Final Results

RNS Number : 3971K

Value and Income Trust plc

14 July 2011

 



VALUE AND INCOME TRUST PLC

ANNUAL FINANCIAL REPORT

FOR THE YEAR ENDED 31 MARCH 2011

SUMMARY

	31 March 2011	31 March 2010
Net asset value per share valuing debt at par (including income)	249.1p	231.8p
Net asset value per share valuing debt at market value (including income)	233.7p	218.3p
Ordinary share price	186.0p	169.0p
Discount of ordinary share price to net asset value per share valuing debt at market value (including revenue)	20.4%	22.5%
Total interim dividend and proposed final dividend per share	7.8p	7.6p
Total assets less current liabilities	£149.4m	£141.8m

THE YEAR

·      Net Asset Value total return (with debt at market value) of 10.9% over one year and 18.5% over three years

·      FTSE All-Share Index total return of 8.7% over one year and 17.0% over three years

·      Share price total return of 14.0% over one year and 28.6% over three years.

·      Dividends for the year up 2.6% - increased for 24^th consecutive year

CHAIRMAN'S STATEMENT

Value and Income Trust had a good year.

Over the 12 months to 31st March 2011 the net asset value total return per share (that is taking the growth in net asset value and dividend together) rose by 10.9% with debt valued at market, and by 12.6% with debt valued at par. The share price total return was 14.0% while the FTSE All-Share Index total return was 8.7% over the same period. This performance was sufficiently good for OLIM to earn a performance fee. As I have noted before, the formula for the fee, which is based on VIT's share price total return over 3 years, provides a testing target.

The proposed final dividend of 4.0p would make total dividends for the year of 7.8p, an increase of 2.6%. This would be payable on 15 July 2011 to shareholders on the register on 17 June 2011. The ex dividend date will be 15 June 2011.

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 Investment Managers' Report that we are fully invested in both equities and property. This reflects optimism about the prospects for dividend growth from our portfolio and also the attractive yield provided by the properties, with one-third of the rental income now being index-linked.

I hope that we shall see as many shareholders as possible at the Annual General Meeting on Friday 8th July 2011, which is to be held in London this year. There will be a brief presentation on the investment outlook.

James Ferguson

2 June 2011

MANAGER'S REPORT

EQUITY PORTFOLIO

MARKET BACKGROUND

The FTSE All Share Index rose by 5.4% in the year to end March 2011, recording a rise of 54.6% in the two years since the end of March 2009, which marked the low point of the Index during the depths of the economic recession.

In the early months of the year under review the market fell heavily, amid concerns about sovereign debt in Southern Europe and Ireland, and the problems of BP following the oil spill in the Gulf of Mexico, which caused it to suspend dividends already declared and for the rest of the year. The negotiations surrounding the formation of the Coalition were an additional concern and slowing growth in America and China added to the gloom. There was a strong rebound in the second quarter as the new Government showed its commitment to reducing the fiscal deficit and global growth strengthened. The FTSE All Share Index closed the first half just 1.5% lower than its end March close.

In the second half of VIT's year the Index rose by 7%, with all the gain recorded by end December. Fears of 'double dip' recession around the world were replaced by projections of modest growth in the UK and Continental Europe in 2010 and 2011, with stronger growth in America and in the developing economies. Although there was a surprise setback in UK GDP reported for the last quarter of 2010, the cause was mainly the severe weather experienced in December.

In the last quarter of our year, geopolitical events halted any further equity gains with earthquakes in New Zealand and Japan, floods in Australia and elsewhere, and political uprisings in the Arab countries of North Africa and in other parts of the Middle East.

Over the year as a whole, high yielding equities again underperformed with a rise of just 2% in the FTSE High Yield Index, but Mid-cap and Small-cap outperformed with rises of 14% and 12% in their respective indices. World equities overall rose by approximately the same percentage as the UK market, adjusted for the rise in sterling against the dollar over the year. Within global markets, the German DAX and the Emerging Markets Indices recorded mid teen gains, but Japan fell by 14% over the year. Despite rising levels of inflation, gilt yields closed the year marginally lower than at the beginning with ten year gilts at 3.7% and long dated stocks yielding 4.3%. In currency markets the pound strengthened by 5% against the dollar but was little changed against the euro. Most commodities strengthened over the year with the price of oil up by 40% and copper up by 20%.

Performance

Despite the bias towards higher yielding equities, the total return on VIT's equity portfolio in the last year was +13.0%, which compares with the total return on the FTSE All Share Index of +8.7%. Our Mid-cap holdings in the industrial sectors benefitted from global growth with particular strength in Croda (+80%), Spectris (+65%) and Rotork (+24%).

Amongst companies operating mainly in the UK economy, BT Group rose by 50% and Restaurant Group rose by 29%. Forth Ports received a takeover approach and rose by 18% over the year. Performance also benefitted from VT Group, our largest holding of a year ago, which was taken over by Babcock in July.

These strong performers outweighed weakness in BP, Wincanton and National Grid. The financial sectors, where we are considerably underweight, generally underperformed but Legal & General was the exception with a rise of 30%.

Portfolio

Transactions during the year totalled £25.0m and we made net purchases of £2.16m. We continued to be fully invested throughout the year. Following the takeover of VT Group we received 730,000 Babcock shares and £3.77m in cash. We trimmed the large Babcock holding but it remains a significant holding at 4.3% of the total equity portfolio. We reduced the BP holding by a third and we sold our holdings in De la Rue and HMV, both of which encountered severe problems during the year. Late in our year we sold the holding in Marshalls and in the financial sector we switched Provident Financial into Beazley, the specialist Lloyds insurance underwriter. On the sales side of our transactions we also trimmed the holding in Informa.

In the first half we bought three new holdings. Dairy Crest sells milk and has a strong range of branded products, Halma manufactures a range of electronic sensors and operates in global markets, and Rio Tinto is one of the world's largest mining companies. In the second half we bought two further new holdings. Hansard Global provides and services life assurance products for advisers in overseas markets. John Laing Infrastructure Fund is a newly listed company which holds PFI contracts formerly held by John Laing plc.

We increased the holdings in Britvic, Informa, Smiths News, Stobart, Tesco and Unilever during the year. The strategy in stock selection behind the changes to the portfolio has been to overweight the global industrial holdings and in our UK companies we have on the whole avoided those vulnerable to reduced consumer spending. At the end of March 2011 we were holding investments in 38 individual companies with an average net yield of 4.1%.

Outlook

In the UK the Office for Budgetary Responsibility recently downgraded estimates of UK economic growth for 2011 and 2012 to 1.7% and 2.5%. Consumers are clearly under severe pressure now with steep rises in petrol and energy prices, rising food prices, higher VAT and rising unemployment. In Continental Europe the stronger nations in the North are still faced with the debts of the weaker nations in the South and some economists doubt that the euro is sustainable in its current form.

