Annual Financial Report
VALUE AND INCOME TRUST PLC
Annual financial report
FOR THE YEAR ENDED 31 MARCH 2015
SUMMARY
|
|
|
31 March 2015 |
|
Net asset value per share valuing debt at par (including income) |
|
326.9p |
|
Net asset value per share valuing debt at market value (including income) |
|
299.5p |
|
Ordinary share price |
|
254.3p |
|
Discount of ordinary share price to net asset value per share valuing debt at market value (including revenue) |
|
15.1% |
|
Total interim dividend and proposed final dividend per share |
|
9.0p |
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Total assets less current liabilities |
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£189m |
THE YEAR
· Net Asset Value total return (with debt at par value) of 2.5% over one year and 38.8% over three years.
· Share price total return of -1.7% over one year and 56.5% over three years.
· FTSE All-Share Index total return of 6.6% over one year and 35.4% over three years.
· Dividends for the year up 5.9% - increased for 28th consecutive year.
DIVIDEND
The Directors recommend that a final dividend of 4.70 pence per share (2014: 4.40 pence) is paid on 17 July 2015 to shareholders on the register on 19 June 2015. The ex-dividend date is 18 June 2015. An interim dividend of 4.30 pence per share (2014: 4.10 pence) was paid to shareholders on 2 January 2015.
STRATEGIC REPORT
CHAIRMAN'S STATEMENT
Over the year to 31 March 2015, Value and Income Trust's net asset value total return per share (that is taking the growth in net asset value and dividend together) was 2.5%. Our property portfolio had a good year and produced a total return of 13%. The performance of our equity portfolio was behind the Index, but it should be seen in the context of strong performance over the last three years and the general under performance of higher yielding shares in the UK during the last year.
The share price total return over the twelve months was -1.7% while the FTSE All-Share Index total return was 6.6% over the same period. Over three years the share price total return was 56.5% compared to the increase of the Index of 35.4%. Overall the result was sufficiently good to earn a performance fee of £215,000 for OLIM and £90,000 for OLIM Property.
The proposed final dividend of 4.70p would make total dividends for the year of 9.00p, an increase of 5.9%. Subject to approval at the 2015 Annual General Meeting, the final dividend would be payable on 17 July 2015 to shareholders on the register on 19 June 2015. It is good to be able to report that our dividend has been increased every year since the change of investment policy in 1986.
Value and Income Services Limited (VIS) is established as our Alternative Investment Fund Manager. BNP Paribas Securities Services is our depositary and custodian.
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. You will see from the property report that we decided in February to borrow £5 million for five years at an all-in rate of 4% p.a.; this money has been invested at 7% in leases that are index-related.
As this is written we remain fully invested. Our property portfolio is fully let with leases that have an unexpired length of 13½ years and of which 52% are index-related. Our equity portfolio yields 3.7% and the prospects for dividend growth are reasonably encouraging. Both of the portfolios provide good value when compared to the remarkably low yields available from UK gilts.
I hope that we shall see as many shareholders as possible at the Annual General Meeting on Friday 10 July 2015, which is to be held in Edinburgh this year. Our Managers will give a brief presentation on the outlook.
James Ferguson
3 June 2015
INVESTMENT MANAGERS' REPORTS
UK EQUITIES
Market Background
UK equities rose by 3.0% in the year to 31 March 2015, measured by the FTSE All Share Index. For the first nine months of VIT's year, the market moved within a very narrow range but, in the final quarter, fuelled by Quantitative Easing in the Eurozone and encouraging economic reports in the UK the Index rose by 3.7%. Within the overall market, higher yielding shares underperformed significantly, with a fall of 0.9% in the FTSE 350 Higher Yield Index but mid-cap companies outperformed with a rise of 5.0% in the FTSE 250 Index. Overseas, the American equity market rose by 10.4%. The dollar rose by 13.4% against the pound, greatly enhancing the returns to sterling based investors. German equities rose by a quarter but the euro fell by 12.1% against the pound, significantly reducing the return in sterling terms.
Bond yields fell further in all the main markets. In the UK, ten year gilt yields fell from 2.7% at the beginning of our year to 1.6% at the end of March 2015 and the total return on the FTSE All Stocks Index was 13.9%. When the ECB finally introduced a full programme of QE in January, bond yields in the Eurozone fell dramatically. German bond yields fell to just 0.2% and the former 'junk' areas of Italy and Spain ended March with yields similar to our gilt market. Bond yields everywhere demonstrated the desperate attempts by central banks to stimulate economic growth with loose monetary policies. By contrast, commodity prices continued to slide, led by the price of oil (-49%) and natural gas (-40%) and copper (-9%).
For investors in the UK equity market, there were several opposing trends. The domestic economy has continued to strengthen, a pattern which began in mid-2013, which marked the end of the downgrades in forecasts. UK GDP grew by 2.8% in 2014, the fastest among the developed countries, and has finally exceeded the level it reached before the collapse of the world banking system. Real wage growth was reported late in our year, again for the first time since 2008. A further helpful factor for UK GDP was the fall in the rate of reported inflation to zero in the early months of 2015. Economists are concerned about the weakness of the euro, which will make exports to Europe from the UK less competitive, and the failure of the economies in the Eurozone to grow. International terrorism has cast a heavy shadow on the global picture and Ebola was a major concern in the middle of our year. Political tensions have continued in Ukraine and Russia, with a detrimental effect on their economies, and the election of a left wing government in Greece again threatens the future of the euro.
Performance
After significant outperformance in recent years, VIT's equity performance this year was behind the All Share Index. In capital terms the portfolio fell by 0.5%, slightly less than the 0.9% fall in the Higher Yield Index. Including income, the total return was +3.4%, compared with the total return on the All Share Index of +6.5%. Over the last three years the performance of the portfolio has been +48.3% compared to the All Share Index return of +34.6%.
Our underweight allocations to the resource sectors of Oil & Gas and Mining made a positive contribution to performance. Our overweighting in Telecommunications (BT +15%) and Travel & Leisure also benefited the portfolio, in particular with Go Ahead Group (+25%) and Cineworld (+54%). In addition to the general underperformance of higher yielding shares, VIT's performance was negatively affected by the Retail sector (N Brown - 44%). Our large holding of Babcock in the Support Services sector fell by 17%, as investors worried about the acquisition of Avincis, the safety and rescue helicopter company which operates in mainland Europe.
Portfolio
Sales and purchases of equities over the year totalled £24.0m, with net sales of £2.2m. As the year progressed and the market became more volatile, we became a little more cautious about world growth and we reduced the investment in Rotork, which was our largest holding at the end of March 2014, by just over a quarter. Babcock was historically our second largest holding and we therefore sold the rights to the new shares issued for the acquisition of Avincis. In the media sector we took profits on Reed Elsevier and reinvested the proceeds in Daily Mail and General Trust, where we felt there was more potential for price appreciation. We sold the holding in Tesco as the sector became critically competitive and the management revealed serious accounting discrepancies.
In the second half of our year we reduced the holding in Pennon after strong performance and reinvested in Centrica. We reduced Legal and General and added to Johnson Matthey. We started two new holdings. Crest Nicholson is a housebuilder with a geographic focus on Southern England and Wales. It has one of the longest land banks in the industry and a differentiated design approach which appeals to both planners and buyers, and has scope to raise the annual number of units completed from 2,500 to 3,500. Sanne is a Jersey registered company and was a new issue just before the end of our year. Originally a private client focused fiduciary business, it has evolved into an independent and recognised global leader in fund and corporate services for institutional clients in alternative asset classes, with offices around the world. At the end of the year we held investments in 38 companies with a total value of £132.1m and a net yield of 3.7%.
Outlook
Recent equity market peaks have been powered by the ECB's announcement of the enlarged asset purchase programme of 60bn Euros per month which includes, for the first time, the purchase of sovereign debt, known as QE. Investors have also been encouraged by the announcement of falling levels of unemployment, now below 6%, a zero rate of inflation and real growth in wages. Prospects for rising consumer spending here in the UK look brighter than for the last five years or more and our GDP should continue to grow in 2015. We expect that government spending will continue to reduce as a proportion of GDP. This is necessary due to the enormous overhang of public sector debt which is 80% of UK GDP.
With spreading tensions in the Middle East and the Yemen, the UK market may be volatile over the next few months, but we believe that the investment case remains intact for long-term investors. Equity dividends continue to rise, and in the first quarter of 2015, the adjustment for dividends on the FTSE All Share Index rose by nearly 8%. Although the price earnings ratio is now around 15x, which is just above the long-term average of 14x, the average yield of 3.3% is more than double the yield of 1.6% available from ten year gilts.
Angela Lascelles
OLIM Limited
3 June 2015
PROPERTY PORTFOLIO
The Market
Commercial property values are now growing steadily in most areas of the United Kingdom, not just the hotspots in Central London. The total returns on the IPD Annual Index in 2014, at 17.7%, were the highest since 2005, with office and industrial property each returning 23% and retail property on 14%. The Scottish property market, however, has been under political pressure. Stamp duty on Scottish commercial properties changed on 1 April. It is now higher than in the rest of the United Kingdom on properties over £1.9m and lower on the rest.
After underperforming for some years, risky, shorter-let, "recovery stock" office and industrial properties led the market higher as they were seen to offer the best odds for short term capital growth, especially by aggressive overseas buyers. London office and retail rents are still rising, but Central London valuation yields are wafer-thin.
