Annual Financial Report
VALUE AND INCOME TRUST PLC
Annual financial report
FOR THE YEAR ENDED 31 MARCH 2014
SUMMARY
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|
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31 March 2014 |
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Net asset value per share valuing debt at par (including income) |
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325.5p |
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Net asset value per share valuing debt at market value (including income) |
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304.3p |
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Ordinary share price |
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265.0p |
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Discount of ordinary share price to net asset value per share valuing debt at market value (including revenue) |
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12.9% |
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Total interim dividend and proposed final dividend per share |
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8.50p |
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Total assets less current liabilities |
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£183.6m |
THE YEAR
· Net Asset Value total return (with debt at par value) of 12.1% over one year and 40.6% over three years
· Share price total return of 29.8% over one year and 62.0% over three years.
· FTSE All-Share Index total return of 8.7% over one year and 28.2% over three years
· Dividends for the year up 2.4% - increased for 27th consecutive year
DIVIDEND
The Directors recommend that a final dividend of 4.40 pence per share (2013 - 4.30 pence) is paid on 18 July 2014 to shareholders on the register on 20 June 2014. The ex-dividend date is 18 June 2014. An interim dividend of 4.10 pence per share (2012 - 4.00 pence) was paid on 3 January 2014.
CHAIRMAN'S STATEMENT
Our annual report looks different to those of recent years reflecting changes in the Companies Act, the UK Corporate Governance Code and the remuneration regulations. We are required to ensure that the annual report and financial statements are fair, balanced and understandable; you will see that we believe that this is the case. Towards the end of our financial year we took steps to wind up Audax. A change in taxation legislation means that a subsidiary is no longer required and so we have simplified the structure of Value and Income Trust. The debenture issued by Audax, which is repayable in 2021, has been transferred to VIT.
Our equity portfolio had another successful year with a total return of 13.4 %. The property portfolio also did well with a total return of 10.5 %; both of these were well ahead of the All Share Index, with a total return of 8.7%. As you will see from the property report, there were no voids in the portfolio and 50% of the leases are now index linked.
The share price total return over the twelve months was 29.8 % while the FTSE All-Share Index total return was 8.7 % over the same period. Over three years the share price total return was 62.0% compared to the increase of the Index of 28.2%. This result entitled OLIM to a performance fee of £419,116 and OLIM Property to a performance fee of £191,742.
The proposed final dividend of 4.40p would make total dividends for the year of 8.50p, an increase of 2.4%. Subject to approval at the Annual General Meeting, the final dividend would be payable on 18th July 2014 to shareholders on the register on 20 June 2014. The ex dividend date is 18 June 2014. It is pleasing to report that the dividend has been increased every year since the change of investment policy in 1986.
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.
We have to implement the AIFM directive by July 2014. Our preparations for this are well advanced with Value & Income Services Limited being set up as the Alternative Investment Fund Manager (AIFM) and BNP Paribas Securities Services appointed as depositary and custodian. This should have no repercussions for shareholders apart from some extra expense, an unfortunate result of European legislation which was not designed with investment trusts in mind.
Our auditors, Chiene + Tait, indicated to us during the year that they wished to resign following notification of an increase in regulation costs which made it difficult for them to audit quoted investment trusts. This was disappointing because the audit of VIT has been conducted efficiently for many years. We have appointed Grant Thornton UK LLP, who are responsible for the audit of these accounts.
As this is written we remain fully invested. The outlook for property is encouraging as investors search for income. The outlook for equities is also positive. Our equity portfolio yields 3.4% and is likely to be supported by continuing dividend growth.
I hope that we shall see as many shareholders as possible at the Annual General Meeting on Friday 11 July 2014, which is to be held in London this year. There will be a brief presentation on the investment outlook.
James Ferguson
Chairman
6 June 2014
INVESTMENT MANAGERS' REPORTS
EQUITY PORTFOLIO
Market Background
Over the year as a whole, UK equities rose by 5.2%, as measured by the FTSE All Share Index. The first quarter of our year began with further price rises but in June fears of 'tapering' of Quantitative Easing (QE) by the Federal Reserve in America caused sharp falls in asset values. Prices quickly recovered, however, and rose further, as investors realised that QE would not be tapered before economic growth becomes firmly established. From June onwards, economic statistics consistently improved and growth forecasts for the developed nations began to be upgraded for the first time in six years. Emerging economies by contrast were recording slower rates of growth as the year progressed. After June, UK equities rose steadily to the end of December, but declined marginally in the first quarter of 2014. Within the UK equity market, mid and small sized companies continued to outperform large companies and their respective indices rose by 17% and 18%. The FTSE 100 rose by just 3% and the Higher Yield Index rose by 4%.
Overseas, the FTSE World Index rose by 17%, calculated in dollars. This rise was dominated by America (+19%), Japan (+20% in yen and stimulated by QE), and Germany (+23% in euro). Emerging markets fell by 4% (in dollars). Interest rates remained at very low levels worldwide, with our base rate remaining at just 0.5%. Yields on ten year gilts hit their low point in March 2013 at 1.8%, and rose to 3.0% by the end of December, but eased again in the quarter to end March, closing our year at 2.7%. The same trend was seen in overseas bond yields. The pound rose by 20% against the yen, and 9% against the dollar. Against the euro it rose very marginally to €1.21 to the pound. In commodity markets, the copper price fell by 12% and the gold price by 19% over the year. The oil price fell by 2% ending our year at $102 per barrel in the price of Brent crude oil.
The volatility of the early summer was caused by the tension between the expected winding down of the programmes of QE, which had stimulated asset prices, and the better economic news which allowed the tapering of QE to begin. Firstly the reaction was panic, but later in the year, when America began a rapid scale-down of its programme of bond buying, equity markets remained steady at the higher levels. The UK equity market was encouraged by a series of upgrades of GDP growth for 2013 and 2014, which have continued into and beyond the March Budget and have allowed the Chancellor to reduce his forecast of the fiscal deficit, though public sector debt remains at a very high level. Inflation statistics have shown a declining rate and are now rising below the rate of reported earnings growth, as well as now being within the Bank of England's target of 2%.
Performance
VIT's equity performance over the year was again significantly ahead of the All Share Index. In capital terms the portfolio rose by 9.8%, which was 4.6 percentage points above the Index return. Including income, the total return was +13.4%, compared with the total return on the All Share Index of +8.7%. Over the last three years the performance of the portfolio has been +52.9% compared to the All Share Index return of +28.2%.
Our underweight allocations to banking and mining made a positive contribution to performance. Our overweighting in support services was also helpful, with our large holding of Babcock up by 24%, Carillion up by 33% and Sthree with a rise of 15%. In the chemical sector Johnson Matthey rose by 42%. Our mid-cap consumer holdings performed well, particularly Britvic (+67%), N Brown (+40%) Go Ahead Group (+27%) and Restaurant Group (+52%). Life insurance companies made a positive contribution with Amlin rising by 14% and Beazley by 26%. Negative movements in the portfolio were Tesco (-23%) hit by extremely competitive trading in the UK food retailing market, and both our large holdings of Rotork and Spectris fell over the year, affected by worries of slower growth in emerging economies.
Portfolio
We have continued to be fully invested all through the year. In stock selection we continued to overweight the sectors operating in the faster growing economies of the world, and the defensive areas of the UK economy. We continued to underweight the resource and financial sectors.
Transactions during the year totalled £17.1m, with net sales of £2.3m. We reduced our largest holding, Rotork, by £2.1m, and we also took partial profits on Restaurant Group, by sales totalling £1.7m, which we reinvested in Cineworld. This new holding is the largest cinema operator in the UK, and recently completed a rights issue to fund the acquisition of Cinema City, which has a chain of cinemas in Israel and Central Europe. We sold our holding in Dairy Crest, which had reached our target price, and we reduced BT after strong performance. We slightly increased our mining investments with an addition to our holding in BHP Billiton and we added to John Laing Infrastructure Fund. We bought a new holding in Conviviality which has a chain of convenience stores and off licences, mainly in the North of England, but also owns Wine Rack, which operates within the M25 around London. Late in our year Vodafone completed its restructuring after selling Verizon Wireless. The company repaid cash to shareholders and issued Verizon Communications shares, which we sold. We reinvested some of the proceeds back into Vodafone, where the yield was an attractive 5%, and we topped up our holdings in Unilever and GlaxoSmithKline. At the end of March 2014 we were holding investments in 37 companies with a total value of £135.2m and a net yield of 3.4%.
Outlook
UK GDP growth gathered momentum in 2013, beginning with a rise of 0.3% in the first quarter, but strengthening as the year progressed. For the whole year it grew by 1.7% and the latest forecast for 2014 is for growth of 2.9%, the fastest rate of growth of any of the developed economies of the world. In the USA, faster growth expected for this year has allowed the Federal Reserve to wind down its programme of QE which is expected to fall to zero by the end of 2014; currently it is $65m per month, having been reduced from $85m, its level for most of 2013. In China, the growth in GDP continues to decline gently, but is still expected to be about 7.5% this year. Other emerging markets are growing more slowly with 2.0% expected in Brazil and about the same in Russia, though growth there will be threatened by the situation in Ukraine and Crimea. India continues to outpace the developed nations with growth of more than 5% but Japan is expected to lag despite its heavy programme of QE, in operation now for a year. The Eurozone trails the rest of the world with growth of just 1% forecast for this year.
Though the extreme undervaluation of UK equities has been removed by the rises in 2012 and 2013, our market remains attractive to investors compared to cash and gilt yields. The historic yield of 3.4% is still significantly higher than the yield on ten year gilts. The current price earnings ratio is close to the long term average of 14x. Earnings and dividends are expected to grow this year in high single digits, well above the current rate of inflation. With over half the capitalisation of our market represented by companies trading in global markets, investors gain exposure to investment in overseas economies combined with the advantage of UK corporate governance.
Angela Lascelles
OLIM Limited
6 June 2014
PROPERTY PORTFOLIO
The Market
UK commercial property capital values turned upwards in mid-2013 after a roller coaster five years, and are now clearly set on a path of growth, which is broadening out from Central London. Over 2013 as a whole, the Investment Property Databank (IPD) Annual Universe, the main measure of institutional fund performance with portfolios totalling £155 billion, gave a total return of 11%, coming equally from capital growth and rental income. Rental values grew on average by 1%. Last year a property's region rather than sector was the main driver of performance - total returns for London properties averaged 14% (16% in Central London) with the rest of the U.K. averaging only 9%, and returns in Northern England, Scotland, Wales and Northern Ireland ranging from 6% to 8%, less than half the South East return, with a similar pattern for shops at 7% outside the South East. The industrial/warehouse distinction was less marked, at 14% against 12%, because there are virtually no industrial properties in Central London. Leisure properties and supermarkets both often let on long, index-linked leases, returned 10%-11%, but retail warehouses and shopping centres averaged 7% with continuing pressure on tenants and retail spending.
Average rental values for U.K. commercial property also bottomed out in mid-2013, led by Central London offices, but with industrial warehouse values also starting to grow. Retail rental values have now just stabilised - there is still plenty of downward pressure on rents in weaker locations with declining local spending power or population, usually in conurbations outside Southern England. But many prosperous smaller towns and suburban high streets throughout the United Kingdom are now seeing good demand for space from retailers of various types, especially discount and convenience store operators, as well as café, restaurant and other leisure users. Retail properties let to strong tenants off current market rents in these locations should deliver good long term capital and rental from initial yields of 6% - 8%. Retailers' covenant quality is also improving as private equity owned companies float on the Stock Exchange and as the squeeze on real incomes ends.
