Half Yearly Financial Report

RNS Number : 7842B

Value and Income Trust plc

02 November 2009

 



VALUE AND INCOME TRUST PLC

UNAUDITED HALF-YEARLY FINANCIAL REPORT 

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2009

SUMMARY

	30 September 2009	31 March 2009	30 September 2008
Net asset value per share	195.57p	129.63p	184.53p
(valuing debt at market)
Net asset value per share	212.49p	165.55p	211.99p
(valuing debt at par)
Share price (mid)	149.50p	88.50p	143.50p
Dividend per share	3.80p	7.50p	3.80p
	(Interim)	(Total)	(Interim)

Value and Income Trust ('VIT') is a specialist United Kingdom investment trust designed for both institutional and private investors whose shares are listed on the London Stock Exchange. VIT invests in higher yielding, less fashionable areas of the UK commercial property and equity markets, particularly in medium and smaller sized companies. VIT aims for long term real growth in dividends and capital values without undue risk. Figures for net asset values and net current assets shown in the table above are calculated after deducting dividends declared but not yet paid, as in previous years.

Over the six months ended 30 September 2009, VIT's share price rose by 68.9% while the net asset value, valuing debt at par, rose by 28.4%. The FTSE All-Share Index rose by 32.8% over the half-year, in capital terms. VIT's property portfolio was revalued independently at 30 September 2009 and the capital value had increased by 4.5% compared to 31 March 2009. During the period, VIT received £787,000, net of costs, as a partial repayment of a claim against HM Revenue & Customs for VAT suffered on investment management fees.

An interim dividend of 3.80p per share has been declared payable on 8 January 2010 to those shareholders on the register on 11 December 2009. The ex-dividend date will be 9 December 2009.

ENQUIRIES:

Matthew Oakeshott / Angela Lascelles OLIM Limited, Investment Managers Tel: [phone] / Fax: [phone] Website: www.olim.co.uk

INTERIM MANAGEMENT REPORT

Events during the period

At the Company's Annual General Meeting on 10 July 2009, all resolutions were passed.

At the period end the following shareholder had notified the Company of its holding:

Shareholder	Number of Ordinary shares held	% of Ordinary Shares held
Legal & General Group PLC	1,475,777	3.2

Risks and Uncertainties

The Board regularly reviews, and agrees policies for managing, each of the principal risks and uncertainties which it has identified as affecting the Company's business.

These policies are summarised below and are considered equally applicable to the second half of the financial year as for the period under review.

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

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 these are reviewed regularly. 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%.

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

Other price risk: Other price risks (i.e. changes in market prices other than those arising from interest rate or currency risk) may affect the value of the Company'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 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 London Stock Exchange and all investment properties are commercial property located in UK with long strong income streams.

• Liquidity risk: This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. The Company'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.

• Credit risk: This is the failure of a counterparty to a transaction to discharge its obligations under the transaction which could result in the Company 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 Company is mitigated by the review of failed trade reports on a daily basis. In addition, a stock reconciliation to third party administrators' records is carried out on a daily basis to ensure that discrepancies are picked up on a timely basis. The Manager's Compliance Officer carries out periodic reviews of the Custodian's operations and reports its findings to the Manager's Risk Management Committee. This review will also include checks on the maintenance and security of investments held; and

    - cash is held only with reputable banks.

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

• Property risk: The Company'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. None of the Company's financial assets is past due or impaired.

• Discount volatility risk: The Company's shares may trade at a price which represents a discount to its underlying net asset value. The Board reviews regularly the level of the discount and considers what action, if any, to take in relation to minimising the discount.

• Regulatory risk: The Company operates in a complex regulatory environment and therefore faces a number of regulatory risks. Breaches of regulations, such as 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.

Statement of Directors' Responsibilities

The Directors confirm that to the best of their knowledge:

• the condensed set of financial statements within the Half-Yearly Financial Report has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting'; and 

• the Interim Board Report includes a fair review of the information required by 4.2.7R and 4.2.8R of the FSA's Disclosure and Transparency Rules.

