TIDMVIN
RNS Number : 5316U
Value and Income Trust plc
29 July 2020
VALUE AND INCOME TRUST PLC
ANNUAL FINANCIAL REPORT
FOR THE YEARED 31 MARCH 2020
Highlights of the Year
-- Net Asset Value total return (with debt at par)* of -21.8%
over one year and -19.8% over three years.
-- Share Price total return* of -30.7% over one year and -25.7% over three years.
-- FTSE All-Share Index total return of -18.5% over one year and -12.2% over three years.
-- Dividends for year up 2.5% - increased for the 33rd consecutive year.
Financial Record
31 March 2020
NAV (valuing debt at par) (p) 253.1
NAV (valuing debt at market) (p)* 232.7
Ordinary share price (p) 165.0
Discount of share price to NAV (valuing
debt at market) (%) 29.1
Dividend per share (p) 12.10
Total assets less current liabilities
(GBPm) 176.2
* This is an Alternative Performance Measure (APM) which has
been explained in the Glossary in the Annual Report.
Chairman's Statement
As this is written, markets are dominated by the development of
COVID-19. This pandemic has already plunged the United Kingdom and
much of the rest of the world into deep recession. It is still far
too early to try to predict when and where our economy will recover
and how many jobs and how many businesses will be lost. VIT's
income is therefore under severe short-term pressure from cut and
cancelled equity dividends, and tenants struggling to pay rent on
closed properties. However, you will see from our Investment
Managers' reports that there are reasons for cautious optimism in
the longer term when the crisis is past.
The Board has declared a fourth interim dividend of 3.4p per
share which making total dividends of 12.1p per share for the year
to 31 March 2020 compared to 11.8p in the previous year, an
increase of 2.5%. The fourth interim dividend will be paid on 28
August 2020 to all Shareholders on the register as at 31 July 2020.
We are proud of the fact that this will be the 33rd year of
dividend increases following the reconstruction of VIT. It is our
present intention to preserve this record if possible, by using our
powers to distribute part of our capital reserves of 154.4p per
share if necessary. But keeping up that record will require
dividend cover to be rebuilt in the years ahead.
The prospect of the repayment of the GBP15 million 11% Debenture
stock in March 2021 gives the Board encouragement for the growth of
income in the longer term. In order to secure the refinancing of
this in good time, we drew down in November 2019 a GBP22 million
loan expiring on 30 November 2026 at a net interest rate of 3.1%.
95% of the interest payable is at a fixed rate and 5% at a floating
rate. The proceeds of this loan have been placed on accessible
deposit, pending repayment of the Debenture and investment of the
additional GBP7 million less costs.
Over the year, VIT's NAV total return (with debt at par) was
-21.8% and the Share Price total return was -30.7%. This compares
with the FTSE All-Share Index total return of -18.5%.
As noted in previous statements, the difference between the fair
value and the nominal value of our two debenture stocks and our
bank loans is reducing over the life of the instruments, which will
be repaid at their nominal value. The figures are set out in Note
17 to the Financial Statements. The two debentures have covenants
attached to them and information about them is included in Note 12
to the Financial Statements; there is plenty of headroom in terms
of both capital and income.
I would remind shareholders that new Articles of Association
were adopted in July 2016. These included a requirement for the
Board to put an Ordinary Resolution to Shareholders in 2024 in
relation to the future direction of the Company, including
proposals that provide an opportunity for any Shareholders to
realise their investment in full at NAV, less costs, by March 2027
at the latest. The details of this are shown in the Annual
Report.
This year's AGM will be held in the offices of Maven Capital
Partners UK LLP, First Floor, Kintyre House, 205 West George
Street, Glasgow G2 2LW on Thursday, 3 September 2020 at 10.00am.
However, in light of the Government advice against all
non-essential travel and maintaining social distancing,
Shareholders will be unable to attend the AGM in person. The Notice
of Annual General Meeting can be found in the Annual Report. The
Board encourages Shareholders to vote using the Proxy Form, which
can be submitted to Computershare, the Company's Registrar. Proxy
Forms should be completed and returned in accordance with the
instructions thereon and the latest time for the receipt of Proxy
Forms is 10.00am on Tuesday, 1 September 2020. Proxy votes can be
also be submitted by CREST or online using the Registrar's Share
Portal Service at www.investorcentre.co.uk/eproxy. The Board would
also encourage Shareholders to submit any questions for the Board
and Manager by email or by letter in advance of the AGM.
Shareholders wishing to submit a question should write to: The
Company Secretary, Value and Income Trust PLC, c/o Maven Capital
Partners UK LLP, First Floor Kintyre House, 205 West George Street,
Glasgow G2 2LW or email to: CoSec@mavencp.com.
James Ferguson
Chairman
29 July 2020
INVESTMENT MANAGERS' REPORTS
UK Equities
Market Background
The coronavirus COVID-19 outbreak has had a major effect on
world stock markets and on the returns generated for investors in
VIT's financial year, despite the virus only becoming prevalent in
the final weeks of the period. Global equities had gained ground
steadily during the first ten months of VIT's financial year to the
end of March 2020, before dropping precipitously from the middle of
February as the severe economic impact of the virus and the
resultant lockdown measures became clearer. Up until that point,
markets had taken heart as the economic outlook had stabilised
after growth had slowed through the first half of 2019 due to the
monetary and fiscal tightening seen around the world in 2018. Those
circumstances changed abruptly in mid-February 2020 as it became
clear that the virus had spread around the world and that draconian
lockdown measures would be needed to prevent health systems from
being overwhelmed. The severe impact of the virus is illustrated by
the fact that the UK stock market rose by 5.5% in the first nine
months of VIT's financial year, before falling 26.0% in the three
months to the end of March 2020. Overall, the UK stock market, as
measured by the FTSE All-Share Index, fell by 21.9% in the
twelve-month period.
It is difficult to remember now but the UK stock market had
actually entered 2020 on a relatively optimistic note after months
of tortuous Brexit stalemate. The Conservatives had just won an
unexpectedly large majority at the December general election,
preventing the economically destructive manifesto put forward by
the Labour Party from being implemented. The election result had
also brought certainty to the Brexit process, with many accepting
that breaking the Brexit logjam would aid businesses even if there
was likely to be some economic costs associated with leaving the
EU. All this now seems a distant memory with governments around the
world on an effective war footing and everyday life put on hold for
literally billions of people.
As noted above, the FTSE All-Share Index fell substantially in
the twelve-month reporting period by 21.9% and, including income,
the total return was -18.5%. The MSCI World Index, which is
measured in dollars, was much more resilient, falling by just
12.1%, and to UK based investors the fall was limited to just 7.7%
as the pound weakened from $1.30 to $1.24 during the year. The UK
stock market underperformed other world markets due to its high
weightings in commodity and financial stocks, which have generally
been poor performers in the sell-off. Within the UK market, large
defensive global companies and utilities have been the only real
safe havens during the last quarter. These types of companies tend
to be amongst the very largest in the market and, consequently, the
FTSE 100 Index of largest companies outperformed the more
domestically focused FTSE 250 Index of mid-sized companies by over
5% in the final quarter. High yielding companies, which have an
over representation in the commodity and financial sectors of the
market, were also hard hit, with the FTSE Higher Yield Index
falling by 28.2% over the year, performing well behind the wider
market.
In the bond market, ten-year gilt yields ended VIT's year at
0.4%, down from 1.0% a year earlier, whilst twenty-year gilt yields
fell to just 0.8%. The ten-year gilt yield actually traded below
0.2% during the last quarter, which is the lowest level recorded
for well over 50 years and reflects the safe haven status of gilts.
The total return on the FTSE All Stocks Gilt Index over the year
was +9.9%, meaning the return differential between equities and
gilts was almost 30% in gilts' favour. Commodities reflected the
general background in financial markets and were extremely weak in
the final three months of VIT's financial year. Perhaps the most
dramatic fall was seen in the oil market where the price of a
barrel of oil fell by two thirds over the course of the year to end
at $23, down from $68 a year earlier. Anticipated falls in the
demand for oil as a result of the economic lockdown were compounded
by the decision of the Saudi Arabians to launch a price war after
OPEC failed to agree production cuts in early March. Metal prices
were also weak but the decline in the price of copper for example,
at 23.6%, was nowhere near that recorded for oil.
Prior to the coronavirus outbreak the UK economy had actually
been performing reasonably well. The UK economy grew by 1.1% in
2019, which was ahead of expectations that had been downgraded
because of Brexit-related uncertainty. Entering 2020, growth
expectations were rising along with business confidence, which had
been buoyed by the election result. Expectations for global
economic growth had also been stabilising, responding to interest
rate reductions made by many central banks worldwide in the second
half of 2019. Entering 2020, economists were expecting global
growth of around 3% for the year, but those forecasts have been
rendered irrelevant by the coronavirus outbreak.
Performance
VIT's equity portfolio underperformed the FTSE All-Share Index
significantly during the reporting period. For the first ten months
of the year the holdings generally performed well but they
underperformed sharply during the coronavirus inspired sell-off in
February and March. The total return recorded by VIT's equity
portfolio was -23.7%, well behind the -18.5% recorded by the FTSE
All-Share Index. As noted above, higher yielding shares, on which
the portfolio is focused, underperformed the market sharply over
the year, falling by 28.2% in capital terms and generating a total
return of -23.8%, as measured by the FTSE Higher Yield Index. The
portfolio was further hindered by its overweight positions in
Travel & Leisure and Life Assurance. In particular, Cineworld
(-58% to sale), Restaurant Group (-77% to sale) and Marston's
(-60%) were substantial fallers in the sell-off as the government
forced the shutdown of their operations in the lockdown period. The
Life Assurance sector underperformed with other financial sectors
as the market became concerned about their exposure to corporate
credit defaults and their ability to pay dividends. Other notable
underperformers included Go-Ahead (-58%), ITV (-48%) and Crest
Nicholson (-51% to sale) which are all largely exposed to the UK
economy. Go-Ahead has had to cope with the severe curtailment of
its rail and bus networks, ITV has seen a significant drop in
advertising revenues as many companies have simply stopped spending
in this area and Crest Nicholson will have to cope with a UK
housing market that has ground to a complete halt. There were some
bright spots in the portfolio, including Pennon (+46%), United
Utilities (+11%), Spectris (-2%) and Unilever (-7%), but these were
not enough to offset the weakness seen elsewhere. Pennon, United
Utilities and Unilever all benefited from investors' flight to
safety with Pennon's share price also being aided by the GBP4.2bn
disposal of its Viridor waste and recycling operation to KKR. The
portfolio is under-represented in these types of large global and
defensive businesses, which tended to outperform in the sell-off,
as they are generally much lower yielding than average. Spectris
also benefited from a fortuitously-timed disposal, which left its
balance sheet ungeared and the company well-placed to navigate the
current difficulties.
Portfolio
The last twelve months saw sales of equities of GBP17.2m and
purchases of GBP13.9m giving total transactions of GBP31.1m, with
net sales of GBP3.3m. During the period prior to the coronavirus
sell-off, we continued to reorganise the portfolio, selling those
companies with challenged business models such as BT, Centrica and
Eddie Stobart Logistics. We also made a complete disposal of
Johnson Matthey, where we became concerned about the company's
exposure to diesel engines. The monies raised were reinvested in
new holdings in PayPoint and FDM. Both companies have attractive
growth opportunities, strong balance sheets and generate cash.
PayPoint is a transaction services business focused on the
convenience retail store sector, whilst FDM is a global IT services
business. During the year M&G, the well-known UK-based savings
and investment business, demerged from the Prudential and we made a
significant addition to this holding, attracted by the strong cash
flows emerging from its life assurance book. We also made additions
to the Vodafone, Lloyds Banking Group, DS Smith, ITV and Royal
Dutch Shell holdings in this period.
As the severe economic consequences of coronavirus lockdown
became clearer, we reassessed the portfolio and sold those holdings
where the impact on the business was large, any possible recovery
was going to be drawn out and their balance sheet positions meant
that they were likely to need further equity finance to survive. As
a result, we made the difficult decision to sell the portfolio's
holdings in Cineworld, Restaurant Group and Crest Nicholson. We
invested some of the money raised by topping up existing holdings
in BHP, Royal Dutch Shell, PayPoint and M&G, where we felt that
the companies were well-placed to survive the downturn and there
was a good chance that they would continue to pay dividends. The
equity portfolio was left with a small effective cash balance at
the end of March 2020 and we will look to invest this in due
course.
