective risk management to protect stakeholder value.   Macroeconomic and geopolitical challenges have continued into 2026 which has provided some uncertainty around interest rates and inflation. Our approach to risk management remains key to managing our ongoing operations and performance, as well as positioning ourselves to take advantage of the changing landscape in the medium and long-term. Risk management framework The Board reviewed its Risk Management Policy in 2025 and has continued to operate in line with this policy during the year. The Board has ultimate responsibility for risk management and adopts a structured approach to considering risks which informs its decision making. The Board has reviewed its principal risks and has added cyber risk as a principal risk based on the risk scoring framework in place. This reflects the increasing number of cyber events causing business interruption generally, rather than any specific changes to our operating environment. During the year, we have updated our cyber certifications and worked with our property managers to better understand how risk is managed in our supply chain. The Board also reviewed changes in risk trends and in particular notes the increased risk scores attached to our discount and ability to attract capital and occupier risks. The impact of the continuing discount and inability to attract capital increased during the year and has been a key consideration in the decision to commence a Strategic Review in January 2026. From a portfolio perspective, the Board is monitoring the increase in vacancy and leasing activity. The Board views the decrease in occupancy as a short-term timing issue due to the lease profile of the portfolio rather than a medium or long-term structural trend. The Board has also considered its risk appetite to help manage risks and operations. The risk appetite may change over time and at different points in the property cycle, but the overall appetite for risk remains low and aligned to our long-term strategic objectives. The Board considers the prolonged period of trading at a significant discount to NAV and the current level of occupancy to be nearing its risk parameter and this is an area of focus looking ahead.   Responsibilities Board The Board has ultimate responsibility for risk management and internal controls within the Company as well as determining the risk appetite. The Board reviews the Risk Management Policy at least annually and will ensure that it is aligned with the Company's strategic priorities. Audit and Risk Committee Responsible for overseeing the development and implementation of the Risk Management Policy, including a six-monthly or as necessary, review of the existing principal and emerging risks alongside mitigating controls and their effectiveness. The Audit and Risk Committee will report to the Board on such matters. Executive Committee The Executive Committee is responsible for detailed risk assessment including maintaining a risk matrix setting out risks, detailed controls and risk appetite as well as embedding a culture of risk awareness in relation to day-to-day operational matters. Management committees Support the Executive Committee in these matters. The Transaction and Finance Committee has oversight of all property transactions and the Responsibility Committee specifically has input on the ESG risks across all areas. Principal Risks The principal risks have the potential to affect the business meeting its strategic objectives materially. These are summarised in the table below, which also includes commentary on updates of any changes during the year. Emerging risks The Board has incorporated emerging risks into its principal risks and considers this to be an appropriate way of reporting and managing these, recognising that these elements are rapidly evolving and harder to predict. The risk matrix includes additional commentary on emerging risks, and we continue to monitor these to determine how they will affect us, our occupiers and wider stakeholders. We continue to monitor the impact of the conflict in the Middle East and the evolving geopolitical landscape's impact on investor sentiment and return expectations. We are also cognisant of the impact of technology, and shifting consumer trends on our occupiers in adapting our portfolio and sector mix. Finally, we will continue to assess the impact of any new but unknown changes in legislation which may impact the cost and returns across our portfolio.   Market A. Economic market conditions The Company's performance is adversely impacted by wider economic factors such as inflation, interest rates, political changes, recession and geopolitical events. Impact Investors required return increases and there is a difference between the Company's achieved returns compared to investors' return requirements. Occupiers' businesses are adversely impacted by poor economic conditions. Inflation impacts the Company's cost base. How is the risk managed The Board considers economic and market conditions when reviewing its strategy and making investment decisions. The Board has continued its focus on capital allocation and reinvesting disposal proceeds during the year into attractive areas on a risk return basis, including the share buyback programme. Commentary Current macroeconomic conditions and geopolitical events mean the outlook continues with some uncertainty. The outlook for GDP growth, inflation, the labour market and other factors will influence the central bank's decision making on interest rates. Emerging risks: Geopolitical risk is heightened given the conflict in the Middle East which, combined with higher energy prices, may lead to a