Two years into economic recovery, rental values are now improving across most regions and property types. Office and industrial/warehouse rents and tenant demand are growing as expected across much of Southern and Middle England. Average retail rental values stabilised in Spring 2014 and are now edging ahead. Intensive competitive pressure in retailing is still depressing retail rents where local spending power and population are in decline, usually in conurbations outside Southern England. But rents are growing again in some prosperous smaller towns, suburban high streets and edge of town locations throughout the United Kingdom as real consumer incomes move ahead. Medium term retail rental growth outside London will benefit from the rates revaluation, which will take effect in 2017, based on rents today rather than at their peak in 2008.
The internet continues to change established shopping patterns, but the more savvy retailers are turning it from a threat into an opportunity and many high streets are benefitting from new openings by convenience and discount stores, cafes and bar/restaurants. Leisure property capital and rental values are also rising, with strong operators such as Greene King (now including Spirit), Marstons, Mitchells and Butlers, Prezzo, Restaurant Group and Wetherspoons competing for new units both in and out of town. Household spending on eating out, for example, is estimated to be rising by 7% p.a. Leisure property is also rapidly gaining acceptance as a serious institutional investment, with health and fitness and cinemas leading the way in 2014 in the IPD rankings for net new investment. Voids and overrenting in the IPD Monthly Index are at their lowest levels since 2008, which augurs well for continuing rental growth in most sectors.
Demand for scarce investments with long index-related leases in most sectors is very strong, as insurance companies and pension funds seek to match their long-term annuity and inflation-linked liabilities with realistic returns from well let property instead of the "return-free risk" offered by index-linked gilts on negative real yields. But capital and rental values are falling for large supermarkets (the worst performing sub sector in IPD last year with a 6.2% return), in view of the rapid structural change highlighted by Tesco's and Morrison's troubles in particular. Consumers' preferences are moving rapidly towards more frequent trips to smaller, more convenient supermarkets combined with growth in on-line shopping for bulkier items.
UK Property simply offers outstanding value at a yield premium of 4 points over conventional gilts and 7 points over long-dated index-linked gilts. Long term property investors can lock in an average real yield premium at all-time high since index-linked gilts were first issued in the UK a generation ago. Property's prospects are also highly competitive with UK equities at almost double their running yield, with voids and tenant defaults declining and rental income from property portfolios growing again - the usual cyclical pattern at this stage of an economic recovery.
British and Irish banks continue to dispose of property owned by distressed borrowers and by sales of non-performing loan portfolios, formal Receiverships and "consensual sales" under the threat of Receivership. Most banks are also lending freely again on commercial as well as residential property. Reasonable quality property is still available from these bank-driven sales, but the prices are rising and the competition for larger lot sizes and portfolios is fierce, with US hedge funds competing at a premium for larger packages. Individual properties and small groups for sale between £2m and £10m still offer the best value, in the gap between private and institutional/overseas demand.
Average property capital values should continue to rise in 2015, giving average total returns of 10%-12%. Average rental values should also show useful real growth throughout 2015 as employment continues to grow and the economic recovery spreads to the parts of the United Kingdom furthest from London.
2014 was the best year for the British economy since the 2008 crash, with growth at almost 3%. 2015 may be slower. House prices in London have boiled over after their very rapid rise but most house prices elsewhere are benefitting from cuts in stamp duty. Consumer incomes are now clearly growing again in real terms, with average earnings growth around 2%, usefully above both the Retail Price Index at 0.5%, and the Consumer Price Index in negative territory. Falling commodity prices, especially oil, will give a welcome boost to British real incomes in 2015. The UK service sector is buoyant but manufacturing output, construction and investment remain patchy and the trade deficit, at 6% of GDP, may become a serious concern if our public sector deficit also stays high and Britain has to continue borrowing large sums from abroad for the foreseeable future. Abroad, the IMF is warning of several years of slow growth - the USA is performing reasonably, and the Eurozone GDP is edging ahead, but Greece and Russia are in serious trouble and China, India and Brazil continue to disappoint.
There is still no sign of the Bank of England Monetary Policy Committee raising interest rates, with market expectations delayed well into 2016. With ultra-low interest rates right across the yield curve in most developed economies, rises in short rates here may be small and slow unless sterling comes under sustained pressure. Meanwhile property's exceptionally high yield premium over both short and long-term interest rates provides solid medium-term protection against interest rate rises. Buying pressure from many new as well as established investors should keep prices rising throughout 2015. Affordable and rising real rents, and the specific property locations and types which deliver them, remain the key to high long term real returns when bought at realistic yields.
The Portfolio
VIT's property portfolio produced a total return of 13% over the year to March. The IPD Monthly Index return over the same period was 18%.
We concentrate on properties with strong income streams to meet the fixed interest payments on our debt. These have also produced good long-term capital performance. The total return on our property portfolio has averaged 9% a year over the past 5 and 10 years, 12% over 20 years and 13% over the 28 years since the start. These returns are below the IPD average over 5 years but above over longer periods. Real returns over the R.P.I. from VIT's property portfolio averaged 6% a year over the past 5 and 10 years and 8% a year over longer periods.
Two properties were sold for £1.9 million at a net yield of 4.7% during the year, in Central London and Haddington in Scotland. The proceeds of these sales, and a £5 million 5-year fixed-rate loan at 4% p.a. (including all fees), were reinvested at an average net initial yield of 7% in four Stonegate pub/restaurants in Bedford, Bournemouth, Coventry and Selby and a Prezzo restaurant in Brentwood. All these properties have index-related leases with R.P.I-linked rent reviews for 25 or 30 years without a break. They were bought for £7.5 million including purchase costs and valued at £7.75 million 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 13½ years. The portfolio has been fully let and income-producing throughout the year, apart from two months' loss of rent at Haddington. 10% of the rental income is reviewed annually, with 90% five yearly. This year's purchases take the proportion of index-related income up to 52% of the portfolio (it was 35% three years ago).
The property portfolio has been funded for many years by long term fixed rate loans - £20 million of VIT 93/8% Debenture Stock repayable in 2026 and £15 million of VIT 11% Debenture Stock repayable in 2021. Because these Debenture Stocks were issued at a premium, their effective interest cost averaged 9%, which compares with the 13% p.a. long-term return on VIT's properties. Interest rates have now fallen so low compared to property yields that we decided to borrow £5 million in February for five years at a fixed interest rate, including all fees, of 4% p.a. and reinvest it in property let on good covenants on long index-related leases at 7% increasing VIT's net income by over £100,000 a year.
Results of Independent Revaluation
The VIT property portfolio was subject to an independent professional revaluation at 31 March 2015 by Savills, who have replaced Jones Lang LaSalle as the independent valuers.
The revaluation showed a value of £54,500,000. Our properties are revalued every six months, at 30 September and 31 March.
Capital values rose by 5% over the year and rental income rose by 1% on a like for like basis. Index-related properties performed best (+8½% in capital value) and Scottish properties worst (-10%). Thirty-one of the properties valued at 31 March 2015 were freehold or the Scottish equivalent and one is held on a long lease with 42 years to run.
Matthew Oakeshott
OLIM Property Limited
3 June 2015
BUSINESS REVIEW
This Business Review is intended to provide an overview of the strategy and business model of the Company as well as the key measures used by the Directors in overseeing its management. The Company is an investment trust company which invests in accordance with the investment aims and investment policy below.
The Group
On 28 March 2014, all of the assets and liabilities of Audax Properties plc (Audax), including the debenture stock previously issued by Audax, were transferred to the Company. On 31 January 2015, Audax was placed into members' voluntary liquidation.
In July 2014, Value and Income Services Limited (VIS), a wholly owned subsidiary of the Company, was authorised by the Financial Conduct Authority and was appointed as the Company's Alternative Investment Fund Manager (AIFM).
Investment Aims
The Company invests in higher yielding, less fashionable areas of the UK commercial property and quoted equity markets, particularly in medium and smaller sized companies. The Company aims to achieve long term real growth in dividends and capital value without undue risk.
Investment Policy
The Company's policy is to invest in quoted UK equities, UK commercial property and cash or near cash securities. It is not normally the Company's policy to invest in overseas shares or in unquoted companies. UK equities usually account for between half and three-quarters of the total portfolio and property for a quarter to a half but the asset allocation may go outside these ranges if relative market levels and investment value, or a desired increase in cash or near cash securities, make it appropriate.
The Company focuses on the fundamental values and incomes of businesses in which it invests - their profitability, cash flows, balance sheets, management and products or services - and the location, tenants and leases of its property investments. The equity portfolio has generally yielded more than the FTSE All-Share Index. The Group has held between 30 and 40 individual shareholdings and between 20 and 30 individual properties in recent years. However, as at the year end the number of individual properties increased to 32. These ranges may change as market conditions or the size of each portfolio vary in future. In order to limit the risk to the equity portfolio that is derived from any particular investment, no individual shareholding will account for more than 10% of the equity portfolio at the time of purchase.
The Company has, since 1986, had a long standing policy of increasing its exposure to equities and to property through the judicious use of borrowings. Until recently, all borrowings have been long term debentures to provide secure long term funding, avoiding the risks associated with short term funding of having to sell illiquid assets at a low point in markets if loans have to be repaid. On 26 February 2015, a five year secured term loan facility of £5m was arranged with Santander UK plc at a five year fixed interest rate of 4% p.a. including all fees.
Gearing has varied between 25% and 40% of the total portfolio. The Company will not raise new borrowings if total net borrowings would then represent more than 50% of the total assets. No material changes may be made to the Company's investment policy described above without the prior approval of shareholders by the passing of an Ordinary Resolution.
Performance, Results and Dividend
A review of the performance of the equity and property portfolios is detailed in the Chairman's Statement and the Investment Managers' Reports. The Directors recommend that a final dividend of 4.70 pence per share (2014: 4.40 pence) is paid on 17 July 2015 to shareholders on the register on 19 June 2015. The ex-dividend date is 18 June 2015.