At the end of the year the portfolio had 31 investments. On a
historic basis the yield of the portfolio was approaching 6%.
However, dividends are being suspended by a wide range of companies
in an effort to preserve cash resources and it is possible that
dividends from the UK stock market could fall by up to 40% in 2020
and investment income from VIT's equity portfolio is likely to
reflect this trend. It is to be hoped that dividend payments will
bounce back in 2021, but it is likely that this will not cover
2020's shortfall. Any recovery in dividend payments will be
crucially dependent on the speed with which lockdown measures can
be eased so that companies can resume trading on a more normal
basis.
Outlook
The outlook for equities has rarely been as difficult to
foresee. On the one hand, the scale of economic contraction caused
by the coronavirus could be at least double that caused by the
financial crisis in 2008/09. Many companies have been severely
affected by the virus lockdown containment measures and, in many
cases, have stopped trading altogether. In response, a large number
of UK companies have announced that they will be suspending
dividend payments in order to preserve cash resources on their
balance sheets. Large numbers have even resorted to cancelling
previously declared payments, which is a sign of how fast the
situation is changing. Corporate profit forecasts are meaningless
at the time of writing and the dividend base of the market is
subject to a high degree of uncertainty, although it is probable
that UK stock market dividends will fall substantially in 2020. On
the other hand, the scale of government responses around the world
has been unprecedented. Measures including state support of wages,
funding packages for businesses impacted by a lack of trade and
other support programmes have been announced with potential costs
running into the hundreds of billions of pounds in the UK alone.
Worldwide, similar measures worth literally trillions of dollars
have been announced and governments will be running fiscal deficits
at levels never seen outside of times of war. On top of this,
central banks around the world have cut interest rates sharply and
many, including the Bank of England, the European Central Bank and
the US Federal Reserve, have announced new quantitative easing
measures or similar asset purchase programmes, which have flooded
the world with liquidity. This seems to have halted the decline in
share prices for the time being, which have bounced off the bottom.
Whether this proves to be of only temporary relief, or the start of
the recovery will be dependent on the future path of the virus, the
success or otherwise of efforts to contain it and the speed with
which the lockdown measures can be eased. Nonetheless, following
the stock market falls and despite the uncertainty regarding
corporate dividend payments, share valuations on most measures are
now low and judicious investment in companies able to survive
without dilutive rescue fundraising should prove profitable from
here.
Patrick Harrington
OLIM Limited
29 July 2020
Property Portfolio
The Market
Average capital values of UK commercial property slipped by
almost 4% on Brexit- blighted low transaction volumes over 2019,
giving a total return of 0.7% including rental income for the MSCI
(ex-IPD) Annual Index. This average, however, masks a sharp
divergence between modest growth in industrial/warehouse and
alternative sector values versus double-digit declines in all types
of retail property except supermarkets. Offices showed little
change. UK institutional investors were net sellers of property for
most of 2019 with only occasional large overseas purchases of
trophy buildings lightening the general gloom.
This year started with more optimism in the market for both
property values and transaction volumes, following the decisive
Conservative election victory, with the medium term outlook for
both property rents and prices depending on avoiding a hard Brexit.
Capital values showed little change in January and February 2020.
In March that all changed. World equity markets collapsed and the
UK property market froze as the COVID-19 pandemic forced many
businesses to close.
The UK economy is now in a slump, with 2020 certain to show the
sharpest full year drop in GDP since 1921. Property rents will
fall, valuation yields will rise and capital values will be down,
in many cases well down, when the market reopens over the next few
months. Property investors are firefighting, ensuring tenants who
can pay their rent, do; agreeing phased payment plans with tenants
who are basically sound but temporarily closed; and judging which
weaker tenants really cannot pay and need relief to avoid the costs
of an empty property until there is a realistic chance of
reletting.
There are vast variations between tenants, sectors and property
types and the immediate and longer-term effects of this crisis. It
is likely to accelerate and bring into ever sharper focus the
structural changes in property use which are ruining so many high
streets and shopping centres. Some sectors have emerged strongly
from the crisis so far - notably supermarkets and convenience
stores, which were already outperforming with their strong
covenants and long leases and are well placed to deliver further
rental and capital growth in the years ahead. Others, like pubs,
are hard hit now but should still see the main players emerge in a
sound long-term competitive position after the crisis is over as
they gain market share from their weaker rivals who have gone
under.
Overall, lease lengths in property will now shorten further,
break clauses will abound, upwards only rent reviews will be under
extreme pressure, either outright on new leases or indirectly
through break clauses, and open market rent reviews will be almost
impossible to achieve until the economy is well into recovery - and
definitely not in 2020 or 2021. Meanwhile the Government, under
tenant pressure, is suspending landlords' traditional tools for
enforcing rent collection - eviction orders, use of Commercial Rent
Arrears Recovery (CRAR) bailiffs and statutory demands for winding
up.
This property crisis differs from the two previous serious
downturns in VIT's history, the early 1990's and 2008-10, because
for the first time strong tenants are trying not to pay their rent
although they can. After tough discussions with robust and
well-advised landlords, they are mostly still paying, but with some
phasing where necessary. The key message for property owners now,
which will ring ever louder in investors' ears after the crisis is
over, is to stick to strong tenants paying realistic rents on long,
index-linked, leases like VIT's, with our 15 year average unexpired
lease length and 86% of rental increases index-linked. Safe, long
income of that type will be valued highly after the crisis is over
in a world of negative real interest rates and lacerated equity
dividends.
Offices
The most profound and long-lasting effect of the pandemic will
be a reduction in demand for office space, especially high value
large corporate offices. The well-established trend towards
hot-desking and remote working will zoom upwards. Large and medium
sized companies will still keep some office space, for essential
meetings from time to time at their corporate centre, but several
months' experience of most people working productively and
efficiently from home will lead to savage reappraisals of whether
so much expensive office space is really necessary at a time when
many companies will be facing an existential cash crisis. Office
tenants will be extremely reluctant to renew office leases as they
expire, or to resume paying full rent if they have received
concessions from landlords during the crisis.
Offices in expensive big city centre locations will be worst
hit, especially London where the value of its unique locational
advantage in many sectors will be seriously undermined. Serviced
office operators may see some additional demand for short term
space for new tenants, but this will be swamped by their existing
tenant base cutting back or going under, and yet again their flawed
business model of taking long leases and granting short licences
will prove fatal for most of them as it does in every serious
downturn.
Office rents and rental values will fall far and fast right
across the UK and office capital values may fall even faster.
Valuation yields have been forced down, in London and the main
provincial cities, to historic lows, driven by the weight of money
from overseas investors in general, and the Far East in particular.
Most overseas buyers will not commit to new purchases here while
they are unable to travel so the office market will re-open at
levels well below pre-pandemic valuations, where bottom fishers and
vulture funds are actually prepared to buy.
Retail
Coronavirus will speed up the structural changes which were
already revolutionising retail property. Many bricks and mortar
retailers in high streets and shopping centres were already on
their last legs and will never re-open. This lockdown is opening
the eyes of many older consumers, in particular, to the ease of
buying online and the range of goods and services and speed of
delivery.
Property valuers have been persistently behind the downward
curve of most retail property rental and capital values all over
the UK for the past three years. Many obsolete shops and shopping
centres must now be valued from their site value up, not the former
retail value down. Retail warehouse values will also come under
downward pressure, but the falls may be limited, in prosperous
parts of Southern England at least, by their potential alternative
use values, for industrial or distribution purposes, low-rent food
stores for Aldi or Lidl, or even, if the site is right, residential
development. However, most of those options will still be painful
and slow.
The only bright light shining through the general retail
property gloom is on supermarkets and convenience stores, which
have seen their turnover increase by as much as 20% to 30% during
this crisis. The large supermarket chains have growing on-line
operations but online penetration remains far lower than in
non-food retail, and many consumers still prefer the choice and
convenience of their local physical food shop, and have relied on
it during the lockdown. Supermarket investments, with their long
and often index- related leases have massively outperformed other
retail investments in recent years and that outperformance will
continue.
Warehouse/Industrial Property
Warehouse and industrial properties have enjoyed a historic
re-rating in recent years, so that they are now valued on yields
comparable to traditional office property and well below retail
property, investors' traditional favourite, for the first time
since reliable property valuation records began in Britain after
the Second World War. Warehouse and industrial property generally
will maintain and consolidate that premium rating among the three
traditional commercial property sectors, as office capital values
plummet and valuation yields move out and the non-food property
crash goes from bad to worse.
Although warehouse/industrial property may be more resilient,
rental and capital values will still slip from their current
optimistic valuations. With a wave of bankruptcies and rapidly
rising unemployment, multi-let industrial estates in particular
will see vacancies soar and values fall. Projected rental
increases, which over-optimistic investors and valuers have had to
factor in to justify buying these estates at eye-wateringly low
interest yields, will just not happen.
Well-let and located distribution warehouses should hold their
value better and will benefit from an accelerated trend towards
online retailing, but they will still suffer a higher rate of
tenant failures in this economic crash. As with supermarkets,
carefully chosen warehouse investments let on long leases at
realistic rents to strong tenants will continue to outperform short
let sheds with shaky tenants.
Alternatives
The "Alternative" property sector (properties other than shops,
industrial and offices) has been growing rapidly in importance for
institutional investors in particular in recent years, to the point
where it now accounts for 15% - 20% of the main UK commercial
property market indices and 35% of all investment property
transactions in 2019. It covers a very wide range of property types
and tenants, some of whom will be hit much harder than others by
the crisis, but most alternative sector investments have relatively
long, often indexed leases, so the tenant's ability to pay is
crucial for valuation purposes. Despite the lockdown, alternative
sector tenants are major beneficiaries from the business rates
holiday and the Government's furlough scheme for their generally
low-paid employees, and alternative investments may outperform the
more traditional sectors of the property market over the next year,
but with wide variations.
Leisure
Pubs will suffer in the short term from a prolonged shutdown and
slow recovery with social distancing required and only minimal
income now from takeaways to offset their fixed costs. Pubcos with
tied sub-tenants face a particular squeeze with rent still owed to
their landlords on their leased pubs although their sub-tenants can
pay no rent to them, and sell none of their beer. But, unlike
restaurants, where most multiple chains were already drowning in
debt, many of the leading pubcos, as well as the traditional
regional brewers, have strong balance sheets with plenty of
freehold assets and very long-standing banking relationships. So
most profitable pubs will survive and re-open, but many individual
pubs and less well-funded operators will not, as in retail and
restaurants. The well-established trend of smaller pubs closing and
larger and better-run pubs gaining market share should
continue.
Drinking patterns will have changed during the lockdown, with
Majestic for example reporting their growth in home deliveries has
made up for the loss of sales from their shops, which have all
closed. That is, however, unlikely to cause a long-term structural
change in consumer behaviour because a visit to a pub, especially a
food-led pub like many institutionally-owned managed houses, cannot
really be replicated on-line or at home. Some suburban and rural
pubs were doing good business with people newly working from home
until they were forced to close. Most pubs also benefit from some
underlying alternative use value, usually for residential purposes,
because they were typically built to serve customers living
nearby.
The two leading ten pin bowling companies have both raised fresh
equity during the crisis and are well placed to reopen when they
are allowed. Bingo halls, however, may suffer more from a switch to
online because their customer base is ageing fast and more likely
to stay at home. Cinemas will also suffer from the lockdown boost
to home entertainment operators like Netflix and Amazon Prime.
Caravan Parks
Caravan parks may be the biggest winner from the crisis in the
leisure sector. They essentially offer their customers an
affordable second home and a cheap domestic holiday option. Both
should prove attractive in these times of great uncertainty and
squeezed incomes when the lockdown ends, with many Britons cautious
about taking foreign holidays for some time to come, combined with
lack of airline and tour operator capacity as many go under.
Health and Fitness
Health and Fitness clubs have had to close but have generally
frozen their memberships. They should be able to re-open rapidly
for their existing customers when permission is given, but on a
limited basis with machines well apart and restricted admissions.