Industrial and warehouse rents are also starting to rise in a number of stronger locations, especially near motorway junctions and in Southern England more generally where land supply is tight and there is strong demand for alternative use for housing. Meanwhile demand for investments of all types with long index-linked leases continues to grow, as large insurance companies and pension funds seek to match their long-term annuity and inflation-linked liabilities with returns less painful than the "return-free risk" index-linked gilts on zero real yields at best.
Property's yield premium over gilts remains far too high at 3 ½ points over conventional and 6 ½ points over long-dated index-linked gilts. Long term property investors still have the chance to lock in an average real yield premium less than 1 point below a 30 year high since index-linked gilts were first issued in the U.K. Property's prospects are also competitive with U.K. equities at almost double their running yield, with voids and tenant defaults declining and rental income from most property portfolios now growing again.
Britain's banks are speeding up disposals of property owned by distressed borrowers both by formal Receiverships and "consensual sales" under the threat of Receivership. Most banks are also lending more actively on commercial as well as residential property with the stimulus and subsidy of the Funding for Lending scheme. Reasonable quality property is still available from this source, but the prices are rising and the competition for larger lot sizes and portfolios is fierce. The best value is available in properties for sale below £5m and under most institutional investors' radar.
Average property capital values now look likely to rise by 8% - 10% over 2014, giving average total returns in the mid-teens. Average rental values should also grow in real terms, with an improving trend next year as employment continues to grow and the economic recovery gathers pace and spreads out away from London to the rest of the United Kingdom.
The economic recovery is now gathering pace, with consumer confidence boosted by rising house prices in Southern England. Real consumer incomes are just stabilising, with average earnings and transfer payments growing around 1½% a year in line with the Consumer Price Index, but still behind the Retail Price Index, which includes housing costs. The dominant service sector is now really motoring and construction is recovering rapidly. Manufacturing still presents a mixed picture, with investment improving but exports and the balance of payments still in deep deficit. The Funding for Lending and Help to Buy programmes have clearly had a major impact on mortgage supply but are pushing up house prices. Net bank lending to small and medium sized businesses continues to fall. With recovery well under way in the USA and most Eurozone economies more stable, prospects for world economic growth have improved to at least 3% this year and next; the growing momentum in the U.K. economy implies similar growth here in both years.
The Bank of England Monetary Policy Committee's massive injections of Quantitative Easing are having uncomfortable side effects for pension funds and annuity rates. Larger businesses generally enjoy strong balance sheets, liquidity and rising confidence in future demand. As unemployment falls below 7%, the markets are increasingly sceptical about the Bank of England's forward guidance on interest rates and gilt yields will come under upward pressure before the Election in 2015. Short term interest rates may also start to rise next year. But the prospects remain good for commercial property because its high yield premium over current short and long-term interest rates provides a considerable built-in cushion against interest rate rises, and capital values are also beginning to feel the benefit of rising rents and tenant demand.
The Portfolio
VIT's property portfolio produced a total return of 10.5% over the year to March. The IPD Monthly Index over the same period was 13%.
We concentrate on properties with strong income streams to meet the fixed interest payments on our long-term debt. These have also produced good long-term capital performance. The total return on our property portfolio has averaged 7% a year over the past 3 years, 5% over 5 years, 10% over 10 years, and 13% over the 27 years since the start. These returns are in line with the IPD average over 3 years but well above over longer periods. Real returns from VIT's property portfolio averaged 4% a year over the past three years and 6%-8% a year over longer periods.
Two properties were sold during the year, at Galashiels and Worcester, with the proceeds reinvested at higher yields in two pub/restaurants in Lancaster, and a foodstore in Sudbury, with long index-linked leases to Mitchell's Brewery and Iceland. They were bought for £3.2 million and valued at £3.3 million at our year end.
All properties are fully let on full repairing and insuring leases, with upward only rent reviews and an average unexpired lease length of 13 years. The portfolio has been fully let and income-producing throughout the year. 99% of the rental income is reviewed five yearly, with 50% now index-linked (up from 39% last year and 35% two years ago).
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 VIT 11% Debenture Stock, originally issued by our subsidiary Audax Properties and repayable in 2021 and transferred to VIT on 28 March 2014. Because those Debenture Stocks were issued at a premium, their effective interest cost averaged 9%. We believe this is the right way to finance long-term property investment and we do not intend to replace it with shorter term bank debt. The upheavals in the property and banking markets since 2008 reinforce that view.
Results of Independent Valuation
The VIT property portfolio, including properties previously held within our subsidiary Audax Properties PLC, was subject to an independent professional revaluation by Jones Lang LaSalle, at 31st March 2014.
The revaluation showed a value of £46,475,000. Our properties are revalued independently every six months, at 30th September and 31st March.
Capital values rose by 3% over the year and rental income by 1% on a like for like basis. Twenty-eight of the properties valued at 31 March 2014 were freehold or the Scottish equivalent and one is held on a long lease with 43 years to run.
Matthew Oakeshott
OLIM Property Limited
6 June 2014
STRATEGIC REPORT
This Strategic Report has been prepared by the Directors in accordance with Section 414C of the Companies Act 2006, as amended.
The Board
The Board, which is responsible for setting and monitoring the Company's strategy, currently consists of five Directors, of whom four are male and one is female. The names and biographies of the Directors as set out under Directors' Details, indicate their range of investment, commercial and professional experience.
The Group
During the year, the investment properties owned and the debenture stock previously issued by Audax Properties PLC were transferred to the Company. Further details are provided in the Notes to the Financial Statements and in the Chairman's Statement. On 16th January 2014, a new wholly owned subsidiary company Value & Income Services Limited was incorporated. This company will be the AIFM for the Company.
Investment Aims
The Company invests in higher yielding, less fashionable areas of the UK commercial property and quoted equity markets, particularly in medium and smaller sized companies. The Company aims to achieve long term real growth in dividends and capital value without undue risk.
Investment Policy
The Company's policy is to invest in quoted UK equities, UK commercial property and cash or near cash securities. It is not normally the Company's policy to invest in overseas shares or in unquoted companies. UK equities usually account for between half and three-quarters of the total portfolio and property for a quarter to a half but the asset allocation may go outside these ranges if relative market levels and investment value, or a desired increase in cash or near cash securities, make it appropriate.
The Company focuses on the fundamental values and incomes of businesses in which it invests - their profitability, cash flows, balance sheets, management and products or services- and the location, tenants and leases of its property investments. The equity portfolio has always yielded more than the FTSE All-Share Index. The Company 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. In order to limit the risk to the equity portfolio that is derived from any particular investment, no individual shareholding will account for more than 10% of the equity portfolio at the time of purchase.
The Company has had a long standing policy, since 1986, of funding its exposure to property and partly to equities through long term debentures. All borrowings have been 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 25% and 40% of the total portfolio. The Company will not raise new borrowings if total net borrowings would then represent more than 50% of the total assets.
No material changes may be made to the Company's investment policy described above without the prior approval of shareholders by the passing of an Ordinary Resolution.
Performance, Results and Dividend
A review of the performance of the equity and property portfolios is detailed in the Chairman's Statement and the Investment Managers' Reports. The Directors recommend that a final dividend of 4.40pence per share (2013- 4.30pence) is paid on 18 July 2014 to shareholders on the register on 20 June 2014. The ex-dividend date is 18 June 2014. An interim dividend of 4.10pence per share (2013- 4.00pence) was paid to shareholders on 3 January 2014.
The table below shows the revenue reserve position and dividends paid and payable by the Group and the Company, under the former basis of accounting (Pre IFRS), subject to shareholders approval of the proposed final dividend at the forthcoming Annual General Meeting.
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Group £000 |
Group Pence per Share |
Company £000 |
Company Pence per share |
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Revenue reserve at 31 March 2013 |
1,826 |
4.02 |
712 |
1.56 |
|
Net revenue earned in the year |
3,773 |
8.28 |
3,698 |
8.12 |
|
Dividends paid and payable |
(3,871) |
(8.50) |
(3,871) |
(8.50) |
|
Revenue reserve at 31 March 2014 |
1,728 |
3.80 |
539 |
1.18 |
Principal Risks and Uncertainties
The Board carries out a regular review of the risk environment in which the Group operates. The principal risks and uncertainties which affect the Group's business are:
Market Risk
The fair value of, or future cash flows from, a financial instrument held by the Group may fluctuate because of changes in market prices. This market risk comprises three elements - price risk, interest rate risk and currency risk.
Price Risk
Changes in market prices (other than those arising from interest rate or currency risk) may affect the value of the Group's investments.
It is the Board's policy to hold an appropriate spread of investments in the portfolio in order to reduce the risk arising from factors specific to a particular sector. For equities, asset allocation and stock selection, as set out in the Investment Policy, both act to reduce market risk. The Managers actively monitor market prices throughout the year and report to the Board, which meets regularly in order to review investment strategy. The equity investments held by the Company are listed on the UK Stock Exchange. All investment properties held by the Group are commercial properties located in the UK, most with long strong income streams.
Interest rate risk
Interest rate movements may affect:
- the fair value of the investments in property; and
- the level of income receivable on cash deposits
The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment and borrowing decisions.
The Board imposes borrowing limits to ensure gearing levels are appropriate to market conditions and reviews these on a regular basis. 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 Group's investment portfolio is invested in securities whose fair value and dividend stream are affected by movements in foreign exchange rates. It is not the Company's policy to hedge this risk.
Liquidity risk
This is the risk that the Group will encounter difficulty in meeting obligations associated with its financial liabilities.
The Group's assets comprise of readily realisable securities which can be sold to meet commitments if required and investment properties which, by their nature, are less readily realisable. The maturity of the Company's existing borrowings is set out in the interest risk profile section of note 20 to the Financial Statements.
Credit risk
This is the failure of a counterparty to a transaction to discharge its obligations under that transaction that could result in the 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 OLIM and limits are set on the amount that may be due from any one broker.
- the risk of counterparty exposure due to failed trades causing a loss to the 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 performed on a daily basis to ensure that discrepancies are picked up on a timely basis. OLIM's Compliance Officer carries out periodic reviews of the Custodian's operations and reports its findings to the OLIM Risk Management Committee. This review will also include checks on the maintenance and security of investments held.
- cash is held only with reputable banks with high quality external credit ratings which are monitored on a regular basis.
None of the Group's assets is secured by collateral or other credit enhancements.
Property Risk
The Group's commercial property portfolio is subject to both market and specific property risk. Since the UK commercial property market has been markedly cyclical for many years, it is prudent to expect that to continue. The price and availability of credit, real economic growth and the constraints on the development of new property are the main influences on the property investment market.
Against that background, the specific risks to the income from the portfolio are tenants being unable to pay their rents and other charges, or leaving their properties at the end of their leases. All leases are on full repairing and insuring terms, with upward only rent reviews and the average unexpired lease length is 13 years (2013 - 13.5 years). OLIM Property is responsible for property investment management, with surveyors, solicitors and managing agents acting on the portfolio under OLIM Property's supervision.