An interim dividend of 4.30 pence per share (2014: 4.10 pence) was paid to shareholders on 2 January 2015.
The table below shows the revenue reserve position and dividends paid and payable by the Company, subject to shareholders approval of the proposed final dividend at the forthcoming Annual General Meeting.
Company Revenue
Reserves
|
|
£000 |
Pence per share |
|
Revenue reserve at 31 March 2014 |
539 |
1.19p |
|
Net revenue earned in the year |
4,321 |
9.48 |
|
Dividends paid and payable |
(4,100) |
(9.00) |
|
Revenue reserve at 31 March 2015 |
760 |
1.67p |
Principal Risks and Uncertainties
The Board carries out a regular review of the risk environment in which the Group operates. The principal risks and uncertainties which affect the Group's business are:
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
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. VIS delegates its portfolio management responsibilities to the Investment Managers, OLIM Limited (OLIM) and OLIM Property Limited (OLIM Property) (collectively, the Managers) who monitor market prices throughout the year and report to VIS and the Board, which meet regularly in order to review investment strategy. The equity investments held by the Group are listed on the UK Stock Exchange. All investment properties held by the Group are commercial properties located in the UK with long, strong income streams.
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. Current borrowings comprise debenture stock and the five year secured term loan, 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%.
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 Company's policy to hedge this risk.
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 Company's existing borrowings is set out in the interest risk profile section of note 20 of the Financial Statements.
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 OLIM (who report to VIS) 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. OLIM's Compliance Officer (together with VIS) carry out periodic reviews of the Depositary's operations and report their findings to the OLIM and VIS Risk Management Committees. 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 equity investments are secured by collateral or other credit enhancements.
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 13½ years (2014: 13 years). OLIM Property is responsible for property investment management, with surveyors, solicitors and managing agents acting on the portfolio under OLIM Property's supervision.
Additional risks and uncertainties include:
§ Discount volatility: The Company's shares may trade at a price which represents a discount to its underlying net asset value;
§ Regulatory risk: The Group operates in a complex regulatory environment and faces a number of regulatory risks. A breach of Section 1158 of the Corporation Tax 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 Administrator and the Managers.
The Alternative Investment Fund Managers Directive (AIFMD) introduced a new authorisation and supervisory regime for all managers of authorised investment funds in the European Union.
In accordance with the requirements of the AIFMD, the Company has appointed VIS as its AIFM and BNP Paribas Securities Services as its Depositary. The Board has put in place controls in the form of regular reporting from the AIFM and the Depositary to ensure that both are meeting their regulatory responsibilities in relation to the Company.
Key Performance Indicators
The Directors have identified the three key performance indicators below to determine the performance of the Company:
● Share price total return relative to the FTSE All-Share Index (total return);
● Net asset value total return relative to the FTSE All-Share Index (total return); and
● Dividend growth relative to the Retail Prices Index
At each Board Meeting, the Directors consider a number of performance measures to assess the Company's success in achieving its objectives.
Statement of Compliance with Investment Policy
The Company is adhering to its stated investment policy and managing the risks arising from it. This can be seen in various tables and charts throughout the Annual Report, and from the information provided in the Chairman's Statement, and the Investment Managers' Reports.
Employee, Environmental and Human Rights Policy
As an investment trust company, the Company has no direct employee or environmental responsibilities, nor is it responsible for the emission of greenhouse gases. Its principal responsibility to Shareholders is to ensure that the investment portfolio is properly managed and invested. The Company has no employees and accordingly, has no requirement to report separately on employment matters. Management of the investment portfolio is undertaken by the Managers through members of their portfolio management teams. In light of the nature of the Company's business, there are no relevant human rights issues and, therefore, the Company does not have a human rights policy.
Future Strategy
The Board and the Managers intend to maintain the strategic policies set out above for the year ending 31 March 2016 as it is believed that these are in the best interests of Shareholders.
James Ferguson
Chairman
3 June 2015
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Financial Statements for each financial year. Under that law, the Directors are required to prepare the Group Financial Statements in accordance with IFRS as adopted by the EU and Article 4 of the EU IAS Regulation and have also chosen to prepare the parent company financial statements under IFRS as adopted by the EU. The Financial Statements are required by law to give a true and fair view of the state of affairs of the Company and of the net return of the Company for that period. In preparing these Financial Statements, the Directors are required to:
§ select suitable accounting policies and then apply them consistently;
§ make judgments and estimates that are reasonable and prudent;
§ state whether applicable IFRS have been followed, subject to any material departures disclosed and explained in the Financial Statements; and
§ prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping proper accounting records that disclose with adequate accuracy at any time the financial position of the Company and enable them to ensure that the Financial Statements comply with the Companies Act. 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.
Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that comply with that law and those regulations.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's websites hosted by the Managers. Legislation in the United Kingdom governing the preparation and dissemination of Financial Statements may differ from legislation in other jurisdictions.
The Directors are also responsible for ensuring that the Annual Report and Financial Statements, taken as a whole are fair balanced and understandable and provide the information necessary to assess the Company's performance, business model and strategy.
Directors' Responsibility Statement
Each Director confirms, to the best of his or her knowledge, that:
§ the Financial Statements have been prepared in accordance with the applicable accounting standards and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and its undertakings as at 31 March 2015 and for the year to that date; and that
§ the Strategic Report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that it faces.
The Directors confirm that the Annual Report and Financial Statements taken as a whole are fair, balanced and understandable and provide the information necessary to assess the Company's performance, business model and strategy.
For and on behalf of the Board of Value and Income Trust PLC
James Ferguson
3 June 2015
VALUE AND INCOME TRUST PLC
GROUP STATEMENT OF COMPREHENSIVE INCOME
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Year ended |
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Year ended |
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31 March 2015 |
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31 March 2014 |
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Note |
Revenue |
Capital |
Total |
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Revenue |
Capital |
Total |
|
|
|
|
|
£'000 |
£'000 |
£'000 |
|
£'000 |
£'000 |
£'000 |
|
|
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Investment Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Dividend income |
|
5,207 |
- |
5,207 |
|
4,834 |
- |
4,834 |
|
|
|
Rental income |
|
3,636 |
- |
3,636 |
|
3,462 |
- |
3,462 |
|
|
|
Other income |
|
14 |
- |
14 |
|
1 |
- |
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2 |
8,857 |
- |
8,857 |
|
8,297 |
- |
8,297 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains and losses on investments |
|
|
|
|
|
|
|
|
|
|
|
|
Realised gains on held-at-fair-value investments & investment properties |
9 |
- |
4,857 |
4,857 |
|
- |
6,159 |
6,159 |
|
|
|
Unrealised (losses)/gains on held-at-fair-value investments and investment properties |
9 |
- |
(3,431) |
(3,431) |
|
- |
7,781 |
7,781 |
|
|
|
Net currency (losses)/gains |
|
- |
(3) |
(3) |
|
- |
2 |
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income |
|
8,857 |
1,423 |
10,280 |
|
8,297 |
13,942 |
22,239 |
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Investment management fees |
3 |
(363) |
(1,153) |
(1,516) |
|
(368) |
(1,470) |
(1,838) |
|
|
|
Other operating expenses |
4 |
(660) |
- |
(660) |
|
(655) |
(5) |
(660) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance costs |
5 |
(3,516) |
- |
(3,516) |
|
(3,501) |
- |
(3,501) |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
(4,539) |
(1,153) |
(5,692) |
|
(4,524) |
(1,475) |
(5,999) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax |
|
4,318 |
270 |
4,588 |
|
3,773 |
12,467 |
16,240 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxation |
6 |
- |
- |
- |
|
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the year |
|
4,318 |
270 |
4,588 |
|
3,773 |
12,467 |
16,240 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per ordinary share (pence) |
7 |
9.48 |
0.59 |
10.07 |
|
8.28 |
27.37 |
35.65 |
|
|
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 4.70p per share, making a total dividend of 9.00p per
share for the year ended 31 March 2015 (2014: 8.50p per share) which, if approved, will be payable
on 17 July 2015 (see note 8).