They will also suffer some erosion of membership from job losses
and reduced consumer spending. However, better financed
high-quality operators like David Lloyd and Nuffield should survive
but will need to discount for some time as most people can't swim
or play tennis at home. Virgin Active has a problem with weak
private equity owners, but their properties are generally
profitable at the operating level. The low-cost operators, like
Pure Gym, will gain some members trading down, but will be more
vulnerable because their basic operation is more replicable at home
with online help.
Hotels
Hotel values in and after the crisis will vary dramatically by
tenant and location. Premier Inn (the well-funded Whitbread plc)
should benefit from the woes of its principal competitor, the
highly-geared and private- equity funded Travelodge. Hotels in
London and other large city centres relying heavily on overseas
tourists or big corporate customers will do far worse than
provincial hotels serving British travellers and holidaymakers.
Care Homes
Care homes will be hard hit by the pandemic. Care home vacancy
rates will shoot up as residents succumb to Coronavirus and new
admissions slow right down - several of the main private-equity
backed care homes providers are chronically over-geared and will
not survive without recapitalisations and rent cuts. High quality
homes with self-funded residents will continue to outperform those
dependent on public funding.
Conclusion
Most sectors of the UK commercial property market face a very
difficult 2020, with many still struggling in 2021 if the lockdown
lasts much longer. Offices and non-food retail will suffer most,
with industrial/warehouse property and supermarkets less severely
affected.
Performance
VIT's property portfolio produced a total return of 6.3% over
the year to March, against -0.6% for the MSCI (formerly IPD) Index,
the main benchmark for commercial property performance. VIT's
property record is shown in the table in the Annual Report.
We specialise in UK commercial properties with long, strong,
index-related income streams to deliver above average long-term
real returns. The total returns on our property portfolio have been
between 8% and 12% a year over the past 3, 5, 10, 20 years and 33
years and are above the MSCI averages over all these periods. The
real returns above the Retail Price Index from VIT's property
portfolio were 3% last year (across six diversified sub-sectors)
and between 6% and 9% a year over all cumulative periods from 3 to
33 years since the inception of our management.
Properties
All 26 properties are let on full repairing and insuring leases
(tenants are responsible for repair, maintenance and outgoings),
with upward only rent reviews and an average unexpired lease length
now of over 15 years (17 years if the break options are not
exercised). 23 of the properties valued at 31 March 2020 are
freehold and 3 are long leasehold with 111, 59 and 37 years to run
(Doncaster, Fareham and Horsham).
The portfolio has been fully let throughout the year, with 86%
(up from 79% this time last year and up from 35% eight years ago)
of the portfolio's net rental income now from index-related leases,
which are either Retail Price Index-linked or with fixed rental
uplifts.
Purchases and Sales
Five new properties were purchased over the year, all with
RPI-linked rent reviews: a Government let driving test centre in
Aberdeen, two industrial units in Thirsk and Thetford, a bowling
alley in Doncaster and a pub in Newcastle upon Tyne for GBP10.8
million in total, at an average net initial yield on purchase of
6.9%; their average unexpired lease length was 15 years (if the
break options are exercised). Over the course of the year the sales
of five properties completed: a short-let industrial unit in Luton,
and the last three high street shops in Godalming, Lymington and
Sudbury, plus a restaurant in Brentwood let to Prezzo for GBP9.2
million in total (3% above valuation) at a net sale yield of 7.4%.
The property portfolio was fully invested at the year end.
Due to our strategic sales programme over the last 10 years the
Company is now no longer invested in high street shops or retail
warehouses.
Rental Payments
We have been working closely with our tenants during this
unprecedented period, engaging and agreeing phased payment plans
for temporary rental concessions, changing quarterly payments to
monthly or rent deferments. As at early June, 64% of the March
quarter's rent had been paid with 36% on Agreed Payment Plans,
including 8% from Adelie Foods, the tenant at Milton Keynes which
went into administration on 28 May 2020.
Results of Independent Revaluation
The VIT property portfolio was subject to an independent
professional revaluation at 31 March 2020 by Savills. The
revaluation showed a value of GBP70,200,000 (before taking into
account the right of use asset classified as investment property
related to properties held under leasehold). Our properties are
revalued every six months, at 30 September and 31 March. Given the
unknown future impact that COVID-19 might have on the UK property
market, the leading commercial valuers (also as per the current
RICS Valuation Standard) have introduced an industry-agreed
"material uncertainty" clause into their valuation reports from
March 2020 until further notice.
The capital value of properties held throughout the year rose by
2.7% and rental income rose by 1.4%. Higher value properties,
especially Industrials and the Caravan Park performed best, but
Pubs and Leisure properties were down. Of the held properties, 5
gained, 10 fell and 6 were unchanged in value. The combined total
of the capital values of the 5 new purchases were 8.0% above their
purchase prices excluding costs and 3.0% including costs of
purchase.
Safe, long let indexed property like the VIT Property Portfolio
has weathered previous downturns well (as the Property Record Table
in the Annual Report shows) and should prove resilient again once
all our tenants are allowed to reopen and trade.
Louise Cleary
OLIM Property Limited
29 July 2020
BUSINES REVIEW
This Business Review is intended to provide an overview of the
strategy and business model of the Company as well as the key
measures used by the Directors in overseeing its management. The
Company is an investment trust company which invests in accordance
with the investment aims and investment policy below.
The Group
Value and Income Services Limited (VIS), a wholly owned
subsidiary of the Company, is authorised by the Financial Conduct
Authority to act as the Company's Alternative Investment Fund
Manager (AIFM).
Investment Aims
The Company invests in higher yielding UK commercial property
and quoted equities, particularly in medium and smaller sized
companies. The Company aims to achieve long-term real growth in
dividends and capital value without undue risk.
Investment Policy
The Company's policy is to invest in quoted UK equities, UK
commercial property and cash or near cash securities. It is not
normally the Company's policy to invest in overseas shares or in
unquoted companies. UK equities usually account for between half
and three-quarters of the total portfolio and property for a
quarter to a half but the asset allocation may go outside these
ranges if relative market levels and investment value, or a desired
increase in cash or near cash securities, make it appropriate.
The Company focuses on the fundamental values and incomes of
businesses in which it invests - their profitability, cash flows,
balance sheets, management and products or services - and the
location, tenants and leases of its property investments. The
equity portfolio has generally yielded more than the FTSE All-Share
Index. The Group has held between 30 and 40 individual
shareholdings and between 20 and 30 individual properties in recent
years. These ranges may change as market conditions or the size of
each portfolio varies 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. Since 1986, the Company
has had a longstanding policy of increasing its exposure to
equities and to property through the judicious use of borrowings.
Until 2015, all borrowings had been long-term debentures to provide
secure long-term funding, and avoiding the risks associated with
short-term funding of having to sell illiquid assets at a low point
in markets if loans had to be repaid. On 26 February 2015, a five
year secured term loan facility of GBP5m was arranged at a five
year fixed interest rate of 4% p.a. including all costs. This loan
was refinanced on 12 May 2016 and a new ten year secured term loan
facility of GBP15m was arranged at a ten year interest rate of 4.4%
p.a. including all costs to replace the original GBP5m loan
arranged in February 2015.
On 28 November 2019, the Company entered into a seven year
secured term loan of GBP22m at a fixed interest rate of 3.1% per
annum (3.3% per annum after all expenses) on GBP20.9m and at a
floating rate of Libor plus 2.35% on the balance of GBP1.1m. The
net proceeds will be held on accessible deposit until 31 March 2021
to refinance the Company's GBP15m 11% First Mortgage Debenture
Stock 2021 which expires on that date and to support the
acquisition of further UK properties and equities in accordance
with the Company's investment policy.
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. In the year to 31 March
2020, no material changes were made to the Company's investment
policy.
Performance, Results and Dividend
As at 31 March 2020, the Net Asset Value (NAV) total return
(with debt at par) over one year was -21.8% and the Share Price
total return over one year was -30.7%. This compares to the FTSE
All-Share Index total return over one year of -18.5%. Total assets
less current liabilities was GBP176.2 million. The first quarterly
dividend for the year to 31 March 2020 of 2.9p per share was paid
on 25 October 2019, the second quarterly dividend of 2.9p per share
was paid on 31 January 2020 and the third quarterly dividend of
2.9p per share was paid on 24 April 2020.
A review of the performance of the equity and property
portfolios is detailed in the Chairman's Statement and in the
Investment Managers' Reports. The Directors have declared that a
fourth interim dividend of 3.4p per Ordinary Share (2019 final:
3.4p) is paid on 28 August 2020 to Shareholders on the register on
31 July 2020. The ex-dividend date is 30 July 2020. This represents
an annual increase in dividends of 2.5% as compared with the 1.5%
and 2.6% respective annual increases in the Consumer Price and
Retail Price Indices as at the end of March 2020. This continues
the Company's strong long-term record of real growth in dividends,
as detailed in the Financial Highlights in the Annual Report.
The table in the Annual Report shows the revenue reserve
position and dividends paid and payable by the Company.
Principal and Emerging Risks and Uncertainties
The Board has an ongoing process for identifying, evaluating and
monitoring the principal and emerging risks and uncertainties
facing the Group and the Parent Company. The risk register forms a
key part of the Group and the Parent Company's risk management
framework used to carry out a robust assessment of the risks,
including a significant focus on the controls in place to mitigate
them. The principal and emerging risks and uncertainties which
affect the Group and the Company's business are:
Market risk
The fair value of, or future cash flows from, a financial
instrument held by the Group may fluctuate because of changes in
market prices. This market risk comprises three elements - price
risk, interest rate risk and currency risk.
Price risk
Changes in market prices (other than those arising from interest
rate or currency risk) may affect the value of the Group's
investments.
It is the Board's policy to hold an appropriate spread of
investments in the portfolio in order to reduce the risk arising
from factors specific to a particular sector. For equities, asset
allocation and stock selection, as set out in the Investment
Policy, both act to reduce market risk.
VIS delegates its portfolio management responsibilities to the
Investment Managers, OLIM Limited (OLIM) and OLIM Property Limited
(OLIM Property) (collectively, the Investment Managers) who
actively monitor market prices throughout the year and report to
VIS and to the Board, which meet regularly in order to review
investment strategy. The equity investments held by the Group are
listed on the London Stock Exchange. All investment properties held
by the Group are commercial properties located in the UK with long,
strong income streams.
Interest rate risk
Interest rate movements may affect:
- the fair value of the investments in property;
- the level of income receivable on cash deposits; and
- the fair value of borrowings.
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 that gearing levels
are appropriate to market conditions and reviews these on a regular
basis. Current borrowings comprise debenture stocks, a ten year
secured term loan and a seven year secured term loan, providing
secure long-term funding. It is the Board's policy to maintain a
gearing level, measured on the most stringent basis of calculation
after netting off cash equivalents, of between 25% and 40%.
Currency risk
A small proportion of the Group's investment portfolio is
invested in securities whose fair value and dividend stream are
affected by movements in foreign exchange rates. It is not the
Company's policy to hedge this risk.
Liquidity risk
This is the risk that the Group will encounter difficulty in
meeting obligations associated with its financial liabilities.
The Group's assets comprise 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 rate risk profile section of Note 21 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 Group suffering a loss.
The risk is not significant and is managed as follows:
- investment transactions are carried out with a number of
brokers, whose credit standing is reviewed periodically by OLIM
(which reports to VIS) and limits are set on the amount that may be
due from any one broker.
- the risk of counterparty exposure due to failed trades causing
a loss to the Group is mitigated by the review of failed trade
reports on a daily basis. In addition, a stock reconciliation to
third party administrators' records is performed on a daily basis
to ensure that discrepancies are picked up on a timely basis. VIS
carries out periodic reviews of the Depositary's operations and
reports its findings to the Company. This review also includes
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.
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 property valuation as at 31 March 2020
by the Independent Valuers, Savills, is subject to a material
uncertainty clause due to the coronavirus pandemic.
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 17 years (up
from 16 years in 2019) and 15 years if break options are exercised.
Details of the tenant and geographical spread of the portfolio are
set out in the Annual Report. The long-term record of performance
through the varying property cycles since 1987 is set out in the
Annual Report. OLIM Property is responsible for property investment
management, with surveyors, solicitors and managing agents acting
on the portfolio under OLIM Property's supervision.
Political risk
The full political, economic and legal consequences of the UK's
decision to leave the European Union (EU) are not yet known.