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

James Ferguson

Chairman

30 October 2009

VALUE AND INCOME TRUST PLC

GROUP STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2009

		6 months ended			6 months ended			Year ended
		30 September 2009			30 September 2008			31 March 2009
		(Unaudited)			(Unaudited)			(Audited)
		Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
		£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
	Notes
INVESTMENT INCOME
Investment income		2,250	-	2,250	2,848	-	2,848	4,350	-	4,350
Interest income		176	-	176	158	-	158	215	-	215
OTHER OPERATING INCOME		1,738	-	1,738	1,655	-	1,655	3,314	-	3,314
		_________	_______	_______	_______	_______	_______	_______	_______	_______
TOTAL INCOME		4,164	-	4,164	4,661	-	4,661	7,879	-	7,879
GAINS AND LOSSES ON INVESTMENTS
Realised losses on held-at-fair-value investments		-	(3,469)	(3,469)	-	(2,197)	(2,197)	-	(7,673)	(7,673)
Unrealised gains/(losses) on held-at-fair-value investments		-	22,549	22,549	-	(12,689)	(12,689)	-	(23,076)	(23,076)
Unrealised gains/(losses) on property		-	1,838	1,838	-	(4,325)	(4,325)	-	(9,304)	(9,304)
		_________	_______	_______	_______	_______	_______	_______	_______	_______
TOTAL REVENUE		4,164	20,918	25,082	4,661	(19,211)	(14,550)	7,879	(40,053)	(32,174)
		_________	_______	_______	_______	_______	_______	_______	_______	_______
EXPENSES
Investment management fees		(108)	(252)	(360)	(137)	(320)	(457)	(253)	(591)	(844)
VAT recoverable on management fees		316	484	800	-	-	-	-	-	-
Other operating expenses		(560)	-	(560)	(283)	-	(283)	(402)	-	(402)
FINANCE COSTS		(1,751)	-	(1,751)	(1,751)	-	(1,751)	(3,501)	-	(3,501)
		_________	_______	_______	_______	_______	_______	_______	_______	_______
TOTAL EXPENSES		(2,103)	232	(1,871)	(2,171)	(320)	(2,491)	(4,156)	(591)	(4,747)
		_________	_______	_______	_______	_______	_______	_______	_______	_______
GAIN/(LOSS) BEFORE TAX		2,061	21,150	23,211	2,490	(19,531)	(17,041)	3,723	(40,644)	(36,921)
TAXATION		-	(141)	(141)	-	948	948	-	1,400	1,400
		_________	_______	_______	_______	_______	_______	_______	_______	_______
GAIN/(LOSS) FOR THE PERIOD		2,061	21,009	23,070	2,490	(18,583)	(16,093)	3,723	(39,244)	(35,521)
		_________	_______	_______	_______	_______	_______	_______	_______	_______
EARNINGS PER ORDINARY SHARE (PENCE)	2	4.52	46.12	50.64	5.47	(40.80)	(35.33)	8.17	(86.15)	(77.98)

The total column of this statement represents the Group's Statement of Comprehensive Income prepared in accordance with IFRS. The supplementary revenue return and capital return columns are both prepared under guidance issued 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 the parent company. There are no minority interests.

  VALUE AND INCOME TRUST PLC

STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2009

Group		6 months ended 30 September 2009				Year ended 31 March 2009
		(Unaudited)				(Audited)
		Share	Share	Retained	Total	Share	Share	Retained	Total
		capital	premium	earnings		capital	premium	earnings
	Notes	£000	£000	£000	£000	£000	£000	£000	£000
Net assets at 31 March 2009		4,555	18,446	52,405	75,406	4,555	18,446	91,339	114,340
Net loss for the period		-	-	23,070	23,070	-	-	(35,521)	(35,521)
Dividends paid	3	-	-	(1,685)	(1,685)	-	-	(3,413)	(3,413)
		________	_______	_______	_______	_______	_______	_______	_______
NET ASSETS AT 30 SEPTEMBER 2009		4,555	18,446	73,790	96,791	4,555	18,446	52,405	75,406
		________	_______	_______	_______	_______	_______	_______	_______