Additional risks and uncertainties include:
▪ Discount volatility: The Company's shares may trade at a price which represents a discount to its underlying net asset value. The Company monitors the level of the Discount;
▪ Regulatory risk: The Company operates in a complex regulatory environment and faces a number of regulatory risks. A breach of Section 1158 of the Corporation Taxes Act 2010 (Section 1158) would result in the Company being subject to capital gains tax on portfolio investments. Breaches of other regulations, including the Companies Act 2006, the UKLA Listing Rules or the UKLA Disclosure and Transparency Rules, could lead to a number of detrimental outcomes and reputational damage. Breaches of controls by service providers to the Company could also lead to reputational damage or loss. The Audit and Management Engagement Committee monitors compliance with regulations by reviewing internal control reports from the Administrator and the Investment Managers, OLIM Limited (OLIM) and OLIM Property Limited (OLIM Property), (collectively the Managers).
There is also a further regulatory risk in the form of the Alternative Investment Fund Managers Directive (AIFMD) which came into force in July 2013 and is due to be fully implemented in the UK by 22 July 2014. The AIFMD introduces a new authorisation and supervisory regime for all fund managers and investment companies in the European Union. This will create some additional regulatory costs for the Company.
- Referendum on Scottish Independence: As a Scottish registered Company, the Directors are mindful that there is uncertainty arising in relation to the referendum on Scottish independence due on 18 September 2014. The Directors consider that should the vote be in favour of independence, there will be a transition period during which there will be an opportunity to assess the new situation and take any appropriate action.
Key Performance Indicators
The Directors have identified the three key performance indicators below to determine the progress of the Company:
• Share price total return relative to the FTSE All-Share Index (total return);
• Net asset value total return relative to the FTSE All-Share Index (total return); and
• Dividend growth relative to the Retail Prices Index
At each Board Meeting, the Directors consider a number of performance measures to assess the Company's success in achieving its objectives.
Statement of Compliance with Investment Policy
The Company is adhering to its stated investment policy and managing the risks arising from it. This can be seen in various tables and charts throughout the Annual Report, and from the information provided in the Chairman's Statement, and the Investment Managers' Reports.
The management of the Company's investment portfolio has been delegated to the Managers and further information relating to this is detailed in the Directors' Report.
Employee, Environmental and Human Rights Policy
As an investment trust, the Company has no direct employee or environmental responsibilities, nor is it responsible for the emission of greenhouse gases. Its principal responsibility to Shareholders is to ensure that the investment portfolio is properly managed and invested. The Company has no employees and accordingly, has no requirement to report separately on employment matters. Management of the investment portfolio is undertaken by the Managers. In light of the nature of the Company's business, there are no relevant human rights issues and, therefore, the Company does not have a human rights policy.
Future Strategy
The Board and the Managers intend to maintain the strategic policies set out above for the year ending 31 March 2015 as it is believed that these are in the best interests of Shareholders.
James Ferguson
Chairman
6 June 2014
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Financial Statements for each financial year. Under that law the Directors are required to prepare Group Financial Statements in accordance with IFRS as adopted by the EU and Article 4 of the EU IAS Regulation and have also chosen to prepare the parent company financial statements in accordance with IFRS as adopted by the EU. The Financial Statements are required by law to give a true and fair view of the state of affairs of the Company and of the net return of the Company for that period. In preparing these Financial Statements, the Directors are required to:
· Select suitable accounting policies and then apply them consistently
· Make judgements and estimates that are reasonable and prudent;
· State whether applicable IFRS have been followed, subject to any material departures disclosed and explained in the Financial Statements: and
· Prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping proper accounting records that disclose with adequate accuracy at any time the financial position of the Company and enable them to ensure that the Financial Statements comply with the Companies Act. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities
Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that comply with that law and those regulations.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website hosted by the Managers. Legislation in the United Kingdom governing the preparation and dissemination of Financial Statements may differ from legislation in other jurisdictions.
The Directors are also responsible for ensuring that the Annual Report and Financial Statements, taken as a whole are fair balanced and understandable and provide the information necessary to assess the Company's performance, business model and strategy.
Directors' Responsibility Statement
Each Director confirms, to the best of his or her knowledge, that:
· the Financial Statements, have been prepared in accordance with the applicable accounting standards and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and its undertakings as at 31 March 2014 and for the year to that date;
· The Strategic Report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and that
· The Annual Report and Financial Statements taken as a whole are fair, balanced and understandable and provide the information necessary to assess the Company's performance, business model and strategy.
For and on behalf of the Board of Value and Income Trust PLC
James Ferguson
Chairman
6 June 2014
VALUE AND INCOME TRUST PLC
GROUP STATEMENT OF COMPREHENSIVE INCOME
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Year ended |
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31 March 2014 |
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31 March 2013 |
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Total |
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£'000 |
£'000 |
£'000 |
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£'000 |
£'000 |
£'000 |
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|
|
|
|
|
Investment income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend income |
2 |
4,834 |
- |
4,834 |
|
4,669 |
- |
4,669 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental income |
|
3,462 |
- |
3,462 |
|
3,562 |
- |
3,562 |
|
|
Interest income on short-term deposits |
|
1 |
- |
1 |
|
2 |
- |
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
2 |
8,297 |
- |
8,297 |
|
8,233 |
- |
8,233 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains and losses on investments |
|
|
|
|
|
|
|
|
|
|
|
Realised gains on held-at-fair-value investments & investment properties |
9 |
- |
6,159 |
6,159 |
|
- |
4,400 |
4,400 |
|
|
Unrealised gains on held-at-fair-value investments and investment properties |
9 |
- |
7,781 |
7,781 |
|
- |
18,417 |
18,417 |
|
|
Net currency gains |
|
- |
2 |
2 |
|
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
Total income |
|
8,297 |
13,942 |
22,239 |
|
8,233 |
20,515 |
28,748 |
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
Investment management fees |
3 |
(368) |
(1,470) |
(1,838) |
|
(312) |
(854) |
(1,166) |
|
|
Other operating expenses |
4 |
(655) |
(5) |
(660) |
|
(513) |
- |
(513) |
|
|
|
|
|
|
|
|
|
|
|
|
Finance costs |
5 |
(3,501) |
- |
(3,501) |
|
(3,501) |
- |
(3,501) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
(4,524) |
(1,475) |
(5,999) |
|
(4,326) |
(854) |
(5,180) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax |
|
3,773 |
12,467 |
16,240 |
|
3,907 |
19,661 |
23,568 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxation |
6 |
- |
- |
- |
|
- |
390 |
390 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the year |
|
3,773 |
12,467 |
16,240 |
|
3,907 |
20,051 |
23,958 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per ordinary share (pence) |
7 |
8.28 |
27.37 |
35.65 |
|
8.58 |
44.02 |
52.60 |
|
|
The total column of this statement represents the Statement of Comprehensive Income of the Group, prepared in accordance with IFRS.
|
|
The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the |
|
Association of Investment Companies. All items in the above statement derive from continuing operations. All income is attributable to the equity holders of Value and Income Trust PLC, the parent company. There are no minority interests.
|
|
The Board is proposing a final dividend of 4.40p per share, making a total dividend of 8.50p per share for the year ended 31 March 2014 (2013 - 8.30p per share) which, if approved, will be payable on 18 July 2014. |
|
|
|
|
VALUE AND INCOME TRUST PLC
COMPANY STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2014
|
|
|
|
Year ended |
|
Year ended |
||||
|
|
|
|
31 March 2014 |
|
31 March 2013 |
||||
|
|
|
Note |
Revenue |
Capital |
Total |
|
Revenue |
Capital |
Total |
|
|
|
|
£'000 |
£'000 |
£'000 |
|
£'000 |
£'000 |
£'000 |
|
Investment income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend income |
2 |
4,834 |
- |
4,834 |
|
4,669 |
- |
4,669 |
|
|
Rental income |
|
1,374 |
- |
1,374 |
|
1,348 |
- |
1,348 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2 |
6,208 |
- |
6,208 |
|
6,017 |
- |
6,017 |
|
|
|
|
|
|
|
|
|
|
|
|
Gains and losses on investments |
|
|
|
|
|
|
|
|
|
|
|
Realised gains on held-at-fair-value investments and investment properties |
9 |
- |
5,265 |
5,265 |
|
- |
4,555 |
4,555 |
|
|
Unrealised gains on held-at-fair-value investments and investment properties |
9 |
- |
4,047 |
4,047 |
|
- |
16,865 |
16,865 |
|
|
Net currency gains |
|
- |
2 |
2 |
|
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
Total income |
|
6,208 |
9,314 |
15,522 |
|
6,017 |
20,978 |
26,995 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
Investment management fees |
3 |
(246) |
(1,184) |
(1,430) |
|
(208) |
(610) |
(818) |
|
|
Other operating expenses |
4 |
(397) |
(5) |
(402) |
|
(386) |
- |
(386) |
|
|
|
|
|
|
|
|
|
|
|
|
Finance costs |
5 |
(1,867) |
- |
(1,867) |
|
(1,851) |
- |
(1,851) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
(2,510) |
(1,189) |
(3,699) |
|
(2,445) |
(610) |
(3,055) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax |
|
3,698 |
8,125 |
11,823 |
|
3,572 |
20,368 |
23,940 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxation |
6 |
- |
- |
- |
|
18 |
- |
18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the year |
|
3,698 |
8,125 |
11,823 |
|
3,590 |
20,368 |
23,958 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per ordinary share (pence) |
7 |
8.12 |
17.84 |
25.96 |
|
7.88 |
44.72 |
52.60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
The total column of this statement represents the Statement of Comprehensive Income of the Company prepared in accordance with IFRS.
|
|
The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the |
|
Association of Investment Companies. All items in the above statement derive from continuing operations.