It is possible that investments in the UK may be more difficult
to value and assess for suitability of risk, harder to buy or sell
and may be subject to greater or more frequent rises and falls in
value. In the longer term there is likely to be a period of
uncertainty as the UK seeks to negotiate its ongoing relationship
with the EU and other global trade partners. The UK's laws and
regulations, including those relating to investment companies, may
in future, diverge from those of the EU.
The Board reviews regularly the political situation, together
with any associated changes to the economic, regulatory and
legislative environment, to ensure that any risks arising are
mitigated as effectively as possible.
An explanation of certain economic and financial risks and how
they are managed is contained in Note 21 to the Financial
Statements.
Climate Change and Social Responsibility Risk
The Board recognises that climate change is an important
emerging risk that all companies should take into consideration
within their strategic planning. As referred to elsewhere in this
Strategic Report and in the Statement of Corporate Governance in
this Annual Report, the Company has little direct impact on
environmental issues. As an investment trust company, the Company
has no direct employee or environmental responsibilities. The Board
is aware that the Manager continues to take into account
environmental, social and governance matters when considering
investment proposals.
Other Emerging Risks
The Directors are cognisant of the potential impact of the
coronavirus (COVID-19) outbreak and its implications for the
activities of the Manager and on the performance of investee
companies and assets. This is covered in more detail in the
Chairman's Statement and in the Investment Managers' Reports in the
Annual Report.
While VIT's property portfolio is sufficiently robust to
withstand the current market impacts of the pandemic, there is a
risk that, as noted in the Investment Managers' Report, property
values may fall and tenants may struggle to pay rent. If this
happens, there is a risk that loan to value and interest cover
covenants could be breached. If this were to occur, VIT has
sufficient cash and liquid equity investments to cover any loan
repayments triggered by covenant breaches. However, as noted in the
Investment Managers Report, safe, long let property like the VIT
Property Portfolio should prove resilient again once all our
tenants are allowed to reopen and trade.
Additional risks and uncertainties include:
- Discount volatility: The Company's shares may trade at a price
which represents a discount to its underlying net asset value.
- Regulatory risk: The Group operates in a complex regulatory
environment and therefore faces a number of regulatory risks. A
breach of Section 1158 of the Corporation Tax Act 2010 would result
in the Company being subject to capital gains tax on portfolio
investments. Breaches of other regulations, including but not
limited to, the Companies Act 2006, the FCA Listing Rules, the FCA
Disclosure, Guidance and Transparency Rules, the Market Abuse
Regulation, the Foreign Account Tax Compliance Act, the Common
Reporting Standard, the Packaged Retail and Insurance-based
Investment Products (PRIIPs) Regulation and the Second Markets in
Financial Instruments Directive (MiFID II), 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 from the
Investment Managers.
The Alternative Investment Fund Managers Directive (AIFMD)
introduced a new authorisation and supervisory regime for all
managers of authorised investment funds in the EU.
In accordance with the requirements of the AIFMD, the Company
appointed VIS as its Alternative Investment Fund Manager (AIFM) and
BNP Paribas Securities Services as its Depositary. The Board has
controls in place in the form of regular reporting from the AIFM
and the Depositary to ensure that both are meeting their regulatory
responsibilities in relation to the Company.
The Company must also comply with the General Data Protection
Regulation (GDPR) which came into force on 25 May 2018, replacing
the Data Protection Act 1998. This regulation enforces the
principle of 'privacy by design and by default' and enshrines new
rights for individuals, including the right to be forgotten and to
data portability. The Directors have worked with the third parties
that process Shareholders' personal data to ensure that their
rights under the new regulation are protected.
The Company's privacy policy is available to view on the
Managers' websites www.olim.co.uk and www.olimproperty.co.uk.
Key Performance Indicators
At each Board Meeting, the Directors consider a number of
performance measures to assess the Company's success in achieving
its objectives and which also enable Shareholders and prospective
investors to gain an understanding of its business.
A historical record of these performance measures, with
comparatives, together with the Alternative Performance Measures
(APMs) are shown in the Financial Highlights and Long-Term Record
in the Annual Report. Definitions of the APMs can be found in the
Glossary in the Annual Report.
In addition, the Board have identified the three key performance
indicators below to determine the performance of the Company:
- Net asset value total return relative to the FTSE All-Share Index (total return);
- Share price total return relative to the FTSE All-Share Index (total return); and
- Dividend growth relative to the Retail Prices Index.
The net asset value (NAV) total return is considered to be a
more appropriate long-term measure of Shareholder value as it
includes the current NAV per share and the sum of dividends paid to
date.
The share price total return relative to the FTSE All-Share
Index (total return) is the theoretical return including
reinvesting each dividend in additional shares in the Company at
the current mid-market price on the day that the shares go
ex-dividend.
Dividend growth relative to the Retail Prices Index is included
to track performance against inflation.
The Board reviews the Company's investment income and
operational expenses on a quarterly basis, as the Directors
consider that both of these elements are important components in
the generation of Shareholder returns. Further information can be
found in Notes 2 and 4 to the Financial Statements in the Annual
Report.
The Board consider that the FTSE All-Share Index is the most
appropriate index to use as a comparison to the performance of its
equity portfolio and the MSCI (formerly IPD) Index as the main
benchmark for commercial property performance. The Investment
Managers' Reports report on how the Company performed during the
year under review against the FTSE All-Share Index and the MSCI
Index. In addition, the Directors will consider economic,
regulatory and political trends and factors that may impact on the
Company's future development and performance.
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 this Annual Report, and from the
information provided in the Chairman's Statement and the Investment
Managers' Reports in the Annual Report.
Employee, Environmental and Human Rights Policy
As an investment trust company, the Company has no direct
employee or environmental responsibilities, nor is it responsible
for the emission of greenhouse gases. Its principal responsibility
to Shareholders is to ensure that the investment portfolio is
properly managed and invested. The Company has no employees and
accordingly, has no requirement to report separately on employment
matters.
Management of the investment portfolio is undertaken by the
Investment Managers through members of their portfolio management
teams. In light of the nature of the Company's business, there are
no relevant human rights issues and, therefore, the Company does
not have a human rights policy.
Independent Auditor
The Company's Independent Auditor is required to report if there
are any material inconsistencies between the content of the
Strategic Report and the Financial Statements. The Independent
Auditor's Report can be found in the Annual Report.
Future Strategy
The Board and the Investment Managers intend to maintain the
strategic policies set out above for the year ending 31 March 2021
as it is believed that these are in the best interests of
Shareholders.
At the Annual General Meeting of the Company held in July 2016,
Shareholders approved an amendment to the Company's Articles of
Association. The amended Articles require the Board to put an
Ordinary Resolution to Shareholders in 2024 in relation to the
future direction of the Company, including proposals that provide
an opportunity for Shareholders to realise their investment in full
at Net Asset Value, less costs, by 31 March 2027 at the latest. The
reason for doing this in 2024 is to give sufficient time for
refinancing the debt or for selling properties as required. The
Company's Viability Statement is included in the Annual Report.
Approval
This Business Review, and the Strategic Report as a whole, was
approved by the Board of Directors and signed on its behalf by:
James Ferguson
Chairman
29 July 2020
Going Concern
The Group and the Parent Company's business activities, together
with the factors likely to affect their future development and
performance, are set out in the Directors' Report in the Annual
Report, and the financial position of the Group and of the Parent
Company is described in the Chairman's Statement. In addition, Note
21 to the Financial Statements includes: the policies and processes
for managing the financial risks; details of the financial
instruments; and the exposures to market price risk, interest rate
risk, liquidity risk, credit risk and price risk sensitivity. The
Directors believe that the Group and the Parent Company are well
placed to manage their business risks.
Following a detailed review, and taking into account the impact
of the COVID-19 pandemic referred to in the Chairman's Statement
and in the Investment Managers' Reports, the Directors have a
reasonable expectation that the Group and the Parent Company have
adequate financial resources to enable them to continue in
operational existence for the foreseeable future, being at least 12
months from approval of the Financial Statements, and accordingly,
they have continued to adopt the going concern basis (as set out in
Note 1(b) to the Financial Statements when preparing the Annual
Report and Financial Statements.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report
and the Financial Statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare Financial
Statements for each financial year. Under that law, the Directors
are required to prepare the Group Financial Statements in
accordance with IFRS as adopted by the EU and Article 4 of the EU
IAS Regulation and have also chosen to prepare the parent company
financial statements under IFRS as adopted by the EU. The Financial
Statements are required by law to give a true and fair view of the
state of affairs of the Group and Company and of the net return of
the Group and 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 adequate accounting
records that disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the Financial Statements comply with the Companies Act. They are
also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
Under applicable law and regulations, the Directors are also
responsible for preparing a Strategic Report, Directors' Report,
Directors' Remuneration Report and Corporate Governance Statement
that comply with that law and those regulations.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's websites hosted by the Investment 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 is fair, balanced
and understandable and provides the information necessary to assess
the Company's position and 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 the undertakings included in the consolidation
taken as a whole as at 31 March 2020 and for the year to that date;
and that
- the Strategic Report includes a fair review of the development
and performance of the business and the position of the Company and
the undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and
uncertainties that they face.
The Directors confirm that the Annual Report and Financial
Statements taken as a whole is fair, balanced and understandable
and provides the information necessary to assess the Company's
position and performance, business model and strategy.
For and on behalf of the Board of Value and Income Trust PLC
James Ferguson
Chairman
29 July 2020
Group Statement of Comprehensive Income
For the year ended 31 March
Year ended Year ended
31 March 2020 31 March 2019 (Restated)
Revenue Capital Total Revenue Capital Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- ---- ---------- --------- --------- -------- -------------- ----------
INCOME
Investment income 2 5,931 - 5,931 6,215 - 6,215
Rental income 2 4,716 - 4,716 4,491 - 4,491
Other income 2 97 - 97 9 - 9
========== ========= ========= ======== ============== ==========
GAINS AND LOSSES ON INVESTMENTS 10,744 - 10,744 10,715 - 10,715
Realised (losses)/gains
on held-at-fair-value
investments and
Investment properties 9 - (3,482) (3,482) - 5,294 5,294
Unrealised losses on
held-at-fair-value investments
and investment properties 9 - (31,381) (31,381) - (3,613) (3,613)
========== ========= ========= --------
TOTAL INCOME 10,744 (34,863) (24,119) 10,715 1,681 12,396
========== ========= ========= -------- -------------- ----------
EXPENSES
Investment management
fees 3 (345) (805) (1,150) (348) (813) (1,161)
Other operating expenses 4 (878) - (878) (781) - (781)
FINANCE COSTS 5 (4,609) - (4,609) (4,359) - (4,359)
========== ========= =========
TOTAL EXPENSES (5,832) (805) (6,637) (5,488) (813) (6,301)
========== ========= ========= -------- -------------- ----------
(LOSS)/PROFIT BEFORE
TAXATION 4,912 (35,668) (30,756) 5,227 868 6,095
TAXATION 6 (263) 359 96 (241) 343 102
========== ========= ========= -------- -------------- ----------
(LOSS)/PROFIT ATTRIBUTABLE
TO EQUITY SHAREHOLDERS
OF PARENT COMPANY 4,649 (35,309) (30,660) 4,986 1,211 6,197
---------- --------- --------- -------- -------------- ----------
EARNINGS PER ORDINARY
SHARE (PENCE) 7 10.21 (77.52) (67.31) 10.95 2.65 13.60
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.
The Group does not have any other comprehensive income and so
the total (loss)/profit, as disclosed above, is the same as the
Group's total comprehensive income. All income is attributable to
the equity holders of Value and Income Trust PLC, the parent
company. There are no minority interests.
The Notes form part of these Financial Statements.
The Board has declared a fourth interim dividend of 3.40p per
share, making total dividends of 12.10p per share for the year
ended 31 March 2020 (2019: 11.80p per share) payable on 28 August
2020 (see Note 8).
