Annual Financial Report

RNS Number : 6338K

Value and Income Trust plc

31 July 2013

 

VALUE AND INCOME TRUST PLC

Annual financial report

FOR THE YEAR ENDED 31 MARCH 2013

SUMMARY

		31 March 2013
Net asset value per share valuing debt at par (including income)		298.2p
Net asset value per share valuing debt at market value (including income)		269.8p
Ordinary share price		210.8p
Discount of ordinary share price to net asset value per share valuing debt at market value (including revenue)		21.9%
Total interim dividend and proposed final dividend per share		8.30p
Total assets less current liabilities		£171.2m

THE YEAR

·      Net Asset Value total return (with debt at par value) of 21.2% over one year and 40.1% over three years

·      Share price total return of 22.7% over one year and 43.6% over three years.

·      FTSE All-Share Index total return of 16.3% over one year and 28.2% over three years

·      Dividends for the year up 3.1% - increased for 26^th consecutive year

DIVIDEND

The Directors recommend that a final dividend of 4.30 pence per share (2012 - 4.15 pence) is paid on 19 July 2013 to shareholders on the register on 21 June 2013.  The ex-dividend date is 19 June 2013. An interim dividend of 4.0 pence per share (2012 - 3.9 pence) was paid on 4 January 2013.

CHAIRMAN'S STATEMENT

Over the year to 31 March 2013 Value and Income Trust's net asset value total return per share (that is taking the growth in net asset value and dividend together) showed an increase of 22.9% with debt valued at market and 21.2% with debt valued at par. Our equity portfolio had a particularly good year and our property portfolio performed satisfactorily in what continued to be a difficult market.

The share price total return was 22.7% while the FTSE All-Share Index total return was 16.3% over the same period. Over three years the share price total return was 43.6% compared to the increase in the Index of 28.2%. This result entitled OLIM to a performance fee of £ 83,000 and OLIM Property to a performance fee of £42,000. 

The proposed final dividend of 4.30p would make total dividends for the year of 8.30p, an increase of 3.1 %. Subject to approval at the Annual General Meeting, the final dividend would be payable on 19 July 2013 to shareholders on the register on 21 June 2013. The ex dividend date is 19 June 2013. It is pleasing to report that the dividend has been increased every year since the change of investment policy in1986.

Our two debentures have covenants attached to them. Information about these is included in note 12 to the financial statements; there is plenty of headroom in terms of both capital and income.

During the course of last year Maven became our company secretary. The transfer from Aberdeen took place smoothly, which is a tribute to those involved. We are grateful to Aberdeen, our secretary since October 2000, and particularly to Stuart Reid, who was responsible for VIT for over 7 years.

The prospects for dividend growth from our equities are encouraging. Our property portfolio is providing an attractive yield with no voids in the portfolio. Consequently we remain fully invested, as was our position a year ago.

James Ferguson

Chairman

24 May 2013

INVESTMENT MANAGERS' REPORTS

EQUITY PORTFOLIO

Market Background

Our year began amidst further concerns about the state of the world economy and renewed strains within the Eurozone. Forecasts of GDP growth in 2012 were downgraded for the UK, US and China and generally in both developing parts of the world and in the emerging economies. In May the credit ratings of Spanish banks were downgraded to junk status, though the banks were subsequently rescued by €100bn loans and confidence in the Eurozone was further restored by Mario Draghi's statement in July that the ECB would do 'whatever is necessary to preserve the euro'. In the first quarter of our year the FTSE All Share Index fell by 3.7%. The remainder of our year to end March 2013 saw a steady recovery in UK equities, and for the year as a whole the All Share Index rose by 12.6% and recorded a total return of 16.3%. Mid and small sized companies both rose by 21% and recorded total returns of just over 24%. The FTSE Higher Yield Index rose slightly less than the All Share Index with a rise of 12.0% but gave a higher total return of 17.4%.

Equities generally rose in the developed economies of the world. In Japan, measured in yen, the Nikkei 225 Index rose by 23% and in America, measured in dollars, the S&P 500 rose by 11%. In contrast, the FTSE All Emerging All Cap Index fell by 0.5% in response to the slowdown in world economic growth. Interest rates remained low and bond yields fell further worldwide, supported by further programmes of Quantitative Easing in the UK and regular purchases of US Treasury bonds by the Federal Reserve. In the currency markets the pound fell by 5% against the dollar but rose by 13% against the yen. It was little changed against the euro.

The rise in equities during the last nine months may have surprised some investors, conscious of the lack of economic growth during this time. Looking back to the summer of 2012 will remind them that UK equities were yielding 3.7%, more than twice the 1.7% yield on UK ten year gilts and with cash returns remaining negligible. Moreover, equity dividends were growing, reflecting the health of the UK listed corporate sector. In the year to end March 2013 the ex-dividend adjustment on the All Share Index rose by 7.6%. After Mario Draghi's statement, referred to above, concerns about Europe faded and bond yields in the peripheral countries of Southern Europe fell back to manageable levels. Confidence was also restored by economists' forecasts for GDP growth in China, where the declining rate of growth levelled out, and is now gently rising again.

Performance

VIT's equity performance over the year was again significantly ahead of the All Share Index. In capital terms the portfolio rose by 22.0%, which was 9.4 percentage points above the Index return. Including income, the total return was +26.5%, compared with the total return on the All Share Index of +16.3%. Over the last three years the performance of the portfolio has been +52.4% compared to the All Share Index return of +28.2%.

In the last year our strategy has continued to tilt the portfolio towards a heavy weighting in companies operating in industrial sectors trading in global economies. Rotork, our largest holding, rose by 42% over the year, and Spectris and Halma, also large holdings, both rose by 36%. In the chemical sector Croda rose by 30%. Some of our Mid-cap companies which depend on consumer spending performed very well, with rises of 58% in the price of Restaurant Group and 45% in Marstons. Our holdings in the insurance sector also rose strongly with Beazley up by 49%, Amlin by 28% and Legal and General with a rise of 32%. Amongst our large company holdings strong performances were recorded by Unilever (+35%) and Reed Elsevier (+41%).

 Portfolio

With dividends growing above the rate of inflation and a high starting yield on the market, we have continued to be fully invested all through the year. In stock selection we continued to overweight the sectors operating in the faster growing economies of the world, and the defensive areas of the UK economy. We continued to underweight the resource and financial sectors.

Transactions during the year totalled £20.1m, with net sales of just £156,000. We reduced the very large holdings in Babcock and Rotork during the year and we sold the small holding in Smiths News. In the utility sectors, we sold National Grid and re-invested in Pennon. We were concerned that National Grid's cashflow might not be sufficient to support both the dividend payout and the current capital spending programme. We were attracted to Pennon by the well managed water business as well as the long term potential of the energy-for-water operation. In the oil sector we reduced the position in Royal Dutch Shell and added to the holding in BP. We believe that the valuation of BP more than reflects the likely cost of the current legal action related to the Macondo oil leak. In addition the company's future growth prospects look superior to Shell. We started a new holding in AMEC, which gives engineering consultancy services to the oil and gas  producers, and in BG Group, the natural gas company. We also started a holding in Johnson Matthey, the global specialty chemicals company. At the end of March we were holding 36 companies with a total value of £123.81m and an overall net yield of 3.9%

Outlook

UK GDP growth in 2012 was very muted, with a final reckoning for the year of +0.3%. Three of the four quarters recorded negative progress, but the third quarter showed growth stimulated partly by the Olympic games. The long hard winter has extended the flatlining of GDP into 2013 and in the Budget statement the Office for Budgetary Responsibility downgraded its forecast for this year to just +0.6% from the previous level of +1.2%. Analysts are now forecasting growth in earnings and dividends for UK listed companies in 2013 of about 5% on average, modestly positive in real terms.

The Budget forecast further delays in reducing the fiscal deficit, and public sector debt is not expected to decline until after the life of this parliament. Consumer spending received some stimulus in the Budget with the rise in personal allowances and some modest changes in indirect taxes. The economic background remains troubled, but markets are supported by the loose monetary policies pursued by central banks around the world. Though the immediate risks of a break-up of the Eurozone are perceived to have receded somewhat, the underlying problems of high levels of consumer and public debt in both Europe and the US remain. Equities continue to offer reasonable value to long-term investors. The yield on UK equities of 3.3% is still well ahead of the yield on ten-year gilts while the price earnings ratio of the market remains a little below the long term average of 14 times. We are continuing with our strategy of focusing our investments on high quality growth companies, particularly those with significant overseas economic exposure.

Angela Lascelles

OLIM Limited

17 May 2013

PROPERTY PORTFOLIO

The Market

UK commercial property showed an average total return of 2.5% over the year to March on the Investment Property Databank (IPD) Index, with a 4% fall in capital values.  There is now a two way pull on property values.  Very high yields on property compared with other asset classes are the main plus, as against the negative pressures on tenants and rents. 