The catastrophe in Japan is a short term economic disaster but will entail rebuilding in the future. Interest rates are rising already in several countries, notably China, and our Government may have to curb inflationary pressures by raising interest rates sooner than previously thought.

Despite the gloom and turbulent events so far in 2011, earnings from quoted companies are forecast to rise by 17% this year and dividends by 15%. UK plc is a global universe and well over half of earnings arise in overseas markets. Manufacturing statistics continue on a firm trend although the outlook for commodity prices may be more mixed given the general tightening of monetary policy. BP has resumed dividend payments, and these account for 6 percentage points of the projected rise in market income in 2011.

We believe that equities provide the safest home for investors during periods of rising inflation and note that gilt yields are now negative in real terms, with the latest statistics for inflation showing the CPI rising at 4.4% and the RPI at 5.5%. In comparison UK equities historically yield on average 2.9% and our portfolio yields 4.1%. The price earnings ratio on 2011 forecasts is 10 times which compares with the long term average of 14 times. We intend to remain fully invested in the current climate but we continue with a defensive theme to our stock selection of companies operating in the UK economy.

2 June 2011

PROPERTY PORTFOLIO

The Market

UK commercial property showed a total return of 15.2% over calendar year 2010, with capital values up 8.5% and rental values slightly down, on the Investment Property Databank (IPD) Annual Index. Property's return was in line with UK equities and comfortably ahead of UK gilts. Central London offices recovered very strongly, returning +25% after -15% in 2009. Rental values were down 1% on average on retail and industrial property and up 2% on offices (this was simply because of Central London; office rental values fell 2% in the rest of the UK). Capital gains in all sectors were concentrated in the first half of the year and capital values are now only inching forward.

From the depths of the property crash in July 2009, capital values have recovered by 17%, and they are now 35% below their June 2007 peak. All three main property sectors have moved broadly together over this period, but with marked outperformance within each sector by large properties let to strong tenants on long leases. Banks are only lending on safe property and at relatively low loan to value ratios, and institutional demand has been patchy, and tending to chase a small range of large trophy or bond-type assets.

Tenant demand for space is patchy and cautious, with tenants slow to take on new property and often demanding long rent-free periods and break clauses to renew existing leases when they expire. Many retailers are particularly nervous after poor trading since February, but supermarkets are still keen on more space, especially in town. Government departments and other public bodies are vacating space whenever they can. Average void rates on the IPD Index are down from 13% eighteen months ago to 10% today (9% to 6% for retail, 16% to 15% for office and 18% to 13% for industrial property), but have crept up slightly so far in 2011.

Banks, especially Royal Bank of Scotland and Lloyds and the Irish banks, are now disposing of properties and property-backed loans, as they redirect lending to non-property borrowers. Cash is king, as banks will only lend on safe property at low loan to value ratios.

Yields around 7% on UK commercial property are too high and capital values too low. It still yields twice as much as UK equities and over twice as much as medium term gilts. Conventional long gilts yielding less than current inflation levels, and index-linked gilts are on negligible real yields. Despite the difficult occupational market, property offers an attractive each way bet: a high running yield with some prospects of long term income growth on top.

Estimates for UK GDP growth in 2011 are being steadily downgraded. Manufacturing output is buoyant, driven by past devaluation helping on exports and import competition, and by healthy growth in overseas economies from China, India and Brazil to Germany and the USA. But services and construction are less robust. Consumer spending generally held up through Christmas, but is now under serious pressure from the VAT increase to 20% and a rising tide of public sector job losses. Consumer confidence outside London and the South-East has taken a serious knock. Inflation remains stubbornly high - much of it is imported through international energy, commodity and food price increases - but retail prices increasing around 5% a year leave the Bank of England Monetary Policy Committee badly split on interest rates which must clearly rise over 2011.

Despite serious strains in the world financial system, markets trust the firm action taken on the UK public sector deficit, gilt yields are low and Britain's credit rating sound. GDP growth for 2011 now looks unlikely to beat 1.5% unless consumer confidence and bank lending to small business improve soon.

Average rental values on commercial property measured by IPD may slip a little further over 2011. The recovery in Central London office rents is starting to slow and office rents elsewhere are still under pressure. Supermarket and department store rents are still generally undervalued, and real disposable incomes will be under unprecedented pressure at least until the end of 2012.

Property capital values may rise by about 2% over 2011 as a whole. Property's yield compared with other asset classes is still near historic highs, and offers very good investment value to long term investors hungry for income, although this year is proving at least as hard as last for tenant failure and covenant deterioration. The best investments will combine strong tenants with reasonable rental growth prospects from the quality and location of the property, or index-linked rent reviews, or preferably both. Property should continue to give comparable returns to equities and outperform bonds at relatively low risk since the bulk of the expected return comes up front in rental income, rather than required capital growth.

The Portfolio

VIT's property portfolio produced a total return of 9% over the year to March, compared with the IPD Monthly Index return of 11% over the same period.

We concentrate on properties with strong income streams to meet the fixed interest payments on our long-term debt. These have also produced good long-term capital performance. The total return on our property portfolio has averaged 6% a year over the past 5 years, 11% over 10 years, and 14% over the 24 years since the start. These returns are all at least 3% a year above the IPD averages.

We bought three properties with R.P.I linked rent reviews during the year at Ayr, Luton and Poole for £2.4 million at a net yield of 7.9%, and sold three smaller properties with limited growth prospects at Derby, Glasgow and Gloucester for £1.5 million at a net yield of 7.5%. We have also sold the Edinburgh property since the year end at a net yield of 6.8%.

All properties are fully let on full repairing and insuring leases, with upward only rent reviews and an average unexpired lease length of 14 years. 99% of the rental income is reviewed five yearly, with one-third index-linked. The property portfolio is matched with £35 million of long term, fixed rate loans - £20 million of VIT 9 3/8% Debenture Stock repayable in 2026 and £15 million of 11% Debenture Stock, issued by our subsidiary Audax Properties and repayable in 2021.

Because those Debenture Stocks were issued at a premium, their effective interest cost averaged 9%. We believe this is the right way to finance long-term property investment and we do not intend to replace it with shorter term bank debt. The turmoil in markets since 2007 reinforces that view.

Results of Independent Revaluation

The VIT property portfolio, including properties held within our subsidiary Audax Properties plc, was subject to an independent professional revaluation by Messrs King Sturge and Co. at 31st March 2011.

The revaluation showed a value of £49,825,000; properties within VIT were valued at £16,675,000 while Audax properties totalled £33,150,000. Our properties are revalued independently every six months, at 30th September and 31st March. The portfolio showed a marginal capital gain over the past six months. Twenty-eight of the properties valued at 31 March 2011 were freehold or the Scottish equivalent and one is held on a long lease with 46 years to run.

2 June 2011

BUSINESS REVIEW

The Directors have prepared this Business Review in accordance with the requirements of Section 417 of the Companies Act 2006.

A review of the Company's activities is given in the Chairman's Statement and the Investment Managers' Report, which includes likely future developments of the business.