Company Statement of Comprehensive Income
For the year ended 31 March
Year ended Year ended
31 March 2020 31 March 2019 (Restated)
Revenue Capital Total Revenue Capital Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- ---- ----------- ------------ --------- ------------ ------------- ----------
INCOME
Investment income 2 5,931 - 5,931 6,215 - 6,215
Rental income 2 4,716 - 4,716 4,491 - 4,491
Other income 2 97 - 97 9 - 9
=========== ============ ========= ============ ============= ==========
10,744 - 10,744 10,715 - 10,715
GAINS AND LOSSES ON INVESTMENTS
Realised (losses)/gains
on held-at-fair-value
investments and investment
properties 9 - (3,482) (3,482) - 5,294 5,294
Unrealised losses on
held-at-fair-value
investments and investment
properties 9 - (30,781) (30,781) - (3,015) (3,015)
-----------
TOTAL INCOME 10,744 (34,263) (23,519) 10,715 2,279 12,994
----------- ------------ --------- ------------ ------------- ----------
EXPENSES
Investment management
fees 3 (345) (805) (1,150) (348) (813) (1,161)
Other operating expenses 4 (878) - (878) (781) - (781)
FINANCE COSTS 5 (4,576) - (4,576) (4,327) - (4,327)
TOTAL EXPENSES (5,799) (805) (6,604) (5,456) (813) (6,269)
----------- ------------ --------- ------------ ------------- ----------
(LOSS)/PROFIT BEFORE TAXATION 4,945 (35,068) (30,123) 5,259 1,466 6,725
TAXATION 6 (263) 359 96 (241) 343 102
----------- ------------ --------- ------------ ------------- ----------
(LOSS)/PROFIT ATTRIBUTABLE
TO EQUITY SHAREHOLDERS
OF PARENT COMPANY 4,682 (34,709) (30,027) 5,018 1,809 6,827
----------- ------------ --------- ------------ ------------- ----------
EARNINGS PER ORDINARY
SHARE (PENCE) 7 10.28 (76.20) (65.92) 11.02 3.97 14.99
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.
The Company does not have any other comprehensive income and so
the total (loss)/profit, as disclosed above, is the same as the
Company's total comprehensive income.
The Notes form part of these Financial Statements.
Group Statement of Financial Position
As at 31 March
As at As at As at
31 March 2020 31 March 2019 (Restated) 31 March 2018 (Restated)
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ---- -------- -------- ------------- ------------ -------------------- --------
ASSETS
NON CURRENT ASSETS
Investments held at
fair value through
profit or loss 9 90,757 128,706 128,925
Investment properties 9 74,459 73,074 72,987
========
165,216 201,780 201,912
Deferred tax asset 6 485 389 287
========
165,701 202,169 202,199
CURRENT ASSETS
Cash and cash equivalents 26,428 4,338 3,639
Receivables 10 668 907 711
======== ------------- --------------------
27,096 5,245 4,350
======== ------------ --------
TOTAL ASSETS 192,797 207,414 206,549
CURRENT LIABILITIES
Debenture stock 11 (15,000) - -
Payables 11 (1,624) (1,809) (1,860)
======== ------------- --------------------
(16,624) (1,809) (1,860)
======== ------------ --------
TOTAL ASSETS LESS CURRENT
LIABILITIES 176,173 205,605 204,689
NON-CURRENT LIABILITIES
Payables (4,243) (4,259) (4,272)
Borrowings 12 (56,623) (49,913) (49,898)
-------- ------------- --------------------
(60,866) (54,172) (54,170)
-------- ------------ --------
NET ASSETS 115,307 151,433 150,519
-------- ------------ --------
EQUITY ATTRIBUTABLE TO
EQUITY SHAREHOLDERS
Called up share capital 14 4,555 4,555 4,555
Share premium 15 18,446 18,446 18,446
Retained earnings 16 92,306 128,432 127,518
========
TOTAL EQUITY 115,307 151,433 150,519
-------- ------------ --------
NET ASSET VALUE PER
ORDINARY SHARE (PENCE) 17 253.14 332.45 330.45
These Financial Statements were approved by the Board on 29 July
2020 and were signed on its behalf by:-
JAMES FERGUSON, CHAIRMAN
The Notes form part of these Financial Statements.
Company Statement of Financial Position
As at 31 March
As at As at As at
31 March 2020 31 March 2019 (Restated) 31 March 2018 (Restated)
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ---- -------- -------- ----------------- -------- ----------------- --------
ASSETS
NON CURRENT ASSETS
Investments held at
fair value through
profit or loss 9 90,957 128,906 129,125
Investment properties 9 75,687 74,336 74,281
======== --------
166,644 203,242 203,406
Deferred tax asset 6 485 389 287
--------
167,129 203,631 203,693
CURRENT ASSETS
Cash and cash equivalents 26,228 4,138 3,439
Receivables 10 668 907 711
======== ----------------- -----------------
26,896 5,045 4,150
======== -------- --------
TOTAL ASSETS 194,025 208,676 207,843
CURRENT LIABILITIES
Debenture stock 11 (15,630) - -
Payables 11 (1,659) (1,843) (1,894)
-------- ----------------- -----------------
(17,289) (1,843) (1,894)
======== -------- --------
TOTAL ASSETS LESS CURRENT
LIABILITIES 176,736 206,833 205,949
NON-CURRENT LIABILITIES
Payables (5,437) (5,487) (5,532)
Borrowings 12 (56,623) (51,176) (51,791)
-------- ----------------- -----------------
(62,060) (56,663) (57,323)
--------
NET ASSETS 114,676 150,170 148,626
-------- -------- --------
EQUITY ATTRIBUTABLE TO
EQUITY SHAREHOLDERS
Called up share capital 14 4,555 4,555 4,555
Share premium 15 18,446 18,446 18,446
Retained earnings 16 91,675 127,169 125,625
========
TOTAL EQUITY 114,676 150,170 148,626
-------- -------- --------
NET ASSET VALUE PER
ORDINARY SHARE (PENCE) 17 251.76 329.68 326.29
These Financial Statements were approved by the Board on 29 July
2020 and were signed on its behalf by:-
JAMES FERGUSON, CHAIRMAN
The Notes form part of these Financial Statements.
Statement of Changes in Equity
For the year ended 31 March
Year ended 31 March 2020
Share Share Retained
capital premium earnings Total
Note GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------- ---- -------- -------- --------- --------
GROUP
Net assets at 31 March 2019 (Restated) 4,555 18,446 128,432 151,433
Loss for the year - - (30,660) (30,660)
Dividends paid 8 - - (5,466) (5,466)
======== ======== --------- --------
Net assets at 31 March 2020 4,555 18,446 92,306 115,307
-------- -------- --------- --------
COMPANY
Net assets at 31 March 2019 (Restated) 4,555 18,446 127,169 150,170
Loss for the year - - (30,027) (30,027)
Dividends paid 8 - - (5,466) (5,466)
======== ======== --------- --------
Net assets at 31 March 2020 4,555 18,446 91,676 114,677
-------- -------- --------- --------
Year ended 31 March 2019
Retained
Share capital Share premium earnings Total
Note GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ---- ------------- ------------- --------- -------
GROUP
Net assets at 31 March 2018 4,555 18,446 127,518 150,519
Profit for the year - - 6,197 6,197
Dividends paid 8 - - (5,283) (5,283)
------------- ------------- --------- -------
Net assets at 31 March 2019 4,555 18,446 128,432 151,433
------------- ------------- --------- -------
COMPANY
Net assets at 31 March 2018 4,555 18,446 125,625 148,626
Profit for the year - - 6,827 6,827
Dividends paid 8 - - (5,283) (5,283)
------------- ------------- --------- -------
Net assets at 31 March 2019 4,555 18,446 127,169 150,170
------------- ------------- --------- -------
The Notes form part of these Financial Statements.
Group Statement of Cashflows
For the year ended 31 March
2020 2019 (Restated)
Note GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------- ---- -------- ------- -------- ---------
Cash flows from operating activities
Dividend income received 6,466 5,994
Rental income received 4,162 4,499
Interest received 10 8
Operating expenses paid (2,101) (1,975)
------- ---------
NET CASH INFLOW FROM OPERATING ACTIVITIES 18 8,537 8,526
Cash flows from investing activities
Purchase of investments held at fair
value through profit or loss (13,900) (21,225)
Purchase of investment properties (10,758) (9,409)
Sale of investments held at fair value
through profit or loss 17,160 22,269
Sale of investment properties 9,199 10,178
NET CASH INFLOW FROM INVESTING ACTIVITIES 1,701 1,813
Cash flow from financing activities
Loans drawn down 22,000 -
Fees paid on new loan (320) -
Interest paid on loans (4,156) (4,153)
Finance cost of leases (191) (191)
Payment of lease liabilities (15) (13)
Dividends paid 8 (5,466) (5,283)
--------
NET CASH INFLOW/(OUTFLOW) FROM FINANCING ACTIVITIES 11,852 (9,640)
======= ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 22,090 699
Cash and cash equivalents at 1 April 2019 4,338 3,639
------- ---------
CASH AND CASH EQUIVALENTS AT 31 MARCH 2020 26,428 4,338
------- ---------
The Notes form part of these Financial Statements.
Company Statement of Cashflows
For the year ended 31 March
2020 2019 (Restated)
Note GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------- ---- -------- ------- -------- -------
Cash flows from operating activities
Dividend income received 6,466 5,994
Rental income received 4,162 4,499
Interest received 10 8
Operating expenses paid (2,101) (1,975)
------- -------
NET CASH INFLOW FROM OPERATING ACTIVITIES 18 8,537 8,526
Cash flows from investing activities
Purchase of investments held at fair
value through profit or loss (13,900) (21,225)
Purchase of investment properties (10,758) (9,409)
Sale of investments held at fair value
through profit or loss 17,160 22,269
Sale of investment properties 9,199 10,178
NET CASH INFLOW FROM INVESTING ACTIVITIES 1,701 1,813
Cash flow from financing activities
Loans drawn down 22,000 -
Fees paid on new loan (320) -
Interest paid on loans (4,156) (4,153)
Finance cost of leases (191) (191)
Payment of lease liabilities (15) (13)
Dividends paid 8 (5,466) (5,283)
-------- --------
NET CASH INFLOW/(OUTFLOW) FROM FINANCING ACTIVITIES 11,852 (9,640)
======= -------
NET INCREASE IN CASH AND CASH EQUIVALENTS 22,090 699
Cash and cash equivalents at 1 April 2019 4,138 3,439
------- -------
CASH AND CASH EQUIVALENTS AT 31 MARCH 2020 26,228 4,138
------- -------
The Notes form part of these Financial Statements.
Notes to the Financial Statements
1 Accounting policies
The Financial Statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs) which comprise
standards and interpretations approved by the International
Accounting Standards Board (IASB) together with interpretations of
the International Accounting Standards and Standing Interpretations
Committee approved by the International Accounting Standards
Committee (IASC) that remain in effect, and to the extent that they
have been adopted by the European Union.
The functional and presentational currency of the Group and
Company is pounds sterling because that is the currency of the
primary economic environment in which the Group and Company
operate. The Financial Statements and the accompanying notes are
presented in pounds sterling and rounded to the nearest thousand
pounds except where otherwise indicated.
(a) Basis of preparation
The Financial Statements have been prepared on a going concern
basis as disclosed 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 October 2019 is consistent with the requirements of IFRSs, the
Directors have sought to prepare the Financial Statements on a
basis compliant with the recommendations of the SORP, except for
the allocation of finance costs to revenue as explained in Note
1(f).
The Board has considered the requirements of IFRS 8, 'Operating
Segments'. The Board is charged with setting the Group's investment
strategy. The Board has delegated the day to day implementation of
this strategy to the Investment Managers but the Board retains
responsibility to ensure that adequate resources of the Group are
directed in accordance with its decisions. The Board is of the view
that the Group is engaged in a single segment of business, being
investments in quoted UK equities and UK commercial properties. The
view that the Group is engaged in a single segment of business is
based on the fact that one of the key financial indicators received
and reviewed by the Board is the total return from the investment
portfolio taken as a whole. A review of the investment portfolio is
included in the Investment Managers' Reports in the Annual
Report.
(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 in the Annual Report. The financial
position of the Group as at 31 March 2020 is shown in the Statement
of Financial Position in the Annual Report. The cash flows of the
Group for the year ended 31 March 2020 are set in the Annual
Report. The Group had fixed debt totalling GBP71,623,000 as at 31
March 2020, as set out in Notes 11 and 12; none of the borrowings
is repayable before March 2021. Note 21 sets out the Group's risk
management policies and procedures, including those covering market
price risk, liquidity risk and credit risk. As at 31 March 2020,
the Group's total assets less current liabilities exceeded its
total non current liabilities by a factor of over two. The assets
of the Group consist mainly of securities and investment properties
that are held in accordance with the Group's investment policy.