Capital values bounced back by about 20% from the depths of the property crash in mid-2009 to autumn 2011, but have been drifting down since in most sectors and regions. Retail and industrial/warehouse property, as well as office property outside Central London, fell in value by 4% - 6% on average last year. Rising London office values, mainly in the West End, reduced the national average fall in office capital values to 2%. In the retail sector, supermarkets (which have longer than average lease lengths and often indexed rent reviews) performed best, followed by retail warehouses, with high street shops and shopping centres under the most pressure. Industrial/warehouse and office property values held up better in South-East England than in the rest of the United Kingdom, but suffered everywhere, outside London, from shortening lease lengths and rising void levels where tenants exercised break clauses, or vacated property when leases ended. Three years of falling real incomes and a flat economy have cut the value of investment property let on conventional leases and increased the attraction of property let to strong tenants with indexed or fixed rent increases.

Rental values have also slipped slightly over the past year in the retail and industrial sectors, and in provincial offices, but office rents in the West End of London (where office buildings are increasingly being converted into residential use) are still growing. Letting markets generally are thin, with a shortage of evidence for valuers to use, and increasing incentives are necessary to persuade cautious tenants to sign or renew leases. This should be reflected in further falls in reported rental values over the year ahead.

2013 is shaping up as another tough year, both for the UK economy and most tenants of commercial property. Average property rental values may slip again as fierce competitive pressure on occupiers and shortage of finance for smaller companies accentuate the established trends for offices to use less space per worker, for retailers to rationalise their physical property requirements and trade more online, and for warehousing to be ever more concentrated near a few motorway junctions. But there are still plenty of recession-beating businesses gaining market share and leasing new space, such as discounters and high quality retailers taking both large and small stores, and restaurant, pub, hotel and other leisure operators growing strong brands and signing leases for at least ten years.

Property's yield premium over gilts is much too high at nearly 5 points over conventional and over 7 points over long-dated index-linked gilts. Long term property investors now have the chance to lock in an initial yield premium without precedent since Standard Life started to compile property yield statistics almost a century ago.  Property's real yield premium is near a 30 year high since index-linked gilts were first issued in the UK. Property is fairly valued against UK equities at over double their running yield but with little rental growth likely over the next three years.

Average property capital values are likely to fall by about 2% this year, with average rental values slightly down again giving total returns of 4%-5%.  Void levels are rising to approach their peak levels in 2009, with office voids already well above it.  But index-linked properties offer outstanding value and should continue to outperform.  For most property types, security of income will drive outperformance.

Britain's banking system remains fragile and banks are speeding up disposals of property owned by distressed borrowers both by formal Receiverships and "consensual sales" under the threat of Receivership.  This gives cash buyers a happy hunting ground so long as they are highly selective. Specific tenant and individual property risk remains high, and high yielding property with short leases or shaky tenants will continue to fall in value until the economy is clearly enjoying sustained recovery and finance for property is flowing more freely.

The UK economy was basically flat last year and most forecasters see a return to modest growth in 2013.  Despite the Budget increase in income tax thresholds, real consumer incomes still look likely to fall for again, with average earnings and transfer payments now growing just over 1% but price inflation stubbornly sticking near 3% under the influence of rising food and energy costs. Pressures in the Eurozone are hitting confidence and growth here, the service sector is inching ahead, but manufacturing is hesitant and construction remains deeply depressed. The Funding for Lending programme is clearly reducing mortgage interest rates but has not so far moved bank lending to small and medium sized businesses into positive territory.

The Bank of England Monetary Policy Committee's massive injections of Quantitative Easing are having uncomfortable side effects for pension funds and annuity rates, and are unlikely to be restarted in their present form. Larger businesses generally enjoy strong balance sheets and liquidity but many lack the confidence in future demand they need to invest. Britain's substantial public sector deficit is rising again, once special factors are stripped out, and the objective of public debt falling has now been postponed until after 2015.

The balance of risk and reward remains firmly in favour of safe property in all sectors, let at affordable rents to strong tenants on long leases, preferably with index-linked rent reviews where the net present value of the income stream alone often offers exceptional value against gilts and corporate bonds. Well-chosen and located property also provides significant capital growth potential based on its residual value at the end of the lease.

The Portfolio

VIT's property portfolio produced a total return of 3.5% over the year to March, 1% above the IPD Monthly Index return over the same period. 

We concentrate on properties with strong income streams to meet the fixed interest payments on our long-term debt.  These have also produced good long-term capital performance.  The total return on our property portfolio has averaged 7% a year over the past 3 years, 5% over 5 years,  10% over 10 years, and 13% over the 26 years since the start.  These returns are below the IPD average over 3 years but well above over longer periods.

Two properties were sold during the year, at Galashiels and Hereford, with the proceeds reinvested in properties at Risca, South Wales and Lynton, Devon with long index-linked leases to Caerphilly Council. Tesco and Costcutter.  They were bought for £2,215,000 and valued at £2,350,000 at our year end.

All properties are fully let on full repairing and insuring leases, with upward only rent reviews and an average unexpired lease length of 13.5 years.  Holland and Barrett, Card Factory and YMCA replaced tenants whose leases expired during the year.  One tenant Metalrax, went into administration after the year end.  The lease has since been assigned with no loss of rent. 99% of the rental income is reviewed five yearly, with 39% index-linked.

The property portfolio is matched with £35 million of long term, fixed rate loans - £20 million of VIT 9 3/8% Debenture Stock repayable in 2026 and £15 million of 11% Debenture Stock, issued by our subsidiary Audax Properties PLC and repayable in 2021.  Because those Debenture Stocks were issued at a premium, their effective interest cost averaged 9%.  We believe this is the right way to finance long-term property investment and we do not intend to replace it with shorter term bank debt.  The upheavals in the property and banking markets since 2008 reinforce that view.

Results of Independent Valuation

The VIT property portfolio, including properties held within our subsidiary Audax Properties PLC, was subject to an independent professional revaluation by Jones Lang LaSalle. at 31^st March 2013.

The revaluation showed a value of £46,225,000; properties within VIT were valued at £17,850,000 while Audax properties PLC totalled £28,375,000.  Our properties are revalued independently every six months, at 30^th September and 31^st March.

Capital values fell by 4% in line with the IPD Index, while the income yield is 1% higher. Twenty-seven of the properties valued at 31 March 2013 were freehold or the Scottish equivalent and one is held on a long lease with 44 years to run.

Matthew Oakeshott

OLIM Property Limited

17 May 2013

BUSINESS REVIEW

The Directors have prepared this Business Review in accordance with the requirements of Section 417 of the Companies Act 2006.  A review of the Company's activities is given in the Chairman's Statement and the Investment Managers' Report, which includes likely future developments of the business.

The Directors have identified the principal risks and uncertainties which affect the Company's business and these are detailed in Note 20 to the Financial Statements.

Additional risks include:

• Discount volatility: The Company's shares may trade at a price which represents a discount to its underlying net asset value; and

• Regulatory risk:  The Company operates in a complex regulatory environment and faces a number of regulatory risks. A breach of Section 1158 of the Corporation Taxes Act 2010 ("Section 1158") would result in the Company being subject to capital gains tax on portfolio investments. Breaches of other regulations, including the Companies Act 2006, the UKLA Listing Rules or the UKLA Disclosure and Transparency Rules, could lead to a number of detrimental outcomes and reputational damage. Breaches of controls by service providers to the Company could also lead to reputational damage or loss.  The Audit and Management Engagement Committee monitors compliance with regulations by reviewing internal control reports from the Company Secretary and Administrator and the Investment Managers, OLIM Limited ("OLIM") and OLIM Property Limited ("OLIM Property"), (collectively the "Managers").

There is also a further regulatory risk in the form of the Alternative Investment Fund Managers Directive ("AIFMD") which came into force in July 2011 and is due to be implemented by member states of the European Union by July 2013. The AIFMD will introduce a new authorisation and supervisory regime for all investment trust fund managers and investment companies in the European Union. This is expected to create some additional regulatory costs for the Company.

The Directors have identified the Company's share price total return and net asset value total return, relative to the FTSE All-Share Index (total return) and the Company's dividend growth, relative to the Retail Prices Index, as the three key performance indicators for determining the progress of the Company.

Results and Dividend

The Directors recommend that a final dividend of 4.30 pence per share (2012 - 4.15pence) is paid on 19 July 2013 to shareholders on the register on 21 June 2013.  The ex-dividend date is 19 June 2013.   An interim dividend of 4.0pence per share (2012 - 3.9 pence) was paid to shareholders on 4 January 2013.