higher volatility, inflation and interest rate environment for a prolonged period. Overseen by Board Risk trend: Increasing Link to strategic pillars: 1. Portfolio Performance 2. Operational Excellence 3. Acting Responsibly B. Discount and ability to attract capital The Company's share price discount to NAV will persist or widen and there is insufficient appetite from new or existing shareholders to support an equity raise or growth. Impact A share price discount will prevent the Company raising more equity which adversely affects the Company's ability to achieve economies of scale from an internally managed model. Shareholder dissatisfaction increases susceptibility to corporate activity/interest. Unable to attract broader coverage from analysts/rating agencies/investors due to scale. How is the risk managed The level of discount relative to the NAV is closely monitored by the Board. The Board has prioritised the allocation of disposal proceeds to its share buyback programme with a total programme commitment of £30 million. Proactive push to widen shareholder base with brokers and increase shareholder engagement, for example, increasing the frequency and number of webinars. Commentary The Board believes that the Company's share price has not, for a sustained period of time, adequately reflected the intrinsic value of the Company and its assets. The Company announced a Strategic Review on 13 January 2026 in order to explore options available to maximise value for shareholders.   Overseen by Board Risk trend: Increasing Link to strategic pillars: 1. Portfolio Performance 2. Operational Excellence 3. Acting Responsibly   Portfolio C. Portfolio strategy Diversification across geographies and 'traditional' sectors may lead to the Company's portfolio delivering below MSCI/peer group performance. Impact Underperformance vs peer group and insufficient clarity to investors on return profile. The Company is unable to meet investors' required returns and is perceived to hold sectors/assets which generate lower returns than either the overall benchmark or specialists. How is the risk managed The composition of the portfolio is reviewed regularly alongside market trends to determine whether a pivot in sector or geography weightings is appropriate. Annual asset-level business plans are completed with forecast returns. Team remuneration is linked to MSCI and peer performance. Commentary The Group has sought to reduce exposure to the office sector and recycle capital from lower yielding assets. The disposal of the largest office asset, Stanford Building, completed in September 2025 for £34.5 million at a 1% premium to 31 March 2025 valuation. The portfolio is most concentrated in the industrial sector. The portfolio has outperformed the MSCI UK Quarterly Property Index this year. Emerging risks: Technological change and the impact of Artificial Intelligence may mean assets do not meet future occupier demand. Overseen by Board Risk trend: No change/stable Link to strategic pillars: 1. Portfolio Performance 2. Operational Excellence 3. Acting Responsibly D. Investment Lack of acquisitions or reinvestment opportunities that are accretive to returns. Where suitable investments can be identified, there may be pricing competition which affects the ability to transact. Issues not identified in due diligence. Impact Underperformance in the property portfolio. Unable to recycle capital and reprofile returns and/or yield on the portfolio. How is the risk managed The team is actively engaging with the market, seeking new deals and building an investment pipeline. Acquisitions are subject to Board-level approval and post-acquisition reviews are carried out after two years. Commentary We have evolved our capital allocation strategy, deprioritising new acquisitions at present and allocating capital to increase the share buyback programme. MSCI recorded a 17% increase in transaction volumes in the year to March 2026, albeit investment volumes were boosted by portfolio and corporate deals. Overseen by Board Risk trend: Decreasing Link to strategic pillars: 1. Portfolio Performance 2. Operational Excellence E. Occupiers Occupier defaults, increasing numbers of lease breaks actioned. Poorer occupational property market. Impact Immediate impact on earnings and dividend capacity. Risk of bank covenant breaches. How is the risk managed The property portfolio is diversified across sectors, assets and occupiers. Our occupier focused approach, underpinned by our key Picton Promise commitments, ensures strong occupier engagement, evidenced by our annual occupier survey. Monthly meetings monitor property manager performance, with weekly rent collection reporting. Commentary During the year, two industrial occupiers exercised their break options, which in part caused occupancy to reduce from 94% to 84%, despite an increased number of new lettings/renewals over the year. The Board views the fall in occupancy as a short-term timing issue rather than a medium or long-term structural trend. The assets are of a high quality and well located and we therefore remain confident occupancy will increase in the near-term. The occupier market has remained resilient, with MSCI reporting five consecutive years of robust levels of rental growth to March 2026. Our rent collection rate is 99%. Overseen by Board Risk trend: Increasing Link to strategic pillars: 1. Portfolio Performance 3. Acting Responsibly F. Valuation Property valuations are subjective and dependent on geopolitical, macroeconomic and cyclical factors, such as inflation and interest rates in addition to structural changes in certain sectors and regions. Impact Decreasing valuations reduce investor