|
|
All income is attributable to the equity holders of Value and Income Trust PLC, the parent company. There are no minority interests. |
VALUE AND INCOME TRUST PLC
STATEMENT OF FINANCIAL POSITION
|
|
|
|
|
Group |
|
Company |
||||||||
|
|
|
|
|
As at |
|
As at |
|
As at |
|
As at |
||||
|
|
|
|
|
31 March 2014 |
|
31 March 2013 |
|
31 March 2014 |
|
31 March 2013 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note |
£'000 |
£'000 |
|
£'000 |
£'000 |
|
£'000 |
£'000 |
|
£'000 |
£'000 |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Non current assets |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Investments held at fair value through profit or loss |
9 |
|
135,229 |
|
|
123,815 |
|
|
148,486 |
|
|
136,779 |
||
|
Investment properties |
9 |
|
46,475 |
|
|
46,225 |
|
|
46,475 |
|
|
17,850 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
181,704 |
|
|
170,040 |
|
|
194,961 |
|
|
154,629 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Cash and cash equivalents |
|
3,308 |
|
|
2,140 |
|
|
2,094 |
|
|
2,038 |
|
||
|
Other receivables |
10 |
619 |
|
|
689 |
|
|
440 |
|
|
673 |
|
||
|
|
|
|
|
|
3,927 |
|
|
2,829 |
|
|
2,534 |
|
|
2,711 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
|
185,631 |
|
|
172,869 |
|
|
197,495 |
|
|
157,340 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Other payables |
11 |
|
(2,073) |
|
|
(1,701) |
|
|
(13,937) |
|
|
(1,172) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS LESS CURRENT LIABILITIES |
|
|
183,558 |
|
|
171,168 |
|
|
183,558 |
|
|
156,168 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Debenture stock |
12 |
|
(35,301) |
|
|
(35,325) |
|
|
(39,718) |
|
|
(20,325) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET ASSETS |
|
|
148,257 |
|
|
135,843 |
|
|
143,840 |
|
|
135,843 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY ATTRIBUTABLE TO EQUITY SHAREHOLDERS |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Called up share capital |
14 |
|
4,555 |
|
|
4,555 |
|
|
4,555 |
|
|
4,555 |
||
|
Share premium |
15 |
|
18,466 |
|
|
18,446 |
|
|
18,446 |
|
|
18,446 |
||
|
Retained earnings |
16 |
|
125,256 |
|
|
112,842 |
|
|
120,839 |
|
|
112,842 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL EQUITY |
|
|
148,257 |
|
|
135,843 |
|
|
143,840 |
|
|
135,843 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Asset Value per ordinary share (pence) |
17 |
|
325.48 |
|
|
298.23 |
|
|
315.79 |
|
|
298.23 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VALUE AND INCOME TRUST PLC
STATEMENTS OF CHANGES IN EQUITY
|
Group |
|
|
Year ended 31 March 2014 |
|
|
||
|
|
|
Note |
Share capital |
Share premium |
Retained earnings |
Total |
|
|
|
|
|
|
||||
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Net assets at 31 March 2013 |
|
4,555 |
18,446 |
112,842 |
135,843 |
|
|
|
Net profit for the year |
|
- |
- |
16,240 |
16,240 |
|
|
|
Dividends paid |
8 |
- |
- |
(3,826) |
(3,826) |
|
|
|
|
|
|
|
|
|
|
|
|
Net assets at 31 March 2014 |
|
4,555 |
18,446 |
125,256 |
148,257 |
|
|
|
|
|
|
|
|
|
|
|
|
Company |
|
|
|
|
|
|
|
|
|
|
|
Year ended 31 March 2014 |
|
|
||
|
|
|
|
Share capital |
Share premium |
Retained earnings |
Total |
|
|
|
|
|
|
|
|||
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Net assets at 31 March 2013 |
|
4,555 |
18,466 |
112,842 |
135,843 |
|
|
|
Net profit for the year |
|
- |
- |
11,823 |
11,823 |
|
|
|
Dividends paid |
8 |
- |
- |
(3,826) |
(3,826) |
|
|
|
|
|
|
|
|
|
|
|
|
Net assets at 31 March 2014 |
|
4,555 |
18,466 |
120,839 |
143,840 |
|
|
|
|
|
|
|
|
|
|
|
|
Group |
|
|
Year ended 31 March 2013 |
|
|
||
|
|
|
Note |
Share capital |
Share premium |
Retained earnings |
Total |
|
|
|
|
|
|
||||
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Net assets at 31 March 2012 |
|
4,555 |
18,446 |
92,596 |
115,597 |
|
|
|
Net profit for the year |
|
- |
- |
23,958 |
23,958 |
|
|
|
Dividends paid |
8 |
- |
- |
(3,712) |
(3,712) |
|
|
|
|
|
|
|
|
|
|
|
|
Net assets at 31 March 2013 |
|
4,555 |
18,446 |
112,842 |
135,843 |
|
|
|
|
|
|
|
|
|
|
|
|
Company |
|
|
|
|
|
|
|
|
|
|
|
Year ended 31 March 2013 |
|
|
||
|
|
|
|
Share capital |
Share premium |
Retained earnings |
Total |
|
|
|
|
|
|
|
|||
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Net assets at 31 March 2012 |
|
4,555 |
18,446 |
92,596 |
115,597 |
|
|
|
Net profit for the year |
|
- |
- |
23,958 |
23,958 |
|
|
|
Dividends paid |
8 |
- |
- |
(3,712) |
(3,712) |
|
|
|
|
|
|
|
|
|
|
|
|
Net assets at 31 March 2013 |
|
4,555 |
18,446 |
112,842 |
135,843 |
|
|
|
|
|
|
|
|
|
|
|
VALUE AND INCOME TRUST PLC
GROUP STATEMENT OF CASH FLOWS
For the year ended 31 March
|
|
|
|
|
|
2014 |
|
2013 |
||
|
|
|
|
|
Note |
£'000 |
£'000 |
|
£'000 |
£'000 |
|
Cash flows from operating activities |
|
|
|
|
|
|
|||
|
|
Dividend income received |
|
|
5,117 |
|
|
4,346 |
||
|
|
Rental income received |
|
|
3,497 |
|
|
3,427 |
||
|
|
Interest received |
|
|
|
2 |
|
|
2 |
|
|
|
Operating expenses paid |
|
|
(2,312) |
|
|
(2,037) |
||
|
|
Taxation paid |
|
|
|
(63) |
|
|
(9) |
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH FROM OPERATING ACTIVITIES |
18 |
|
6,241 |
|
|
5,729 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|||
|
|
Purchase of investments |
|
(11,711) |
|
|
(12,315) |
|
||
|
|
Sale of investments |
|
|
13,987 |
|
|
12,237 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH INFLOW/(OUTFLOW) FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|||
|
|
|
2,276 |
|
|
(78) |
||||
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from financing activities |
|
|
|
|
|
|
|||
|
|
Interest paid |
|
|
(3,525) |
|
|
(3,525) |
|
|
|
|
Dividends paid |
|
8 |
(3,826) |
|
|
(3,712) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH OUTFLOW FROM FINANCING ACTIVITIES |
|
|
(7,351) |
|
|
(7,237) |
|||
|
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE/ (DECREASE) IN CASH AND CASH EQUIVALENTS |
|
|
1,166 |
|
|
(1,586) |
|||
|
Cash and cash equivalents at 1 April 2013 |
|
|
2,140 |
|
|
3,726 |
|||
|
Foreign exchange movements |
|
|
2 |
|
|
- |
|||
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at 31 March 2014 |
|
|
3,308 |
|
|
2,140 |
|||
|
|
|
|
|
|
|
|
|
|
|
VALUE AND INCOME TRUST PLC
COMPANY STATEMENT OF CASH FLOWS
For the year ended 31 March
|
|
|
|
|
|
|
2014 |
|
|
2013 |
|
|
|
|
|
Note |
£'000 |
£'000 |
|
£'000 |
£'000 |
|
Cash flows from operating activities |
|
|
|
|
|
|
|||
|
|
Dividend income received |
|
|
5,117 |
|
|
4,346 |
||
|
|
Rental income received |
|
|
1,393 |
|
|
1,287 |
||
|
|
Operating expenses paid |
|
|
(1,339) |
|
|
(1,557) |
||
|
|
Taxation paid |
|
|
|
(63) |
|
|
(9) |
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH FROM OPERATING ACTIVITIES |
18 |
|
5,108 |
|
|
4,067 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|||
|
|
Purchase of investments |
|
(8,272) |
|
|
(10,501) |
|
||
|
|
Sale of investments |
|
|
9,719 |
|
|
10,738 |
|
|
|
|
Increase in loan to subsidiary |
|
25 |
|
|
1 |
|
||
|
NET CASH INFLOW FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|||
|
|
|
1,472 |
|
|
238 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from financing activities |
|
|
|
|
|
|
|||
|
|
Interest paid |
|
|
(2,700) |
|
|
(1,875) |
|
|
|
|
Dividends paid |
|
8 |
(3,826) |
|
|
(3,712) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH OUTFLOW FROM FINANCING ACTIVITIES |
|
|
(6,526) |
|
|
(5,587) |
|||
|
|
|
|
|
|
|
|
|||
|
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS |
|
|
54 |
|
|
(1,282) |
|||
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at 1 April 2013 |
|
|
2,038 |
|
|
3,320 |
|||
|
Foreign exchange movements |
|
|
2 |
|
|
- |
|||
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at 31 March 2014 |
|
|
2,094 |
|
|
2,038 |
|||
|
|
|
|
|
|
|
|
|
|
|
VALUE AND INCOME TRUST PLC
NOTES TO THE ACCOUNTS
|
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 and Company is pounds sterling because that is the currency of the primary economic environment in which the Group operates. The financial statements and the accompanying notes are presented in pounds sterling and rounded to the nearest thousand pounds except where otherwise indicated. |
|
|
|
|
|
(a) Basis of preparation |
|
|
The financial statements have been prepared on a going concern basis and on the historical cost basis, except for the revaluation of certain financial assets. The principal accounting policies adopted are set out below. Where presentational guidance set out in the Statement of Recommended Practice Financial Statements of Investment Trust Companies and Venture Capital Trusts (the SORP) issued by the Association of Investment Companies (AIC) in 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 Board has considered the requirements of IFRS 8 'Operating Segments'. The Board is charged with setting the Group's investment strategy. The Board has delegated the day to day implementation of this strategy to the Investment Managers but the Board retains responsibility to ensure that adequate resources of the Group are directed in accordance with its decisions. The Board is of the view that the Group is engaged in a single segment of business, being investments in quoted UK equities and UK commercial properties. The view that the Group is engaged in a single segment of business is based on the fact that one of the key financial indicators received and reviewed by the Board is the total return from the investment portfolio taken as a whole. A review of the investment portfolio is included in the Investment Managers' Reports. |
|
|
|
|
|
(b) Going concern |
|
|
The Group's business activities, together with the factors likely to affect its future development and performance, are set out in the Strategic Report. The financial position of the Group as at 31 March 2014 is shown in the Statement of Financial Position. The cash flows of the Group for the year ended 31 March 2014, which are not untypical, are set out in the Group Statement of Cash Flows. The Group had fixed debt totalling £35,301,000 as at 31 March 2014 as set out in Note 12; none of the borrowings is repayable before 2021. The Group had no short term borrowings. Note 20 sets out the Group's risk management policies, including those concerning market price risk, liquidity risk and credit risk. As at 31 March 2014, the Group's total assets less current liabilities exceeded its total non current liabilities by a factor of over five. The assets of the Group consist mainly of securities and investment properties that are held in accordance with the Group's investment policy. Most of these securities are readily realisable, even in volatile markets. The Directors, who have reviewed carefully the Group's forecasts for the coming year, consider that the Group has adequate financial resources to enable it to continue in operational existence for the foreseeable future. Accordingly the Directors believe that it is appropriate to continue to adopt the going concern basis in preparing the Financial Statements. |
|
|
|
|
|
(c) Basis of consolidation |
|
|
The consolidated financial statements incorporate the financial statements of the Company and the entity controlled by the Company (its subsidiary). 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, adjusted for the fair value of the debenture stock transferred during the year. |
|
|
|
|
|
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. |
|
|
|
|
|
On 28 March 2014, the investment properties then owned and the debenture stock previously issued by Audax Properties plc were transferred at fair value to its holding company, Value and Income Trust PLC. Further details are given in the Strategic Report and in Notes 9 and 11 to the Financial Statements. |
|
|
|
|
|
A new wholly owned subsidiary of the Company, Value & Income Services Limited was incorporated on 16 January 2014 but has not traded at any time since that date. |
|
|
|
|
|
(d) Presentation of Statement of Comprehensive Income |
|
|
In order to reflect better the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the Statement of Comprehensive Income between items of a revenue and capital nature has been presented alongside the Statement of Comprehensive Income. In accordance with the Company's Articles, net capital returns may not be distributed by way of dividend. Additionally the net revenue is the measure that the directors believe to be appropriate in assessing the Company's compliance with certain requirements set out in sections 1158-1160 of the Corporation Tax Act 2010. |
|
|
|
|
|
(e) Income |
|
|
Dividend income from investments is recognised as revenue for the period on an ex-dividend basis. Where no ex-dividend date is available, dividends receivable on or before the period end are treated as revenue for the period. |
|
|
|
|
|
Where the Group has elected to receive dividend income in the form of additional shares rather than cash, the amount of cash dividend foregone is recognised as income. Any excess in the value of shares received over the amount of cash dividend foregone is recognised as a gain in the income statement. |
|
|
|
|
|
Interest receivable from cash and short term deposits and interest payable is accrued to the end of the period. |
|
|
|
|
|
Rental receivable and lease incentives, where material, from investment properties under operating leases are recognised in the Statement of Comprehensive Income over the term of the lease on a straight line basis. Other income is recognised on an accruals basis. |
|
|
|
|
|
(f) Expenses and Finance Costs |
|
|
All expenses and finance costs are accounted for on an accruals basis. Expenses are presented as capital where a connection with the maintenance or enhancement of the value of investments can be demonstrated. In this respect and in accordance with the SORP, the investment management fees are allocated 30% to revenue and 70% to capital to reflect the Board's expectations of long term investment returns. Any performance fees payable are allocated to capital, reflecting the fact that, although they are calculated on a total return basis, they are expected to be attributable largely to capital performance. It is normal practice and in accordance with the SORP for investment trust companies to allocate finance costs to capital on the same basis as the investment management fee allocation. However as the Company has a significant exposure to property, and property companies do not charge finance costs to capital, the directors consider that, contrary to the SORP, it is inappropriate to allocate finance costs to capital.