Table 1 shows the revenue reserve position and dividends paid and payable by the Group and the Company, under the former basis of accounting, subject to shareholders' approval of the proposed final dividend at the forthcoming Annual General Meeting.

	Group £000	Group Pence per share	Company £000	Company Pence per share
Revenue reserve at 31 March 2012	1,700	3.74	903	1.98
Net revenue earned in the year	3,907	8,58	3,590	7.88,
Dividends paid and payable	(3,781)	(8.30)	(3,781)	(8.30)
Revenue reserve at 31 March 2013	1,826	4.02	712	1.56

Table 1 Group and Company revenue reserves

Principal Activity and Status

The business of the Company is that of an investment trust and the Directors do not envisage any change in this activity in the foreseeable future.  The Company is registered as a public limited company in Scotland under company number SC50366 and is an investment company within the meaning of Section 833 of the Companies Act 2006. The Company is a member of The Association of Investment Companies. 

The Company has been approved by HM Revenue & Customs as an investment trust for the purposes of Section 1158 for the year ended 31 March 2012. The Company has applied for and been accepted as an approved investment trust under Sections 1158 and 1159 of the Corporation Taxes Act 2010 and Part 2, Chapter 1 of Statutory Instrument 2011/2999.  This approval relates to accounting periods commencing on or after 1 April 2012. The Directors are of the opinion, that the Company has conducted its affairs so as to be able to retain such approval. The Company intends to manage its affairs so that its Ordinary shares continue to be a qualifying investment for inclusion in the stocks and shares component of an Individual Savings Account.

The Company makes no political donations or expenditures or donations for charitable purposes and, in common with most investment trusts, has no employees.

Share Capital

As at 31 March 2012 and 31 March 2013, and the date of approval of this Report, the Company had 45,549,975 ordinary shares of 10p nominal in issue.  Each ordinary share entitles the holder to one vote on a show of hands and, on a poll, to one vote for every share held.

Investment Management

 Up to 5 April 2012, investment management of the Company's assets and responsibility for the Company's operations was delegated to OLIM.   With effect from 5 April 2012, responsibility for providing property investment management services to the Company was transferred from OLIM to OLIM Property.  OLIM continues to provide equity investment management services to the Company. 

Under two separate investment management agreements entered into by the Company on 5 April 2012, both of which may be terminated by either party on giving one year's notice, OLIM and OLIM Property receive an investment management fee of 2/3 of 1% of VIT total assets less current liabilities ("VIT total assets"), which is allocated 2/3 to OLIM and 1/3 to OLIM Property.

OLIM and OLIM Property are also entitled to a performance fee subject to the achievement of certain criteria.  The objective is to give the Managers' a performance fee of 10% of any outperformance of the VIT share price total return ("VIT SPTR") over the FTSE All-Share Index share price total return ("FTSE SPTR").

The performance fee is paid annually in respect of performance over the preceding three years.  The fee is payable only if the VIT SPTR has been positive over the period  and, in addition, the NAV total return has been positive and has exceeded the FTSE SPTR over the period.

The maximum performance fee payable in any year is 1/3 of 1% of VIT total assets and is divided 1/3 to OLIM Property and 2/3 to OLIM.  The fee is wholly charged to capital.

During the year ended 31 March 2013 OLIM received an annual investment management fee of £697,000, excluding VAT, and OLIM Property received an annual investment management fee of £344,000 excluding VAT.

In addition, a performance fee of £83,000, excluding VAT, was paid to OLIM, and a performance fee of £42,000, excluding VAT, was paid to OLIM Property.

An additional fee is payable to the Company Secretary in respect of company secretarial and administrative services. Up to 1 February 2013 the Company Secretary was Aberdeen Asset Management PLC. On 1 February 2013 Maven Capital Partners UK LLP was appointed Company Secretary.

The Directors (excluding Matthew Oakeshott and Angela Lascelles) review the terms and conditions of the appointment of OLIM and OLIM Property on a regular basis.  Following the most recent review, the Directors are satisfied that the continuing appointment of OLIM and OLIM Property as investment managers, on the current terms, is in the best interests of shareholders as a whole as the Company benefits from the specialised teams of investment professionals at OLIM and OLIM Property.  In the event of termination on less than the agreed notice period, compensation is payable in lieu of the unexpired notice period.

By order of the Board

Maven Capital Partners UK LLP

Company Secretary

Glasgow, 24 May 2013

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

The financial statements are published on the Company's website which is maintained by, OLIM: www.olim.co.uk. The maintenance and integrity of the corporate and financial information relating to the Company is the joint responsibility of the Directors, OLIM and OLIM Property. The work carried out by the Auditor does not involve consideration of the maintenance and integrity of this website and, accordingly, the Auditor accepts no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.  Visitors to the website need to be aware that legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors are required to prepare the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and Article 4 of the European Union IAS Regulation and have also chosen to prepare the parent company financial statements in accordance with IFRSs as adopted by the European Union.  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 the profit or loss of the Company for that period. In preparing these financial statements, International Accounting Standard 1 requires that Directors:

·      properly select and apply accounting policies;

·      present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

·      provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance;

·      make an assessment of the Group's ability to continue as a going concern; and

·      make judgements and estimates that are reasonable and prudent.

The Directors are responsible for keeping adequate 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 the financial statements comply with the Companies Act 2006.

They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Responsibility Statement

The Directors confirm to the best of their knowledge, that:

·      the Financial Statements, prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group and the Company and the undertakings included in the consolidation taken as a whole; and

·      the Directors' Report includes a fair review of the development and performance of the business and the position of the Group and the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

For and on behalf of the Board of Value and Income Trust PLC.

James Ferguson

Chairman

24 May 2013

VALUE AND INCOME TRUST PLC

GROUP STATEMENT OF COMPREHENSIVE INCOME

				Year ended														Year ended
				31 March 2013														31 March 2012
				Revenue		Capital			Total			Revenue			Capital				Total
				£'000		£'000			£'000			£'000			£'000				£'000
Investment income
		Dividend income		4,669		-			4,669			4,459			-				4,459
		Rental income		3,562		-			3,562			3,398			-				3,398
		Interest income on short-term deposits		2		-			2			1			-				1
Other operating income				3,564		-			3,564			3,399			-				3,399
Other comprehensive income
		Unrealised losses on investment properties		-		(2,302)			(2,302)			-			(798)				(798)
				8,233		(2,302)			5,931			7,858			(798)				7,060
Gains and losses on investments
		Realised gains on held-at-fair-value investments		-		4,400			4,400			-			105				105
		Unrealised gains on held-at-fair-value investments		-		18,417			18,417			-			3,782				3,782
Total income				8,233		20,515			28,748			7,858			3,089				10,947
Expenses
	Investment management fees		(312)			(854)			(1,166)				(292)				(1,184)		(1,476)
	Other operating expenses		(513)			-			(513)				(421)				-		(421)
Finance costs			(3,501)			-			(3,501)				(3,505)				-		(3,505)
Total expenses			(4,326)			(854)			(5,180)				(4,218)				(1,184)		(5,402)
Profit before tax			3,907			19,661			23,568				3,640				1,905		5,545
Taxation			-			390			390				-				182		182
Profit for the period			3,907			20,051			23,958				3,640			2,087			5,727
Earnings per ordinary share (pence)			8.58			44.02			52.60				7.99			4.58			12.57

The total column of this statement represents the Statement of Comprehensive Income of the Group, prepared in accordance with IFRS.

The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the

Association of Investment Companies. All items in the above statement derive from continuing operations. All income is attributable to the equity holders of Value and Income Trust PLC, the parent company. There are no minority interests.

The Board is proposing a final dividend of 4.30p per share, making a total dividend of 8.30p per share for the year ended 31 March 2013 (2012 - 8.05p per share) which, if approved, will be payable on 19 July 2013.

VALUE AND INCOME TRUST PLC

COMPANY STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 March 2013

		Year ended				Year ended
		31 March 2013				31 March 2012
		Revenue	Capital	Total		Revenue	Capital	Total
		£'000	£'000	£'000		£'000	£'000	£'000
Investment income
	Dividend income	4,669	-	4,669		5,609	-	5,609
	Rental income	1,348	-	1,348		1,277	-	1,277
Other operating income		1,348	-	1,348		1,277	-	1,277
Other comprehensive income
	Unrealised (losses)/gains on investment properties	-	(442)	(442)		-	70	70
		6,017	(442)	5,575		6,886	70	6,956
Gains and losses on investments
	Realised gains/(losses) on held-at-fair-value investments	-	4,555	4,555		-	(97)	(97)
	Unrealised gains on held-at-fair-value investments	-	16,865	16,865		-	2,150	2,150
Total income		6,017	20,978	26,995		6,886	2,123	9,009
Expenses
	Investment management fees	(208)	(610)	(818)		(194)	(957)	(1,151)
	Other operating expenses	(386)	-	(386)		(280)	-	(280)
Finance costs		(1,851)	-	(1,851)		(1,852)	-	(1,852)
Total expenses		(2,445)	(610)	(3,055)		(2,326)	(957)	(3,283)
Profit before tax		3,572	20,368	23,940		4,560	1,166	5,726
Taxation		18	-	18		1	-	1
Profit for the period		3,590	20,368	23,958		4,561	1,166	5,727
Earnings per ordinary share (pence)		7.88	44.72	52.60		10.01	2.56	12.57

The total column of this statement represents the Statement of Comprehensive Income of the Company prepared in accordance with IFRS.