confidence and share price. Volatile or unsupportable valuations could lead to loss of investor confidence in the NAV. Risk of bank covenant breaches. How is the risk managed The properties are valued quarterly by an independent valuer in accordance with the Royal Institution of Chartered Surveyors Red Book valuation standards, with oversight from the Property Valuation Committee, which facilitates an in-depth quarterly review. Mandatory valuation rotation with a maximum of five years for an individual and ten years for a firm. No development or land. Commentary Commercial property values have stabilised during the year and headroom exists on banking covenants. Knight Frank was appointed as external valuer effective June 2025 due to mandatory valuer rotation and the transition has been smooth. The Board notes the additional disclosure in the Knight Frank valuation report regarding the conflict in the Middle East and will continue to monitor the impact of the macroeconomic environment on the valuation. Overseen by Property Valuation Committee Risk trend: No change/stable Link to strategic pillars: 1. Portfolio Performance   Finance and tax G. Liquidity and working capital The Company requires cash flows from rental income and contractual lease payments in order to meet its liabilities to lenders, suppliers and dividend payments to shareholders. Impact Insufficient cash to meet liabilities which may mean delayed payments to suppliers and insufficient cash for dividends payments. How is the risk managed The revolving credit facility (RCF) allows flexibility to draw, repay and manage working capital, capital expenditure and disposal/acquisitions. The Board reviews quarterly cash flow forecasts. Commentary We refinanced the RCF with NatWest, extending the maturity for an initial term of three years with two further one-year extension options. The RCF is undrawn but provides operational flexibility and opportunity for investment. Surplus disposal proceeds from the sale of Stanford Building have been retained to fund capital expenditure. Overseen by Executive Committee Risk trend: No change/stable Link to strategic pillars: 2. Operational Excellence H. Gearing Potential to enhance returns but in falling markets there may also be an adverse impact on performance. A breach of debt covenants or failure to manage refinancing events could lead to a funding shortfall. Cost base exposed to interest rate risk. Impact Loan amounts become immediately due in the event of a breach or a refinancing which may have to be resolved by forced asset sales or penal interest rates. Increased cost base if interest rate increases. How is the risk managed The Board reviews quarterly cash flow forecasts and loan covenants. Interest rate hedging is in place through the fixed rate loans. We have a diverse lender base and longstanding relationships. Commentary Gearing has been maintained at a modest level of 24% during the year. The RCF has been refinanced and the maturity extended for an initial term of three years with two further one-year extension options. Debt maturity is 5.7 years. Overseen by Board Risk trend: No change/stable Link to strategic pillars: 2. Operational Excellence   Other I. Regulatory compliance The Company must comply with a wide range of legislation and regulation including health and safety, tax and listing rules, environmental reporting and accounting matters. New or revised legislation or regulations may have an adverse impact on operations and increase costs. Impact Financial loss and reputational damage or REIT status withdrawn. Litigation, fines and reputational damage from health and safety failures. Additional costs as a result of increasing legislation and loss of shareholder confidence as a result of any breaches. How is the risk managed Appointment of Deloitte as tax advisers. The Board monitors changes to legislation with its professional advisers and through industry bodies such as the Better Buildings Partnership and Real Estate UK. The governance structure supports this further with the Health and Safety and Responsibility committees. Commentary Planning reforms have been beneficial to our change of use strategy and securing planning permission for alternative use at four office assets. The UK Government continues to support the REIT regime and its focus to decarbonise and transition to net zero. The new Renters Rights Act 2026 does not impact our portfolio. Emerging risks: Increase in new regulation and/or legislation constrains returns, such as the proposed ban on upwards only rent reviews. Overseen by Board Risk trend: No change/stable Link to strategic pillars: 2. Operational Excellence 3. Acting Responsibly J. Operational A small team with higher key person reliance and simple operational structure which may be impacted by a major event/business disruption. Impact Loss of certain individuals will have a material impact on operations and shareholder engagement/market perception. An unexpected business disruption event would have an adverse financial impact and restrict the ability to operate. How is the risk managed A succession plan is in place and reviewed annually. We have in place an employee remuneration structure that supports retention. We continue to engage with our employees through our Board and open culture. Commentary During the year, we focused on embedding additional asset management resource into the team. In light of the Strategic Review, the designated Director for employee engagement has held one-to-ones with employees and sought individual feedback on related matters. We reviewed our Employee Handbook, Incident Management Strategy and Business Continuity Plan. Overseen by