Aims of the Company

Value and Income Trust ('VIT') is an investment trust whose shares are listed on the London Stock Exchange. VIT invests in higher-yielding, less fashionable areas of the UK commercial property and quoted equity markets, particularly in medium and smaller sized companies. VIT aims for long term real growth in dividends and capital value without undue risk.

Investment Policy

VIT's policy is to invest in quoted UK equities, UK commercial property and cash or near cash securities. It is VIT's policy not normally 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.

VIT focuses on the fundamental values and incomes of the businesses in which it invests - their profitability, cashflows, balance sheets, management and products or services - and the location, tenants and leases of its property investments. The share portfolio has always yielded more than the FTSE All-Share Index. VIT has held between 30 and 40 individual shareholdings and between 20 and 30 individual properties in recent years, but both these ranges may change as market conditions or the size of each portfolio vary in future. No individual shareholding will account for more than 10% of the equity portfolio at the time of purchase.

VIT has had a long standing policy, since 1986, of increasing its exposure to equities and, particularly, to property through the judicious use of borrowings. 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. Gearing has varied between a quarter and two-fifths of the total portfolio. VIT will not raise new borrowings if total net borrowings would then represent more than half of the total assets.

Principal Risks and Uncertainties

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

Additional risks include:

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

-       Regulatory risk: the Company operates in a complex regulatory environment and faces a number of regulatory risks. Breaches of regulations, such as Sections 1158 - 1159 of Corporation Tax Act 2010 (formerly Section 842 of the Income and Corporation Taxes Act 1988), the UKLA Listing Rules or the Companies Act, could lead to a number of detrimental outcomes and reputational damage. The Audit and Management Engagement Committee monitors compliance with regulations by reviewing internal control reports from the Administrator and the Investment Manager, OLIM Limited ('OLIM').

Key Performance Indicators

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

Results and Dividend

The Directors recommend that a final dividend of 4.0 pence per share (2010 - 3.8 pence) is paid on 15 July 2011 to shareholders on the register on 17 June 2011. The ex-dividend date is 15 June 2011. An interim dividend of 3.8 pence per share (2010 - 3.8 pence) was paid to shareholders on 7 January 2011.

Principal Activity and Status

The business of the Company is that of an investment trust and the Directors do not envisage any change in this activity in the foreseeable future. The Company is registered as a public limited company in Scotland under company number SC 50366 and is an investment company as defined by Section 833 of the Companies Act 2006.

The Company has been approved by HM Revenue & Customs as an investment trust for the purposes of Sections 1158 - 1159 of Corporation Tax Act 2010 (formerly Section 842 of the Income and Corporation Taxes Act 1988) for the year ended 31 March 2010. The Directors are of the opinion, under advice, that the Company has conducted its affairs for the year ended 31 March 2011 so as to be able to continue to obtain approval as an investment trust under Sections 1158 - 1159 of Corporation Tax Act 2010 (formerly Section 842 of the Income and Corporation Taxes Act 1988) for that year, although approval for that year would be subject to review were there to be any enquiry under the Corporation Tax Self-Assessment regime.

The Company's affairs have also been conducted in such a way as to permit its ordinary shares to be included in Individual Savings Accounts and the Directors intend that the ordinary shares will continue to be eligible in the future. The Company makes no political donations or expenditures or donations for charitable purposes and, in common with most investment trusts, has no employees.

Share Capital

As at 31 March 2010 and 31 March 2011, the Company had 45,549,975 ordinary shares of 10p nominal in issue. Each ordinary share entitles the holder to one vote on a show of hands and, on a poll, to one vote for every share held.

By order of the Board

Aberdeen Asset Management PLC

Secretaries

Edinburgh

2 June 2011

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Annual Report, the Directors' Remuneration Report and the financial statements in accordance with applicable United Kingdom law and regulations.

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

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors are required to prepare the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and Article 4 of the IAS Regulation and have chosen to prepare the parent company financial statements in accordance with IFRSs as adopted by the European Union. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, International Accounting Standard 1 requires that Directors:

-       properly select and apply accounting policies;

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

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

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006.

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

Under applicable law and regulations, the Directors are also responsible for preparing a Directors' Report, Directors' Remuneration Report and Corporate Governance statement that comply with that law and those regulations.

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

The Directors confirm to the best of their knowledge, that

-       the financial statements have been prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the Group; and

-       the Directors' Report includes a fair review of the development and performance of the business and the position of the Company and the Group together with a description of the principal risks and uncertainties that the Company and the Group faces.

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

James Ferguson

Chairman

2 June 2011

VALUE AND INCOME TRUST PLC

GROUP STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 March 2011

		Year ended			Year ended
		31 March 2011			31 March 2010
		Revenue	Capital	Total	Revenue	Capital	Total
	Note	£'000	£'000	£'000	£'000	£'000	£'000
Investment income
Dividend income	2	3,823	-	3,823	3,867	-	3,867
		________	________	________	________	________	________
Rental income		3,573	-	3,573	3,634	-	3,634
Interest income on short-term deposits		2	-	2	313	-	313
Underwriting commission		-	-	-	24	-	24
		________	________	________	________	________	________
Other operating income		3,575	-	3,575	3,971	-	3,971
		________	________	________	________	________	________
Other comprehensive income
Unrealised (losses)/gains on investment properties	9	-	(58)	(58)	-	3,009	3,009
		________	________	________	________	________	________
	2	7,398	(58)	7,340	7,838	3,009	10,847
Gains and losses on investments
Realised gains on held-at-fair-value investments	9	-	3,090	3,090	-	1,014	1,014
Unrealised gains on held-at-fair-value investments	9	-	5,743	5,743	-	26,053	26,053
		________	________	________	________	________	________
Total income		7,398	8,775	16,173	7,838	30,076	37,914
		________	________	________	________	________	________
Expenses
Investment management fees	3	(290)	(786)	(1,076)	(250)	(582)	(832)
Other operating expenses	4	(457)	-	(457)	(852)	-	(852)
VAT recoverable on investment management fees	22	-	-	-	562	432	994
Finance costs	5	(3,501)	-	(3,501)	(3,501)	-	(3,501)
		________	________	________	________	________	________
Total expenses		(4,248)	(786)	(5,034)	(4,041)	(150)	(4,191)
		________	________	________	________	________	________
Profit before tax		3,150	7,989	11,139	3,797	29,926	33,723
Taxation	6	-	221	221	-	(149)	(149)
		________	________	________	________	________	________
Profit for the period		3,150	8,210	11,360	3,797	29,777	33,574
		________	________	________	________	________	________
Earnings per ordinary share (pence)	7	6.92	18.02	24.94	8.34	65.37	73.71
The Board is proposing a final dividend of 4.0p per share, making total dividends of 7.8p per share for the year ended 31 March 2011 (2010: 7.6p per share) which, if approved, will be payable on 15 July 2011 (see note 8). 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.