|
|
|
(g) Other Receivables and Payables |
|
|
Other receivables do not carry any interest and are stated at their nominal value, as reduced by appropriate allowances for any estimated irrecoverable amounts. Other payables are not interest bearing and are stated at their nominal value.
|
|
|
(h) Taxation |
|
|
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. |
|
|
|
|
|
(i) Dividends payable |
|
|
Interim dividends are recognised as a liability in the period in which they are paid as no further approval is required in respect of such dividends. Final dividends are recognised as a liability only after they have been approved by shareholders in general meeting. |
|
|
|
|
|
(j) Investments Equity investments All investments have been designated upon initial recognition as fair value through profit or loss. Investments are recognised and derecognised on the trade date where a purchase or sale is under a contract whose terms require delivery within the timeframe established by the market concerned, and are initially measured at fair value. Subsequent to initial recognition, investments are recognised at fair value through profit or loss. For listed investments, this is deemed to be bid market prices or closing prices for SETS stocks sourced from the London Stock Exchange. SETS is the London Stock Exchange electronic trading service covering most of the market including all FTSE 100 constituents and most liquid FTSE 250 constituents along with some other securities. Gains and losses arising from changes in fair value are included in net profit or loss for the period as a capital item in the Statement of Comprehensive Income and are ultimately recognised in the retained earnings.
Investment property All investment properties have been designated upon initial recognition as fair value through profit or loss. Investment properties are recognised and derecognised on the date where a purchase or sale is legally completed, and are initially measured at fair value.
As disclosed in Note 20, the Group leases out all of its properties on operating leases. A property held under an operating lease is classified and accounted for as an investment property where the Group holds it to earn rental, capital appreciation or both. Any such property leased under an operating lease is carried at fair value.
Fair value is established by half-yearly professional valuation on an open market basis by Jones Lang LaSalle, Chartered Surveyors and Valuers, and in accordance with the RICS Valuation Professional Standards. The determination of fair value by Jones Lang LaSalle is supported by market evidence. It is not more heavily based on other factors because of the nature of the properties and the availability of comparable market data. These valuations are disclosed in Note 9.
The Company accounts for its investment in its subsidiary at fair value. All fair value adjustments in relation to the subsidiary are eliminated on consolidation. |
|
|
|
|
|
(k) Cash and cash equivalents Cash and cash equivalents comprises deposits held with banks.
(l) Non - current liabilities All new loans and borrowings are initially recognised at cost, being the fair value of the consideration received, less issue costs where applicable. After initial recognition, all interest bearing loans and borrowings are subsequently measured at amortised cost. Amortised cost is calculated by taking into account any discount or premium on settlement. The costs of arranging any interest-bearing loans are capitalised and amortised over the life of the loan.
(m) Adoption of new and revised Accounting Standards Amendments to the following IFRSs were applicable for the year ended 31 March 2014. This did not have any impact on the financial position or performance of the Group.
IFRS7 - Amendments to financial instruments disclosure IFRS 10 - Amendments to accounting for investee companies in consolidated financial statements IFRS 12 - Amendments to disclosures of Interest in Other Entities IFRS 13 - Amendments to fair value measurement and disclosure IAS 27 - Amendments to Separate Financial Statements
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 financial impact on the financial statements of the Company. The Company concludes however that certain additional disclosures may be necessary on their application.
|
|
|
|
|
|
|
2014 |
2013 |
||
|
|
|
Group |
Company |
Group |
Company |
|
|
|
£000 |
£000 |
£000 |
£000 |
|
2 |
Income |
|
|
|
|
|
|
Investment income |
|
|
|
|
|
|
Dividends from listed investments in UK - franked |
4,200 |
4,200 |
4,131 |
4,131 |
|
|
Dividends from listed investments in UK - unfranked |
634 |
634 |
538 |
538 |
|
|
|
_______ |
_______ |
_______ |
________ |
|
|
|
4,834 |
4,834 |
4,669 |
4,669 |
|
|
Other operating income |
|
|
|
|
|
|
Rental income |
3,462 |
1,374 |
3,562 |
1,348 |
|
|
Interest receivable on short term deposits |
1 |
- |
2 |
- |
|
|
|
_______ |
_______ |
_______ |
________ |
|
|
Total income |
8,297 |
6,208 |
8,233 |
6,017 |
|
|
|
________ |
________ |
________ |
________ |
|
|
|
2014 |
2013 |
||||
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
3 |
Investment management fee |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group |
|
|
|
|
|
|
|
|
Investment management fee |
368 |
859 |
1,227 |
312 |
729 |
1,041 |
|
|
Performance fee |
- |
611 |
611 |
- |
125 |
125 |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
368 |
1,470 |
1,838 |
312 |
854 |
1,166 |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
Company |
|
|
|
|
|
|
|
|
Investment management fee |
246 |
573 |
819 |
208 |
485 |
693 |
|
|
Performance fee |
- |
611 |
611 |
- |
125 |
125 |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
246 |
1,184 |
1,430 |
208 |
610 |
818 |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
2014 |
2013 |
|||||
|
|
|
Group |
|
Company |
Group |
|
Company |
|
|
|
|
£000 |
|
£000 |
£000 |
|
£000 |
|
|
4 |
Other operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Auditors' remuneration |
|
|
|
|
|
|
|
|
|
|
- audit |
23 |
|
15 |
18 |
|
13 |
|
|
|
- other non-audit services |
- |
|
- |
1 |
|
1 |
|
|
|
- taxation compliance services |
5 |
|
4 |
4 |
|
3 |
|
|
|
- out of pocket expenses |
- |
|
- |
1 |
|
1 |
|
|
Directors' fees |
48 |
|
48 |
52 |
|
52 |
|
|
|
NIC on directors' fees |
3 |
|
3 |
4 |
|
4 |
|
|
|
Fees for company secretarial services |
137 |
|
116 |
144 |
|
99 |
|
|
|
Direct property costs |
(4) |
|
(23) |
(21) |
|
(9) |
|
|
|
Other expenses |
443 |
|
234 |
310 |
|
222 |
|
|
|
|
_______ |
|
________ |
_______ |
|
________ |
|
|
|
|
655 |
|
397 |
513 |
|
386 |
|
|
|
Capital costs |
5 |
|
5 |
- |
|
- |
|
|
|
|
_______ |
|
_______ |
_______ |
|
_______ |
|
|
|
|
660 |
|
402 |
513 |
|
386 |
|
|
|
|
_______
|
|
________ |
_______ |
|
________ |
|
|
|
|
|||||||
|
|
Directors' fees comprise the chairman's fees of £20,000 (2013 - £20,000) and fees of £14,000 (2013 - £14,000) per annum paid to each other director. The Directors' fees of £14,000 each (2013 - £14,000 each) in respect of the qualifying services provided by Matthew Oakeshott and Angela Lascelles are included in the investment management fees payable to OLIM Limited and OLIM Property Limited as detailed below. |
|||||||
|
|
|
|||||||
|
|
Angela Lascelles is a Director of OLIM Limited which received an investment management fee of £886,000 (2013 - £697,000) and a performance fee of £419,000 (2013 - £83,000).