VALUE AND INCOME TRUST PLC
COMPANY STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2015
|
|
|
|
Year ended |
|
Year ended |
||||
|
|
|
|
31 March 2015 |
|
31 March 2014 |
||||
|
|
|
Note |
Revenue |
Capital |
Total |
|
Revenue |
Capital |
Total |
|
|
|
|
£'000 |
£'000 |
£'000 |
|
£'000 |
£'000 |
£'000 |
|
Investment Income |
|
|
|
|
|
|
|
|
|
|
|
Dividend income |
|
5,207 |
- |
5,207 |
|
4,834 |
- |
4,834 |
|
|
Rental income |
|
3,636 |
- |
3,636 |
|
1,374 |
- |
1,374 |
|
|
Other income |
|
14 |
- |
14 |
|
- |
- |
- |
|
|
|
2 |
8,857 |
- |
8,857 |
|
6,208 |
- |
6,208 |
|
|
|
|
|
|
|
|
|
|
|
|
Gains and losses on investments |
|
|
|
|
|
|
|
|
|
|
|
Realised gains on held-at-fair-value investments and investment properties |
9 |
- |
4,857 |
4,857 |
|
- |
5,265 |
5,265 |
|
|
Unrealised (losses)/gains on held-at-fair-value investments and investment properties |
9 |
- |
(2,803) |
(2,803) |
|
- |
4,047 |
4,047 |
|
|
Net currency (losses)/gains |
|
- |
(3) |
(3) |
|
- |
2 |
2 |
|
|
|
|
|
|
|
|
|
|
|
|
Total income |
|
8,857 |
2,051 |
10,908 |
|
6,208 |
9,314 |
15,522 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
Investment management fees |
3 |
(363) |
(1,153) |
(1,516) |
|
(246) |
(1,184) |
(1,430) |
|
|
Other operating expenses |
4 |
(657) |
- |
(657) |
|
(397) |
(5) |
(402) |
|
|
|
|
|
|
|
|
|
|
|
|
Finance costs |
5 |
(3,516) |
- |
(3,516) |
|
(1,867) |
- |
(1,867) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
(4,536) |
(1,153) |
(5,689) |
|
(2,510) |
(1,189) |
(3,699) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax |
|
4,321 |
898 |
5,219 |
|
3,698 |
8,125 |
11,823 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxation |
6 |
- |
- |
- |
|
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the year |
|
4,321 |
898 |
5,219 |
|
3,698 |
8,125 |
11,823 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per ordinary share (pence) |
7 |
9.48 |
1.97 |
11.45 |
|
8.12 |
17.84 |
25.96 |
|
|
|
|
|
|
|
|
|
|
|
|
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 2015 |
|
31 March 2014 |
|
31 March 2015 |
|
31 March 2014 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note |
£'000 |
£'000 |
|
£'000 |
£'000 |
|
£'000 |
£'000 |
|
£'000 |
£'000 |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Non-current assets |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Investments held at fair value through profit or loss |
9 |
|
132,133 |
|
|
135,229 |
|
|
132,333 |
|
|
148,486 |
||
|
Investment properties |
9 |
|
54,500 |
|
|
46,475 |
|
|
54,500 |
|
|
46,475 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
186,633 |
|
|
181,704 |
|
|
186,833 |
|
|
194,961 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Cash and cash equivalents |
|
4,693 |
|
|
3,308 |
|
|
4,493 |
|
|
2,094 |
|
||
|
Other receivables |
10 |
625 |
|
|
619 |
|
|
625 |
|
|
440 |
|
||
|
|
|
|
|
|
5,318 |
|
|
3,927 |
|
|
5,118 |
|
|
2,534 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
|
191,951 |
|
|
185,631 |
|
|
191,951 |
|
|
197,495 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Other payables |
11 |
|
(2,900) |
|
|
(2,073) |
|
|
(2,900) |
|
|
(13,937) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS LESS CURRENT LIABILITIES |
|
|
189,051 |
|
|
183,558 |
|
|
189,051 |
|
|
183,558 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Borrowings |
12 |
|
(40,169) |
|
|
(35,301) |
|
|
(43,955) |
|
|
(39,718) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET ASSETS |
|
|
148,882 |
|
|
148,257 |
|
|
145,096 |
|
|
143,840 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY ATTRIBUTABLE TO EQUITY SHAREHOLDERS |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Called up share capital |
14 |
|
4,555 |
|
|
4,555 |
|
|
4,555 |
|
|
4,555 |
||
|
Share premium |
15 |
|
18,446 |
|
|
18,446 |
|
|
18,446 |
|
|
18,446 |
||
|
Retained earnings |
16 |
|
125,881 |
|
|
125,256 |
|
|
122,095 |
|
|
120,839 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL EQUITY |
|
|
148,882 |
|
|
148,257 |
|
|
145,096 |
|
|
143,840 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Asset Value per ordinary share (pence) |
17 |
|
326.85 |
|
|
325.48 |
|
|
318.54 |
|
|
315.79 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VALUE AND INCOME TRUST PLC
STATEMENTS OF CHANGES IN EQUITY
|
Group |
|
|
Year ended 31 March 2015 |
|
|
||
|
|
|
Note |
Share capital |
Share premium |
Retained earnings |
Total |
|
|
|
|
|
|
||||
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Net assets at 31 March 2014 |
|
4,555 |
18,446 |
125,256 |
148,257 |
|
|
|
Net profit for the year |
|
- |
- |
4,588 |
4,588 |
|
|
|
Dividends paid |
8 |
- |
- |
(3,963) |
(3,963) |
|
|
|
|
|
|
|
|
|
|
|
|
Net assets at 31 March 2015 |
|
4,555 |
18,446 |
125,881 |
148,882 |
|
|
|
|
|
|
|
|
|
|
|
|
Company |
|
Year ended 31 March 2015 |
|
|
|||
|
|
|
|
Share capital |
Share premium |
Retained earnings |
Total |
|
|
|
|
|
|
|
|||
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Net assets at 31 March 2014 |
|
4,555 |
18,446 |
120,839 |
143,840 |
|
|
|
Net profit for the year |
|
- |
- |
5,219 |
5,219 |
|
|
|
Dividends paid |
8 |
- |
- |
(3,963) |
(3,963) |
|
|
|
|
|
|
|
|
|
|
|
|
Net assets at 31 March 2015 |
|
4,555 |
18,446 |
122,095 |
145,096 |
|
|
|
|
|
|
|
|
|
|
|
|
Group |
|
|
Year ended 31 March 2014 |
|
|
||
|
|
|
Note |
Share capital |
Share premium |
Retained earnings |
Total |
|
|
|
|
|
|
||||
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Net assets at 31 March 2013 |
|
4,555 |
18,446 |
112,842 |
135,843 |
|
|
|
Net profit for the year |
|
- |
- |
16,240 |
16,240 |
|
|
|
Dividends paid |
8 |
- |
- |
(3,826) |
(3,826) |
|
|
|
|
|
|
|
|
|
|
|
|
Net assets at 31 March 2014 |
|
4,555 |
18,446 |
125,256 |
148,257 |
|
|
|
|
|
|
|
|
|
|
|
|
Company |
|
Year ended 31 March 2014 |
|
|
|||
|
|
|
|
Share capital |
Share premium |
Retained earnings |
Total |
|
|
|
|
|
|
|
|||
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Net assets at 31 March 2013 |
|
4,555 |
18,446 |
112,842 |
135,843 |
|
|
|
Net profit for the year |
|
- |
- |
11,823 |
11,823 |
|
|
|
Dividends paid |
8 |
- |
- |
(3,826) |
(3,826) |
|
|
|
|
|
|
|
|
|
|
|
|
Net assets at 31 March 2014 |
|
4,555 |
18,446 |
120,839 |
143,840 |
|
|
|
|
|
|
|
|
|
|
|
VALUE AND INCOME TRUST PLC
GROUP STATEMENT OF CASHFLOWS
For the year ended 31 March
|
|
|
|
|
|
2015 |
|
2014 |
||
|
|
|
|
|
Note |
£'000 |
£'000 |
|
£'000 |
£'000 |
|
Cash flows from operating activities |
|
|
|
|
|
|
|||
|
|
Dividend income received |
|
|
5,151 |
|
|
5,117 |
||
|
|
Rental income received |
|
|
3,567 |
|
|
3,497 |
||
|
|
Interest received |
|
|
|
7 |
|
|
2 |
|
|
|
Other income received |
|
|
8 |
|
|
- |
||
|
|
Operating expenses paid |
|
|
(2,495) |
|
|
(2,312) |
||
|
|
Taxation received/(paid) |
|
|
|
73 |
|
|
(63) |
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH FROM OPERATING ACTIVITIES |
18 |
|
6,311 |
|
|
6,241 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|||
|
|
Purchase of investments |
|
(17,267) |
|
|
(11,711) |
|
||
|
|
Sale of investments |
|
|
14,943 |
|
|
13,987 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH INFLOW/(OUTFLOW) FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|||
|
|
|
(2,324) |
|
|
2,276 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from financing activities |
|
|
|
|
|
|
|||
|
|
Loans drawn down |
|
|
4,889 |
|
|
- |
|
|
|
|
Interest paid |
|
|
(3,525) |
|
|
(3,525) |
|
|
|
|
Dividends paid |
|
8 |
(3,963) |
|
|
(3,826) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH OUTFLOW FROM FINANCING ACTIVITIES |
|
|
(2,599) |
|
|
(7,351) |
|||
|
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE IN CASH AND CASH EQUIVALENTS |
|
|
1,388 |
|
|
1,166 |
|||
|
Cash and cash equivalents at 1 April |
|
|
3,308 |
|
|
2,140 |
|||
|
Foreign exchange movements |
|
|
(3) |
|
|
2 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at 31 March |
|
|
4,693 |
|
|
3,308 |
|||
|
|
|
|
|
|
|
|
|
|
|
VALUE AND INCOME TRUST PLC
COMPANY STATEMENT OF CASHFLOWS
For the year ended 31 March
|
|
|
|
|
|
|
2015 |
|
|
2014 |
|
|
|
|
|
Note |
£'000 |
£'000 |
|
£'000 |
£'000 |
|
Cash flows from operating activities |
|
|
|
|
|
|
|||
|
|
Dividend income received |
|
|
5,151 |
|
|
5,117 |
||
|
|
Rental income received |
|
|
3,958 |
|
|
1,393 |
||
|
|
Interest received |
|
|
7 |
|
|
- |
||
|
|
Other income received |
|
|
8 |
|
|
- |
||
|
|
Operating expenses paid |
|
|
(2,678) |
|
|
(1,339) |
||
|
|
Taxation received/(paid) |
|
|
|
73 |
|
|
(63) |
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH FROM OPERATING ACTIVITIES |
18 |
|
6,519 |
|
|
5,108 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|||
|
|
Purchase of investments |
|
(17,467) |
|
|
(8,272) |
|
||
|
|
Sale of investments |
|
|
28,197 |
|
|
9,719 |
|
|
|
|
(Decrease)/increase in loan to subsidiary |
|
(12,248) |
|
|
25 |
|
||
|
|
|
|
|
|
|
|
|||
|
NET CASH (OUTFLOW)/INFLOW FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|||
|
|
|
(1,518) |
|
|
1,472 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from financing activities |
|
|
|
|
|
|
|||
|
|
Loans drawn down |
|
|
4,889 |
|
|
- |
|
|
|
|
Interest paid |
|
|
(3,525) |
|
|
(2,700) |
|
|
|
|
Dividends paid |
|
8 |
(3,963) |
|
|
(3,826) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH OUTFLOW FROM FINANCING ACTIVITIES |
|
|
(2,599) |
|
|
(6,526) |
|||
|
|
|
|
|
|
|
|
|||
|
NET INCREASE IN CASH AND CASH EQUIVALENTS |
|
|
2,402 |
|
|
54 |
|||
|
Cash and cash equivalents at 1 April 2014 |
|
|
2,094 |
|
|
2,038 |
|||
|
Foreign exchange movements |
|
|
(3) |
|
|
2 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at 31 March 2015 |
|
|
4,493 |
|
|
2,094 |
|||
|
|
|
|
|
|
|
|
|
|
|
VALUE AND INCOME TRUST PLC
NOTES TO THE 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 presentational currency of the Group and Company is pounds sterling because that is the currency of the primary economic environment in which the Group and Company operate. The financial statements and the accompanying notes are presented in pounds sterling and rounded to the nearest thousand pounds except where otherwise indicated. |
|
|
|
|
|
(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 November 2014 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 except for the allocation of finance costs to revenue as explained in note 1(f).