VALUE AND INCOME TRUST PLC

COMPANY STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 March 2011

		Year ended			Year ended
		31 March 2011			31 March 2010
		Revenue	Capital	Total	Revenue	Capital	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Investment income
Dividend income	2	4,073	-	4,073	3,867	-	3,867
		________	________	________	________	________	________
Rental income		1,261	-	1,261	1,245	-	1,245
Interest income on short-term deposits		-	-	-	310	-	310
Underwriting commission		-	-	-	24	-	24
		________	________	________	________	________	________
Other operating income		1,261	-	1,261	1,579	-	1,579
		________	________	________	________	________	________
Other comprehensive income
Unrealised (losses)/gains on investment properties	9	-	(258)	(258)	-	1,337	1,337
		________	________	________	________	________	________
		5,334	(258)	5,076	5,446	1,337	6,783
Gains and losses on investments
Realised gains on held-at-fair-value investments	9	-	3,116	3,116	-	806	806
Unrealised gains on held-at-fair-value investments	9	-	6,058	6,058	-	27,760	27,760
		________	________	________	________	________	________
Total income		5,334	8,916	14,250	5,446	29,903	35,349
		________	________	________	________	________	________
Expenses
Investment management fees	3	(194)	(560)	(754)	(167)	(388)	(555)
Other operating expenses	4	(330)	-	(330)	(363)	-	(363)
VAT recoverable on investment management fees	22	-	-	-	562	432	994
Finance costs	5	(1,851)	-	(1,851)	(1,851)	-	(1,851)
		________	________	________	________	________	________
Total expenses		(2,375)	(560)	(2,935)	(1,819)	44	(1,775)
		________	________	________	________	________	________
Profit before tax		2,959	8,356	11,315	3,627	29,947	33,574
Taxation	6	45	-	45	-	-	-
		________	________	________	________	________	________
Profit for the period		3,004	8,356	11,360	3,627	29,947	33,574
		________	________	________	________	________	________
Earnings per ordinary share (pence)	7	6.59	18.35	24.94	7.96	65.75	73.71
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

As at 31 March 2011

		Group				Company
		As at		As at		As at		As at
		31 March 2011		31 March 2010		31 March 2011		31 March 2010
		£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
ASSETS
Non current assets
Investments held at fair value through profit or loss	9		99,431		88,638		115,579		104,471
Investment properties held at fair value through profit or loss	9		49,825		48,750		16,675		16,675
			_______		_______		_______		_______
			149,256		137,388		132,254		121,146
Current assets
Cash and cash equivalents		2,344		5,670		2,384		5,551
Other receivables	10	300		325		322		316
		_______		_______		_______		_______
			2,644		5,995		2,706		5,867
			_______		_______		_______		_______
TOTAL ASSETS			151,900		143,383		134,960		127,013
Current liabilities
Other payables	11		(2,493)		(1,629)		(1,125)		(1,052)
			_______		_______		_______		_______
TOTAL ASSETS LESS CURRENT LIABILITIES			149,407		141,754		133,835		125,961
Non-current liabilities
Debenture stock	12	(35,372)		(35,396)		(20,372)		(20,396)
Deferred tax	13	(572)		(793)		-		-
		_______		_______		_______		_______
			(35,944)		(36,189)		(20,372)		(20,396)
			_______		_______		_______		_______
NET ASSETS			113,463		105,565		113,463		105,565
			_______		_______		_______		_______
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		90,462		82,564		90,462		82,564
			_______		_______		_______		_______
TOTAL EQUITY			113,463		105,565		113,463		105,565
			_______		_______		_______		_______
Net Asset Value per Ordinary share (pence)	17		249.10		231.76		249.10		231.76

VALUE AND INCOME TRUST PLC

GROUP STATEMENT OF CHANGES IN EQUITY

Group		Year ended 31 March 2011					Year ended 31 March 2010
		Share	Share	Retained		Total	Share	Share	Retained	Total
		capital	premium	earnings			capital	premium	earnings
		£'000	£'000	£'000		£'000	£'000	£'000	£'000	£'000
Net assets at 31 March 2010		4,555	18,446	82,564		105,565	4,555	18,446	52,405	75,406
Net profit for the year		-	-	11,360		11,360	-	-	33,574	33,574
Dividends paid	8	-	-	(3,462)		(3,462)	-	-	(3,415)	(3,415)
		_______	_______	_______		_______	_______	_______	_______	_______
Net assets at 31 March 2011		4,555	18,446	90,462		113,463	4,555	18,446	82,564	105,565
		_______	_______	_______		_______	_______	_______	_______	_______
Company
		Year ended 31 March 2011					Year ended 31 March 2010
		Share	Share		Retained	Total	Share	Share	Retained	Total
		capital	premium		earnings		capital	premium	earnings
		£'000	£'000		£'000	£'000	£'000	£'000	£'000	£'000
Net assets at 31 March 2010		4,555	18,446		82,564	105,565	4,555	18,446	52,405	75,406
Net profit for the year		-	-		11,360	11,360	-	-	33,574	33,574
Dividends paid	8	-	-		(3,462)	(3,462)	-	-	(3,415)	(3,415)
		_______	_______		_______	_______	_______	_______	_______	_______
Net assets at 31 March 2011		4,555	18,446		90,462	113,463	4,555	18,446	82,564	105,565
		_______	_______		_______	_______	_______	_______	_______	_______

VALUE AND INCOME TRUST PLC

GROUP STATEMENT OF CASH FLOWS

For the year ended 31 March 2011

		2011		2010
		£'000	£'000	£'000	£'000
Cash flows from operating activities
Dividend income received			3,783		3,873
Rental received			3,595		3,892
Interest received			139		177
Other income			-		24
VAT on management fees refunded			-		994
Operating expenses paid			(1,506)		(1,234)
			_________		_________
NET CASH FROM OPERATING ACTIVITIES	18		6,011		7,726
Cash flows from investing activities
Purchase of investments		(15,352)		(18,426)
Sale of investments		13,002		18,407
		_________		_________
NET CASH OUTFLOW FROM
INVESTING ACTIVITIES			(2,350)		(19)
Cash flow from financing activities
Interest paid		(3,525)		(3,525)
Dividends paid	8	(3,462)		(3,415)
		_________		_________
NET CASH OUTFLOW FROM FINANCING ACTIVITIES			(6,987)		(6,940)
			_________		_________
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS			(3,326)		767
Cash and cash equivalents at 1 April 2010			5,670		4,903
			_________		_________
Cash and cash equivalents at 31 March 2011			2,344		5,670
			_________		_________