The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the

Association of Investment Companies. All items in the above statement derive from continuing operations.

All income is attributable to the equity holders of Value and Income Trust PLC, the parent company. There are no minority interests.

VALUE AND INCOME TRUST PLC

STATEMENT OF FINANCIAL POSITION

			Group						Company
			As at			As at			As at			As at
			31 March 2013			31 March 2012			31 March 2013			31 March 2012
			£'000	£'000		£'000	£'000		£'000	£'000		£'000	£'000
ASSETS
Non current assets
Investments held at fair value through profit or loss				123,815			101,197			136,779			115,713
Investment properties held at fair value through profit or loss				46,225			48,250			17,850			18,175
				170,040			149,447			154,629			133,888
Current assets
Cash and cash equivalents			2,140			3,726			2,038			3,320
Other receivables			689			277			673			276
				2,829			4,003			2,711			3,596
TOTAL ASSETS				172,869			153,450			157,340			137,484
Current liabilities
Other payables				(1,701)			(2,114)			(1,172)			(1,538)
TOTAL ASSETS LESS CURRENT LIABILITIES				171,168			151,336			156,168			135,946
Non-current liabilities
Debenture stock			(35,325)			(35,349)			(20,325)			(20,349)
Deferred tax			-			(390)			-			-
				(35,325)			(35,739)			(20,325)			(20,349)
NET ASSETS				135,843			115,597			135,843			115,597
EQUITY ATTRIBUTABLE TO EQUITY SHAREHOLDERS
Called up share capital				4,555			4,555			4,555			4,555
Share premium				18,446			18,446			18,446			18,446
Retained earnings				112,842			92,596			112,842			92,596
TOTAL EQUITY				135,843			115,597			135,843			115,597
Net Asset Value per ordinary share (pence)				298.23			253.78			298.23			253.78

VALUE AND INCOME TRUST PLC

STATEMENTS OF CHANGES IN EQUITY

Group				Year ended 31 March 2013					Year ended 31 March 2012
				Share	Share	Retained	Total		Share	Share	Retained	Total
				capital	premium	earnings			capital	premium	earnings
				£'000	£'000	£'000	£'000		£'000	£'000	£'000	£'000
Net assets at 31 March 2012				4,555	18,446	92,596	115,597		4,555	18,446	90,462	113,463
Net profit for the year				-	-	23,958	23,958		-	-	5,727	5,727
Dividends paid				-	-	(3,712)	(3,712)		-	-	(3,593)	(3,593)
Net assets at 31 March 2013				4,555	18,446	112,842	135,843		4,555	18,446	92,596	115,597
Company
				Year ended 31 March 2013					Year ended 31 March 2012
				Share	Share	Retained	Total		Share	Share	Retained	Total
				capital	premium	earnings			capital	premium	earnings
				£'000	£'000	£'000	£'000		£'000	£'000	£'000	£'000
Net assets at 31 March 2012				4,555	18,446	92,596	115,597		4,555	18,446	90,462	113,463
Net profit for the year				-	-	23,958	23,958		-	-	5,727	5,727
Dividends paid				-	-	(3,712)	(3,712)		-	-	(3,593)	(3,593)
Net assets at 31 March 2013				4,555	18,446	112,842	135,843		4,555	18,446	92,596	115,597

VALUE AND INCOME TRUST PLC

GROUP STATEMENT OF CASH FLOWS

For the year ended 31 March

							2013			2012
						£'000	£'000		£'000	£'000
Cash flows from operating activities
	Dividend income received						4,346			4,413
	Rental income received						3,427			3,379
	Interest received						2			1
	Operating expenses paid						(2,037)			(1,445)
	Taxation paid						(9)			-
NET CASH FROM OPERATING ACTIVITIES							5,729			6,348
Cash flows from investing activities
	Purchase of investments					(12,315)			(10,416)
	Sale of investments					12,237			12,571
NET CASH (OUTFLOW)/INFLOW FROM
INVESTING ACTIVITIES							(78)			2,155
Cash flow from financing activities
	Interest paid					(3,525)			(3,528)
	Dividends paid					(3,712)			(3,593)
NET CASH OUTFLOW FROM FINANCING ACTIVITIES							(7,237)			(7,121)
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS							(1,586)			1,382
Cash and cash equivalents at 1 April 2012							3,726			2,344
Cash and cash equivalents at 31 March 2013							2,140			3,726

VALUE AND INCOME TRUST PLC

COMPANY STATEMENT OF CASH FLOWS

For the year ended 31 March

						2013			2012
					£'000	£'000		£'000	£'000
Cash flows from operating activities
	Dividend income received					4,346			5,563
	Rental income received					1,287			1,308
	Interest received					-			-
	Operating expenses paid					(1,557)			(1,001)
	Taxation paid					(9)			-
NET CASH FROM OPERATING ACTIVITIES						4,067			5,870
Cash flows from investing activities
	Purchase of investments				(10,501)			(9,629)
	Sale of investments				10,738			10,118
	Increase in loan to subsidiary				1			45
NET CASH INFLOW
FROM INVESTING ACTIVITIES						238			534
Cash flow from financing activities
	Interest paid				(1,875)			(1,875)
	Dividends paid				(3,712)			(3,593)
NET CASH OUTFLOW FROM FINANCING ACTIVITIES						(5,587)			(5,468)
						(1,282)			936
Cash and cash equivalents at 1 April 2012						3,320			2,384
Cash and cash equivalents at 31 March 2013						2,038			3,320

 