Group		6 months ended 30 September 2008
		(Unaudited)
		Share	Share	Retained	Total
		capital	premium	earnings
	Notes	£000	£000	£000	£000
Net assets at 31 March 2009		4,555	18,446	91,339	114,340
Net loss for the period		-	-	(16,093)	(16,093)
Dividends paid	3	-	-	(1,685)	(1,685)
		______	_______	_______	_______
NET ASSETS AT 30 SEPTEMBER 2009		4,555	18,446	73,561	96,562
		______	_______	_______	_______

  VALUE AND INCOME TRUST PLC

GROUP BALANCE SHEET

AS AT 30 SEPTEMBER 2009

		As at		As at		As at
		30 September 2009		31 March 2009		30 September 2008
		(Unaudited)		(Audited)		(Unaudited)
		£'000	£'000	£'000	£'000	£'000	£'000
ASSETS	Notes
NON CURRENT ASSETS
Investments held at fair value through profit or loss			83,148		62,301		78,200
Investment properties held at fair value through profit or loss			46,875		44,850		46,675
			_________		_________		_________
			130,023		107,151		124,875
CURRENT ASSETS
Cash and cash equivalents		3,990		4,903		9,089
Other receivables		399		1,605		398
		_________		_________		_________
			4,389		6,508		9,487
			_________		_________		_________
TOTAL ASSETS			134,412		113,659		134,362
CURRENT LIABILITIES
Other payables			(1,428)		(2,189)		(1,272)
			_________		_________		_________
			132,984		111,470		133,090
NON-CURRENT LIABILITIES
Debenture stock		(35,408)		(35,420)		(35,432)
Deferred tax		(785)		(644)		(1,096)
		_________		_________		_________
			(36,193)		(36,064)		(36,528)
			_________		_________		_________
			96,791		75,406		96,562
			_________		_________		_________
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS
Ordinary called up share capital			4,555		4,555		4,555
Share premium			18,446		18,446		18,446
Retained earnings	5		73,790		52,405		73,561
			_________		_________		_________
			96,791		75,406		96,562
			_________		_________		_________
NET ASSET VALUE PER ORDINARY SHARE			212.49p		165.55p		211.99p

  VALUE AND INCOME TRUST PLC

GROUP CASH FLOW STATEMENT

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2009

	6 months ended		6 months ended		Year ended
	30 September 2009		30 September 2008		31 March 2009
	(Unaudited)		(Unaudited)		(Audited)
	£000	£000	£000	£000	£000	£000
CASH FLOWS FROM OPERATING ACTIVITIES
Dividend income received		2,218		3,025		4,705
Rental received		1,904		1,412		3,147
Interest received		60		155		215
Other income		24		-		-
VAT recovered on management fees		800
Operating expenses paid		(660)		(641)		(1,552)
		_________		_________		_________
NET CASH INFLOW FROM OPERATING ACTIVITIES		4,346		3,951		6,515
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investments	(11,420)		(5,674)		(18,214)
Sale of investments	9,609		4,651		13,931
	_________		_________		_________
NET CASH OUTFLOW FROM
INVESTING ACTIVITIES		(1,811)		(1,023)		(4,283)
CASH FLOW FROM FINANCING ACTIVITIES
Interest paid	(1,763)		(1,763)		(3,525)
Dividends paid	(1,685)		(1,685)		(3,413)
	_________		_________		_________
NET CASH USED IN FINANCING ACTIVITIES		(3,448)		(3,448)		(6,938)
		_________		_________		_________
NET DECREASE IN CASH AND CASH EQUIVALENTS		(913)		(520)		(4,706)
Cash and cash equivalents at the start of the period		4,903		9,609		9,609
		_________		_________		_________
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD		3,990		9,089		4,903
		_________		_________		_________

  VALUE AND INCOME TRUST PLC

NOTES TO THE FINANCIAL STATEMENTS

1.

Accounting policies

(a)

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 sterling because that is the currency of the primary economic environment in which the Group operates.

The financial statements have been prepared on the historical cost basis, except for the revaluation of certain financial assets. 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)

Dividends payable

Interim dividends are recognised as a liability in the period in which they are declared by the board of directors and 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.