VALUE AND INCOME TRUST PLC

NOTES TO FINANCIAL STATEMENTS

1	Accounting policies
	The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) which comprise standards and interpretations approved by the International Accounting Standards Board (IASB) together with interpretations of the International Accounting Standards and Standing Interpretations Committee approved by the International Accounting Standards Committee (IASC) that remain in effect, and to the extent that they have been adopted by the European Union.
	The functional and reporting currency of the Group is pounds sterling because that is the currency of the primary economic environment in which the Group operates.
	(a)  Basis of preparation
	The financial statements have been prepared on a going concern basis and on the historical cost basis, except for the revaluation of certain financial assets. The principal accounting policies adopted are set out below. Where presentational guidance set out in the Statement of Recommended Practice  Financial Statements of Investment Trust Companies and Venture Capital Trusts (the SORP) issued by the Association of Investment Companies (AIC) in January 2009 is consistent with the requirements of IFRSs, the directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP.
	The directors are of the opinion that the Group is engaged in a single segment of business, being investment business.
	(b) Going concern
	The Group's business activities, together with the factors likely to affect its future development and performance, are set out in the Business Review section of the Directors' Report. The financial position of the Group as at 31 March 2011 is shown in the Statement of Financial Position. The cash flows of the Group for the year ended 31 March 2011, which are not untypical, are set out in the Group Statement of Cash Flows. The Group had fixed debt totalling £35,372,000 as at 31 March 2011, as set out in Note 12; none of the borrowings is repayable before 2021. The Group had no short term borrowings. Note 20 sets out the Group's risk management policies and procedures, including those covering market price risk, liquidity risk and credit risk. As at 31 March 2011, the Group's total assets les current liabilities exceeded its total non current liabilities by a factor of over four. The assets of the Group consist mainly of securities and investment properties that are held in accordance with the Group's investment policy. Most of these securities are readily realisable, even in volatile markets. The directors, who have reviewed carefully the Group's forecasts for the coming year, consider that the Group has adequate financial resources to enable it to continue in operational existence for the foreseeable future. Accordingly the Directors believe that it is appropriate to continue to adopt the going concern basis in preparing the Group's accounts.
	(c)  Basis of consolidation The consolidated financial statements incorporate the financial statements of the Company and the entity controlled by the Company (its subsidiary). Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. All intra-group transactions, balances, income and expenses are eliminated on consolidation. The investment in the subsidiary is recognised at fair value in the financial statements of the Company. This is considered to be the net asset value of the shareholders' funds, as shown in its Statement of Financial Position.
	Audax Properties plc, a wholly owned subsidiary of the Company, charges expenses wholly to income. On consolidation, however, an adjustment is made to charge 70% of the investment management fee paid by Audax Properties plc to capital. The allocation has no effect on the total return of the Company or the Group.
	(d) Presentation of Statement of Comprehensive Income
	In order to reflect better the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the Statement of Comprehensive Income between items of a revenue and capital nature has been presented alongside the Statement of Comprehensive Income. In accordance with the Company's status as a UK investment company under section 833 of the Companies Act 2006, 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 and other income are recognised as earned.
	(f)  Expenses and Finance Costs
	All expenses and finance costs are accounted for on an accruals basis. Expenses are presented as capital where a connection with the maintenance or enhancement of the value of investments can be demonstrated. In this respect, the investment management fees are allocated 30% to revenue and 70% to capital to reflect the Board's expectations of long term investment returns. Any performance fees payable are allocated to capital, reflecting the fact that, although they are calculated on a total return basis, they are expected to be attributable largely to capital performance.
	It is normal practice for investment trust companies to allocate finance costs to capital on the same basis as the investment management fee allocation. However as the Company has a significant exposure to property, and property companies do not charge finance costs to capital, the directors consider it inappropriate to allocate finance costs to capital.
	(g)  Taxation
	Deferred tax is recognised in respect of all temporary differences that have originated but not reversed at the date of the Statement of Financial Position, where transactions or events that result in an obligation to pay more tax in the future or the right to pay less tax in the future have occurred at the date of the Statement of Financial Position.
	This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the temporary differences can be deducted.
	Due to the Company's status as an investment trust company, and the intention to continue to meet the conditions required to obtain approval for the foreseeable future, the Company has not provided deferred tax on any capital gains and losses arising on the revaluation or disposal of investments.
	This is not the case for the subsidiary company and hence the Group where such provision is made, calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in accordance with the accounting treatment of the item which gives rise to the requirement for that provision.
	(h) Dividends payable
	Interim dividends are recognised as a liability in the period in which they are paid as no further approval is required in respect of such dividends.  Final dividends are recognised as a liability only after they have been approved by shareholders in general meeting.
	(i) Investments
	All investments have been designated upon initial recognition as fair value through profit or loss. Investments are recognised and derecognised on the trade date where a purchase or sale is under a contract whose terms require delivery within the timeframe established by the market concerned, and are initially measured at fair value.
	Subsequent to initial recognition, investments are recognised at fair value through profit or loss. For listed investments, this is deemed to be bid market prices or closing prices for SETS stocks sourced from the London Stock Exchange. SETS is the London Stock Exchange electronic trading service covering most of the market including all FTSE 100 constituents and most liquid FTSE 250 constituents along with some other securities. Gains and losses arising from changes in fair value are included in net profit or loss for the period as a capital item in the Statement of Comprehensive Income and are ultimately recognised in the retained earnings.
	In respect of  investment properties, fair value is established by half-yearly professional valuation on an open market basis by King Sturge and Co, Chartered Surveyors and Valuers and in accordance with the RICS Valuation Standards.
	(j) Cash and cash equivalents
	Cash and cash equivalents comprises deposits held with banks.
	(k)  Non - current liabilities
	All loans and borrowings are initially recognised at cost, being the fair value of the consideration received, less issue costs where applicable. After initial recognition, all interest-bearing loans and borrowings are subsequently measured at amortised cost. Amortised cost is calculated by taking into account any discount or premium on settlement. The costs of arranging any interest-bearing loans are capitalised and amortised over the life of the loan.
	(l) Adoption of new and revised Accounting Standards
	At the date of authorisation of these financial statements, various Standards, amendments to Standards and Interpretations which have not been applied to these financial statements, were in issue but were not yet effective (and in some cases, had not yet been adopted by the EU). These have not been applied to these financial statements.
	The directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial statements of the Group.

		2011		2010
		Group	Company	Group	Company
		£000	£000	£000	£000
2	Income
	Investment income
	Dividends from listed investments in UK - franked	3,715	3,715	3,842	3,842
	Dividends from listed investments in UK - unfranked	108	108	25	25
	Dividends from subsidiary - franked	-	250	-	-
		_______	_______	_______	_______
		3,823	4,073	3,867	3,867
	Other operating income
	Rental income	3,573	1,261	3,634	1,245
	Interest receivable on short term deposits	2	-	313	310
	Underwriting commission	-	-	24	24
		_______	_______	_______	_______
	Total income	7,398	5,334	7,838	5,446
		_______	_______	_______	_______

		2011			2010
		Revenue	Capital	Total	Revenue	Capital	Total
		£000	£000	£000	£000	£000	£000
3	Investment management fee
	Group
	Investment management fee	290	677	967	250	582	832
	Performance fee	-	109	109	-	-	-
		_______	_______	_______	_______	_______	_______
		290	786	1,076	250	582	832
		_______	_______	_______	_______	_______	_______
	Company
	Investment management fee	194	451	645	167	388	555
	Performance fee	-	109	109	-	-	-
		_______	_______	_______	_______	_______	_______
		194	560	754	167	388	555
		_______	_______	_______	_______	_______	_______