The Board has considered the requirements of IFRS 8, 'Operating Segments'. The Board is charged with setting the Group's investment strategy. The Board has delegated the day to day implementation of this strategy to the Investment Managers but the Board retains responsibility to ensure that adequate resources of the Group are directed in accordance with its decisions. The Board is of the view that the Group is engaged in a single segment of business, being investments in quoted UK equities and UK commercial properties. The view that the Group is engaged in a single segment of business is based on the fact that one of the key financial indicators received and reviewed by the Board is the total return from the investment portfolio taken as a whole. A review of the investment portfolio is included in the Investment Managers' Reports. |
|
|
|
|
|
(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 Strategic Report. The financial position of the Group as at 31 March 2015 is shown in the Statement of Financial Position. The Group had fixed debt totalling £40,169,000 as at 31 March 2015, as set out in note 12; none of the borrowings are repayable before 2020. The Group had no short term borrowings. Note 20 sets out the Group's risk management policies and procedures, including those covering market price risk, liquidity risk and credit risk. As at 31 March 2015, 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 Financial Statements. |
|
|
|
|
|
(c) Basis of consolidation |
|
|
The consolidated financial statements incorporate the financial statements of the Company and the entity controlled by the Company (its subsidiary). An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has ability to affect those returns through its power over the investee. The Company consolidates the investee it controls. 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, which was a wholly owned subsidiary of the Company, was placed into members' voluntary liquidation on 31 January 2015.
Value and Income Services Limited, a wholly owned subsidiary of the Company incorporated on 16 January 2014, has been appointed to act as Alternative Investment Fund Manager but has not traded at any time during the year. |
|
|
|
|
|
(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 receivable and lease incentives, where material, from investment properties under operating leases are recognised in the Statement of Comprehensive Income over the term of the lease on a straight line basis. Other income is recognised on an accruals basis. |
|
|
|
|
|
(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 and in accordance with the SORP 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 allocate finance costs to revenue to match rental income, the directors consider that, contrary to the SORP, it is inappropriate to allocate finance costs to capital.
|
|
|
(g) Other Receivables and Payables |
|
|
Other receivables do not carry any interest and are stated at their nominal value, as reduced by appropriate allowances for any estimated irrecoverable amounts. Other payables are not interest bearing and are stated at their nominal value.
|
|
|
(h) Taxation |
|
|
The Company's liability for current tax is calculated using tax rates that have been enacted or substantially enacted by the balance sheet date.
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 probable 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 maintain 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. |
|
|
|
|
|
(i) 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. |
|
|
|
|
|
|
|
|
(j) Investments Equity 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.
Investment properties Investment properties are initially recognised at cost, being the fair value of consideration given, including transaction costs associated with the investment property. Any subsequent capital expenditure incurred in improving investment properties is capitalised in the period incurred and included within the book cost of the property.
After initial recognition, investment properties are measured at fair value, with gains and losses recognised in the Statement of Comprehensive Income.
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 Savills (UK) Limited, Chartered Surveyors and Valuers, and in accordance with the RICS Valuation - Professional Standards (9th edition). The determination of fair value by Savills 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. These valuations are disclosed in note 9 to the Financial Statements.
The Company accounts for its investment in its subsidiary at fair value. All fair value adjustments in relation to the subsidiary are eliminated on consolidation. |
|
|
|
|
|
(k) Cash and cash equivalents Cash and cash equivalents comprises deposits held with banks.
(l) Non-current liabilities All new 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.
(m) Critical accounting judgements and key estimates The preparation of the financial statements requires the directors to make judgements, estimates and assumptions that may affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. The critical accounting area involving a higher degree of judgement or complexity comprises the determination of fair value of the investment properties. The Group engages independent professional qualified valuers to perform the valuation. Information about the valuation techniques and inputs used in determining fair value at 31 March 2015 is disclosed in note 9 to the financial statements.
|
|
|
(n) Adoption of new and revised Accounting Standards In the current year the Group has applied a number of amendments to IFRS that are mandatorily effective for an accounting period that begins on or after 1 April 2014. Their adoption has not had any material impact on the disclosures or on the amounts reported in these financial statements. § IFRS 10 - Consolidated Financial Statements § IFRS 12 - Disclosure of Interests in Other Entities § IAS 27 (Revised) - Separate Financial Statements § Amendments to IAS 36 - Recoverable amount disclosures for non-financial assets At the date of authorising these financial statements, the following standards and interpretations, which have not been applied in these financial statements, were in issue but not yet effective (and in some cases had not yet been adopted by the EU). § IFRS 9: Financial Instruments (2014) (effective 1 January 2018) § Amendments to IAS 1: Presentation of Financial Statements (effective 1 January 2016) The Directors do not expect the adoption of the above standards and interpretations (or any other standards and interpretations which are in issue but not effective) will have a material impact on the financial statements of the Group in future periods. |
|
|
|
|
|
|
2015 |
2014 |
||
|
|
|
Group |
Company |
Group |
Company |
|
|
|
£000 |
£000 |
£000 |
£000 |
|
2 |
Income |
|
|
|
|
|
|
Investment income |
|
|
|
|
|
|
Dividends from listed investments in UK |
5,207 |
5,207 |
4,834 |
4,834 |
|
|
|
|
|
|
|
|
|
Other operating income |
|
|
|
|
|
|
Rental income |
3,636 |
3,636 |
3,462 |
1,374 |
|
|
Interest receivable on short term deposits |
6 |
6 |
1 |
- |
|
|
Underwriting commission |
8 |
8 |
- |
- |
|
|
|
_______ |
_______ |
_______ |
________ |
|
|
Total income |
8,857 |
8,857 |
8,297 |
6,208 |
|
|
|
________ |
________ |
________ |
________ |
|
|
|
2015 |
2014 |
||||
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
3 |
Investment management fee |
|
|
|
|
|
|
|
|
Group |
|
|
|
|
|
|
|
|
Investment management fee |
363 |
848 |
1,211 |
368 |
859 |
1,227 |
|
|
Performance fee |
- |
305 |
305 |
- |
611 |
611 |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
363 |
1,153 |
1,516 |
368 |
1,470 |
1,838 |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
Company |
|
|
|
|
|
|
|
|
Investment management fee |
363 |
848 |
1,211 |
246 |
573 |
819 |
|
|
Performance fee |
- |
305 |
305 |
- |
611 |
611 |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
363 |
1,153 |
1,516 |
246 |
1,184 |
1,430 |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
2015 |
2014 |
|||||
|
|
|
Group |
|
Company |
Group |
|
Company |
|
|
|
|
£000 |
|
£000 |
£000 |
|
£000 |
|
|
4 |
Other operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Auditors' remuneration |
|
|
|
|
|
|
|
|
|
|
- audit |
30 |
|
30 |
23 |
|
15 |
|
|
|
- other non-audit services (liquidation of Audax Properties plc) |
11 |
|
11 |
- |
|
- |
|
|
|
- taxation compliance services |
7 |
|
7 |
5 |
|
4 |
|
|
Directors' fees |
54 |
|
54 |
48 |
|
48 |
|
|
|
NIC on directors' fees |
4 |
|
4 |
3 |
|
3 |
|
|
|
Fees for company secretarial services |
190 |
|
190 |
137 |
|
116 |
|
|
|
Direct property costs |
(38) |
|
(38) |
(4) |
|
(23) |
|
|
|
Other expenses |
402 |
|
399 |
443 |
|
234 |
|
|
|
|
_______ |
|
________ |
_______ |
|
________ |
|
|
|
|
660 |
|
657 |
655 |
|
397 |
|
|
|
Capital costs |
- |
|
- |
5 |
|
5 |
|
|
|
|
_______ |
|
_______ |
_______ |
|
_______ |
|
|
|
|
660 |
|
657 |
660 |
|
402 |
|
|
|
|
_______
|
|
________ |
_______ |
|
________ |
|
|
|
|
|||||||
|
|
Directors' fees comprise the chairman's fees of £22,000 (2014: £20,000) and fees of £16,000 (2014: £14,000) per annum paid to each other director. The Directors' fees of £16,000 each (2014: £14,000) in respect of the qualifying services provided by Angela Lascelles and Matthew Oakeshott 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 £878,000 (2014: £886,000) and a performance fee of £215,000 (2014: £419,000).