(c)

Investments

All investments have been designated upon initial recognition as fair value though 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 income statement and are ultimately recognised in the retained earnings.

In respect of property investments, fair value is established by a 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.

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 income statement and are ultimately recognised in the retained earnings.

2.

Earnings per ordinary share

The return per ordinary share is based on the following figures:

6 months ended

6 months ended

Year ended

September 2009

September 2008

March 2009

Group

Group

Group

£000

£000

£000

Revenue return

2,061

2,490

3,723

Capital return

21,009

(18,583)

(39,244)

Weighted average ordinary shares in issue

45,549,975

45,549,975

45,549,975

Return per share - revenue

4.52p

5.47p

8.17p

Return per share - capital

46.12p

(40.80p)

(86.15p)

_________

_________

_________

Total return per share

50.64p

(35.33p)

(77.98p)

_________

_________

_________

6 months ended

6 months ended

Year ended

September 2009

September 2008

March 2009

3.

Dividends paid

£000

£000

£000

Ordinary dividends on equity shares deducted from reserves are as follows:-

Dividends on ordinary shares:

Final dividend of 3.7p per share (2008 - 3.7p) paid 17 July 2009

1,685

1,685

1,685

Interim dividend of 3.8p per share (2008 - 3.7p) paid 9 January 2009

-

-

1,731

-

-

Unclaimed dividends refunded by Registrar

(3)

_________

_________

_________

1,685

1,685

3,413

_________

_________

_________

4.

Interim dividend

The Directors have declared an interim dividend of 3.8p (2009 - 3.8p) per Ordinary share, payable on 8 January 2010 to shareholders registered on 11 December 2009. The Ordinary shares will be quoted ex-dividend on 9 December 2009.

5.

Retained earnings

The table below shows the movement in retained earnings analysed between revenue (distributable) and capital (non-distributable) items.

Group

Revenue

Capital

Total

£000

£000

£000

At 31 March 2009

3,473

48,932

52,405

Movement during the period:-

Profit for the period

2,061

21,009

23,070

Dividends paid on ordinary shares

(1,685)

-

(1,685)

________

________

________

At 30 September 2009

3,849

69,941

73,790

________

________

________

6.

Transaction costs

During the period, 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 Income Statement

The total costs are as follows:-

6 months ended

6 months ended

Year ended

September 2009

September 2008

March 2009

£000

£000

£000

Purchases

60

32

276

Sales

17

8

32

________

________

________

77

40

308

________

________

________

7.

Related Party Transactions

Angela Lascelles and Matthew Oakeshott, Directors of the Company, are Directors of OLIM Limited ('OLIM') which has an agreement with the Company to provide investment management services. OLIM receives a quarterly fee of 1/6% of the Group's total assets less current liabilities. OLIM is also entitled to a performance fee, charged wholly to capital if the total positive returns to shareholders from their investment in the Company exceed the total return on the FTSE All-Share Index by more than 10 percentage points in any three year period.

Audax Properties plc is a wholly owned subsidiary of the Company and accordingly the Company is the ultimate controlling party.

8.

Comparative information

The financial information in this report does not constitute statutory financial statements as defined in sections 434 - 436 of the Companies Act 2006 The financial information for the six months ended 30 September 2009 and 2008 has not been audited.

The information for the year ended 31 March 2009 has been extracted from the latest published audited financial statements that have been filed with the Registrar of Companies and on which the report of the auditors was unqualified under section 235 of the Companies Act 1985.

9.

Approval

The Half-Yearly Financial Report was approved by the Board on 30 October 2009.

10.

Interim Report

The Interim Report will be issued to shareholders in November 2009 and copies may be obtained from the Manager, OLIM Limited, Pollen House, 10/12 Cork Street, London W1S 3NP (Tel. [phone]; Email: [e-mail]) or by download from the Value and Income Trust section of the Manager's website - www.olim.co.uk or from the Company Secretary, Aberdeen Asset Management PLC, 7th Floor, 40 Princes Street, Edinburgh EH2 2BY (Tel. [phone]).

 

END

 

 

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