			2011		2010
			Group	Company	Group	Company
			£000	£000	£000	£000
4	Other operating expenses
	Auditors' remuneration
		- audit	17	12	16	11
		- other non-audit services	1	1	1	1
		- taxation services	4	3	2	1
		- out of pocket expenses	1	1	1	1
	Directors' fees		53	53	50	50
	Fees for company secretarial services		135	90	133	88
	Other expenses		246	170	649	211
			_______	_______	_______	_______
			457	330	852	363
			_______	_______	_______	_______
	Non executive directors' fees comprise the chairman's fees of £17,000 (2010 - £17,000) and fees of £12,000 (2010 - £12,000) per annum paid to each other non-executive director. The executive directors who served during the year received no emoluments directly from the company (2010 - nil). The executive directors are shareholders and directors of OLIM Limited which received an investment management fee of £967,000 (2010 - £832,000) and a performance fee of £109,000 (2010 - £nil).

		2011		2010
		Group	Company	Group	Company
		£000	£000	£000	£000
5	Finance costs
	Interest payable on:
	11% First Mortgage Debenture Stock 2021	1,650	-	1,650	-
	9.375% Debenture Stock 2026	1,875	1,875	1,875	1,875
	Less amortisation of issue premium	(24)	(24)	(24)	(24)
		_______	_______	_______	_______
		3,501	1,851	3,501	1,851
		_______	_______	_______	_______

			2011			2010
			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)/increase in deferred tax provision		-	(221)	(221)	-	149	149
			_______	_______	_______	_______
			-	(221)	(221)	-	149	149
			_______	_______	_______	_______	_______	_______
	Factors affecting the current tax (credit)/charge for year:
	Revenue / capital return on ordinary activities before tax				11,139			33,723
					_______			_______
	Tax thereon at 26% (2010 - 28%)				2,896			9,442
	Effects of:
	Non taxable dividends				(994)			(1,083)
	(Gains)/losses on investments not taxable				(2,445)			(8,213)
	Excess expenses (utilised) / not utilised				379			(3)
	Decrease in rate of deferred tax				(57)			-
	Expenses disallowed				-			6
					_______			_______
					(221)			149
					_______			_______
			2011			2010
			Revenue	Capital	Total	Revenue	Capital	Total
			£000	£000	£000	£000	£000	£000
	Company
	Corporation tax credit		(45)	-	(45)	-	-	-
			_______	_______	_______	_______	_______	_______
			(45)	-	(45)	-	-	-
			_______	_______	_______	_______	_______	_______
	Factors affecting the current tax (credit)/charge for year:
	Revenue / capital return on ordinary activities before tax				11,315			33,574
					_______			_______
	Tax thereon at 26% (2010 - 28%)				2,942			9,401
	Effects of:
	Non taxable dividends				(1,059)			(1,083)
	(Gains)/losses on investments not taxable				(2,318)			(8,373)
	Excess expenses not utilised				379			55
	Difference in corporation tax rates				11			-
					_______			_______
					(45)			-
					_______			_______
b)	Factors affecting the tax charge for the year
	The Company has losses for tax purposes arising in the year of £1,459,000 (2010 £196,000). Under current legislation, it is unlikely that these losses will be capable of offset against the Group's future taxable profits.
	Audax Properties plc revalues its property portfolio on a six monthly basis and is required to recognise a deferred tax liability in respect of all unrealised gains recognised. Any movement in this provision is recognised within taxation in the Group's Statement of Comprehensive Income.
c)	Factors affecting future tax charges Both the Company and Audax Properties plc have deferred tax assets of £4,389,000 (2010 £4,318,000) and £3,000  (2010 £3,000) respectively at 31 March 2011 relating to total accumulated unrelieved tax losses carried forward. These have not been recognised in the accounts as it is unlikely that they will be capable of offset against the Group's future taxable profits.

		2011		2010
		Group	Company	Group	Company
		£000	£000	£000	£000
7	Return per ordinary share
	The return per ordinary share is based on the following figures:
	Revenue return	3,150	3,004	3,797	3,627
	Capital return	8,210	8,356	29,777	29,947
	Weighted average ordinary shares in issue	45,549,975	45,549,975	45,549,975	45,549,975
	Return per share - revenue	6.92p	6.59p	8.34p	7.96p
	Return per share - capital	18.02p	18.35p	65.37p	65.75p
		_______	_______	_______	_______
	Total return per share	24.94p	24.94p	73.71p	73.71p
		_______	_______	_______	_______

		2011	2010
		£000	£000
8	Dividends
	Dividends on ordinary shares:
	Final dividend of 3.8p per share (2010 - 3.7p) paid 16 July 2010	1,731	1,685
	Interim dividend of 3.8p per share (2010 - 3.8p) paid 7 January 2011	1,731	1,731
	Unclaimed dividends refunded by Registrar	-	(1)
		_______	_______
	Dividends paid in the period	3,462	3,415
		_______	_______
	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 revenue available for distribution by way of dividend for the year is £3,004,000 (2010 - £3,627,000).
		2011	2010
		£000	£000
	Interim dividend for the year ended 31 March 2011 -  3.8p	1,731	1,731
	(2010 - 3.8p) paid 7 January 2011
	Unclaimed dividends refunded by Registrar	-	(1)
	Proposed final dividend for the year ended 31 March 2011 -  4.0p	1,822	1,731
	(2010 - 3.8p) payable 15 July 2011	_______	_______
		3,553	3,461
		_______	_______

			Investment
		Equities	properties	Total
		£'000	£'000	£'000
9	Investments
	Group
	Cost at 31 March 2010	71,228	32,328	103,556
	Unrealised appreciation	17,410	16,422	33,832
		_______	_______	_______
	Valuation at 31 March 2010	88,638	48,750	137,388
	Purchases	13,595	2,500	16,095
	Sales proceeds	(11,429)	(1,573)	(13,002)
	Realised gains on sales	2,884	206	3,090
	Movement in unrealised appreciation in year	5,743	(58)	5,685
		_______	_______	_______
	Valuation at 31 March 2011	99,431	49,825	149,256
		_______	_______	_______
	Company
	Cost at 31 March 2010	71,253	11,501	82,754
	Unrealised appreciation	33,218	5,174	38,392
		_______	_______	_______
	Valuation at 31 March 2010	104,471	16,675	121,146
	Purchases	13,595	740	14,335
	Sales proceeds	(11,429)	(714)	(12,143)
	Realised gains on sales	2,884	232	3,116
	Movement in unrealised appreciation in year	6,058	(258)	5,800
		_______	_______	_______
	Valuation at 31 March 2011	115,579	16,675	132,254
		_______	_______	_______
	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:-
			2011	2010
			£'000	£'000
	Purchases		71	200
	Sales		15	33
			_______	_______
			86	233
			_______	_______