|
|||||||
|
|
Matthew Oakeshott is a director of OLIM Property Limited which received an investment management fee of £341,000 (2013 - £344,000) and a performance fee of £192,000 (2013 - £42,000). |
|||||||
|
|
|
2014 |
2013 |
||||
|
|
|
Group |
|
Company |
Group |
|
Company |
|
|
|
£000 |
|
£000 |
£000 |
|
£000 |
|
5 |
Finance costs |
|
|
|
|
|
|
|
|
Interest payable on: |
|
|
|
|
|
|
|
|
11% First Mortgage Debenture Stock 2021 |
1,650 |
|
16 |
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 |
|
1,867 |
3,501 |
|
1,851 |
|
|
|
________ |
|
________ |
_______ |
|
________ |
|
|
|
2014 |
2013 |
||||
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
6 |
Taxation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a) |
Analysis of the tax (credit)/charge for the year: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group |
|
|
|
|
|
|
|
|
Corporation tax payable |
- |
- |
- |
- |
- |
- |
|
|
Decrease in deferred tax provision |
- |
- |
- |
- |
(390) |
(390) |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
- |
- |
- |
- |
(390) |
(390) |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
Factors affecting the current tax (credit)/charge for year: |
||||||
|
|
Revenue / capital return on ordinary activities before tax |
16,240 |
|
|
23,568 |
||
|
|
|
_______ |
|
|
_______ |
||
|
|
Tax thereon at 23% (2013 - 23%) |
3,735 |
|
|
5,421 |
||
|
|
Effects of: |
|
|
|
|
||
|
|
Non taxable dividends |
(1,112) |
|
|
(1,074) |
||
|
|
Gains on investments not taxable |
(3,207) |
|
|
(4,718) |
||
|
|
Excess expenses not utilised |
584 |
|
|
10 |
||
|
|
Decrease in rate of deferred tax |
- |
|
|
(29) |
||
|
|
|
_______ |
|
|
_______ |
||
|
|
|
- |
|
|
(390) |
||
|
|
|
_______ |
|
|
_______ |
||
|
|
|
||||||
|
|
|
|
|
||||
|
|
|
2014 |
2013 |
||||
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
Company |
|
|
|
|
|
|
|
|
Group relief receivable |
- |
- |
- |
(18) |
- |
(18) |
|
|
|
|
|
|
|
|
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
- |
- |
- |
(18) |
- |
(18) |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
Factors affecting the current tax (credit)/charge for year: |
||||||
|
|
Revenue / capital return on ordinary activities before tax |
11,823 |
|
|
23,940 |
||
|
|
|
_______ |
|
|
_______ |
||
|
|
Tax thereon at 23% (2013 - 23%) |
2,719 |
|
|
5,506 |
||
|
|
Effects of: |
|
|
|
|
||
|
|
Non taxable dividends |
(1,112) |
|
|
(1,074) |
||
|
|
Gains on investments not taxable |
(2,142) |
|
|
(4,825) |
||
|
|
Excess expenses not utilised |
535 |
|
|
375 |
||
|
|
|
_______ |
|
|
_______ |
||
|
|
|
- |
|
|
(18) |
||
|
|
|
_______ |
|
|
_______ |
||
|
|
|
||||||
|
|
|
||||||
|
b) |
Factors affecting the tax charge for the year |
||||||
|
|
The Company has losses for tax purposes arising in the year of £1,867,000 (2013 - £1,851,000). Under current legislation, it is unlikely that these losses will be capable of offset against the Group's future taxable profits. |
||||||
|
|
|
||||||
|
c) |
Factors affecting future tax charges |
||||||
|
|
Both the Company and Audax Properties PLC have deferred tax assets of £5,251,000 (2013 - £4,739,000) and £37,000 (2013 - £nil) respectively at 31 March 2014 relating to total accumulated unrelieved tax losses carried forward of £22,831,000 (2013 - £20,604,000) and £161,000 (2013-nil). 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. |
||||||
|
|
|
2014 |
2013 |
||||
|
|
|
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 |
3,773 |
|
3,698 |
3,907 |
|
3,590 |
|
|
Capital return |
12,467 |
|
8,125 |
20,051 |
|
20,368 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average ordinary shares in issue |
45,549,975 |
|
45,549,975 |
45,549,975 |
|
45,549,975 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return per share - revenue |
8.28p |
|
8.12p |
8.58p |
|
7.88p |
|
|
Return per share - capital |
27.37p |
|
17.84p |
44.02p |
|
44.72p |
|
|
|
________ |
|
________ |
________ |
|
________ |
|
|
Total return per share |
35.65p |
|
25.96p |
52.60p |
|
52.60p |
|
|
|
________ |
|
________ |
________ |
|
________ |
|
|
|
2014 |
2013 |
|
|
|
£000 |
£000 |
|
8 |
Dividends |
|
|
|
|
Dividends on ordinary shares: |
|
|
|
|
Final dividend of 4.30p per share (2013 - 4.15p) paid 19 July 2013 |
1,959 |
1,890 |
|
|
Interim dividend of 4.10p per share (2013 - 4.00p) paid 3 January 2014 |
1,867 |
1,822 |
|
|
|
________ |
________ |
|
|
Dividends paid in the period |
3,826 |
3,712 |
|
|
|
________ |
________ |
|
|
|
|
|
|
|
The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. |
||
|
|
|
||
|
|
Set out below is the total dividend paid and proposed in respect of the financial year, which is the basis upon which the requirements of Sections 1158 - 1159 of the Corporation Tax Act 2010 are considered. The current year's revenue available for distribution by way of dividend is £3,698,000 (2013 - £3,590,000). |
||
|
|
|
|
|
|
|
|
2014 |
2013 |
|
|
|
£000 |
£000 |
|
|
Interim dividend for the year ended 31 March 2014 - 4.10p |
1,867 |
1,822 |
|
|
(2013 - 4.00p) paid 3 January 2014 |
|
|
|
|
Proposed final dividend for the year ended 31 March 2014 - 4.40p |
2,004 |
1,959 |
|
|
(2013 - 4.30p) payable 18 July 2014 |
________ |
________ |
|
|
|
3,871 |
3,781 |
|
|
|
________ |
________ |
|
|
|
Equities |
Investment properties |
Total |
|
|
|
|
£'000 |
£'000 |
£'000 |
|
|
9 |
Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
Group |
|
|
|
|
|
|
Cost at 31 March 2013 |
78,463 |
32,961 |
111,424 |
|
|
|
Unrealised appreciation |
45,352 |
13,264 |
58,616 |
|
|
|
|
________ |
________ |
________ |
|
|
|
Valuation at 31 March 2013 |
123,815 |
46,225 |
170,040 |
|
|
|
|
|
|
|
|
|
|
Purchases |
8,272 |
3,428 |
11,710 |
|
|
|
Sales proceeds |
(9,719) |
(4,267) |
(13,986) |
|
|
|
Realised gains on sales |
5,264 |
895 |
6,159 |
|
|
|
Movement in unrealised appreciation in year |
7,597 |
184 |
7,781 |
|
|
|
|
________ |
________ |
________ |
|
|
|
Valuation at 31 March 2014 |
135,229 |
46,475 |
181,704 |
|
|
|
|
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equities |
Investment in Subsidiary |
Investment properties |
Total |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Company |
|
|
|
|
|
|
Cost at 31 March 2013 |
78,463 |
25 |
13,306 |
91,794 |
|
|
Unrealised appreciation |
45,351 |
12,940 |
4,544 |
62,835 |
|
|
|
|
|
|
|
|
|
Valuation at 31 March 2013 |
123,814 |
12,965 |
17,850 |
154,629 |
|
|
|
|
|
|
|
|
|
Purchases |
8,272 |
- |
28,050 |
36,322 |
|
|
Investment in subsidiary |
- |
4,417 |
- |
4,417 |
|
|
Sales proceeds |
(9,719) |
- |
- |
(9,719) |
|
|
Realised gains on sales |
5,265 |
- |
- |
5,265 |
|
|
Movement in unrealised appreciation/ (depreciation) in year |
7,597 |
(4,125) |
575 |
4,047 |
|
|
|
________ |
________ |
________ |
________ |
|
|
Valuation at 31 March 2014 |
135,229 |
13,257 |
46,475 |
194,961 |
|
|
|
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
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:- |
||||
|
|
|
|
|
||
|
|
|
2014 |
2013 |
||
|
|
|
£'000 |
£'000 |
||
|
|
Purchases |
47 |
65 |
||
|
|
Sales |
17 |
19 |
||
|
|
|
________ |
________ |
||
|
|
|
64 |
84 |
||
|
|
|
________ |
________ |
||
|
|
|
|
|
||
|
|
As part of the group's corporate reconstruction, all investment properties previously owned by Audax Properties PLC were transferred to the ownership of Value and Income Trust plc (VIT) with effect from 28 March 2014. The fair values of the investment properties, at which the transfers were made, were established by professional valuation, on the basis of market value, by Jones Lang LaSalle Limited, Real Estate Advisers. These valuations were carried out in accordance with the RICS Valuation - Professional Standards January 2014, (published by the Royal Institution of Chartered Surveyors) by reference to the Investment Method whereby the net annual income derived from a property is capitalised by an appropriate capitalisation rate or Years' Purchase figure to arrive at the present Capital Value of the property after an allowance for a purchaser's costs. The relevant capitalisation rate is chosen based on the investment rate of return expected (as derived from comparisons of other similar property investments) for the type of property concerned taking into consideration such factors as risk, capital appreciation, security of income, ease of sale and management of property etc.
Following the transfer of the debenture from Audax Properties PLC to Value and Income Trust plc, the debenture is, in accordance with IAS 39, initially recorded at its fair value of £19,417,000, rather than its nominal value of £15,000,000. Given that this transfer took place between a parent and a subsidiary, the difference in value has been treated by the parent as an investment in its subsidiary.
|
||||
|
|
|
2014 |
2013 |
||||
|
|
|
Group |
|
Company |
Group |
|
Company |
|
|
|
£000 |
|
£000 |
£000 |
|
£000 |
|
10 |
Other receivables |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts falling due within one year: |
|
|
|
|
|
|
|
|
Dividends receivable |
298 |
|
298 |
581 |
|
581 |
|
|
Amounts due from subsidiary |
- |
|
- |
- |
|
18 |
|
|
Prepayments and accrued income |
321 |
|
142 |
108 |
|
74 |
|
|
|
________ |
|
________ |
________ |
|
________ |
|
|
|
619 |
|
440 |
689 |
|
673 |
|
|
|
________ |
|
________ |
________ |
|
________ |
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
2013 |
||||
|
|
|
Group |
|
Company |
Group |
|
Company |
|
|
|
£000 |
|
£000 |
£000 |
|
£000 |
|
11 |
Other payables |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value Added Tax payable |
- |
|
65 |
137 |
|
61 |
|
|
Amounts due to OLIM Limited |
419 |
|
419 |
141 |
|
122 |
|
|
Amounts due to OLIM Property Limited |
192 |
|
192 |
71 |
|
61 |
|
|
Accruals and other creditors |
1,462 |
|
1,013 |
1,352 |
|
928 |
|
|
Amount due to subsidiary |
- |
|
12,248 |
- |
|
- |
|
|
|
________ |
|
________ |
________ |
|
________ |
|
|
|
2,073 |
|
13,937 |
1,701 |
|
1,172 |
|
|
|
________ |
|
________ |
________ |
|
________ |
|
|
|
|
|
|
|
|
|
|
|
The amounts due to OLIM Limited and OLIM Property Limited comprise management fees for the month of March 2014 and a performance fee for the year to 31 March 2014, subsequently paid in May 2014.
|
||||||
|
|
As part of the Group's corporate reconstruction which took effect on 28 March 2014, all investment properties then belonging to Audax Properties plc and the 11% First Mortgage Debenture Stock 2021 issued by Audax Properties plc were transferred to the ownership/issuance of Value and Income Trust PLC (VIT). As a result, a large inter company account balance of £12,248,000 has been created. It is envisaged that this balance will be extinguished soon after the year end. |
||||||
|
|
|
2014 |
2013 |
||||
|
|
|
Group |
|
Company |
Group |
|
Company |
|
|
|
£000 |
|
£000 |
£000 |
|
£000 |
|
12 |
Non-current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11% First Mortgage Debenture Stock 2021 |
15,000 |
|
15,000 |
15,000 |
|
- |
|
|
Fair value adjustment |
- |
|
4,417 |
- |
|
- |
|
|
|
________ |
|
________ |
________ |
|
________ |
|
|
|
15,000 |
|
19,417 |
15,000 |
|
- |
|
|
|
|
|
|
|
|
|
|
|
9.375% Debenture Stock 2026 |
20,000 |
|
20,000 |
20,000 |
|
20,000 |
|
|
Add:- Balance of premium less issue expenses |
325 |
|
325 |
349 |
|
349 |
|
|
Less : Credit to income for the year |
(24) |
|
(24) |
(24) |
|
(24) |
|
|
|
________ |
|
________ |
________ |
|
________ |
|
|
|
35,301 |
|
39,718 |
35,325 |
|
20,325 |
|
|
|
________ |
|
________ |
________ |
|
________ |
|
|
|
|
|
|
|
|
|
|
|
The 11% First Mortgage Debenture Stock 2021, previously issued by Audax Properties plc, was on 28 March 2014, transferred to Value and Income Trust PLC (VIT) following the approval of the substitution of VIT as issuer of the Debentures by the holders on 11 March 2014. Applications were made to the UK Listing Authority and the London Stock Exchange for the Debentures to be admitted in the name of VIT to the Official List and to trading on the main market of the London Stock Exchange from 28 March 2014. Following an application by Audax Properties PLC to the UK Listing Authority and the London Stock Exchange, conditional upon admission occurring, the admission to the Official List and to trading on the London Stock Exchange's main market for listed securities, the debentures were derecognised with effect from 28 March 2014.
|
||||||
|
|
The 11% First Mortgage Debenture Stock 2021, now issued by VIT, is repayable at par on 31 March 2021 and is secured over specific assets of the Company. Under IFRS 39, this debenture requires to be initially recorded at fair value in the Company's accounts. This adjustment is eliminated on consolidation. |
||||||
|
|
|
||||||
|
|
The Trust Deed of the 11% Debenture Stock contains four covenants with which the Company has complied; 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 VIT is repayable at par on 30 November 2026 and is secured by a floating charge over the property and assets of the Company. |
||||||
|
|
|
||||||
|
|
The Trust Deed of the 9.375% Debenture Stock contains restrictions and events of default. The restrictions require that the aggregate group borrowings, £35 million, must not at any time exceed the total group capital and reserves (equivalent to net assets of £148.26 million as at 31 March 2014).