Matthew Oakeshott is a director of OLIM Property Limited which received an investment management fee of £333,000 (2014: £341,000) and a performance fee of £90,000 (2014: £192,000).
|
|||||||
|
|
|
2015 |
2014 |
||||
|
|
|
Group |
|
Company |
Group |
|
Company |
|
|
|
£000 |
|
£000 |
£000 |
|
£000 |
|
5 |
Finance costs |
|
|
|
|
|
|
|
|
Interest payable on: |
|
|
|
|
|
|
|
|
11% First Mortgage Debenture Stock 2021 |
1,650 |
|
1,650 |
1,650 |
|
16 |
|
|
9.375% Debenture Stock 2026 |
1,875 |
|
1,875 |
1,875 |
|
1,875 |
|
|
Less amortisation of issue premium |
(23) |
|
(23) |
(24) |
|
(24) |
|
|
Loan interest payable |
12 |
|
12 |
- |
|
- |
|
|
Amortisation of loan expenses |
2 |
|
2 |
- |
|
- |
|
|
|
________ |
|
________ |
_______ |
|
________ |
|
|
|
3,516 |
|
3,516 |
3,501 |
|
1,867 |
|
|
|
________ |
|
________ |
_______ |
|
________ |
|
|
|
2015 |
2014 |
||||
|
|
|
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 |
- |
- |
- |
- |
- |
- |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
- |
- |
- |
- |
- |
- |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
Factors affecting the current tax (credit)/charge for year: |
||||||
|
|
Revenue / capital return on ordinary activities before tax |
4,588 |
|
|
16,240 |
||
|
|
|
_______ |
|
|
_______ |
||
|
|
Tax thereon at 21% (2014 - 23%) |
963 |
|
|
3,735 |
||
|
|
Effects of: |
|
|
|
|
||
|
|
Non taxable dividends |
(1,093) |
|
|
(1,112) |
||
|
|
Gains on investments not taxable |
(299) |
|
|
(3,207) |
||
|
|
Excess expenses not utilised |
429 |
|
|
584 |
||
|
|
|
_______ |
|
|
_______ |
||
|
|
|
- |
|
|
- |
||
|
|
|
_______ |
|
|
_______ |
||
|
|
|
||||||
|
|
|
|
|
||||
|
|
|
2015 |
2014 |
||||
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
Company |
|
|
|
|
|
|
|
|
Group relief receivable |
- |
- |
- |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
- |
- |
- |
- |
- |
- |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
Factors affecting the current tax (credit)/charge for year: |
||||||
|
|
Revenue / capital return on ordinary activities before tax |
5,219 |
|
|
11,823 |
||
|
|
|
|
|
|
_______ |
||
|
|
Tax thereon at 21% (2014 - 23%) |
1,096 |
|
|
2,719 |
||
|
|
Effects of: |
|
|
|
|
||
|
|
Non taxable dividends |
(1,093) |
|
|
(1,112) |
||
|
|
Gains on investments not taxable |
(431) |
|
|
(2,142) |
||
|
|
Excess expenses not utilised |
428 |
|
|
535 |
||
|
|
|
_______ |
|
|
_______ |
||
|
|
|
- |
|
|
- |
||
|
|
|
_______ |
|
|
_______ |
||
|
|
|
||||||
|
|
|
||||||
|
b) |
Factors affecting the tax charge for the year |
||||||
|
|
The Company and Group have losses for tax purposes arising in the year of £3,508,000 (2014: £1,867,000). Under current legislation, it is unlikely that these losses will be capable of offset against the Group's future taxable profits. |
||||||
|
|
|
||||||
|
c) |
Factors affecting future tax charges |
|
|
The Company and Group have deferred tax assets of £5,174,000 (2014: £5,251,000) at 31 March 2015 relating to total accumulated unrelieved tax losses carried forward of £24,871,000 (2014: £22,831,000). These have not been recognised in the financial statements as it is unlikely that they will be capable of offset against the Group's future taxable profits. |
|
|
|
2015 |
2014 |
||||
|
|
|
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 |
4,318 |
|
4,321 |
3,773 |
|
3,698 |
|
|
Capital return |
270 |
|
898 |
12,467 |
|
8,125 |
|
|
Weighted average ordinary shares in issue |
45,549,975 |
|
45,549,975 |
45,549,975 |
|
45,549,975 |
|
|
|
|
|
|
|
|
|
|
|
Return per share - revenue |
9.48p |
|
9.48p |
8.28p |
|
8.12p |
|
|
Return per share - capital |
0.59p |
|
1.97p |
27.37p |
|
17.84p |
|
|
|
________ |
|
________ |
________ |
|
________ |
|
|
Total return per share |
10.07p |
|
11.45p |
35.65p |
|
25.96p |
|
|
|
________ |
|
________ |
________ |
|
________ |
|
|
|
2015 |
2014 |
|
|
|
£000 |
£000 |
|
8 |
Dividends |
|
|
|
|
Dividends on ordinary shares: |
|
|
|
|
Final dividend of 4.40p per share (2014: 4.30p) paid 18 July 2014 |
2,004 |
1,959 |
|
|
Interim dividend of 4.30p per share (2014: 4.10p) paid 2 January 2015 |
1,959 |
1,867 |
|
|
|
________ |
________ |
|
|
Dividends paid in the period |
3,963 |
3,826 |
|
|
|
________ |
________ |
|
|
|
|
|
|
|
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 £4,321,000 (2014: £3,698,000). |
||
|
|
|
|
|
|
|
|
2015 |
2014 |
|
|
|
£000 |
£000 |
|
|
Interim dividend for the year ended 31 March 2015 of 4.30p (2014: 4.10p) paid 2 January 2015 |
1,959 |
1,867 |
|
|
Proposed final dividend for the year ended 31 March 2015 of 4.70p (2014: 4.40p) payable 17 July 2015 |
2,141 |
2,004 |
|
|
|
________ |
________ |
|
|
|
4,100 |
3,871 |
|
|
|
________ |
________ |
|
|
|
Equities |
Investment properties |
Total |
|
|
|
|
£'000 |
£'000 |
£'000 |
|
|
9 |
Investments |
|
|
|
|
|
|
Group |
|
|
|
|
|
|
Cost at 31 March 2014 |
82,280 |
33,027 |
115,307 |
|
|
|
Unrealised appreciation |
52,949 |
13,448 |
66,397 |
|
|
|
|
________ |
________ |
________ |
|
|
|
Valuation at 31 March 2014 |
135,229 |
46,475 |
181,704 |
|
|
|
|
|
|
|
|
|
|
Purchases |
10,906 |
7,540 |
18,446 |
|
|
|
Sales proceeds |
(13,099) |
(1,844) |
(14,943) |
|
|
|
Realised gains on sales |
4,664 |
193 |
4,857 |
|
|
|
Movement in unrealised appreciation in year |
(5,567) |
2,136 |
(3,431) |
|
|
|
|
________ |
________ |
________ |
|
|
|
Valuation at 31 March 2015 |
132,133 |
54,500 |
186,633 |
|
|
|
|
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
|
|
Equities |
Investment in Subsidiary |
Investment properties |
Total |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Company |
|
|
|
|
|
|
Cost at 31 March 2014 |
82,281 |
4,442 |
41,356 |
128,079 |
|
|
Unrealised appreciation |
52,948 |
8,815 |
5,119 |
66,882 |
|
|
|
________ |
________ |
________ |
________ |
|
|
Valuation at 31 March 2014 |
135,229 |
13,257 |
46,475 |
194,961 |
|
|
|
|
|
|
|
|
|
Purchases |
10,906 |
- |
7,540 |
18,446 |
|
|
Investment in subsidiary |
- |
200 |
- |
200 |
|
|
Sales proceeds |
(13,099) |
(13,254) |
(1,844) |
(28,197) |
|
|
Realised gains on sales |
4,664 |
- |
193 |
4,857 |
|
|
Movement in unrealised appreciation/ (depreciation) in year |
(5,567) |
(3) |
2,136 |
(3,434) |
|
|
|
________ |
________ |
________ |
________ |
|
|
Valuation at 31 March 2015 |
132,133 |
200 |
54,500 |
186,833 |
|
|
|
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
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:- |
||||
|
|
|
2015 |
2014 |
||
|
|
|
£'000 |
£'000 |
||
|
|
Purchases |
69 |
47 |
||
|
|
Sales |
24 |
17 |
||
|
|
|
________ |
________ |
||
|
|
|
93 |
64 |
||
|
|
|
________ |
________ |
||
|
|
|
|
|
||
|
|
The fair values of the investment properties were established by professional valuation on an open market basis for existing use by Savills (UK) Limited, Chartered Surveyors. These valuations were carried out in accordance with the RICS Valuation - Professional Standards 9th edition effective from January 2014 (published by the Royal Institute of Chartered Surveyors) by reference to the Investment Method whereby the net annual income derived from a property is capitalised by an appropriate capitalisation rate or Years' Purchase figure to arrive at the present Capital Value of the property after an allowance for the purchaser's costs. The relevant capitalisation rate is chosen, based on the investment rate of return expected (as derived from comparisons of other similar property investments) for the type of property concerned and taking into consideration such factors as risk, capital appreciation, security of income, ease of sale and management of the property. |
||||
|
|
|
2015 |
2014 |
||||
|
|
|
Group |
|
Company |
Group |
|
Company |
|
|
|
£000 |
|
£000 |
£000 |
|
£000 |
|
10 |
Other receivables |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts falling due within one year: |
|
|
|
|
|
|
|
|
Dividends receivable |
354 |
|
354 |
298 |
|
298 |
|
|
Prepayments and accrued income |
271 |
|
271 |
321 |
|
142 |
|
|
|
________ |
|
________ |
________ |
|
________ |
|
|
|
625 |
|
625 |
619 |
|
440 |
|
|
|
________ |
|
________ |
________ |
|
________ |
|
|
|
|
|
|
|
|
|
|
|
|
2015 |
2014 |
||||
|
|
|
Group |
|
Company |
Group |
|
Company |
|
|
|
£000 |
|
£000 |
£000 |
|
£000 |
|
11 |
Other payables |
|
|
|
|
|
|
|
|
Amounts due to brokers |
1,180 |
|
1,180 |
- |
|
- |
|
|
Amounts due to OLIM Limited |
215 |
|
215 |
419 |
|
419 |
|
|
Amounts due to OLIM Property Limited |
90 |
|
90 |
192 |
|
192 |
|
|
Accruals and other creditors |
1,415 |
|
1,415 |
1,462 |
|
1,013 |
|
|
Value Added Tax payable |
- |
|
- |
- |
|
65 |
|
|
Amount due to subsidiary |
- |
|
- |
- |
|
12,248 |
|
|
|
________ |
|
________ |
________ |
|
________ |
|
|
|
2,900 |
|
2,900 |
2,073 |
|
13,937 |
|
|
|
________ |
|
________ |
________ |
|