VALUE AND INCOME TRUST PLC

NOTES TO FINANCIAL STATEMENTS

1	Accounting policies
	The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) which comprise standards and interpretations approved by the International Accounting Standards Board (IASB) together with interpretations of the International Accounting Standards and Standing Interpretations Committee approved by the International Accounting Standards Committee (IASC) that remain in effect, and to the extent that they have been adopted by the European Union.
	The functional and reporting currency of the Group is pounds sterling because that is the currency of the primary economic environment in which the Group operates.
	(a)  Basis of preparation
	The financial statements have been prepared on a going concern basis and on the historical cost basis, except for the revaluation of certain financial assets. The principal accounting policies adopted are set out below. Where presentational guidance set out in the Statement of Recommended Practice  Financial Statements of Investment Trust Companies and Venture Capital Trusts (the SORP) issued by the Association of Investment Companies (AIC) in January 2009 is consistent with the requirements of IFRSs, the Directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP.
	The Directors are of the opinion that the Group is engaged in a single segment of business, being investment business.
	(b) Going concern
	The Group's business activities, together with the factors likely to affect its future development and performance, are set out in the Business Review.  The financial position of the Group as at 31 March 2013 is shown in the Statement of Financial Position. The cash flows of the Group for the year ended 31 March 2013, which are not untypical, are set out in the Group Statement of Cash Flows. The Group had fixed debt totalling £35,325,000 as at 31 March 2013 as set out in Note 12; none of the borrowings is repayable before 2021. The Group had no short term borrowings. Note 20 sets out the Group's risk management policies, including those concerning market price risk, liquidity risk and credit risk. As at 31 March 2013, the Group's total assets less current liabilities exceeded its total non current liabilities by a factor of over four. The assets of the Group consist mainly of securities and investment properties that are held in accordance with the Group's investment policy. Most of these securities are readily realisable, even in volatile markets. The Directors, who have reviewed carefully the Group's forecasts for the coming year, consider that the Group has adequate financial resources to enable it to continue in operational existence for the foreseeable future. Accordingly the Directors believe that it is appropriate to continue to adopt the going concern basis in preparing the Group's accounts.
	(c)  Basis of consolidation
	The consolidated financial statements incorporate the financial statements of the Company and the entity controlled by the Company (its subsidiary). Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. All intra-group transactions, balances, income and expenses are eliminated on consolidation. The investment in the subsidiary is recognised at fair value in the financial statements of the Company. This is considered to be the net asset value of the shareholders' funds, as shown in its Statement of Financial Position.
	Audax Properties PLC, a wholly owned subsidiary of the Company, charges expenses wholly to income. On consolidation, however, an adjustment is made to charge 70% of the investment management fee paid by Audax Properties PLC to capital. The allocation has no effect on the total return of the Company or the Group.
	(d) Presentation of Statement of Comprehensive Income
	In order to reflect better the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the Statement of Comprehensive Income between items of a revenue and capital nature has been presented alongside the Statement of Comprehensive Income. In accordance with the Company's Articles, net capital returns may not be distributed by way of dividend. Additionally the net revenue is the measure that the directors believe to be appropriate in assessing the Company's compliance with certain requirements set out in sections 1158-1160 of the Corporation Tax Act 2010.
	(e)  Income
	Dividend income from investments is recognised as revenue for the period on an ex-dividend basis. Where no ex-dividend date is available, dividends receivable on or before the period end are treated as revenue for the period.
	Where the Group has elected to receive dividend income in the form of additional shares rather than cash, the amount of cash dividend foregone is recognised as income. Any excess in the value of shares received over the amount of cash dividend foregone is recognised as a gain in the income statement.
	Interest receivable from cash and short term deposits and interest payable is accrued to the end of the period.
	Rental income is recognised on a straight line basis over the period of the relevant lease. Lease incentives, where material, are spread evenly over the term of the lease. Other income is recognised as earned.
	(f)  Expenses and Finance Costs
	All expenses and finance costs are accounted for on an accruals basis. Expenses are presented as capital where a connection with the maintenance or enhancement of the value of investments can be demonstrated. In this respect, the investment management fees are allocated 30% to revenue and 70% to capital to reflect the Board's expectations of long term investment returns. Any performance fees payable are allocated to capital, reflecting the fact that, although they are calculated on a total return basis, they are expected to be attributable largely to capital performance.  It is normal practice for investment trust companies to allocate finance costs to capital on the same basis as the investment management fee allocation. However as the Company has a significant exposure to property, and property companies do not charge finance costs to capital, the Directors consider it inappropriate to allocate finance costs to capital.
	(g)  Taxation
	Deferred tax is recognised in respect of all temporary differences that have originated but not reversed at the date of the Statement of Financial Position, where transactions or events that result in an obligation to pay more tax in the future or the right to pay less tax in the future have occurred at the date of the Statement of Financial Position. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the temporary differences can be deducted. Due to the Company's status as an investment trust company, and the intention to continue to meet the conditions required to obtain approval for the foreseeable future, the Company has not provided deferred tax on any capital gains and losses arising on the revaluation or disposal of investments.
	This is not the case for the subsidiary company and hence the Group where such provision is made, calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in accordance with the accounting treatment of the item which gives rise to the requirement for that provision.
	(h) Dividends payable
	Interim dividends are recognised as a liability in the period in which they are paid as no further approval is required in respect of such dividends.  Final dividends are recognised as a liability only after they have been approved by shareholders in general meeting.
	(i) Investments All investments have been designated upon initial recognition as fair value through profit or loss. Investments are recognised and derecognised on the trade date where a purchase or sale is under a contract whose terms require delivery within the timeframe established by the market concerned, and are initially measured at fair value. Subsequent to initial recognition, investments are recognised at fair value through profit or loss. For listed investments, this is deemed to be bid market prices or closing prices for SETS stocks sourced from the London Stock Exchange. SETS is the London Stock Exchange electronic trading service covering most of the market including all FTSE 100 constituents and most liquid FTSE 250 constituents along with some other securities. Gains and losses arising from changes in fair value are included in net profit or loss for the period as a capital item in the Statement of Comprehensive Income and are ultimately recognised in the retained earnings. As disclosed in Note 20, the Group leases out all of its properties on operating leases. A property held under an operating lease is classified and accounted for as an investment property where the Group holds it to earn rental, capital appreciation or both. Any such property leased under an operating lease is carried at fair value. Fair value is established by half-yearly professional valuation on an open market basis by Jones Lang LaSalle, Chartered Surveyors and Valuers, and in accordance with the RICS Valuation Professional Standards. The determination of fair value by Jones Lang LaSalle is supported by market evidence.  It is not more heavily based on other factors because of the nature of the properties and the availability of comparable market data.
	(j) Cash and cash equivalents Cash and cash equivalents comprises deposits held with banks. (k) Non - current liabilities All loans and borrowings are initially recognised at cost, being the fair value of the consideration received, less issue costs where applicable. After initial recognition, all interest bearing loans and borrowings are subsequently measured at amortised cost. Amortised cost is calculated by taking into account any discount or premium on settlement. The costs of arranging any interest-bearing loans are capitalised and amortised over the life of the loan. (l) Adoption of new and revised Accounting Standards At the date of authorisation of these financial statements, the following Standards and Interpretations were in issue but not yet effective;
	- Amendments to IFRS 7 - Disclosures: Offsetting Financial Assets and Financial Liabilities (effective for annual periods beginning on or after 1 January 2013).
	- Amendments to IFRS 10 - Definition of Investment Entity (early adoption permitted) (effective for annual periods beginning on or after 1 January 2014).
	- IFRS 9 - Financial Instruments: Classification and Measurement (effective for annual periods beginning on or after 1 January 2015).
	- IFRS 10 - Consolidated Financial Statements (early adoption permitted) (effective for annual periods beginning on or after 1 January 2013).
	- IFRS 11 - Joint Arrangements (early adoption permitted) (effective for annual periods beginning on or after 1 January 2013).
	- IFRS 12 - Disclosure of Interests in Other Entities (early adoption permitted) (effective for annual periods beginning on or after 1 January 2013).
	- IFRS 13 - Fair Value Measurement (effective for annual periods beginning on or after 1 January 2013).
	- Annual Improvements and Amendments to IFRS (2009-2011) - IFRS 1 First-time Adoption of International Financial Reporting Standards, IAS 1 Presentation of Financial Statements, IAS 16 Property, Plant and Equipment, IAS 32 Financial Instruments: Presentation, IAS 34 Interim Financial Reporting. (effective for annual periods beginning on or after 1 January 2013).
	- Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance (Amendments to IFRS 10, IFRS 11 and IFRS 12) (effective for annual periods beginning on or after 1 January 2013).
	- Amendments to IAS 19 - Employee Benefits (effective for annual periods on or after 1 January 2013).
	- IAS 27 - Separate Financial Statements (early adoption permitted) (effective for annual periods beginning on or after 1 January 2013).
	- IAS 28 - Investments in Associates and Joint ventures (early adoption permitted) (effective 1 January 2013).
	- Amendments to IAS 32 - Offsetting Financial Assets and Financial Liabilities (effective for annual periods beginning on or after 1 January 2014).
	The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material financial impact on the financial statements of the Company. The Company concludes however that certain additional disclosures may be necessary on their application.

		2013		2012
		Group	Company	Group	Company
		£000	£000	£000	£000
2	Income
	Investment income
	Dividends from listed investments in UK - franked	4,131	4,131	4,197	4,197
	Dividends from listed investments in UK - unfranked	538	538	262	262
	Dividends from subsidiary - franked	-	-	-	1,150
		_______	________	_______	________
		4,669	4,669	4,459	5,609
	Other operating income
	Rental income	3,562	1,348	3,398	1,277
	Interest receivable on short term deposits	2	-	1	-
		_______	________	_______	________
	Total income	8,233	6,017	7,858	6,886
		________	________	________	________

		2013			2012
		Revenue	Capital	Total	Revenue	Capital	Total
		£000	£000	£000	£000	£000	£000
3	Investment management fee
	Group
	Investment management fee	312	729	1,041	292	680	972
	Performance fee	-	125	125	-	504	504
		_______	_______	_______	_______	_______	_______
		312	854	1,166	292	1,184	1,476
		_______	_______	_______	_______	_______	_______
	Company
	Investment management fee	208	485	693	194	453	647
	Performance fee	-	125	125	-	504	504
		_______	_______	_______	_______	_______	_______
		208	610	818	194	957	1,151
		_______	_______	_______	_______	_______	_______

			2013			2012
			Group		Company	Group		Company
			£000		£000	£000		£000
4	Other operating expenses
	Auditors' remuneration
		- audit	18		13	17		12
		- other non-audit services	1		1	2		2
		- taxation services	4		3	4		3
		- out of pocket expenses	1		1	1		1
	Directors' fees		52		52	53		53
	NIC on directors' fees		4		4	3		3
	Fees for company secretarial services		144		99	142		94
	Direct property costs		(21)		(9)	30		(7)
	Other expenses		310		222	169		119
			_______		________	_______		________
			513		386	421		280
			_______		________	_______		________
	Directors' fees comprise the chairman's fees of £20,000 (2012 - £17,000) and fees of £14,000 (2012 - £12,000) per annum paid to each other director. The Directors' fees of £14,000 each (2012 - £12,000 each) in respect of the qualifying services provided by Matthew Oakeshott and Angela Lascelles are included in the investment management fees payable to OLIM Limited and OLIM Property Limited as detailed below.
	Angela Lascelles is a Director of OLIM Limited which received an investment management fee of £697,000 (2012-£972,000) and a performance fee of £83,000 (2012 - £504,000).
	Matthew Oakeshott is a director of OLIM Property Limited which received an investment management fee of £344,000 (2012 - £nil) and a performance fee of £42,000 (2012 - £nil).