		2011		2010
		Group	Company	Group	Company
		£000	£000	£000	£000
10	Other receivables
	Amounts falling due within one year:
	Dividends receivable	212	212	172	172
	Amounts due from subsidiary	-	45	-	-
	Prepayments and accrued income	88	65	153	144
		_______	_______	_______	_______
		300	322	325	316
		_______	_______	_______	_______
	The amount due from the subsidiary relates to an inter-company adjustment for group relief. (2010 - nil)

		2011		2010
		Group	Company	Group	Company
		£000	£000	£000	£000
11	Other payables
	Value Added Tax payable	136	56	149	51
	Amounts due to OLIM Limited	191	164	74	49
	Accruals and other creditors	2,166	905	1,406	952
		_______	_______	_______	_______
		2,493	1,125	1,629	1,052
		_______	_______	_______	_______
	The amounts due to OLIM Limited comprise management fees for the month of March 2011 and a performance fee for the year to 31 March 2011, subsequently paid in April 2011.

		2011		2010
		Group	Company	Group	Company
		£000	£000	£000	£000
12	Non-current liabilities
	9.375% Debenture Stock 2026	20,000	20,000	20,000	20,000
	Add:- Balance of premium less issue expenses	396	396	420	420
	Less : Credit to income for the year	(24)	(24)	(24)	(24)
		_______	_______	_______	_______
		20,372	20,372	20,396	20,396
	11% First Mortgage Debenture Stock 2021	15,000	-	15,000	-
		_______	_______	_______	_______
		35,372	20,372	35,396	20,396
		_______	_______	_______	_______
	The 11% First Mortgage Debenture Stock 2021 issued by Audax Properties plc is repayable at par on 31 March 2021 and is secured over specific assets of Audax Properties plc and the Company.
	The Trust Deed of the Audax Properties plc Debenture Stock contains four covenants with which the Company must comply; the assets which are subject to charge and which secure the Debenture Stock may be owned by either Audax Properties plc or its parent company, Value and Income Trust PLC. Firstly, the value of the assets should not be less than one and one-half times the amount of the  Debenture Stock; secondly, the rental income from the assets should not be less than one and one-half times the annual interest of the Debenture Stock (£1.65 million); thirdly, not more than 20 per cent. of the total value of the assets should be attributable to a single property; and finally, not more than 10 per cent. of the assets should be attributable to leaseholds having an unexpired term of less than 50 years.
	The 9.375% Debenture Stock 2026 issued by Value and Income Trust PLC is repayable at par on 30 November 2026 and is secured by a floating charge over the property and assets of the Company.
	The Trust Deed of the Value and Income Trust PLC Debenture Stock contains restrictions and events of default. The restrictions require that the aggregate group borrowings, £35 million, must not at any time exceed the total group capital and reserves (equivalent to net assets of £113.46 million as at 31 March 2011).

		2011		2010
		Group	Company	Group	Company
		£000	£000	£000	£000
13	Deferred tax
	Opening balance at 31 March 2010	793	-	644	-
	(Decrease)/increase  in deferred tax provision (see note 6):
	- effect of reduction in tax rate on opening balance	(57)	-	-	-
	- current year movement	(164)	-	149	-
		_______	_______	_______	_______
	Closing balance at 31 March 2011	572	-	793	-
		_______	_______	_______	_______
	Calculated as follows:-
	Unrealised gains subject to tax on realisation	2,744	-	3,223	-
	Less capital losses previously realised	(544)	-	(392)	-
		_______	_______	_______	_______
		2,200	-	2,831	-
		_______	_______	_______	_______
	Whereof 26% (2010 - 28%)	572	-	793	-
		_______	_______	_______	_______
	Under IAS 12, provision must be made for any potential tax liability on revaluation surpluses. As an investment trust, the Company does not incur capital gains tax. However, some properties are owned by Audax Properties plc, a subsidiary of the Company, either to ensure that the investment trust status tests are not breached or for other commercial reasons. Provision for capital gains tax has therefore been made for the revaluation surpluses on property assets held by the subsidiary to the extent that the gain cannot be sheltered by capital losses brought forward.

		2011	2010
		£000	£000
14	Share capital
	Authorised:
	56,000,000 ordinary shares of 10p each (2010 - 56,000,000)	5,600	5,600
		_______	_______
	Called up, issued and fully paid:
	45,549,975 ordinary shares of 10p each (2010 - 45,549,975)	4,555	4,555
		_______	_______

		2011		2010
		Group	Company	Group	Company
		£000	£000	£000	£000
15	Share premium
	Opening balance	18,446	18,446	18,446	18,446
		_______	_______	_______	_______

				2011				2010
				Group		Company		Group	Company
				£000		£000		£000	£000
16	Retained earnings
	Opening balance at 31 March 2010			82,564		82,564		52,405	52,405
	Profit for the period			11,360		11,360		33,574	33,574
	Dividends paid (see note 8)			(3,462)		(3,462)		(3,415)	(3,415)
				_______		_______		_______	_______
	Closing balance at 31 March 2011			90,462		90,462		82,564	82,564
				_______		_______		_______	_______
	The table below shows the movement in retained earnings analysed between revenue (distributable) and capital (non-distributable) items
		2011					2010
		Revenue	Capital		Total		Revenue	Capital	Total
		£000	£000		£000		£000	£000	£000
	Group
	Opening balance at 31 March 2010	3,855	78,709		82,564		3,473	48,932	52,405
	Profit for the period	3,150	8,210		11,360		3,797	29,777	33,574
	Dividends paid (see note 8)	(3,462)	-		(3,462)		(3,415)	-	(3,415)
		_______	_______		_______		_______	_______	_______
	Closing balance at 31 March 2011	3,543	86,919		90,462		3,855	78,709	82,564
		_______	_______		_______		_______	_______	_______
	Company
	Opening balance at 31 March 2010	2,283	80,281		82,564		2,071	50,334	52,405
	Profit for the period	3,004	8,356		11,360		3,627	29,947	33,574
	Dividends paid (see note 8)	(3,462)	-		(3,462)		(3,415)	-	(3,415)
		_______	_______		_______		_______	_______	_______
	Closing balance at 31 March 2011	1,825	88,637		90,462		2,283	80,281	82,564
		_______	_______		_______		_______	_______	_______

17	Net asset value per equity share
	The net asset value per ordinary share is based on Group's net assets attributable of £113,463,000 (2010 - £105,565,000) and on 45,549,975 (2010 - 45,549,975) ordinary shares in issue at the year end.
	The net asset value per ordinary share, based on the net assets of the Group adjusted for borrowings at market value (see note 20) is 233.67p (2010 - 218.29p)

		2011		2010
		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	16,173	14,250	37,914	35,349
	Gains and losses on investments	(8,775)	(8,916)	(30,076)	(29,903)
	Investment management fee	(1,076)	(754)	(832)	(555)
	Other operating expenses	(457)	(330)	(852)	(363)
	Recoverable VAT	-	-	994	994
	Decrease/(increase) in receivables	25	39	201	(117)
	Increase in other payables	121	73	377	88
		_______	_______	_______	_______
	Net cash from operating activities	6,011	4,362	7,726	5,493
		_______	_______	_______	_______

19	Related Party Transactions
	Angela Lascelles and Matthew Oakeshott are directors of OLIM Limited which has an agreement with the Company to provide investment management services.
	Audax Properties plc is a wholly owned subsidiary of Value and Income Trust PLC and accordingly the latter is the ultimate controlling party. Details of the year end financial relationship between Audax Properties plc and Value and Income Trust PLC may be found in Note 10.

