During the year the Company has updated EPCs at 63 units across 43 properties covering 983k sq ft for properties where existing EPCs had expired or where works had been completed. For updated EPCs, there was an aggregate decrease in rating of 37 'energy performance asset rating points[25]'. Some of the properties showing an improvement are detailed below: ? Burton upon Trent - a new Starbucks drive through restaurant was built on the site of a former tool hire centre,

improving the EPC score from D (99) to B (43) ? Daventry - a significant refurbishment of this industrial property was carried out during the year, improving the

EPC score from C (52) to B (46) ? Glasgow West George Street - a refurbishment of these offices improved the EPC score from E (62) to B (34) Climate-related risks and opportunities

Climate change poses a number of physical risks to our property portfolio, for example those caused by the increased frequency and severity of extreme weather events. The Committee also recognises there are a number of transition-related risks, including economic, technology or regulatory challenges related to moving to a greener economy which it needs to consider. But climate change also provides opportunities to invest in alternative asset classes or to provide tenants with additional services.

The Company has commenced work to identify and understand our climate-related risks and opportunities alongside our work on our wider ESG ambitions and metrics. Below we have outlined our first year of disclosures aligned to the recommendations of Taskforce on Climate-related Financial Disclosures ("TCFD"). We are working together with our sustainability partner, Carbon Intelligence, to continue to refine our TCFD programme over the next financial year.

Governance

The Board is ultimately responsible to stakeholders for the Company's activities and for oversight of our climate-related risks and opportunities. Specifically, the ESG Committee is the Board-level governance body responsible for reviewing our identified climate-related risks alongside our ESG strategy.

The Investment Manager maintains the Company's risk management framework and risk register, which means our ESG objectives are embedded into the way the Company conducts and manages the business and the property portfolio day to day.

Risk management

This year, the Company conducted a risk identification and materiality assessment to determine our climate-related impacts, identifying the following climate-related risks and opportunities as material to the business: 


Climate-related risks:                                        Climate-related opportunities: 
 
Physical risks                                                  ? Exposure to new asset classes for potential 
                                                                  investment 
 
  ? Asset damage from storms and flooding 
  ? Global temperature increases reducing the appeal of less    ? Shifting tenant preferences may create new demand for 
    energy-efficient assets                                       new or existing products/ services 
  ? Insufficient electricity supply to maintain tenant          ? Opportunities to expand low-carbon buildings and 
    operations due to inadequate infrastructure                   low-carbon landlord services 
                                                                ? Shifting tenant preferences to diversify sectors and 
                                                                  asset types 
Transition risks 
                                                                ? Reducing emissions footprint of buildings for tenants 
  ? Reduced attractiveness of the portfolio due to changing 
    tenant preferences 
  ? Changing insurance products, pricing and availability 
  ? Investor divestment or activism due to changing ESG 
    expectations 
  ? Sector stigmatisation due to high emissions 
  ? Unsuccessful investment in new technology

To account for the long-term nature of climate change three time horizons were used within the assessment: ? Short-term (0-3 years); ? Medium-term (3-12 years); and ? Long-term (12-20 years).

This period differs from the longer-term viability assessment of three years, as the outputs of our climate-related materiality assessment will be reviewed and built upon over time in order to effectively embed identified risks into our risk management framework.

Strategy

In line with the TCFD recommendations, the next phase of implementing TCFD will be to conduct climate scenario analysis, to improve our understanding of the specific impacts of climate change on the Company. Scenario analysis will increase our understanding of our business and portfolio resilience under different climate scenarios including best and worst-case scenarios. This will ensure we are able to comprehensively assess and build upon the existing risk management processes and controls to further mitigate our climate risks.

Approval

This report was approved by the Committee and signed on its behalf by:

Hazel Adam

Chair of the ESG Committee

15 June 2021

Financial review

The Company has faced its most challenging year since IPO in 2014 due to the impact of the COVID-19 pandemic on rent collection rates, occupancy and property portfolio valuations but its financial performance has been robust, allowing dividends of 5.0p per share to be declared for the year, fully covered by net cash receipts and 112.7% covered by EPRA earnings.