The fair values of the debentures are disclosed in Note 20 and the net asset value per share, calculated with the debentures at fair value is disclosed in Note 17. |
||||||
|
13 |
Deferred tax |
|
|
|
|
|
Under IAS 12, provision must be made for any potential tax liability on revaluation surpluses. As an investment trust, the Company does not incur capital gains tax and following the transfer of properties owned by Audax Poperties on 28 March 2014, no provision for deferred tax is required. |
|
|
|
2014 |
2013 |
|
|
|
£000 |
£000 |
|
14 |
Share capital |
|
|
|
|
Authorised: |
|
|
|
|
56,000,000 ordinary shares of 10p each (2013 - 56,000,000) |
5,600 |
5,600 |
|
|
|
________ |
________ |
|
|
|
|
|
|
|
Called up, issued and fully paid: |
|
|
|
|
45,549,975 ordinary shares of 10p each (2013 - 45,549,975) |
4,555 |
4,555 |
|
|
|
________ |
________ |
|
|
|
2014 |
2013 |
||||
|
|
|
Group |
|
Company |
Group |
|
Company |
|
|
|
£000 |
|
£000 |
£000 |
|
£000 |
|
15 |
Share premium |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Opening balance |
18,446 |
|
18,446 |
18,446 |
|
18,446 |
|
|
|
________ |
|
________ |
________ |
|
________ |
|
|
|
2014 |
2013 |
||||||||
|
|
|
Group |
|
Company |
Group |
|
Company |
||||
|
|
|
£000 |
|
£000 |
£000 |
|
£000 |
||||
|
16 |
Retained earnings |
|
|
|
|
|
|
||||
|
|
Opening balance at 31 March 2013 |
112,842 |
|
112,842 |
92,596 |
|
92,596 |
||||
|
|
Profit for the period |
16,240 |
|
11,823 |
23,958 |
|
23,958 |
||||
|
|
Dividends paid (see note 8) |
(3,826) |
|
(3,826) |
(3,712) |
|
(3,712) |
||||
|
|
|
________ |
|
________ |
________ |
|
________ |
||||
|
|
Closing balance at 31 March 2014 |
125,256 |
|
120,839 |
112,842 |
|
112,842 |
||||
|
|
|
________ |
|
________ |
________ |
|
________ |
||||
|
|
|
|
|
|
|
|
|
||||
|
|
The table below shows the movement in retained earnings analysed between revenue and capital items. |
||||||||||
|
|
|
||||||||||
|
|
|
2014 |
2013 |
||||||||
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
||||
|
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
||||
|
|
Group |
|
|
|
|
|
|
||||
|
|
Opening balance at 31 March 2013 |
3,785 |
109,057 |
112,842 |
3,590 |
89,006 |
92,596 |
||||
|
|
Profit for the period |
3,773 |
12,467 |
16,240 |
3,907 |
20,051 |
23,958 |
||||
|
|
Dividends paid (see note 8) |
(3,826) |
- |
(3,826) |
(3,712) |
- |
(3,712) |
||||
|
|
|
_______ |
_______ |
_______ |
________ |
_______ |
_______ |
||||
|
|
Closing balance at 31 March 2014 |
3,732 |
121,524 |
125,256 |
3,785 |
109,057 |
112,842 |
||||
|
|
|
_______ |
_______ |
_______ |
________ |
_______ |
_______ |
||||
|
|
|
|
|
|
|
|
|
||||
|
|
Company |
|
|
|
|
|
|
||||
|
|
Opening balance at 31 March 2013 |
2,671 |
110,171 |
112,842 |
2,793 |
88,803 |
92,596 |
||||
|
|
Profit for the period |
3,698 |
8,125 |
11,823 |
3,590 |
20,368 |
23,958 |
||||
|
|
Dividends paid (see note 8) |
(3,826) |
- |
(3,826) |
(3,712) |
- |
(3,712) |
||||
|
|
|
_______ |
_______ |
_______ |
________ |
_______ |
_______ |
||||
|
|
Closing balance at 31 March 2014 |
2,543 |
118,296 |
120,839 |
2,671 |
110,171 |
112,842 |
||||
|
|
|
_______ |
_______ |
_______ |
________ |
_______ |
_______ |
||||
|
17 |
Net asset value per equity share |
|
|
The net asset value per ordinary share is based on Group's net assets attributable of £148,257,000 (2013 - £135,843,000) and on 45,549,975 (2013 - 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 304.30p (2013 - 269.78p) |
|
|
|
2014 |
2013 |
||||
|
|
|
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 |
22,239 |
|
15,522 |
28,748 |
|
26,995 |
|
|
Gains and losses on investments |
(13,942) |
|
(9,314) |
(20,515) |
|
(20,978) |
|
|
Foreign exchange movements |
2 |
|
2 |
- |
|
- |
|
|
Investment management fee |
(1,838) |
|
(1,430) |
(1,166) |
|
(818) |
|
|
Other operating expenses |
(660) |
|
(402) |
(513) |
|
(386) |
|
|
Decrease/ (increase) in receivables |
5 |
|
215 |
(411) |
|
(380) |
|
|
Increase/ (decrease) in other payables |
435 |
|
515 |
(414) |
|
(366) |
|
|
|
_______ |
|
________ |
_______ |
|
________ |
|
|
Net cash from operating activities |
6,241 |
|
5,108 |
5,729 |
|
4,067 |
|
|
|
_______ |
|
________ |
________ |
|
________ |
|
19 |
Relationship with the Investment Manager |
|
|
Angela Lascelles is a Director of OLIM Limited which has an agreement with the Company to provide investment management services, the terms of which are outlined in Note 3. |
|
|
|
|
|
Matthew Oakeshott is a director of OLIM Property Limited which has an agreement with the Company to provide investment property management services, the terms of which are outlined in Note 3.
|
|
|
|
|
|
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 11.
As part of the Group's corporate reconstruction which took effect on 28 March 2014, all investment properties then belonging to Audax Properties plc with a total value of £28,050,000 and the 11% First Mortgage Debenture Stock 2021 issued by Audax Properties plc were transferred to the ownership/issuance of Value and Income Trust PLC. No properties were transferred between group companies during the previous year. |
|
20 |
Financial instruments |
||||
|
|
Risk management |
||||
|
|
The Group's financial instruments comprise securities, property and other investments, cash balances, loans and debtors and creditors that arise directly from its operations; for example, in respect of sales and purchases awaiting settlement or debtors for accrued income. |
||||
|
|
|
||||
|
|
The Managers have dedicated investment management processes which ensure that the Investment Policy is achieved. For equities, stock selection procedures are in place based on active portfolio management and the identification of stocks. The portfolio is reviewed on a periodic basis by a senior investment manager and also by the Managers' Investment Committees. |
||||
|
|
|
||||
|
|
Additionally, the Managers' Compliance Officers continually monitor the Group's investment and borrowing powers and report to their respective Manager's Risk Management Committee. |
||||
|
|
|
||||
|
|
The main risks that the Group faces from its financial instruments are: (i) market risk (comprising price risk, interest rate risk and currency risk) (ii) liquidity risk (iii) credit risk |
||||
|
|
|
||||
|
|
The Board regularly reviews and agrees policies for managing each of these risks. The Managers' policies for managing these risks are summarised below and have been applied throughout the year. |
||||
|
|
|
||||
|
|
(i) Market risk |
||||
|
|
The fair value of, or future cash flows from, a financial instrument held by the Group may fluctuate because of changes in market prices. This market risk comprises three elements - price risk, interest rate risk and currency risk. |
||||
|
|
|
||||
|
|
Price risk |
||||
|
|
Price risks (i.e. changes in market prices other than those arising from interest rate or currency risk) may affect the value of the Group's investments. |
||||
|
|
|
||||
|
|
It is the Board's policy to hold an appropriate spread of investments in the portfolio in order to reduce the risk arising from factors specific to a particular sector. For equities, asset allocation and stock selection, as set out in the Investment Policy, both act to reduce market risk. The Manager actively monitors market prices throughout the year and reports to the Board, which meets regularly in order to review investment strategy. The investments held by the Group are listed on the UK Stock Exchange. All investment properties are commercial properties located in the UK, most 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 2014 would have increased/decreased by £18,170,000 (2013 - increase/decrease of £16,351,000) 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 2014 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 2014 |
Weighted average period for which rate is fixed Years |
Weighted average interest rate |
|
|
|
|
Assets |
|
|
|
|
|
|
Sterling |
- |
- |
- |
3,308 |
|
|
|
________ |
________ |
________ |
________ |
|
|
Total assets |
- |
- |
- |
3,308 |
|
|
|
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
At 31 March 2014 |
Weighted average period for which rate is fixed Years |
Weighted average interest rate |
|
|
||||||||
|
|
Liabilities |
|
|
|
|
||||||||
|
|
Sterling |
10 |
10.07 |
35,000 |
- |
||||||||
|
|
|
________ |
________ |
________ |
________ |
||||||||
|
|
Total liabilities |
10 |
10.07 |
35,000 |
- |
||||||||
|
|
|
________ |
________ |
________ |
________ |
||||||||
|
|
|
|
|
|
|
||||||||
|
|
At 31 March 2013 |
Weighted average period for which rate is fixed Years |
Weighted average interest rate |
|
|
||||||||
|
|
Assets |
|
|
|
|
||||||||
|
|
Sterling |
- |
- |
- |
2,140 |
||||||||
|
|
|
________ |
________ |
________ |
________ |
||||||||
|
|
Total assets |
- |
- |
- |
2,140 |
||||||||
|
|
|
________ |
________ |
________ |
________ |
||||||||
|
|
|
|
|
|
|
||||||||
|
|
At 31 March 2013 |
Weighted average period for which rate is fixed Years |
Weighted average interest rate |
|
|
||||||||
|
|
Liabilities |
|
|
|
|
||||||||
|
|
Sterling |
11 |
10.07 |
35,000 |
- |
||||||||
|
|
|
________ |
________ |
________ |
________ |
||||||||
|
|
Total liabilities |
11 |
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 floating rate assets consist of cash deposits on call earning interest at prevailing market rates. The Group's equity and property portfolios and short term receivables and payables are non interest bearing and have been excluded from the above tables. All financial liabilities are measured at amortised cost. |
||||||||||||
|
|
|
||||||||||||
|
|
Interest rate sensitivity |
||||||||||||
|
|
The sensitivity analyses below have been determined based on the exposure to interest rates at the balance sheet date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period in the case of instruments that have floating rates. |
||||||||||||
|
|
|
||||||||||||
|
|
If interest rates had been 100 basis points higher or lower and all other variables were held constant, the Group's:
- profit for the year ended 31 March 2014 would increase/decrease by £21,000 (2013 - increase/decrease by £37,000). This is mainly attributable to the Group's exposure to interest rates on its floating rate cash balances. - the Group holds no financial instruments that will have an equity reserve impact. |
||||||||||||
|
|
|
||||||||||||
|
|