20

Financial instruments

Risk management

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

The Manager has a dedicated investment management process which ensures that the Investment Policy is achieved. Stock selection procedures are in place based on active portfolio management and the identification of stocks. The portfolio is reviewed on a periodic basis by a senior investment manager and also by the Manager's Investment Committee.

Additionally, the Manager's Compliance Officer continually monitors the Group's investment and borrowing powers and reports to the 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 Manager's policies for managing these risks are summarised below and have been applied throughout the year.  The numerical disclosures exclude short-term debtors and creditors.

(i) Market risk

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

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

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

Price risk sensitivity

If market prices at the date of the Statement of Financial Position had been 10% higher or lower, while all other variables remained constant, the return attributable to ordinary shareholders for the year ended 31 March 2011 would have increased/decreased by £14,003,000 (2010 - increase/decrease of £12,841,000) and equity reserves would have increased/ decreased by the same amount.

Interest rate risk

Interest rate movements may affect:  - the fair value of the investments in property; and  - the level of income receivable on cash deposits

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

The Board imposes borrowing limits to ensure gearing levels are appropriate to market conditions and reviews these on a regular basis. Borrowings comprise debenture stock, providing secure long term funding. It is the Board's policy to maintain a gearing level, measured on the most stringent basis of calculation after netting off cash equivalents, of between 25% and 40%. Details of borrowings at 31 March 2011 are shown in note 12.

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

At 31 March 2011

Weighted average period for which rate is fixed Years

Weighted average interest rate  %

Fixed rate £'000

Floating rate    £'000

Assets

Sterling

-

-

-

2,344

_______

_______

_______

_______

Total assets

-

2,344

_______

_______

_______

_______

At 31 March 2011

Weighted average period for which rate is fixed Years

Weighted average interest rate         %

Fixed rate £'000

Floating rate    £'000

Liabilities

Sterling

13

10.07

35,000

-

_______

_______

_______

_______

Total liabilities

13

10.07

35,000

-

_______

_______

_______

_______

At 31 March 2010

Weighted average period for which rate is fixed Years

Weighted average interest rate         %

Fixed rate £'000

Floating rate    £'000

Assets

Sterling

-

-

-

5,670

_______

_______

_______

_______

Total assets

-

-

-

5,670

_______

_______

_______

_______

At 31 March 2010

Weighted average period for which rate is fixed Years

Weighted average interest rate         %

Fixed rate £'000

Floating rate    £'000

Liabilities

Sterling

14

10.07

35,000

-

_______

_______

_______

_______

Total liabilities

14

10.07

35,000

-

_______

_______

_______

_______

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

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

Interest rate sensitivity

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

If interest rates had been 100 basis points higher or lower and all other variables were held constant, the Group's:

- profit for the year ended 31 March 2011 would increase/decrease by £57,000 (2010 - increase/ decrease by £49,000). This is mainly attributable 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.

(iii) Credit risk

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

The risk is not significant and is managed as follows:

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

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 balance sheet, the maximum exposure to credit risk at 31 March was as follows:

2011

2010

Balance Sheet £'000

Maximum exposure £'000

Balance Sheet £'000

Maximum exposure £'000

Non-current assets

Investments held at fair value through profit or loss

149,256

148,572

137,388

137,388

Current assets

Cash and cash equivalents

2,344

5,887

5,670

5,828

Other receivables

300

715

325

1,447

_______

_______

_______

_______

151,900

155,174

143,383

144,663

_______

_______

_______

_______

(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 14 years (2010 - 14 years). OLIM is responsible for property investment management, with surveyors, solicitors and managing agents acting on the portfolio under OLIM's supervision.

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

Fair values of financial assets and financial liabilities

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

(i) Fair value hierarchy disclosures

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

Level 1

Level 2

Level 3

Total

£000

£000

£000

£000

At 31 March 2011

Equity investments

99,431

-

-

99,431

Investment properties

-

49,825

-

49,825

_______

_______

_______

_______

99,431

49,825

-

149,256

_______

_______

_______

_______

At 31 March 2010

Equity investments

88,638

-

-

88,638

Investment properties

-

48,750

-

48,750

_______

_______

_______

_______

88,638

48,750

-

137,388

_______

_______

_______

_______

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 £42,401,000 as at 31 March 2011 (2010 - £41,529,000) compared to a balance sheet value in the financial statements of £35,372,000 (2010 - £35,396,000) per note 12.

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

Fair value

Carrying Value

2011

2010

2011

2010

£000

£000

£000

£000

11% First Mortgage Debenture Stock 2021

19,063

18,778

15,000

15,000

9.375% Debenture Stock 2026

23,338

22,751

20,372

20,396

________

________

________

________

42,401

41,529

35,372

35,396

________

________

________

________

21	Events after the Balance Sheet Date
	On 15 April 2011, the property at 30 North Bridge, Edinburgh owned by Audax Properties PLC was sold at a price of £820,000. The property was valued at £750,000 at the year end.
22	Statutory Financial Statements and Annual General Meeting
	The financial information set out above does not constitute the Company's statutory financial statements for the years ended 31 March 2011 or 31 March 2010 but is derived from those financial statements. The unaudited Preliminary Statement of Annual Results for the Company was announced to the London Stock Exchange on 24 May 2011.
	The Annual Report and Statutory Financial Statements for the year ended 31 March 2011 were posted to shareholders in June 2011 and copies are available for download from the website of the Manager, OLIM Limited, (www.olim.co.uk) or by contacting the Manager c/o Pollen House, 10/12 Cork Street, London, W1S 3NP, or from the Secretaries, Aberdeen Asset Management PLC, 7th Floor, 40 Princes Street, Edinburgh, EH2 2BY.
	The statutory financial statements for the year ended 31 March 2011 were delivered to the Registrar of Companies following the Company's Annual General Meeting held at Bow Bells House, 1 Bread Street, London, EC4M 9HH on Friday 8 July 2011 at 12.30 pm. Please note that past performance is not necessarily a guide to the future and that the value of investments and the income from them may fall as well as rise and may be affected by exchange rate movements.  Investors may not get back the amount they originally invested.

For Value and Income Trust plc

Aberdeen Asset Management PLC

Secretaries

2 June 2011

 

END

 

 

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