Executive Committee Risk trend: No change/stable Link to strategic pillars: 2. Operational Excellence K. Cyber Systems are subject to cyber security breaches which cause business interruption, financial or reputational damage. Impact Loss of personal data, loss of financial information or operations delays will impact the ability to meet regulatory reporting and may cause financial loss. Loss of investor confidence. How is the risk managed Annual certification of cyber security with monthly IT reporting from IT providers. Employee training. Commentary We are not heavily reliant on in-house systems to carry out our business; however, the risk of cyber attack remains. We are reliant on key service providers for rent collection and property management and we ensure we have contractual protection and appropriate oversight. Emerging risks: Increased use of Artificial Intelligence may have consequences yet unknown and these will be rapid and difficult to respond to. Overseen by Executive Committee Risk trend: Increasing Link to strategic pillars: 2. Operational Excellence L. Climate change Transition risks associated with the long-term trends arising from climate change. These include increasing regulation, reporting, insurance, government response and business models of landlords and occupiers changing. Physical risks associated with the impact of climate change on our buildings. Impact Cost base increased by increased reporting requirements and regulation. Valuation adversely impacted by capital expenditure needed to transition, manage obsolescence and stranded asset risk. How is the risk managed Our ESG Governance Policy is in place and embedded into processes. The portfolio is diversified across a number of sectors, assets and geographic locations. Flood risk assessments have been updated for all properties in respect of pluvial, fluvial and reservoir flooding. EPC ratings are closely monitored and reported quarterly to the Board. Commentary We have continued to decarbonise and upgrade our portfolio. We continue to improve our EPC profile and remain fully MEES compliant. Our due diligence and risk assessment show limited physical or transition risk within the portfolio, recognising mitigating actions. Emerging risks: Unexpected or accelerated climate change may lead to an increase in stranded assets. Overseen by Responsibility Committee Risk trend: No change/stable Link to strategic pillars: 2. Operational Excellence 3. Acting Responsibly     Viability assessment and statement The UK Corporate Governance Code requires the Board to make a 'viability statement' which considers the Company's 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. On 12 May 2026, the Board received a non-binding indicative all-share offer by LondonMetric Property Plc and Schroder Real Estate Investment Property Trust Limited. The offer is subject to further negotiations and ongoing due diligence. The Board has therefore prepared this viability statement on a continuing basis. The Board conducted this review over a five-year timescale, considered to be the most appropriate for long-term investment in commercial property. The assessment has been undertaken taking into account the principal and emerging risks and uncertainties faced by the Group which could impact its investment strategy, future performance, financing and liquidity. The major risks identified were those relating to a persistently higher bond yield environment and geopolitical uncertainty as well as the inability to raise capital, portfolio and investment risks. In the ordinary course of business, the Board reviews quarterly forecasts, including forecast market returns. The forecasts include assumptions on lease events and expenditure. For the purposes of the viability assessment of the Group, the model covers a five-year period and is stress tested under various scenarios. The Board considered a number of scenarios and their impact on the Group's property portfolio and financial position. These scenarios included different levels of rent collection, occupier defaults, void periods and incentives within the portfolio, and the consequential impact on property costs and loan covenants. Forecast movements in capital values were based on input from external economic consultants. The Group's long-term loan facilities mature after the assessment period, and the Board has assumed that the Group will continue to have access to, but is not reliant on, its revolving credit facility. 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 2031 and will continue to be assessed over rolling five-year periods. The Directors consider that the scenario testing performed was sufficiently robust and that even under stressed 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 2031.   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 are required 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 and Company'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 the Company 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 Group 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 Company; and ‒      The Strategic Report includes a fair review of the development and performance of the business and the position of the Issuer, together with a description of the principal risks and uncertainties that they face. 