		2013			2012
		Group		Company	Group		Company
		£000		£000	£000		£000
5	Finance costs
	Interest payable on:
	11% First Mortgage Debenture Stock 2021	1,650		-	1,650		-
	9.375% Debenture Stock 2026	1,875		1,875	1,875		1,875
	Less amortisation of issue premium	(24)		(24)	(23)		(23)
	Other interest payable	-		-	-		-
		________		________	_______		________
		3,501		1,851	3,505		1,852
		________		________	________		________

		2013			2012
		Revenue	Capital	Total	Revenue	Capital	Total
		£000	£000	£000	£000	£000	£000
6	Taxation
a)	Analysis of the tax (credit)/charge for the year:
	Group
	Corporation tax payable	-	-	-	-	-	-
	Decrease in deferred tax provision	-	(390)	(390)	-	(182)	(182)
		_______	_______	_______	_______	_______	_______
		-	(390)	(390)	-	(182)	(182)
		_______	_______	_______	_______	_______	_______
	Factors affecting the current tax credit for year:
	Revenue / capital return on ordinary activities before tax			23,568			5,545
				_______			_______
	Tax thereon at 23% (2012 - 24%)			5,421			1,331
	Effects of:
	Non taxable dividends			(1,074)			(1,070)
	(Gains)/losses on investments not taxable			(4,718)			(879)
	Excess expenses not utilised			10			480
	Decrease in rate of deferred tax			(29)			(44)
				_______			_______
				(390)			(182)
				_______			_______
		2013			2012
		Revenue	Capital	Total	Revenue	Capital	Total
		£000	£000	£000	£000	£000	£000
	Company
	Group relief receivable	18	-	18	(1)	-	(1)
		_______	_______	_______	_______	_______	_______
		18	-	18	(1)	-	(1)
		_______	_______	_______	_______	_______	_______
	Factors affecting the current tax (credit)/charge for year:
	Revenue / capital return on ordinary activities before tax			23,939			5,726
				_______			_______
	Tax thereon at 23% (2012 - 24%)			5,506			1,374
	Effects of:
	Non taxable dividends			(1,074)			(1,346)
	(Gains)/losses on investments not taxable			(4,825)			(510)
	Excess expenses not utilised			375			481
				_______			_______
				(18)			(1)
				_______			_______
b)	Factors affecting the tax charge for the year
	The Company has losses for tax purposes arising in the year of £1,851,000 (2012 - £2,004,000). Under current legislation, it is unlikely that these losses will be capable of offset against the Group's future taxable profits.
	Audax Properties PLC revalues its property portfolio on a six monthly basis and is required to recognise a deferred tax liability in respect of all unrealised gains recognised. Any movement in this provision is recognised within taxation in the Group's Statement of Comprehensive Income.
c)	Factors affecting future tax charges
	Both the Company and Audax Properties PLC have deferred tax assets of £4,739,000 (2012 - £4,535,000) and £nil (2012 - £nil) respectively at 31 March 2013 relating to total accumulated unrelieved tax losses carried forward of £20,604,000 (2012 - £18,896,000). These have not been recognised in the accounts as it is unlikely that they will be capable of offset against the Group's future taxable profits.

		2013			2012
		Group		Company	Group		Company
		£000		£000	£000		£000
7	Return per ordinary share
	The return per ordinary share is based on the following figures:
	Revenue return	3,907		3,590	3,640		4,561
	Capital return	20,051		20,368	2,087		1,166
	Weighted average ordinary shares in issue	45,549,975		45,549,975	45,549,975		45,549,975
	Return per share - revenue	8.58p		7.88p	7.99p		10.01p
	Return per share - capital	44.02p		44.72p	4.58p		2.56p
		________		________	________		________
	Total return per share	52.60p		52.60p	12.57p		12.57p
		________		________	________		________

		2013	2012
8	Dividends	£000	£000
	Dividends on ordinary shares:
	Final dividend of 4.15 per share (2012 - 4.00p) paid 20 July 2012	1,890	1,822
	Interim dividend of 4.00p per share (2012 - 3.90p) paid 4 January 2013	1,822	1,776
	Unclaimed dividends refunded by Registrar	-	(5)
		________	________
	Dividends paid in the period	3,712	3,593
		________	________
	The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.
	Set out below is the total dividend paid and proposed in respect of the financial year, which is the basis upon which the requirements of Sections 1158 - 1159 of the Corporation Tax Act 2010 are considered. The current year's revenue available for distribution by way of dividend is £3,571,000 (2012 - £4,561,000).
		2013	2012
		£000	£000
	Interim dividend for the year ended 31 March 2013 - 4.00p	1,822	1,776
	(2012 - 3.9p) paid 4 January 2013
	Unclaimed dividends refunded by Registrar	-	(5)
	Proposed final dividend for the year ended 31 March 2013 - 4.30p	1,959	1,890
	(2012 - 4.15p) payable 19 July 2013	________	________
		3,781	3,661
		________	________

			Investment
		Equities	properties	Total
		£'000	£'000	£'000
9	Investments
	Group
	Cost at 31 March 2012	74,262	32,684	106,946
	Unrealised appreciation	26,935	15,566	42,501
		________	________	________
	Valuation at 31 March 2012	101,197	48,250	149,447
	Purchases	9,975	2,340	12,315
	Sales proceeds	(10,148)	(2,089)	(12,237)
	Realised gains on sales	4,374	26	4,400
	Movement in unrealised appreciation in year	18,417	(2,302)	16,115
		________	________	________
	Valuation at 31 March 2013	123,815	46,225	170,040
		________	________	________
	Company
	Cost at 31 March 2012	74,287	13,189	87,476
	Unrealised appreciation	41,426	4,986	46,412
		________	________	________
	Valuation at 31 March 2012	115,713	18,175	133,888
	Purchases	9,975	526	10,501
	Sales proceeds	(10,148)	(590)	(10,738)
	Realised (losses)/gains on sales	4,374	181	4,555
	Movement in unrealised appreciation in year	16,865	(442)	16,423
		________	________	________
	Valuation at 31 March 2013	136,779	17,850	154,629
		________	________	________
	Transaction costs
	During the year expenses were incurred in acquiring and disposing of investments classified as fair value through profit or loss. These have been expensed through capital and are included within gains and losses on investments in the Statement of Comprehensive Income. The total costs were as follows:-
			2013	2012
			£'000	£'000
	Purchases		65	46
	Sales		19	19
			________	________
			84	65
			________	________

		2013			2012
		Group		Company	Group		Company
		£000		£000	£000		£000
10	Other receivables
	Amounts falling due within one year:
	Dividends receivable	581		581	258		258
	Amounts due from subsidiary	-		18	-		1
	Prepayments and accrued income	108		74	19		17
		________		________	________		________
		689		673	277		276
		________		________	________		________

		2013			2012
		Group		Company	Group		Company
		£000		£000	£000		£000
11	Other payables
	Value Added Tax payable	137		61	132		53
	Amounts due to OLIM Limited	141		122	585		558
	Amounts due to OLIM Property Limited	71		61	-		-
	Accruals and other creditors	1,352		928	1,397		927
		________		________	________		________
		1,701		1,172	2,114		1,538
		________		________	________		________
	The amounts due to OLIM Limited and OLIM Property Limited comprise management fees for the month of March 2013 and a performance fee for the year to 31 March 2013, subsequently paid in May 2013.

		2013			2012
		Group		Company	Group		Company
		£000		£000	£000		£000
12	Non-current liabilities
	9.375% Debenture Stock 2026	20,000		20,000	20,000		20,000
	Add:- Balance of premium less issue expenses	349		349	372		372
	Less : Credit to income for the year	(24)		(24)	(23)		(23)
		________		________	________		________
		20,325		20,325	20,349		20,349
	11% First Mortgage Debenture Stock 2021	15,000		-	15,000		-
		________		________	________		________
		35,325		20,325	35,349		20,349
		________		________	________		________
	The 11% First Mortgage Debenture Stock 2021 issued by Audax Properties PLC is repayable at par on  31 March 2021 and is secured over specific assets of Audax Properties PLC and the Company.
	The Trust Deed of the Audax Properties PLC Debenture Stock contains four covenants with which the Company must comply; the assets which are subject to charge and which secure the Debenture Stock may be owned by either Audax Properties PLC or its parent company, Value and Income Trust PLC. Firstly, the value of the assets should not be less than one and one-half times the amount of the  Debenture Stock; secondly, the rental income from the assets should not be less than one and one-half times the annual interest of the Debenture Stock (£1.65 million); thirdly, not more than 20 per cent. of the total value of the assets should be attributable to a single property; and finally, not more than 10 per cent.  of the assets should be attributable to leaseholds having an unexpired term of less than 50 years.