A summary of the Company's financial performance for the year is shown below: 


                                    Year ended 31 Mar 2021 Year ended 31 Mar 2020 
Financial summary                   GBP000 
                                                           GBP000 
 
Revenue                             39,578                 40,903 
Expenses and net finance costs      (15,904)               (12,230) 
EPRA profits                        23,674                 28,673 
Net loss on investment property     (19,925)               (26,550) 
Profit before tax                   3,749                  2,123 
 
EPRA EPS (p)                        5.6                    7.0 
Dividend cover                      112.7%                 104.4% 
OCR excluding direct property costs 1.12%                  1.12% 
 
Borrowings 
Net gearing                         24.9%                  22.4% 
Weighted average debt maturity      7.4 years              7.8 years 
Weighted average cost of debt       3.0%                   3.0%

The Company's rent roll has decreased by 5.0% from GBP40,749k at 31 March 2020 to GBP38,692k at 31 March 2021, which resulted in IFRS revenue decreasing by 3.2% from GBP40,903k to GBP39,578k.

This decrease in contractual rent was due to tenants exiting at contractual lease break or expiry (2.6%) and cessation of rents through Company Voluntary Arrangements ("CVAs") and Administrations (3.2%), partially offset by net property acquisitions (0.8%). Helpfully, rental increases in the industrial sector offset rental decreases seen in other sectors, demonstrating the robust nature of the Company's diverse property portfolio.

EPRA earnings per share decreased to 5.6p (2020: 7.0p) due primarily to this decrease in revenue, a GBP2.7m increase in the doubtful debt provision reflecting our prudent assumptions regarding the recovery of overdue and deferred contractual rents, GBP0.6m of irrecoverable debts due to tenant failure and the concession of GBP0.25m of contractual rent to support tenants most severely impacted by government restrictions.

Dividends

The Board acknowledges the importance of income for shareholders and during the year its objective was to pay dividends on a sustainable basis at a rate which was fully covered by net rental receipts and does not inhibit the flexibility of the Company's investment strategy.

The Company paid dividends totalling 4.9125p per share during the year, comprising the fourth interim dividend of 1.6625p per share relating to the year ended 31 March 2020 and interim dividends of 0.95p, 1.05p and 1.25p per share relating to the year ended 31 March 2021.

The Company paid a fourth interim dividend of 1.25p per share for the quarter ended 31 March 2021 on 28 May 2021 totalling GBP5.3m, and has approved a fifth interim dividend per share of 0.5p totalling GBP2.1m resulting in a total dividend relating to the year of 5.0p per share (2020: 6.65p), totalling GBP21.0m (2020: GBP27.5m). Dividends relating to the year ended 31 March 2021 were 112.7% covered by net recurring income of GBP23.7m, as calculated in Note 21.

Cost control

Despite the operational disruption caused by the COVID-19 pandemic, increasingly onerous compliance requirements and additional expenditure in ensuring the Company's environmental impact is minimised, the Investment Manager's focus on cost control and the Company's competitive management fee structure meant that OCR (excluding direct property costs) was maintained at 1.12% for the year. Although governance related expenditure is likely to continue to increase we believe the economies of scale provided by the Company's relatively fixed cost base and fee structure will mean that further growth will allow ongoing charges to be kept proportionately low.

Key performance indicators

The Board reviews the Company's quarterly performance against a number of key measures: ? NAV per share total return - reflects both the NAV growth of the Company and dividends payable to shareholders.

The Board regards this as the best overall measure of value delivered to shareholders. The Board assesses NAV per

share total return over various time periods and compares the Company's returns to those of its peer group of

listed, closed-ended property investment funds; ? NAV per share, share price and market capitalisation - reflect various measures of shareholder value at a point in

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