In the opinion of the directors, the above sensitivity analyses are not representative of the year as a whole, since the level of exposure changes frequently as part of the interest rate risk management process used to meet the Group's objectives. |
||||||||||||
|
|
|
||||||||||||
|
|
Currency risk |
||||||||||||
|
|
A small proportion of the Group's investment portfolio is invested in securities whose fair value and dividend stream are affected by movements in foreign exchange rates. It is not the Group's policy to hedge this risk. |
||||||||||||
|
|
|
||||||||||||
|
|
Currency sensitivity |
||||||||||||
|
|
There is no sensitivity analysis included as the Group has no outstanding foreign currency denominated monetary items. Where the Group's equity investments (which are non-monetary items) are affected, they have been included within the other price risk sensitivity analysis so as to show the overall level of exposure. |
||||||||||||
|
|
|
||||||||||||
|
|
(ii) Liquidity risk |
||||||||||||
|
|
This is the risk that the Group will encounter difficulty in meeting obligations associated with its financial liabilities. |
||||||||||||
|
|
|
||||||||||||
|
|
The Group's assets comprise of readily realisable securities which can be sold to meet commitments if required and investment properties which, by their nature, are less readily realisable. The maturity of the Group's existing borrowings is set out in the interest risk profile section of this note. |
||||||||||||
|
|
|
||||||||||||
|
|
The table below details the Group's remaining contractual maturity for its financial liabilities, based on the undiscounted cash outflows, including both interest and principal cash flows, and on the earliest date upon which the Group can be required to make payment. |
||||||||||||
|
|
|
||||||||||||
|
|
|
|
|
|
Due between 3 months and 1 year |
|
|||||||
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|||||||
|
|
Debentures |
35,625 |
70,925 |
938 |
2,587 |
67,400 |
|||||||
|
|
Other payables |
725 |
725 |
725 |
- |
- |
|||||||
|
|
|
________ |
________ |
________ |
________ |
________ |
|||||||
|
|
Total |
36,350 |
71,650 |
1,663 |
2,587 |
67,400 |
|||||||
|
|
|
________ |
________ |
________ |
________ |
________ |
|||||||
|
|
|
|
|
|
|
|
|||||||
|
|
(iii) Credit risk |
||||||||||||
|
|
This is the failure of a counterparty to a transaction to discharge its obligations under that transaction that could result in the Group suffering a loss. |
||||||||||||
|
|
|
||||||||||||
|
|
The risk is not significant and is managed as follows: |
||||||||||||
|
|
|
||||||||||||
|
|
- investment transactions are carried out with a large number of brokers, whose credit standing is reviewed periodically by the Manager and limits are set on the amount that may be due from any one broker. - the risk of counterparty exposure due to failed trades causing a loss to the Group is mitigated by the review of failed trade reports on a daily basis. In addition, a stock reconciliation to third party administrators' records is performed on a daily basis to ensure that discrepancies are picked up on a timely basis. The Manager's Compliance Officer carries out periodic reviews of the Custodian's operations and reports its findings to the Manager's Risk Management Committee. This review will also include checks on the maintenance and security of investments held. |
||||||||||||
|
|
- cash is held only with reputable banks with high quality external credit ratings which are monitored on a regular basis. |
||||||||||||
|
|
|
||||||||||||
|
|
None of the Group's assets is secured by collateral or other credit enhancements. |
||||||||||||
|
|
|
||||||||||||
|
|
Credit risk exposure |
||||||||||||
|
|
In summary, compared to the amounts on the group statement of financial position, the maximum exposure to credit risk at 31 March was as follows: |
||||||||||||
|
|
|
|
|
||||||||||
|
|
|
|
|
||||||||||
|
|
|
|
|
||||||||||
|
|
|
|
|
||||||||||
|
|
|
2014 |
2013 |
||||||||||
|
|
|
Balance Sheet £'000 |
Maximum exposure £'000 |
Balance Sheet £'000 |
Maximum exposure £'000 |
||||||||
|
|
|
|
|
|
|
||||||||
|
|
Current assets |
|
|
|
|
||||||||
|
|
Cash and cash equivalents |
3,308 |
5,578 |
2,140 |
3,993 |
||||||||
|
|
Other receivables |
619 |
2,553 |
689 |
1,174 |
||||||||
|
|
|
________ |
________ |
________ |
________ |
||||||||
|
|
|
3,927 |
8,131 |
2,829 |
5,167 |
||||||||
|
|
|
________ |
________ |
________ |
________ |
||||||||
|
|
|
||||||||||||
|
|
(iv) Property risk |
||||||||||||
|
|
The Group's commercial property portfolio is subject to both market and specific property risk. Since the UK commercial property market has been markedly cyclical for many years, it is prudent to expect that to continue. The price and availability of credit, real economic growth and the constraints on the development of new property are the main influences on the property investment market. |
||||||||||||
|
|
|
||||||||||||
|
|
Against that background, the specific risks to the income from the portfolio are tenants being unable to pay their rents and other charges, or leaving their properties at the end of their leases. All leases are on full repairing and insuring terms, with upward only rent reviews and the average unexpired lease length is 13 years (2013 - 13.5 years). OLIM Property is responsible for property investment management, with surveyors, solicitors and managing agents acting on the portfolio under OLIM Property's supervision. |
||||||||||||
|
|
|
||||||||||||
|
|
The Group leases out its investment property to its tenants under operating leases. At 31 March, the future minimum lease receipts under non-cancellable leases are as follows:- |
||||||||||||
|
|
|
||||||||||||
|
|
|
2014 £'000 |
2013 £'000 |
||||||||||
|
|
Due within 1 year |
19 |
8 |
||||||||||
|
|
Due between 2 and 5 years |
2,652 |
1,790 |
||||||||||
|
|
Due after more than 5 years |
41,894 |
43,218 |
||||||||||
|
|
|
________ |
________ |
||||||||||
|
|
|
44,565 |
45,016 |
||||||||||
|
|
|
________ |
________ |
||||||||||
|
|
|
|
|
||||||||||
|
|
This amount comprises the total contracted rent receivable as at 31 March 2014. |
||||||||||||
|
|
|
||||||||||||
|
|
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 2014 |
|
|
|
|
||||||||
|
|
Equity investments |
135,229 |
- |
- |
135,229 |
||||||||
|
|
Investment properties |
- |
46,475 |
- |
46,475 |
||||||||
|
|
|
________ |
_______ |
_______ |
________ |
||||||||
|
|
|
135,229 |
46,475 |
- |
181,704 |
||||||||
|
|
|
________ |
_______ |
_______ |
________ |
||||||||
|
|
At 31 March 2013 |
|
|
|
|
|||
|
|
Equity investments |
123,815 |
- |
- |
123,815 |
|||
|
|
Investment properties |
- |
46,225 |
- |
46,225 |
|||
|
|
|
________ |
_______ |
_______ |
________ |
|||
|
|
|
123,815 |
46,225 |
- |
170,040 |
|||
|
|
|
________ |
_______ |
_______ |
________ |
|||
|
|
|
|
|
|
|
|||
|
|
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 the Group's borrowings has been calculated at £44,647,000 as at 31 March 2014 (2013 - £48,282,000) compared to a balance sheet value in the financial statements of £35,301,000 (2013 - £35,325,000) per note 12. |
|||||||
|
|
|
|||||||
|
|
The fair values of the debentures are determined by comparison with the fair values of equivalent gilt edged securities, discounted to reflect the differing levels of credit worthiness of the borrowers. All other assets and liabilities of the Group are included in the balance sheet at fair value. |
|||||||
|
|
|
|
|
|
||||
|
|
|
Fair value |
|
Balance Sheet Value |
||||
|
|
|
2014 |
2013 |
|
2014 |
2013 |
||
|
|
|
£000 |
£000 |
|
£000 |
£000 |
||
|
|
11% First Mortgage Debenture Stock 2021 |
19,417 |
21,016 |
|
15,000 |
15,000 |
||
|
|
9.375% Debenture Stock 2026 |
25,230 |
27,266 |
|
20,301 |
20,325 |
||
|
|
|
_______ |
________ |
|
_______ |
________ |
||
|
|
|
44,647 |
48,282 |
|
35,301 |
35,325 |
||
|
|
|
_______ |
________ |
|
_______ |
________ |
||
|
|
|
|
||||||
|
21 |
Capital management policies and procedures |
|
||||||
|
|
The Group's capital management objectives are: |
|
||||||
|
|
|
|
||||||
|
|
- |
to ensure that the Group will be able to continue as a going concern; and |
|
|||||
|
|
- |
to maximise the return to its equity shareholders in the form of long term real growth in dividends and capital value without undue risk through the optimisation of the debt and equity balance. |
|
|||||
|
|
|
|
||||||
|
|
The capital of the Group consists of equity, comprising issued capital, reserves and retained earnings. |
|
||||||
|
|
|
|
||||||
|
|
The Board monitors and reviews the broad structure of the Group's capital. This review includes: |
|
||||||
|
|
|
|
||||||
|
|
- - |
the planned level of gearing which takes into account the Managers' views on the market; and the extent to which revenue in excess of that which requires to be distributed should be retained. |
|
|||||
|
|
|
|
||||||
|
|
The Group's objectives, policies and processes for managing capital are unchanged from the preceding accounting period. |
|
||||||
|
|
|
|
||||||
|
|
Details of the Group's gearing and financial covenants are disclosed in note 12. |
|
||||||
|
|
|
|
22 |
Events after the Balance Sheet Date |
|
|
On 14 May 2014, the Company purchased a property at 7 Little Park Street, Coventry for £870,000. |
Additional Information
In accordance with section 435 of the Companies Act 2006, the Directors advise that the financial information set out in this announcement does not constitute the Group's statutory financial statements for the period ended 31 March 2014, but is derived from these financial statements. The financial statements for the period ended 31 March 2014 have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union. The financial statements for the period ended 31 March 2014 will be forwarded to the Registrar of Companies following the Company's Annual General Meeting. The Auditors have reported on these financial statements; their reports were unqualified and did not contain statements under Section 498(2) or (3) of the Companies Act 2006.
The consolidated statement of financial position at 31 March 2014 and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended have been extracted from the Group's financial statements. Those financial statements have not yet been delivered to the Registrar.
For Value and Income Trust PLC
Maven Capital Partners UK LLP
Company Secretary
6 June 2014
This information is provided by RNS
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