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 Company's position and performance, business model and strategy. By Order of the Board   Saira Johnston 11 June 2026     Consolidated Statement of Comprehensive Income for the year ended 31 March 2026     Notes 2026 £000 2025 £000 Income       Revenue from properties 3 51,069 54,019 Property expenses 4 (15,257) (16,343)     Net property income   35,812 37,676     Expenses     Administrative expenses 6 (7,773) (7,100)     Total operating expenses   (7,773) (7,100)     Operating profit before movement on investments   28,039 30,576     Investments     Revaluation of owner-occupied property 14 - 128 Profit on disposal of property, plant & equipment 14 40 - Investment property valuation movements 13 6,561 12,859 (Loss)/profit on disposal of investment property 13 (999) 1,496     Total profit on investments   5,602 14,483     Operating profit   33,641 45,059     Financing     Interest income 8 735 813 Interest expense 8 (8,522) (8,549)     Total finance costs   (7,787) (7,736)     Profit before tax   25,854 37,323 Tax 9 - - Profit after tax   25,854 37,323     Total comprehensive income for the year   25,854 37,323     Earnings per share     Basic 11 5.0p 6.9p Diluted 11 5.0p 6.8p   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 28 form part of these consolidated financial statements.     Consolidated Statement of Changes in Equity for the year ended 31 March 2026     Notes Share capital £000 Retained earnings £000 Other reserves £000 Total £000 Balance as at 31 March 2024   164,400 360,528 (453) 524,475 Profit for the year   - 37,323 - 37,323 Dividends paid 10 - (20,159) - (20,159) Share-based awards   - - 751 751 Purchase of shares held in trust 7 - - (1,519) (1,519) Purchase and cancellation of own shares 21 - (7,493) - (7,493)           Balance as at 31 March 2025   164,400 370,199 (1,221) 533,378 Profit for the year   - 25,854 - 25,854 Dividends paid 10 - (19,738) - (19,738) Share-based awards   - - 744 744 Purchase of shares held in trust 7 - - (920) (920) Purchase and cancellation of own shares 21 - (17,335) - (17,335)           Balance as at 31 March 2026   164,400 358,980 (1,397) 521,983   Notes 1 to 28 form part of these consolidated financial statements.     Consolidated Balance Sheet as at 31 March 2026     Notes 2026 £000 2025 £000 Non-current assets       Investment properties 13 682,090 700,694 Property, plant and equipment 14 1,090 3,504 Lease receivable 15 1,098 -       Total non-current assets   684,278 704,198       Current assets       Accounts receivable 16 24,116 25,122 Cash and cash equivalents 17 43,259 35,320       Total current assets   67,375 60,442       Total assets   751,653 764,640       Current liabilities       Accounts payable and accruals 18 (19,302) (20,048) Loans and borrowings 19 (1,348) (1,388) Obligations under leases 23 (276) (115)       Total current liabilities   (20,926) (21,551)       Non-current liabilities       Loans and borrowings 19 (205,265) (207,153) Obligations under leases 23 (3,479) (2,558)       Total non-current liabilities   (208,744) (209,711)       Total liabilities   (229,670) (231,262)       Net assets   521,983 533,378       Equity       Share capital 21 164,400 164,400 Retained earnings   358,980 370,199 Other reserves   (1,397) (1,221)       Total equity   521,983 533,378       Net asset value per share 24 102p 100p   These consolidated financial statements were approved by the Board of Directors on 11 June 2026 and signed on its behalf by: Saira Johnston Chief Financial Officer 11 June 2026 Notes 1 to 28 form part of these consolidated financial statements.     Consolidated Statement of Cash Flows for the year ended 31 March 2026     Notes 2026 £000 2025 £000 Operating activities     Operating profit   33,641 45,059 Adjustments for non-cash items 22 (4,638) (13,597) Interest received   802 1,248 Interest paid   (8,136) (8,540) Decrease in accounts receivable   936 1,044 Decrease in accounts payable and accruals   (984) (291)       Cash inflows from operating activities   21,621 24,923       Investing activities     Purchase of investment properties 13 - (533) Disposal of investment properties 13 29,513 50,031 Capital expenditure on investment properties 13 (8,792) (11,794) Purchase of property, plant and equipment 14 (3) (12) Disposal of property, plant and equipment 14 3,438 - Lease premium received 15 2,350 -       Cash inflows from investing activities   26,506 37,692       Financing activities     Borrowings repaid 19 (1,564) (17,897) Refinancing costs paid 19 (512) - Purchase of shares held in trust 7 (920) (1,519) Purchase and cancellation of own shares 21 (17,335) (7,493) Dividends paid 10 (19,738) (20,159) Lease payments   (119) -       Cash outflows from financing activities   (40,188) (47,068)       Net increase in cash and cash equivalents   7,939 15,547 Cash and cash equivalents at beginning of year   35,320 19,773       Cash and cash equivalents at end of year 17 43,259 35,320   Notes 1 to 28 form part of these consolidated financial statements.     Notes to the Consolidated Financial Statements for the year ended 31 March 2026 1. General information Picton Property Income Limited (the 'Company' and together with its subsidiaries the 'Group') was established in Guernsey on 15 September 2005. It has a listing on the main market of the London Stock Exchange as a commercial company and entered the UK REIT regime on 1 October 2018. The consolidated financial statements are prepared for the year ended 31 March 2026 with comparatives for the year ended 31 March 2025. 2. Material 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, share-based awards and property, plant and equipment. 