________ |
|
|
|
|
|
|
|
|
|
|
|
The amounts due to OLIM Limited and OLIM Property Limited comprise the performance fee for the year to 31 March 2015, subsequently paid in May 2015. |
||||||
|
|
|
2015 |
2014 |
||||
|
|
|
Group |
|
Company |
Group |
|
Company |
|
|
|
£000 |
|
£000 |
£000 |
|
£000 |
|
12 |
Non-current liabilities |
|
|
|
|
|
|
|
|
Bank Loan |
5,000 |
|
5,000 |
- |
|
- |
|
|
Costs incurred |
(111) |
|
(111) |
- |
|
- |
|
|
Add : Debit to income for the year |
2 |
|
2 |
- |
|
- |
|
|
|
________ |
|
________ |
________ |
|
________ |
|
|
|
4,891 |
|
4,891 |
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
11% First Mortgage Debenture Stock 2021 |
15,000 |
|
15,000 |
15,000 |
|
15,000 |
|
|
Fair value adjustment |
- |
|
3,786 |
- |
|
4,417 |
|
|
|
________ |
|
________ |
________ |
|
________ |
|
|
|
15,000 |
|
18,786 |
15,000 |
|
19,417 |
|
|
|
|
|
|
|
|
|
|
|
9.375% Debenture Stock 2026 |
20,000 |
|
20,000 |
20,000 |
|
20,000 |
|
|
Add:- Balance of premium less issue expenses |
301 |
|
301 |
325 |
|
325 |
|
|
Less : Credit to income for the year |
(23) |
|
(23) |
(24) |
|
(24) |
|
|
|
________ |
|
________ |
________ |
|
________ |
|
|
|
20,278 |
|
20,278 |
20,301 |
|
20,301 |
|
|
|
________ |
|
________ |
________ |
|
________ |
|
|
|
40,169 |
|
43,955 |
35,301 |
|
39,718 |
|
|
|
________ |
|
________ |
________ |
|
________ |
|
|
|
|
|
|
|
|
|
|
|
The Company has an agreement with Santander UK plc to provide a fixed term loan facility for up to £5,000,000 for a period of up to five years to 27 February 2020 (2014: nil). At 31 March 2015, £3,000,000 was drawn down at a rate of 3.644% (drawn down on 27 February 2015) and £2,000,000 was drawn down at a rate of 3.44% (drawn down on 20 March 2015). The terms of the loan facility contain financial covenants which require VIT to ensure that:-
§ in respect of each 3 month period ending on 31 March and 30 September (the Half Year dates) net rental income shall be at least 200 per cent of Interest Costs;
§ in respect of each 12 month period beginning immediately after 31 March and 30 September, net rental income shall be at least 200 per cent of Interest Costs; and
§ at all times the Loan shall not exceed 60 per cent of the value of the Properties that have been charged to Santander UK plc (The Bishop's Finger, 13 Dunstan Street, Canterbury; The Castle, 7 Little Park Street, Coventry; 80/82 High Street, Godalming, Surrey; The Prince of Wales, 48 Cleaver Square, London; and 79 High Street, Lymington).
The 11% First Mortgage Debenture Stock 2021, previously issued by Audax Properties plc, was, on 28 March 2014, transferred to Value and Income Trust PLC (VIT) following the approval of the substitution of VIT as issuer of the Debentures by the holders on 11 March 2014. Applications were made to the UK Listing Authority and the London Stock Exchange for the Debentures to be admitted in the name of VIT to the Official List and to trading on the main market of the London Stock Exchange from 28 March 2014.
Following an application by Audax Properties plc to the UK Listing Authority and the London Stock Exchange, conditional upon admission occurring, the admission to the Official List and to trading on the London Stock Exchange's main market for listed securities, the debentures were derecognised with effect from 28 March 2014.
The 11% First Mortgage Debenture Stock 2021, now issued by VIT, is repayable at par on 31 March 2021 and is secured over specific assets of the Company. Under IAS 39, this debenture required to be initially recorded at fair value of £19,417,000, rather than its nominal value of £15,000,000, in the Company's financial statements. The amortised cost of the debenture as at 31 March 2015 was £18,786,000. The amortisation of the fair value adjustment is presented as a capital item within gains/losses on investments as it relates to the reversal of a previously recognised loss on the Company's investment in its subsidiary. In the Group financial statements the fair value adjustment is eliminated on consolidation.
The Trust Deed of the 11% Debenture Stock contains four covenants with which the Company has complied.
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 VIT 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 9.375% Debenture Stock contains restrictions and events of default. The restrictions require that the aggregate group borrowings, £40 million, must not at any time exceed the total group capital and reserves (equivalent to net assets of £148.88 million as at 31 March 2015).
The fair values of the loan and the debentures are disclosed in Note 20 and the net asset value per share, calculated with the debentures at fair value is disclosed in Note 17.
|
||||||
|
13 |
Deferred tax |
||
|
|
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 and following the transfer of properties owned by Audax Properties on 28 March 2014, no provision for deferred tax is required. |
||
|
|
|
2015 |
2014 |
|
|
|
£000 |
£000 |
|
14 |
Share capital |
|
|
|
|
Authorised: |
|
|
|
|
56,000,000 ordinary shares of 10p each (2014 : 56,000,000) |
5,600 |
5,600 |
|
|
|
|
|
|
|
Called up, issued and fully paid: |
|
|
|
|
45,549,975 ordinary shares of 10p each (2014 : 45,549,975) |
4,555 |
4,555 |
|
|
|
2015 |
2014 |
||||
|
|
|
Group |
|
Company |
Group |
|
Company |
|
|
|
£000 |
|
£000 |
£000 |
|
£000 |
|
15 |
Share premium |
|
|
|
|
|
|
|
|
Balance as at 31 March |
18,446 |
|
18,446 |
18,446 |
|
18,446 |
|
|
|
________ |
|
________ |
________ |
|
________ |
|
|
|
2015 |
2014 |
||||||||
|
|
|
Group |
|
Company |
Group |
|
Company |
||||
|
|
|
£000 |
|
£000 |
£000 |
|
£000 |
||||
|
16 |
Retained earnings |
|
|
|
|
|
|
||||
|
|
Opening balance at 31 March 2014 |
125,256 |
|
120,839 |
112,842 |
|
112,842 |
||||
|
|
Profit for the year |
4,588 |
|
5,219 |
16,240 |
|
11,823 |
||||
|
|
Dividends paid (see note 8) |
(3,963) |
|
(3,963) |
(3,826) |
|
(3,826) |
||||
|
|
|
________ |
|
________ |
________ |
|
________ |
||||
|
|
Closing balance at 31 March 2015 |
125,881 |
|
122,095 |
125,256 |
|
120,839 |
||||
|
|
|
________ |
|
________ |
________ |
|
________ |
||||
|
|
|
|
|
|
|
|
|
||||
|
|
The table below shows the movement in retained earnings analysed between revenue and capital items. |
||||||||||
|
|
|
2015 |
2014 |
||||||||
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
||||
|
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
||||
|
|
Group |
|
|
|
|
|
|
||||
|
|
Opening balance at 31 March 2014 |
3,732 |
121,524 |
125,256 |
3,785 |
109,057 |
112,842 |
||||
|
|
Profit for the year |
4,318 |
270 |
4,588 |
3,773 |
12,467 |
16,240 |
||||
|
|
Dividends paid (see note 8) |
(3,963) |
- |
(3,963) |
(3,826) |
- |
(3,826) |
||||
|
|
|
_______ |
_______ |
_______ |
________ |
_______ |
_______ |
||||
|
|
Closing balance at 31 March 2015 |
4,087 |
121,794 |
125,881 |
3,732 |
121,524 |
125,256 |
||||
|
|
|
_______ |
_______ |
_______ |
________ |
_______ |
_______ |
||||
|
|
|
|
|
|
|
|
|
||||
|
|
Company |
|
|
|
|
|
|
||||
|
|
Opening balance at 31 March 2014 |
2,543 |
118,296 |
120,839 |
2,671 |
110,171 |
112,842 |
||||
|
|
Profit for the year |
4,321 |
898 |
5,219 |
3,698 |
8,125 |
11,823 |
||||
|
|
Dividends paid (see note 8) |
(,3963) |
- |
(3,963) |
(3,826) |
- |
(3,826) |
||||
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
||||
|
|
Closing balance at 31 March 2015 |
2,901 |
119,194 |
122,095 |
2,543 |
118,296 |
120,839 |
||||
|
|
|
_______ |
_______ |
_______ |
________ |
_______ |
_______ |
||||
|
17 |
Net asset value per equity share |
|
|
The net asset value per ordinary share is based on the Group's net assets attributable of £148,882,000 (2014: £148,257,000) and on 45,549,975 (2014: 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 fair value (see note 20) is 299.53p (2014: 304.30p) |
|
|
|
2015 |
2014 |
||||
|
|
|
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 |
10,280 |
|
10,908 |
22,239 |
|
15,522 |
|
|
Gains and losses on investments |
(1,423) |
|
(2,051) |
(13,942) |
|
(9,314) |
|
|
Foreign exchange movements |
(3) |
|
(3) |
2 |
|
2 |
|
|
Investment management fee |
(1,516) |
|
(1,516) |
(1,838) |
|
(1,430) |
|
|
Other operating expenses |
(660) |
|
(657) |
(660) |
|
(402) |
|
|
Decrease/ (increase) in receivables |
59 |
|
(185) |
5 |
|
215 |
|
|
Increase/ (decrease) in other payables |
(426) |
|
23 |
435 |
|
515 |
|
|
|
_______ |
|
_______ |
_______ |
|
________ |
|
|
Net cash from operating activities |
6,311 |
|
6,519 |
6,241 |
|
5,108 |
|
|
|
_______ |
|
________ |
________ |
|
________ |
|
19 |
Relationship with the Investment Manager and other Related Parties |
|
|
Angela Lascelles is a director of OLIM Limited which has an agreement with the Company to provide investment management services.