	The 9.375% Debenture Stock 2026 issued by Value and Income Trust PLC is repayable at par on 30 November 2026 and is secured by a floating charge over the property and assets of the Company.
	The Trust Deed of the Value and Income Trust PLC Debenture Stock contains restrictions and events of default. The restrictions require that the aggregate group borrowings, £35 million, must not at any time exceed the total group capital and reserves (equivalent to net assets of £135.82 million as at 31 March 2013).

		2013			2012
		Group		Company	Group		Company
		£000		£000	£000		£000
13	Deferred tax
	Opening balance at 31 March 2012	390		-	572		-
	Decrease  in deferred tax provision (see note 6):
	-         effect of reduction in tax rate on opening balance	(16)		-	(44)		-
	-         current year movement	(374)		-	(138)		-
		________		________	_______		________
	Closing balance at 31 March 2013	-		-	390		-
		________		________	_______		________
	Calculated as follows:-
	Unrealised gains subject to tax on realisation	192		-	1,955		-
	Less capital losses previously realised	(192)		-	(332)		-
		________		________	_______		________
		-		-	1,623		-
		________		________	_______		________
	Whereof 23% (2012 - 24%)	-		-	390		-
		________		________	_______		________
	Under IAS 12, provision must be made for any potential tax liability on revaluation surpluses. As an investment trust, the Company does not incur capital gains tax. However, some properties are owned by Audax Properties PLC, a subsidiary of the Company, either to ensure that the investment trust status tests are not breached or for other commercial reasons. Provision for capital gains tax has therefore been made for the revaluation surpluses on property assets held by the subsidiary to the extent that the gain cannot be sheltered by capital losses brought forward.

		2013	2012
		£000	£000
14	Share capital
	Authorised:
	56,000,000 ordinary shares of 10p each (2012 - 56,000,000)	5,600	5,600
		________	________
	Called up, issued and fully paid:
	45,549,975 ordinary shares of 10p each (2012 - 45,549,975)	4,555	4,555
		________	________

		2013			2012
		Group		Company	Group		Company
		£000		£000	£000		£000
15	Share premium
	Opening balance	18,446		18,446	18,446		18,446
		________		________	________		________

			2013				2012
			Group		Company		Group			Company
			£000		£000		£000			£000
16	Retained earnings
	Opening balance at 31 March 2012		92,596		92,596		90,462			90,462
	Profit for the period		23,958		23,958		5,727			5,727
	Dividends paid (see note 8)		(3,712)		(3,712)		(3,593)			(3,593)
			________		________		________			________
	Closing balance at 31 March 2013		112,842		112,842		92,596			92,596
			________		________		________			________
	The table below shows the movement in retained earnings analysed between revenue and capital items.
		2013				2012
		Revenue	Capital	Total		Revenue		Capital			Total
		£000	£000	£000		£000		£000			£000
	Group
	Opening balance at 31 March 2012	3,590	89,006	92,596		3,543		86,919			90,462
	Profit for the period	3,907	20,051	23,958		3,640		2,087			5,727
	Dividends paid (see note 8)	(3,712)	-	(3,712)		(3,593)		-			(3,593)
		_______	_______	_______		________		_______			_______
	Closing balance at 31 March 2013	3,785	109,057	112,842		3,590		89,006			92,596
		_______	_______	_______		________		_______			_______
	Company
	Opening balance at 31 March 2012	2,793	88,803	92,596		1,825		88,637			90,462
	Profit for the period	3,590	20,368	23,958		4,561		1,166			5,727
	Dividends paid (see note 8)	(3,712)	-	(3,712)		(3,593)		-			(3,593)
		_______	_______	_______		________		_______			_______
	Closing balance at 31 March 2013	2,671	110,171	112,842		2,793		89,803			92,596
		________	________	________		________		________			________

17	Net asset value per equity share
	The net asset value per ordinary share is based on Group's net assets attributable of £135,843,000 (2012 - £115,597,000) and on 45,549,975 (2012 - 45,549,975) ordinary shares in issue at the year end.
	The net asset value per ordinary share, based on the net assets of the Group adjusted for borrowings at market value (see note 20) is 269.78p (2012 - 227.58p)

		2013			2012
		Group		Company	Group		Company
		£000		£000	£000		£000
18	Reconciliation of income from operations before tax to net cash inflow from operating activities
	Income from operations before tax	28,748		26,995	10,947		9,009
	Gains and losses on investments	(20,515)		(20,978)	(3,089)		(2,123)
	Investment management fee	(1,166)		(818)	(1,476)		(1,151)
	Other operating expenses	(513)		(386)	(421)		(280)
	(Increase)/decrease in receivables	(412)		(380)	23		2
	(Decrease)/increase in other payables	(413)		(366)	364		413
		_______		________	________		________
	Net cash from operating activities	5,729		4,067	6,348		5,870
		_______		________	________		________

19	Relationship with the Investment Manager
	Angela Lascelles is a Director of OLIM Limited which has an agreement with the Company to provide investment management services, the terms of which are outlined in Note 3.
	Matthew Oakeshott is a director of OLIM Property Limited which has an agreement with the Company to provide investment property management services, the terms of which are outlined in Note 3.
	As a result of a management buyout of the property management side of the Company's investment managers, OLIM Limited, the Company agreed terms to split its investment management contract between OLIM Limited, which will continue to manage the Company's equity portfolio and OLIM Property Limited, which will manage the Group's property portfolio. The new agreements were effective from 1 April 2012.
	Audax Properties PLC is a wholly owned subsidiary of Value and Income Trust PLC and accordingly the latter is the ultimate controlling party. Details of the year end financial relationship between Audax Properties PLC and Value and Income Trust PLC may be found in Note 10. No properties were transferred between group companies during the year (2012 - two properties were transferred). No dividend was paid by Audax Properties PLC to Value and Income Trust PLC (2012- £1.15m).

20

Financial instruments

Risk management

The Group's financial instruments comprise securities, property and other investments, cash balances, loans and debtors and creditors that arise directly from its operations; for example, in respect of sales and purchases awaiting settlement or debtors for accrued income.

The Managers have dedicated investment management processes which ensure that the Investment Policy is achieved. For equities, stock selection procedures are in place based on active portfolio management and the identification of stocks. The portfolio is reviewed on a periodic basis by a senior investment manager and also by the Managers' Investment Committee.

Additionally, the Managers' Compliance Officers continually monitor the Group's investment and borrowing powers and report to their respective Manager's Risk Management Committee.

The main risks that the Group faces from its financial instruments are: (i)   market risk (comprising price risk, interest rate risk and currency risk) (ii)  liquidity risk (iii) credit risk

The Board regularly reviews and agrees policies for managing each of these risks. The Managers' policies for managing these risks are summarised below and have been applied throughout the year. The numerical disclosures exclude short-term debtors and creditors.

(i) Market risk

The fair value of, or future cash flows from, a financial instrument held by the Group may fluctuate because of changes in market prices. This market risk comprises three elements - price risk, interest rate risk and currency risk.

Price risk

Price risks (i.e. changes in market prices other than those arising from interest rate or currency risk) may affect the value of the Group's investments.

It is the Board's policy to hold an appropriate spread of investments in the portfolio in order to reduce the risk arising from factors specific to a particular sector. For equities, asset allocation and stock selection, as set out in the Investment Policy, both act to reduce market risk. The Manager actively monitors market prices throughout the year and reports to the Board, which meets regularly in order to review investment strategy. The investments held by the Group are listed on the UK Stock Exchange. All investment properties are commercial properties located in the UK with long strong income streams.

Price risk sensitivity

If market prices at the date of the Statement of Financial Position had been 10% higher or lower, while all other variables remained constant, the return attributable to ordinary shareholders for the year ended 31 March 2013 would have increased/decreased by £16,351,000 (2012 - increase/decrease of £14,223,000) and equity reserves would have increased/ decreased by the same amount.

Interest rate risk

Interest rate movements may affect:

- the fair value of the investments in property; and

- the level of income receivable on cash deposits

The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment and borrowing decisions.

The Board imposes borrowing limits to ensure gearing levels are appropriate to market conditions and reviews these on a regular basis. Borrowings comprise debenture stock, providing secure long term funding. It is the Board's policy to maintain a gearing level, measured on the most stringent basis of calculation after netting off cash equivalents, of between 25% and 40%. Details of borrowings at 31 March 2013 are shown in note 12.