Most of these securities are readily realisable, even in volatile
markets. The Directors, who have reviewed carefully the Group's
forecasts for the coming year, consider that the Group has adequate
financial resources to enable it to continue in operational
existence for the foreseeable future. Accordingly, the Directors
believe that it is appropriate to continue to adopt the going
concern basis in preparing the Financial Statements.
(c) Basis of consolidation
The consolidated Financial Statements incorporate the Financial
Statements of the Company and the entity controlled by the Company
(its subsidiary). An investor controls an investee when it is
exposed, or has rights, to variable returns from its involvement
with the investee and has ability to affect those returns through
its power over the investee. The Company consolidates the investee
that it controls. All intra-group transactions, balances, income
and expenses are eliminated on consolidation. The investment in the
subsidiary is recognised at fair value in the Financial Statements
of the Company. This is considered to be the net asset value of the
Shareholders' funds, as shown in its Statement of Financial
Position.
Value and Income Services Limited is a private limited company
incorporated in Scotland under company number SC467598. It is a
wholly owned subsidiary of the Company and has been appointed to
act as Alternative Investment Fund Manager of the Company.
(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
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.
It is normal practice and in accordance with the SORP for
investment trust companies to allocate finance costs to capital on
the same basis as the investment management fee allocation.
However, as the Company has a significant exposure to property, and
property companies allocate finance costs to revenue to match
rental income, the Directors consider that, contrary to the SORP,
it is inappropriate to allocate finance costs to capital.
(g) Receivables and Payables
Receivables do not carry any interest and are stated at their
nominal value, as reduced by any impairment calculated using an
expected credit loss model. Payables are not interest bearing and
are stated at their nominal value.
(h) Taxation
The Company's liability for current tax is calculated using tax
rates that have been enacted or substantially enacted by the date
of the Statement of Financial Position.
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 probable 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
maintain approval for the foreseeable future, the Company has not
provided deferred tax on any capital gains and losses arising on
the revaluation or disposal of investments.
(i) Dividends payable
Interim dividends are recognised as a liability in the period in
which they are paid as no further approval is required in respect
of such dividends. Final dividends are recognised as a liability
only after they have been approved by Shareholders in general
meeting.
(j) Investments
Equity investments
All equity investments are classified on the basis of their
contractual cashflow characteristics and the Group's business model
for managing its assets. The business model, which is the
determining feature, is such that the portfolio of equity
investments is managed, and performance is evaluated, on the basis
of fair value. Consequently, all equity investments are measured at
fair value through profit or loss.
For listed investments, fair value through profit or loss 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
Investment properties are initially recognised at cost, being
the fair value of consideration given, including transaction costs
associated with the investment property. Any subsequent capital
expenditure incurred in improving investment properties is
capitalised in the period incurred and is included within the book
cost of the property.
After initial recognition, investment properties are measured at
fair value. Gains and losses arising from changes in fair value are
included in net profit or loss for the period as a capital item in
the Statement of Comprehensive Income and are ultimately recognised
in the retained earnings.
As disclosed in Note 21, the Group leases out all of its
properties on operating leases. A property held under an operating
lease is classified and accounted for as an investment property
where the Group holds it to earn rental, capital appreciation or
both. Any such property leased under an operating lease is carried
at fair value. Fair value is established by half-yearly
professional valuation on an open market basis by Savills (UK)
Limited, Chartered Surveyors and Valuers, and in accordance with
the RICS Valuation - Global Standards January 2020 (the 'RICS Red
Book'). The determination of fair value by Savills is supported by
market evidence. 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 measured at cost,
being the fair value of the consideration received, less issue
costs where applicable. Thereafter, 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) Leases
The Group leases properties that meet the definition of
investment property. These right-of-use assets are presented as
part of Investment Properties in the Balance Sheet and held at
fair-value.
(n) Critical accounting judgements and key estimates
The preparation of the Financial Statements requires the
Directors to make judgements, estimates and assumptions that may
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expenses. The
critical accounting area involving a higher degree of judgement or
complexity comprises the determination of fair value of the
investment properties. The Group engages independent professional
qualified valuers to perform the valuation. Information about the
valuation techniques and inputs used in determining fair value as
at 31 March 2020 is disclosed in Note 9. As a result of the
COVID-19 pandemic, the valuation report from Savills as at 31 March
2020 includes a material valuation uncertainty clause which states
that less weight can be attached to previous market evidence for
comparison purposes to inform fully opinions of value due to there
being an unprecedented set of circumstances on which to base
judgement. Consequently, less certainty and a higher degree of
caution should be attached to their valuation than would normally
be the case
(o) Adoption of new and revised Accounting Standards
New and revised standards and interpretations that became
effective during the year, other than IFRS 16, had no significant
impact on the amounts reported in these Financial Statements but
may impact accounting for future transactions and arrangements.
After the adoption of IFRS 16, a right-of-use asset and lease
liability are required to be recognised on the Balance Sheet with
the right-of use asset classified as investment property and
subsequently fair-valued under IAS 40. As the leased assets have
been adjusted to have been recognised previously under finance
leases, and meet the definition of and are included in investment
property, they are not affected.
At the date of authorisation of these Financial Statements, the
following Standards and interpretations, which have not been
applied to these Financial Statements, were in issue but were not
yet effective.
Standards
IAS 1 Amendments - Classification of Liabilities as current or
non-current (effective 1 January 2022)
IAS 1 and IAS 8 Amendments - Definition of Material (effective 1
January 2020)
IAS 1, 8, 34, 37, 38 and IFRS 2, 3, 6, 14 - Amendment to
references to the conceptual framework (effective 1 January
2020)
IFRS 3 Amendment - Definition of a Business (effective 1 January
2020)
IFRS 17 - Insurance Contracts (effective 1 January 2023)
IFRS 9, IAS 39 and IFRS 7 Amendments - Interest Rate Benchmark
Reform (effective 1 January 2020)
Interpretations
IFRIC 12, 19, 20, 22 and SIC 32 - Amendment to references to the
conceptual framework (effective 1 January 2020)
The Directors do not expect the adoption of these Standards and
interpretations (or any other Standards and interpretations which
are in issue but not effective) will have a material impact on the
Financial Statements of the Group in future periods.
2 Income
2020 2019 (Restated)
Group Company Group Company
-------------------------------------------
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------- ------- ------- --------- ---------
Investment income
Dividends from listed investments in UK 5,931 5,931 6,215 6,215
Other operating income
Rental income (restated) 4,716 4,716 4,491 4,491
Interest receivable on short term deposits 97 97 9 9
======= ======= --------- ---------
Total income 10,744 10,744 10,715 10,715
------- ------- --------- ---------
3 Investment management fee
2020 2019
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ---------- --------- --------- --------- ---------- ---------
Group and Company
Investment management fee 345 805 1,150 348 813 1,161
---------- --------- --------- --------- ---------- ---------
A summary of the terms of the management agreement is given in
the Directors' Report.
4 Other operating expenses
2020 2019
Group Company Group Company
--------------------------------------------
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------------- ------- ------- ------- -------
Fee payable to the Company's auditor for
the audit of the Company's accounts 50 50 30 30
- audit of the Subsidiary's accounts 2 2 4 4
Fee payable to the Company's former auditor
for other services
- other assurance services 3 3 4 4
- other non audit services 7 7 2 2
Directors' fees 94 94 88 88
NIC on Directors' fees 5 5 4 4
Fees for company secretarial services 211 211 206 206
Direct property costs 31 31 (4) (4)
Other expenses 475 475 447 447
======= ======= ------- -------
878 878 781 781
------- ------- ------- -------
Other non-audit services provided by the former Auditor comprise
consideration of compliance with covenants.
Directors' fees comprise the Chairman's fees of GBP28,875 (2019
- GBP27,500), the Audit Committee Chairman's fees of GBP23,500
(2019 - GBP20,000) and fees of GBP21,000 (2019 - GBP20,000) per
annum paid to each other Director.
Additional information on Directors' fees is given in the
Directors' Remuneration Report.
OLIM Limited received an investment management fee of GBP738,000
(2019 - GBP757,000), the basis of calculation of which is given in
the Annual Report.
OLIM Property Limited received an investment management fee of
GBP412,000 (2019 - GBP404,000), the basis of calculation of which
is given in the Annual Report.
5 Finance costs
2020 2019 (Restated)
Group Company Group Company
------------------------------------------------
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------ --------- --------- -------- -------
Interest payable on:
11% First Mortgage Debenture Stock 2021 1,650 1,650 1,650 1,650
9.375% Debenture Stock 2026 1,875 1,875 1,875 1,875
Less amortisation of issue premium (23) (23) (24) (24)
Bank loan interest payable 863 863 628 628
Amortisation of loan expenses 54 54 39 39
Finance costs attributable to lease liabilities 190 157 191 159
--------- --------- -------- -------
4,609 4,576 4,359 4,327
--------- --------- -------- -------
6 Taxation
2020 2019 (Restated)
Revenue Capital Total Revenue Capital Total
------------------------------------------------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------ ------- ------- ------------ ------- ------- -------
a) Analysis of the tax credit/(charge)
for the year:
Group
Current tax (263) 263 - (241) 241 -
Deferred tax - 96 96 - 102 102
======= ======= ============ ------- ------- -------
(263) 359 96 (241) 343 102
------- ------- ------------ ------- ------- -------
Factors affecting the total tax credit/(charge)
for year:
(Loss)/profit before tax (30,756) 6,095
============ -------
Tax (credit)/charge thereon at 19% (2019
- 19%) (5,844) 1,158
Effects of:
Non taxable dividends (1,127) (1,181)
Losses/(gains) on investments not taxable 6,624 (320)
Unrelieved finance costs 251 308
Losses brought forward now utilised - (67)
------------ -------
(96) (102)
------------ -------
2020 2019
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------ ------- ------- ------------ ------- ------- -------
Company
Current tax (263) 263 - (241) 241 -
Deferred tax - 96 96 - 102 102
======= ======= ============ ------- ------- -------
(263) 359 96 (241) 343 102
------- ------- ------------ ------- ------- -------
Factors affecting the total tax credit/(charge)
for year:
(Loss)/profit before tax (30,123) 6,725
============ -------
Tax (credit)/charge thereon at 19% (2019
- 19%) (5,723) 1,278
Effects of:
Non taxable dividends (1,127) (1,181)
Losses/(gains) on investments not taxable 6,510 (433)
Unrelieved finance costs 244 301
Losses brought forward now utilised - (67)
------------ -------
(96) (102)
------------ -------
b) Factors affecting future tax charges
Unutilised tax losses 29,712 27,545
--------- ---------
Potential tax benefit at 19%
(2019 - 19%) 5,645 5,233
Recognised as a deferred tax
non-current asset 485 389
Not recognised as a deferred
tax asset 5,160 4,844
--------- ---------
5,645 5,233
--------- ---------
The Company and Group have deferred tax assets of GBP5,645,000
(2019 - GBP5,233,000) at 31 March 2020 relating to total
accumulated unrelieved tax losses carried forward of GBP29,712,000
(2019 - GBP27,545,000). The Company and Group have recognised
deferred tax assets of GBP485,000 (2019 - GBP389,000), based on
forecast profits for the next five years but have not recognised
deferred tax assets of GBP5,160,000 (2019 - GBP4,844,000) arising
as a result of losses carried forward. These losses do not have an
expiry date but it is considered too uncertain that the Group will
generate profits against which these losses would be available to
offset and, on that basis, the deferred tax asset in respect of
these losses has not been recognised.
7 Return per ordinary share
2020 2019 (Restated)
Group Company Group Company
GBP'000 GBP'000 GBP'000 GBP'000
The return per ordinary share is
based on the following figures:
Revenue return 4,649 4,682 4,986 5,018
Capital return (35,309) (34,709) 1,211 1,809
Weighted average ordinary shares
in issue 45,549,975 45,549,975 45,549,975 45,549,975
Return per share - revenue 10.21p 10.28p 10.95p 11.02p
Return per share - capital (77.52p) (76.20p) 2.65p 3.97p
---------- ---------- ---------- ----------
Total return per share (67.31p) (65.92p) 13.60p 14.99p
---------- ---------- ---------- ----------
8 Dividends
2020 2019
GBP'000 GBP'000
------------------------------------------------------ ------- -------
Dividends on ordinary shares:
Third quarterly dividend of 2.80p per share (2019 -
2.70p) paid 26 April 2019 1,275 1,230
Final dividend of 3.40p per share (2019 - 3.30p) paid
26 July 2019 1,549 1,503
First quarterly dividend of 2.90p per share (2019 -
2.80p) paid 25 October 2019 1,321 1,275
Second quarterly dividend of 2.90p per share (2019
- 2.80p) paid 31 January 2020 1,321 1,275
======= -------
Dividends paid in the period 5,466 5,283
------- -------
The third interim dividend of 2.90p (2019 - 2.80p) paid on 24
April 2020, has not been included as a liability in these Financial
Statements.