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 Accounting Standards) as issued by the IASB and the Companies (Guernsey) Law, 2008. On 13 January 2026 the Board announced a Strategic Review to consider options for a merger with other UK REITs, alongside other forms of consolidation, combination, or selling the entire issued share capital of the Company conducted under a Formal Sales Process, or other corporate actions, including but not limited to, selling the Company's portfolio or subsidiaries and returning capital to shareholders. On 12 May 2026, a non-binding indicative all-share offer ('Proposed Offer') from LondonMetric Property Plc and Schroder Real Estate Investment Trust Limited was announced. The Company is engaging with all stakeholders, with negotiations and due diligence ongoing. The Directors have assessed whether the going concern basis remains appropriate for the preparation of the financial statements. They have reviewed the Group's principal and emerging risks, existing loan facilities, access to funding and liquidity position and then considered different adverse scenarios impacting the portfolio and the potential consequences on financial performance, asset values, dividend policy, capital projects and loan covenants. Under all these scenarios the Group has sufficient resources to continue its operations, and remain within its loan covenants, for the foreseeable future and in any case 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. ‒      Amendments to IAS 21 - Lack of Exchangeability The amendments do not have a 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 2026 and thus have not been applied by the Group. ‒      IFRS 18 Presentation and Disclosure in Financial Statements ‒      IFRS 19 Subsidiaries without Public Accountability ‒      Amendments to IFRS 9 and IFRS 7 - Contracts referencing Nature-dependent Electricity ‒      Annual Improvements to IFRS Accounting Standards The adoption of these new and amended standards, together with any other IFRSs or IFRIC interpretations that are not yet effective, are not expected to have a material impact on the financial statements of the Group other than IFRS 18 (Presentation and Disclosure in Financial Statements). IFRS 18 will replace IAS 1 Presentation of Financial Statements and applies for annual reporting periods beginning on or after 1 January 2027. The new standard introduces the following key new requirements. ‒      Entities are required to classify all income and expenses into five categories in the statement of profit or loss, namely the operating, investing, financing, discontinued operations and income tax categories. Entities are also required to present a newly-defined operating profit subtotal. Entities' net profit will not change. ‒      Management-defined performance measures (MPMs) are disclosed in a single note in the financial statements. ‒      Enhanced guidance is provided on how to group information in the financial statements. In addition, all entities are required to use the operating profit subtotal as the starting point for the statement of cash flows when presenting operating cash flows under the indirect method. The Group is still in the process of assessing the impact of the new standard, particularly with respect to the structure of the Group's consolidated statement of comprehensive income, the consolidated statement of cash flows and the additional disclosures required for MPMs. The Group is also assessing the impact on how information is grouped in the financial statements, including for items currently labelled as 'other'. 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 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 judgements and estimates Judgements made by management in the application of IFRSs that have a significant effect on the financial statements and major sources of estimation uncertainty are disclosed in Note 13. The critical estimates and assumptions relate to the investment property valuations applied by the Group's independent valuer. 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. 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 Group's assets and liabilities is 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 19. Property, plant and equipment Owner-occupied property Owner-occupied property is stated at its revalued amount, which is determined in the same manner as investment property. It is depreciated over its remaining useful life (in this case 40 years) with the depreciation included in administrative expenses. On revaluation, any accumulated depreciation is eliminated against the gross carrying amount of the property concerned, and the net amount restated to the revalued amount. Subsequent depreciation charges are adjusted based on the revalued amount. Any difference between the depreciation charge on the revalued amount and that which would have been charged under historic cost is transferred between the revaluation reserve and retained earnings as the property is used. Any gain arising on this remeasurement is recognised in profit or loss to the extent that it reverses a previous impairment loss on the specific property, with any remaining gain recognised in other comprehensive income and presented in the revaluation reserve. Any loss is recognised in profit or loss. However, to the extent that an amount is included in the revaluation surplus for that property, the loss is recognised in other comprehensive income and reduces the revaluation surplus within equity. Plant and equipment Plant and equipment is depreciated on a straight-line basis over the estimated useful lives of each item of plant and equipment. The estimated useful lives are between three and five years. Leases Leases - the Group as a lessee Where the Group is a lessee, a right of use asset and lease liability are recognised at the outset of the lease. The lease liability is initially measured at the present value of the lease payments based on the Group's expecta...

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