Interest risk profile

The interest rate risk profile of the portfolio of financial assets and liabilities at the balance sheet date was as follows:

At 31 March 2013

Weighted average period for which rate is fixed Years

Weighted average interest rate %

Fixed rate £'000

Floating rate £'000

Assets

Sterling

-

-

-

2,140

________

________

________

________

Total assets

-

-

-

2,140

________

________

________

________

At 31 March 2013

Weighted average period for which rate is fixed Years

Weighted average interest rate %

Fixed rate £'000

Floating rate £'000

Liabilities

Sterling

11

10.07

35,000

-

________

________

________

________

Total liabilities

11

10.07

35,000

-

________

________

________

________

At 31 March 2012

Weighted average period for which rate is fixed Years

Weighted average interest rate %

Fixed rate £'000

Floating rate £'000

Assets

Sterling

-

-

-

3,726

________

________

________

________

Total assets

-

-

-

3,726

________

________

________

________

At 31 March 2012

Weighted average period for which rate is fixed Years

Weighted average interest rate %

Fixed rate £'000

Floating rate £'000

Liabilities

Sterling

12

10.07

35,000

-

________

________

________

________

Total liabilities

12

10.07

35,000

-

________

________

________

________

The weighted average interest rate is based on the current yield of each asset, weighted by its market value. The weighted average interest rate on debentures is based on the interest rate payable, weighted by the total value of the loans. The maturity dates of the Group's loans are shown in note 12.

The non-interest bearing assets represent the equity element of the portfolio and other receivables. The floating rate assets consist of cash deposits on call earning interest at prevailing market rates. The Group's equity and property portfolios and short term receivables and payables have been excluded from the above tables. All financial liabilities are measured at amortised cost.

Interest rate sensitivity

The sensitivity analyses below have been determined based on the exposure to interest rates at the balance sheet date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period in the case of instruments that have floating rates.

If interest rates had been 100 basis points higher or lower and all other variables were held constant, the Group's: -      profit for the year ended 31 March 2013 would increase/decrease by £37,000 (2012 - increase/decrease by £23,000). This is mainly attributable to the Group's exposure to interest rates on its floating rate cash balances. -      the Group holds no financial instruments that will have an equity reserve impact.

In the opinion of the directors, the above sensitivity analyses are not representative of the year as a whole, since the level of exposure changes frequently as part of the interest rate risk management process used to meet the Group's objectives.

Currency risk

A small proportion of the Group's investment portfolio is invested in securities whose fair value and dividend stream are affected by movements in foreign exchange rates. It is not the Group's policy to hedge this risk.

Currency sensitivity

There is no sensitivity analysis included as the Group has no outstanding foreign currency denominated monetary items. Where the Group's equity investments (which are non-monetary items) are affected, they have been included within the other price risk sensitivity analysis so as to show the overall level of exposure.

(ii) Liquidity risk

This is the risk that the Group will encounter difficulty in meeting obligations associated with its financial liabilities.

The Group's assets comprise of readily realisable securities which can be sold to meet commitments if required and investment properties which, by their nature, are less readily realisable. The maturity of the Group's existing borrowings is set out in the interest risk profile section of this note.

The table below details the Group's remaining contractual maturity for its financial liabilities, based on the undiscounted cash outflows, including both interest and principal cash flows, and on the earliest date upon which the Group can be required to make payment.

Carrying value

Expected cashflows

Due within 3 months

Due between 3 months and 1 year

Due after 1 year

£'000

£'000

£'000

£'000

£'000

Debentures

35,625

74,450

938

2,587

70,925

Other payables

411

411

411

-

-

________

________

________

________

________

Total

36,036

74,861

1,349

2,587

70,925

________

________

________

________

________

(iii) Credit risk

This is the failure of a counterparty to a transaction to discharge its obligations under that transaction that could result in the Group suffering a loss.

The risk is not significant and is managed as follows:

-        investment transactions are carried out with a large number of brokers, whose credit standing is reviewed periodically by the Manager and limits are set on the amount that may be due from any one broker. -        the risk of counterparty exposure due to failed trades causing a loss to the Group is mitigated by the review of failed trade reports on a daily basis. In addition, a stock reconciliation to third party administrators' records is performed on a daily basis to ensure that discrepancies are picked up on a timely basis. The Manager's Compliance Officer carries out periodic reviews of the Custodian's operations and reports its findings to the Manager's Risk Management Committee. This review will also include checks on the maintenance and security of investments held.

-         cash is held only with reputable banks with high quality external credit ratings which are monitored on a regular basis.

None of the Group's assets is secured by collateral or other credit enhancements.

Credit risk exposure

In summary, compared to the amounts on the group statement of financial position, the maximum exposure to credit risk at 31 March was as follows:

2013

2012

Balance Sheet £'000

Maximum exposure £'000

Balance Sheet £'000

Maximum exposure £'000

Non-current assets

Investments held at fair value through profit or loss

170,040

170,040

149,447

152,598

Current assets

Cash and cash equivalents

2,140

3,993

3,726

4,691

Other receivables

689

1,174

277

1,112

________

________

________

________

172,869

175,207

153,450

158,401

________

________

________

________

(iv) Property risk

The Group's commercial property portfolio is subject to both market and specific property risk. Since the UK commercial property market has been markedly cyclical for many years, it is prudent to expect that to continue. The price and availability of credit, real economic growth and the constraints on the development of new property are the main influences on the property investment market.

Against that background, the specific risks to the income from the portfolio are tenants being unable to pay their rents and other charges, or leaving their properties at the end of their leases. All leases are on full repairing and insuring terms, with upward only rent reviews and the average unexpired lease length is 13.5 years (2012 - 14 years). OLIM Property is responsible for property investment management, with surveyors, solicitors and managing agents acting on the portfolio under OLIM Property's supervision.

The Group leases out its investment property to its tenants under operating leases. At 31 March, the future minimum lease receipts under non-cancellable leases are as follows:-

2013 £'000

2012 £'000

Due within 1 year

8

133

Due between 2 and 5 years

1,790

1,187

Due after more than 5 years

43,218

42,819

________

________

45,016

44,139

________

________

This amount comprises the total contracted rent receivable as at 31 March 2013.

None of the Group's financial assets is past due or impaired.

Fair values of financial assets and financial liabilities

All assets and liabilities of the Group other than the debenture stock are included in the balance sheet at fair value.

(i) Fair value hierarchy disclosures

The table below sets out fair value measurements using the IFRS 7 Fair Value hierarchy:-

Level 1

Level 2

Level 3

Total

£000

£000

£000

£000

At 31 March 2013

Equity investments

123,815

-

-

123,815

________

_______

_______

________

At 31 March 2012

Equity investments

101,197

-

-

101,197

________

_______

_______

________

Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset as follows:-

Level 1 - valued using quoted prices in an active market for identical assets

Level 2 - valued by reference to valuation techniques using observable inputs other than quoted prices

Level 3 - valued by reference to valuation techniques using inputs that are not based on observable market data

There were no transfers between levels during the year.

(ii) Borrowings

The fair value of borrowings has been calculated at £48,282,000 as at 31 March 2013 (2012 - £47,285,000) compared to a balance sheet value in the financial statements of £35,325,000 (2012 - £35,349,000) per note 12.

The fair values of the debentures are determined by comparison with the fair values of equivalent gilt edged securities, discounted to reflect the differing levels of credit worthiness of the borrowers. All other assets and liabilities of the Group are included in the balance sheet at fair value.

Fair value

Balance Sheet Value

2013

2012

2013

2012

£000

£000

£000

£000

11% First Mortgage Debenture Stock 2021

21,016

20,845

15,000

15,000

9.375% Debenture Stock 2026

27,266

26,440

20,325

20,349

_______

________

_______

________

48,282

47,285

35,325

35,349

________

________

________

________

21	Capital management policies and procedures
	The Group's capital management objectives are:
	-	to ensure that the Group will be able to continue as a going concern; and
	-	to maximise the return to its equity shareholders in the form of long term real growth in dividends and capital value without undue risk through the optimisation of the debt and equity balance.
	The capital of the Group consists of equity, comprising issued capital, reserves and retained earnings.
	The Board monitors and reviews the broad structure of the Group's capital. This review includes:
	- -	the planned level of gearing which takes into account the Managers' views on the market; and the extent to which revenue in excess of that which requires to be distributed should be retained.
	The Group's objectives, policies and processes for managing capital are unchanged from the preceding accounting period.
	Details of the Group's gearing and financial covenants are disclosed in note 12.

For Value and Income Trust PLC

Maven Capital Partners UK LLP

Company Secretary

 

END

 

 

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