Matthew Oakeshott is a director of OLIM Property Limited which has an agreement with the Company to provide investment property management services.
Audax Properties plc which was a wholly owned subsidiary of Value and Income Trust PLC was placed into Members' voluntary liquidation on 31 January 2015.
Value and Income Services Limited is a wholly owned subsidiary of Value and Income Trust PLC and all costs and expenses are borne by Value and Income Trust PLC. Value and Income Services Limited has not traded during the year. |
|
20 |
Financial instruments and investment property risks |
||||
|
|
Risk management |
||||
|
|
The Group's and the Company's financial instruments and investment property 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 ensures 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 OLIM's 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.
(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 Company are listed on the UK Stock Exchange.
All investment properties held by the Group 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 2015 would have increased/decreased by £18,663,000 (2014: increase/decrease of £18,170,000) 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 and five year bank loans, 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%.
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 2015 |
Weighted average period for which rate is fixed Years |
Weighted average interest rate |
|
|
|
|
Assets |
|
|
|
|
|
|
Sterling |
- |
- |
- |
4,693 |
|
|
|
________ |
________ |
________ |
________ |
|
|
Total assets |
- |
- |
- |
4,693 |
|
|
|
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
At 31 March 2015 |
Weighted average period for which rate is fixed Years |
Weighted average interest rate |
|
|
|
|
Liabilities |
|
|
|
|
|
|
Sterling |
8.7 |
9.26 |
40,000 |
- |
|
|
|
________ |
________ |
________ |
________ |
|
|
Total liabilities |
8.7 |
9.26 |
40,000 |
- |
|
|
|
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
At 31 March 2014 |
Weighted average period for which rate is fixed Years |
Weighted average interest rate |
|
|
|
|
Assets |
|
|
|
|
|
|
Sterling |
- |
- |
- |
3,308 |
|
|
|
________ |
________ |
________ |
________ |
|
|
Total assets |
- |
- |
- |
3,308 |
|
|
|
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
At 31 March 2014 |
Weighted average period for which rate is fixed Years |
Weighted average interest rate |
|
|
|
|
Liabilities |
|
|
|
|
|
|
Sterling |
10 |
10.07 |
35,000 |
- |
|
|
|
________ |
________ |
________ |
________ |
|
|
Total liabilities |
10 |
10.07 |
35,000 |
- |
|
|
|
________ |
________ |
________ |
________ |
|
|
|
||||
|
|
The weighted average interest rate on borrowings 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 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 are non-interest bearing and 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 2015 would increase/decrease by £33,000 (2014: increase/decrease by £21,000). 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.
|
||||
|
|
|
|||||||||
|
|
|
|
|
|
Due between 3 months and 1 year |
|
||||
|
|
Borrowings |
40,637 |
73,287 |
977 |
2,723 |
69,587 |
||||
|
|
Other payables |
1,634 |
1,634 |
1,634 |
- |
- |
||||
|
|
|
________ |
________ |
________ |
________ |
________ |
||||
|
|
Total |
42,271 |
74,921 |
2,611 |
2,723 |
69,587 |
||||
|
|
|
________ |
________ |
________ |
________ |
________ |
||||
|
|
|
|
|
|
|
|
||||
|
|
(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 OLIM 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. OLIM's Compliance Officer carries out periodic reviews of the Custodian's operations and reports its findings to OLIM's and VIS' Risk Management Committees. 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 during the year was as follows: |
|||||||||
|
|
|
2015 |
2014 |
|||||||
|
|
|
Balance Sheet as at 31 March £'000 |
Maximum exposure during the year £'000 |
Balance Sheet £'000 |
Maximum exposure £'000 |
|||||
|
|
Current assets |
|
|
|
|
|||||
|
|
Cash and cash equivalents |
4,693 |
5,593 |
3,308 |
5,578 |
|||||
|
|
Other receivables |
625 |
1,013 |
619 |
2,553 |
|||||
|
|
|
________ |
________ |
________ |
________ |
|||||
|
|
|
5,318 |
6,606 |
3,927 |
8,131 |
|||||
|
|
|
________ |
________ |
________ |
________ |
|||||
|
|
|
|||||||||
|
|
(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 13½ years (2014: 13 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:- |
|||||||||
|
|
|
|||||||||
|
|
|
2015 £'000 |
2014 £'000 |
||
|
|
Due within 1 year |
81 |
19 |
||
|
|
Due between 2 and 5 years |
3,667 |
2,652 |
||
|
|
Due after more than 5 years |
49,122 |
41,894 |
||
|
|
|
________ |
________ |
||
|
|
|
52,870 |
44,565 |
||
|
|
|
________ |
________ |
||
|
|
|
|
|
||
|
|
This amount comprises the total contracted rent receivable as at 31 March 2015.
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 receivables and payables and the borrowings 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 13 Fair Value hierarchy:- |
||||
|
|
|
|
|
|
|
|
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
At 31 March 2015 |
|
|
|
|
|
|
Equity investments |
132,133 |
- |
- |
132,133 |
|
|
Investment properties |
- |
54,500 |
- |
54,500 |
|
|
|
________ |
_______ |
_______ |
________ |
|
|
|
132,133 |
54,500 |
- |
186,633 |
|
|
|
________ |
_______ |
_______ |
________ |
|
|
|
|
|
|
|
|
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
At 31 March 2014 |
|
|
|
|
|
|
Equity investments |
135,229 |
- |
- |
135,229 |
|
|
Investment properties |
- |
46,475 |
- |
46,475 |
|
|
|
________ |
_______ |
_______ |
________ |
|
|
|
135,229 |
46,475 |
- |
181,704 |
|
|
|
________ |
_______ |
_______ |
________ |
|
|
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 £52,445,000 as at 31 March 2015 (2014: £44,647,000) compared to a balance sheet value in the financial statements of £40,169,000 (2014: £35,301,000) 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. The fair value of the loan is determined by a discounted cash flow calculation based on the appropriate inter-bank rate plus the margin per the loan agreement. All other assets and liabilities of the Company are included in the balance sheet at fair value.
|
||||||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
Fair value |
|
Balance Sheet Value |
|||
|
|
|
2015 |
2014 |
|
2015 |
2014 |
|
|
|
|
£000 |
£000 |
|
£000 |
£000 |
|
|
|
Bank loan |
5,088 |
- |
|
4,891 |
- |
|
|
|
11% First Mortgage Debenture Stock 2021 |
19,874 |
19,417 |
|
15,000 |
15,000 |
|
|
|
9.375% Debenture Stock 2026 |
27,483 |
25,230 |
|
20,278 |
20,301 |
|
|
|
|
_______ |
_______ |
|
_______ |
_______ |
|
|
|
|
52,445 |
44,647 |
|
40,169 |
35,301 |
|
|
|
|
_______ |
________ |
|
_______ |
________ |
|
|
|
Note: Both debentures are categorised as Level 2 (2014: same), as is the bank loan. |
|
|||||
|
|
|
|
|||||
|
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;
- 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.
|
|
|||||
|
22 |
Events after the Balance Sheet Date |
|
|||||
|
|
There were no significant post balance sheet events requiring disclosure in the financial statements. |
|
|||||
|
|
|
|
|||||
|
Additional Information
In accordance with section 435 of the Companies Act 2006, the Directors advise that the financial information set out in this announcement does not constitute the Group's statutory financial statements for the period ended 31 March 2015, but is derived from these financial statements. The financial statements for the period ended 31 March 2015 have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union. The financial statements for the period ended 31 March 2015 will be forwarded to the Registrar of Companies following the Company's Annual General Meeting. The Auditors have reported on these financial statements; their reports were unqualified and did not contain statements under Section 498(2) or (3) of the Companies Act 2006.
The consolidated statement of financial position at 31 March 2015 and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cashflows for the year then ended have been extracted from the Group's financial statements. Those financial statements have not yet been delivered to the Registrar.
|
|
||||||
|
|
|
|
|||||
For Value and Income Trust PLC
Maven Capital Partners UK LLP
Company Secretary
3 June 2015
This information is provided by RNS
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