The fourth interim dividend of 3.40p (2019 final - 3.40p) being
paid on 28 August 2020, has not been included as a liability in
these Financial Statements.
Set out below is the total dividend paid and declared 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 GBP4,682,000 (2019 -
GBP5,018,000).
2020 2019
------------------------------------------------------
GBP'000 GBP'000
------------------------------------------------------ ------- -------
First quarterly dividend of 2.90p per share (2019-
2.80p) paid 25 October 2019 1,321 1,275
Second quarterly dividend of 2.90p per share (2019-
2.80p) paid 31 January 2020 1,321 1,275
Third quarterly dividend of 2.90p per share (2019-
2.80p) payable 24 April 2020 1,321 1,275
Fourth quarterly dividend for the year ended 31 March
2020 - 3.40p (2019 final - 3.40p) payable 28 August
2020 1,549 1,549
------- -------
5,512 5,374
------- -------
9 Investments
Investment
Equities properties Total
--------------------------------------
GBP'000 GBP'000 GBP'000
------------------------------------------------- --------------- ------------ --------
Group
Cost at 31 March 2019 93,048 46,810 139,858
Unrealised appreciation (restated) 35,658 26,264 61,922
=============== ============ ==========
Valuation at 31 March 2019 (restated) 128,706 73,074 201,780
Purchases 13,900 10,758 24,658
Sales proceeds (17,160) (9,199) (26,359)
Realised (losses)/gains on sales (4,432) 950 (3,482)
Movement in unrealised appreciation
in year (30,257) (1,124) (31,381)
---------------
Valuation at 31 March 2020 90,757 74,459 165,216
Investment Investment
Equities in Subsidiary properties Total
GBP'000 GBP'000 GBP'000 GBP'000
Company
Cost at 31 March 2019 93,048 200 55,139 148,387
Unrealised appreciation (restated) 35,658 - 19,197 54,855
Valuation at 31 March 2019 (restated) 128,706 200 74,336 203,242
Purchases 13,900 - 10,757 24,657
Sales proceeds (17,160) - (9,199) (26,359)
Realised (losses)/gains on sales (4,432) - 950 (3,482)
Movement in unrealised appreciation
in year (30,257) - (1,157) (31,414)
Valuation at 31 March 2020 90,757 200 75,687 166,644
As noted in Notes 11 and 12, the movement in unrealised
appreciation in the year disclosed in the Company's Statement of
Comprehensive Income includes amortisation of GBP633,000 (2019 -
GBP630,000) relating to the transfer of the 11% Debenture Stock
2021 from Audax Properties Limited to the Company in 2014.
Of the investment properties held, properties valued at a total
of GBP37,000,000 are held as security over the 11% Debenture Stock
2021.
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:-
2020 2019
GBP'000 GBP'000
Purchases 83 116
Sales 17 22
100 138
The fair values of the investment properties were independently
valued by professional valuation on an open market basis for
existing use by Savills (UK) Limited, Chartered Surveyors, acting
in the capacity of External Valuers as defined in the RICS Red Book
(but not for the avoidance of doubt as an External Valuer of the
portfolio as defined by the Alternative Investment Fund Managers
Regulations 2013). The valuations accord with the requirements of
IFRS 13 and the RICS Valuation - Global Standards (incorporating
the IVSC International Valuation Standards) effective from 31
January 2020 together, where applicable, with the UK National
Supplement effective 14 January 2019 (together the 'Red Book') by
reference to the Investment Method whereby the net annual income
derived from a property is capitalised by an appropriate
capitalisation rate or Years' Purchase figure to arrive at the
present Capital Value of the property after an allowance for the
purchaser's costs. The relevant capitalisation rate is chosen,
based on the investment rate of return expected (as derived from
comparisons of other similar property investments) for the type of
property concerned and taking into consideration such factors as
risk, capital appreciation, security of income, ease of sale and
management of the property.
The World Health Organisation declared the Novel Coronavirus
(COVID-19) a global pandemic on the 11 March 2020. Since then,
global financial markets have been affected and travel restrictions
have been implemented by many countries. Prior to this date,
investor sentiment was positive, as can be seen by the increased
levels of transactions witnessed in January and February 2020.
Between 11 March 2020 and the valuation date, there was a degree of
uncertainty in the market, resulting in many transactions being put
on hold or withdrawn from the market.
As a result of the COVID-19 pandemic, the valuation report from
Savills as at 31 March 2020 includes a material valuation
uncertainty clause which states that less weight can be attached to
previous market evidence for comparison purposes to inform fully
opinions of value due to there being an unprecedented set of
circumstances on which to base judgement. Consequently, less
certainty and a higher degree of caution should be attached to
their valuation than would normally be the case.
As part of Savills' standard process, the valuations were
carried out by specialist valuers, which were peer reviewed and
reviewed again prior to the valuation date. During the review
process, the various characteristics of each asset were taken into
consideration and, where appropriate, an additional level of risk
was applied taking into account the effect on market sentiment
brought on by COVID-19. Due to the make-up of the portfolio, which
predominately comprises industrial, foodstore and long let
properties, yield discounts were only applied to a number of
Licenced and Leisure assets, where capitalisation rates were moved
out by between 25 and 50 basis points.
Inputs
Fair value Range Blended Yield
- Group Key unobservable
Property portfolio GBP'000 input
Industrials 24,967 Net Equivalent Yield 5.00% - 6.50% 5.97%
Pubs 22,550 Net Initial Yield 3.50% -12.00% 5.45%
Other 11,050 Net Equivalent Yield 6.00% - 7.25% 6.16%
Leisure - Bowling 8,800 Net Initial Yield 6.60% - 7.60% 7.15%
Roadside 5,842 Net Equivalent Yield 6.50% - 8.00% 7.04%
Supermarkets 1,250 Net Equivalent Yield 5.00% 5.04%
74,459
One of the properties within the Roadside sector, previously
owned by Audax Properties plc, was, on 28 March 2014, transferred
to Value and Income Trust PLC (VIT). The calculation of fair value
in the Company's Financial Statements is therefore greater by
GBP1,228,000 (2019 - GBP1,262,000) due to the requirement to
reflect the inter-group transfer at fair value at that date. The
input information remains the same.
A 50 bps increase in the equivalent yield applied would have
decreased the net assets attributable to the Group and Company's
shareholders and the total loss for the year by GBP950,000. A 50
bps decrease in the equivalent yield applied would have increased
the net assets attributable to the Group and Company's shareholders
and the total loss for the year by GBP1,050,000. A 5% decrease in
the rental value applied would have decreased the net assets
attributable to the Group and Company's shareholders and the total
loss for the year by GBP3,300,000. A 5% increase in the rental
value applied would have increased the net assets attributable to
the Group and Company's shareholders and the total loss for the
year by GBP3,700,000.
Investment in subsidiary
Country Date of acquisition % Ownership Principal
of incorporation activity
Name
16 January
Value and Income Services Limited UK 2014 100 AIFM
10 Receivables
2020 2019
Group Company Group Company
GBP'000 GBP'000 GBP'000 GBP'000
Amounts falling due within one
year:
Dividends receivable 323 323 849 849
Prepayments and accrued income 345 345 58 58
668 668 907 907
-------------
11 Current Liabilities
2020 2019
Group Company Group Company
GBP'000 GBP'000 GBP'000 GBP'000
Debenture stock
11% First Mortgage Debenture
Stock 2021 15,000 15,000 - -
Fair value adjustment - 630 - -
15,000 15,630 - -
-------
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.
The 11% First Mortgage Debenture Stock 2021, now issued by VIT,
is repayable at par on 31 March 2021 and is secured over specific
assets of the Company. Under IAS 39, now IFRS 9, this debenture
required to be recorded initially at fair value of GBP19,417,000,
rather than its nominal value of GBP15,000,000 in the Company's
Financial Statements. The amortised cost of the debenture as at 31
March 2020 was GBP15,630,000 (2019 - GBP16,263,000). The
amortisation of the fair value adjustment is presented as a capital
item within gains/losses on investments as it relates to the
reversal of a previously recognised loss on the Company's
investment in its subsidiary. In the Group Financial Statements,
the fair value adjustment is eliminated on consolidation.
The Trust Deed of the 11% Debenture Stock contains four
covenants with which the Company has complied.
Firstly, the value of the assets should not be less than one and
one-half times the amount of the Debenture Stock; secondly, the
rental income from the assets should not be less than one and
one-half times the annual interest of the Debenture Stock (GBP1.65
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.
Payables
2020 2019 (Restated)
Group Company Group Company
GBP'000 GBP'000 GBP'000 GBP'000
Amounts due to OLIM Limited 4 4 74 74
Amounts due to OLIM Property
Limited 34 34 34 34
Accruals and other creditors 1,371 1,372 1,509 1,509
Value Added Tax payable 199 199 177 177
Lease liability (restated) 16 50 15 49
1,624 1,659 1,809 1,843
The amounts due to OLIM Limited and OLIM Property Limited
comprise the monthly management fee for March 2020, subsequently
paid in April 2020.
12 Non-current liabilities
2020 2019 (Restated)
Group Company Group Company
GBP'000 GBP'000 GBP'000 GBP'000
Bank loans 37,000 37,000 15,000 15,000
Balance of costs incurred (590) (590) (308) (308)
Add: Debit to income for the
year 54 54 39 39
36,464 36,464 14,731 14,731
11% First Mortgage Debenture
Stock 2021 (per Note 11) - - 15,000 15,000
Fair value adjustment - - - 1,263
- - 15,000 16,263
9.375% Debenture Stock 2026 20,000 20,000 20,000 20,000
Add: Balance of premium less
issue expenses 182 182 206 206
Less: Credit to income for the
year (23) (23) (24) (24)
20,159 20,159 20,182 20,182
Lease liability payable in more
than one year
* within 2-5 years 74 214 70 208
* over 5 years 4,169 5,233 4,189 5,279
4,243 5,437 4,259 5,487
60,866 62,060 54,172 56,663
The Company has a GBP15,000,000 fixed term secured loan facility
for a period of up to ten years to 31 March 2026 (2019 -
GBP15,000,000). At 31 March 2020, GBP11,893,750 was drawn down at a
rate of 4.344% and GBP3,106,250 was drawn down at a rate of 3.60%.
The terms of the loan facility contain financial covenants that
require the Company to ensure that:-
- in respect of each 3 month period ending on 31 March and 30
September (the Half Year dates), net rental income shall be at
least 200 per cent of interest costs;
- in respect of each 12 month period beginning immediately after
31 March and 30 September, net rental income shall be at least 200
per cent of interest costs; and
- at all times, the loan shall not exceed 60 per cent of the
value of the properties that have been charged.
On 28 November 2019, the Company entered into a GBP22,000,000
fixed term secured loan facility for a period of up to seven years
up to 30 November 2026. At 31 March 2020, GBP20,900,000 was drawn
down at a fixed rate of 3.09229% and GBP1,100,000 was drawn down at
a variable rate of 3.18562% (being LIBOR for the period equal in
length to the interest period of the loan plus a margin of 2.35%).
The terms of the loan facility contain financial covenants that
require the Company to ensure that:-
- the total debt ratio does not at any time exceed 50 per cent;
- projected interest cover is not less than 200 per cent at all times; and
- the Loan to Value shall not exceed 68% of the value of the properties that have been charged.
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, GBP72 million, must not at any time
exceed the total group capital and reserves (equivalent to net
assets of GBP115.30 million as at 31 March 2020).
The fair values of the loan and the debentures are disclosed in
Note 21 and the net asset value per share, calculated with the
borrowings 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 no provision for
deferred tax is therefore required in this respect.
As disclosed in Note 6, a deferred tax asset has been recognised
to reflect the estimated value of tax losses carried forward which
are likely to be capable of offset against future profits.
14 Share capital
2020 2019
GBP'000 GBP'000
Authorised:
56,000,000 Ordinary Shares of 10p each (2019 - 56,000,000) 5,600 5,600
Called up, issued and fully paid:
45,549,975 Ordinary Shares of 10p each (2019 - 45,549,975) 4,555 4,555
15 Share premium
2020 2019
Group Company Group Company
GBP'000 GBP'000 GBP'000 GBP'000
Opening balance 18,446 18,446 18,446 18,446
16 Retained earnings
2020 2019 (Restated)
Group Company Group Company
GBP'000 GBP'000 GBP'000 GBP'000
Opening balance at 31 March 2019 128,432 127,169 127,518 125,625
(Loss)/profit for the year (30,660) (30,027) 6,197 6,827
Dividends paid (see Note 8) (5,466) (5,466) (5,283) (5,283)
Closing balance at 31 March 2020 92,306 91,676 128,432 127,169
The table below shows the movement in retained earnings analysed
between revenue and capital items.
2020 2019 (Restated)
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Group
Opening balance at 31 March
2019 4,008 124,424 128,432 4,305 123,213 127,518
(Loss)/profit for the year 4,649 (35,309) (30,660) 4,986 1,211 6,197
Dividends paid (see Note 8) (5,466) - (5,466) (5,283) - (5,283)
Closing balance at 31 March
2020 3,191 89,115 92,306 4,008 124,424 128,432
Company
Opening balance at 31 March
2019 2,854 124,315 127,169 3,119 122,506 125,625
(Loss)/profit for the year 4,682 (34,709) (30,027) 5,018 1,809 6,827
Dividends paid (see Note 8) (5,466) - (5,466) (5,283) - (5,283)
Closing balance at 31 March
2020 2,070 89,606 91,676 2,854 124,315 127,169
17 Net asset value per equity share
The net asset values per ordinary share are based on the Group's
net assets attributable of GBP115,307,000 (2019 - GBP151,433,000)
and on the Company's net assets attributable of GBP114,676,000
(2019 - GBP150,170,000) and on 45,549,975 (2019 - 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 and the Company adjusted for borrowings at fair value
(see Note 21) of GBP105,990,000 (2019 - GBP142,189,000) is 232.69p
(2019 - 312.16p).
2020 2019 (Restated)
Group Company Group Company
Net assets at 31 March 2020 115,307 114,676 151,433 150,170
Fair value adjustments (9,317) (8,686) (9,244) (7,980)
Net assets with borrowings at fair
value 105,990 105,990 142,189 142,190
Number of shares in issue 45,549,975 45,549,975 45,549,975 45,549,975
Net asset value per share 253.14p 251.76p 332.45p 329.68p
Net asset value per share with borrowings
at fair value 232.69p 232.69p 312.16p 312.16p
18 Reconciliation of income from operations before tax to net
cash inflow from operating activities
2020 2019 (Restated)
Group Company Group Company
GBP'000 GBP'000 GBP'000 GBP'000
Income from operations before tax (24,119) (23,519) 12,396 12,994
Losses/(gains) on investments 34,863 34,263 (1,681) (2,279)
Investment management fee (1,150) (1,150) (1,161) (1,161)
Other operating expenses (878) (878) (781) (781)
Decrease/(increase) in receivables 239 239 (196) (196)
Decrease in other payables (418) (418) (51) (51)
Net cash from operating activities 8,537 8,537 8,526 8,526
19 Reconciliation of current and non-current liabilities arising from financing activities
2020 2019 (Restated)
Group Company Group Company
GBP'000 GBP'000 GBP'000 GBP'000
Cash movements:
Payment of rental (for leasing) 205 206 204 204
Drawdown of loans (for Financing) (21,680) (21,680) - -
Non-cash movements:
Finance costs (for leasing) (190) (157) (191) (159)
Changes in fair value - 633 - 630
Amortisation of loan premium and
expenses and fair value adjustment (30) (30) (15) (15)
Change in debt in the year (21,695) (21,028) (2) 660
Opening debt at 31 March 2019 (54,187) (56,712) (54,185) (57,372)
Closing debt at 31 March 2020 (75,882) (77,740) (54,187) (56,712)
20 Relationship with Related Parties
Value and Income Services Limited is a wholly owned subsidiary
of Value and Income Trust PLC and all costs and expenses are borne
by Value and Income Trust PLC. Value and Income Services Limited
has not traded during the year.
Directors' emoluments are fully disclosed in the Directors'
Remuneration Report.
21 Financial instruments and investment property risks
Risk management
The Group's and the Company's financial instruments and
investment property comprise securities, property and other
investments, cash balances, loans and debtors and creditors that
arise directly from its operations; for example, in respect of
sales and purchases awaiting settlement or debtors for accrued
income.
The Managers have dedicated investment management processes
which ensures that the Investment Policy is achieved. For equities,
stock selection procedures are in place based on active portfolio
management and the identification of stocks. The portfolio is
reviewed on a periodic basis by a senior investment manager and
also by OLIM's Investment Committee.
Additionally, the Managers' Compliance Officers continually
monitor the Group's investment and borrowing powers and report to
their respective Managers.
The main risks that the Group faces from its financial
instruments are:
(i) market risk (comprising price risk, interest rate risk and currency risk)
(ii) liquidity risk
(iii) credit risk
The Board regularly reviews and agrees policies for managing
each of these risks. The Managers' policies for managing these
risks are summarised below and have been applied throughout the
year.
(i) Market risk
The fair value of, or future cash flows from, a financial
instrument held by the Group may fluctuate because of changes in
market prices. This market risk comprises three elements - price
risk, interest rate risk and currency risk.
Price risk
Price risks (i.e. changes in market prices other than those
arising from interest rate or currency risk) may affect the value
of the Group's investments.
It is the Board's policy to hold an appropriate spread of
investments in the portfolio in order to reduce the risk arising
from factors specific to a particular sector. For equities, asset
allocation and stock selection, as set out in the Investment
Policy, both act to reduce market risk. The Manager actively
monitors market prices throughout the year and reports to the
Board, which meets regularly in order to review investment
strategy. The investments held by the Company are listed on the UK
Stock Exchange.
All investment properties held by the Group are commercial
properties located in the UK with long, strong income streams.
Price risk sensitivity
If market prices at the date of the Statement of Financial
Position had been 10% higher or lower, while all other variables
remained constant, the return attributable to ordinary shareholders
for the year ended 31 March 2020 would have increased/decreased by
GBP16,522,000 (2019 - increase/decrease of GBP20,178,000) and
equity reserves would have increased/ decreased by the same
amount.
Interest rate risk
Interest rate movements may affect:
- the fair value of the investments in property; and
- the level of income receivable on cash deposits
The possible effects on fair value and cash flows that could
arise as a result of changes in interest rates are taken into
account when making investment and borrowing decisions.
The Board imposes borrowing limits to ensure gearing levels are
appropriate to market conditions and reviews these on a regular
basis. Borrowings comprise debenture stock and seven and ten year
bank loans, providing secure long term funding. It is the Board's
policy to maintain a gearing level, measured on the most stringent
basis of calculation after netting off cash equivalents, of between
25% and 40%. Details of borrowings at 31 March 2020 are shown in
Notes 11 and 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:
Weighted average Weighted
period for average
which interest Floating
rate is fixed rate Fixed rate rate
Years % GBP'000 GBP'000
At 31 March 2020
Assets
Sterling 1 1.14 21,756 4,672
Total assets 1 1.14 21,756 4,672
At 31 March 2020 Liabilities
Sterling 5.35 6.715 72,000 -
Total liabilities 5.35 6.72 72,000 -
At 31 March 2019
Assets
Sterling - - - 4,338
Total assets - - - 4,338
At 31 March 2019 Liabilities
Sterling 5.8 8.31 50,000 -
Total liabilities 5.8 8.31 50,000 -
The weighted average interest rate on borrowings is based on the
interest rate payable, weighted by the total value of the loans.
The maturity dates of the Group's loans are shown in Notes 11 and
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 2020 would
increase/decrease by GBP43,000 (2019 - increase / decrease by
GBP36,000). This is mainly attributable the Group's exposure to
interest rates on its floating rate cash balances.
- the Group holds no financial instruments that will have an equity reserve impact.
In the opinion of the Directors, the above sensitivity analyses
are not representative of the year as a whole, since the level of
exposure changes frequently as part of the interest rate risk
management process used to meet the Group's objectives.
Currency risk
A small proportion of the Group's investment portfolio is
invested in securities whose fair value and dividend stream are
affected by movements in foreign exchange rates. It is not the
Group's policy to hedge this risk.
Currency sensitivity
There is no sensitivity analysis included as the Group has no
outstanding foreign currency denominated monetary items. Where the
Group's equity investments (which are non-monetary items) are
affected, they have been included within the other price risk
sensitivity analysis so as to show the overall level of
exposure.
(ii) Liquidity risk
This is the risk that the Group will encounter difficulty in
meeting obligations associated with its financial liabilities.
The Group's assets comprise of readily realisable securities
which can be sold to meet commitments if required and investment
properties which, by their nature, are less readily realisable. The
maturity of the Group's existing borrowings is set out in the
interest risk profile section of this note.
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
Carrying Expected Due within 3 months Due after
value cashflows 3 months and 1 year 1 year
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 31 March 2020
Borrowings 73,062 95,311 1,380 18,571 75,360
Leases 4,259 11,547 51 154 11,342
Other payables 467 467 467 - -
Total 77,788 107,325 1,898 18,725 86,702
As at 31 March 2019 (Restated)
Borrowings 50,727 72,805 1,091 3,063 68,651
Leases 4,274 11,752 51 154 11,547
Other payables 475 475 475 - -
Total 55,476 85,032 1,617 3,217 80,198
(iii) Credit risk
This is the failure of a counterparty to a transaction to
discharge its obligations under that transaction that could result
in the Group suffering a loss.
The risk is not significant and is managed as follows:
- investment transactions are carried out with a large number of
brokers, whose credit standing is reviewed periodically by OLIM and
limits are set on the amount that may be due from any one
broker.
- the risk of counterparty exposure due to failed trades causing
a loss to the Group is mitigated by the review of failed trade
reports on a daily basis. In addition, a stock reconciliation to
third party administrators' records is performed on a daily basis
to ensure that discrepancies are picked up on a timely basis.
- cash is held only with reputable banks with high quality
external credit ratings which are monitored on a regular basis.
Credit risk exposure
In summary, compared to the amounts on the Group Statement of
Financial Position, the maximum exposure to credit risk during the
year to 31 March was as follows:
2020
Balance Maximum Balance 2019
Sheet exposure Sheet Maximum exposure
GBP'000 GBP'000 GBP'000 GBP'000
Current assets
Cash and cash equivalents 26,428 26,428 4,338 9,306
Other receivables 668 1,185 907 6,376
27,096 27,613 5,245 15,682
(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 17.0
years (2019 - 16 years). Details of the tenant and geographical
spread of the portfolio are set out in the Annual Report. The long
term record of performance through the varying property cycles
since 1987 is set out in the Annual Report. 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 2020, the future minimum lease
receipts under non-cancellable leases are as follows:-
2020 2019
GBP'000 GBP'000
Due within 1 year 4,482 4,361
Due between 2 and 5 years 17,675 17,446
Due after more than 5 years 49,642 44,485
71,799 66,292
This amount comprises the total contracted rent
receivable as at 31 March 2020.
None of the Group's financial assets is past due
or impaired.
Fair values of financial assets and financial liabilities
All assets and liabilities of the Group other than receivables
and payables and the borrowings are included in the Balance Sheet
at fair value.
(i) Fair value hierarchy disclosures
All assets and liabilities of the Group other than receivables
and payables and the borrowings are included in the Balance Sheet
at fair value.
The table below sets out fair value measurements using the IFRS
13 Fair Value hierarchy:-
Level Level Level Total
1 2 3
GBP'000 GBP'000 GBP'000 GBP'000
At 31 March 2020
Equity investments 90,757 - - 90,757
Investment properties - - 74,459 74,459
90,757 - 74,459 165,216
At 31 March 2019 (Restated)
Equity investments 128,706 - - 128,706
Investment properties - - 73,074 73,074
128,706 - 73,074 201,780
Company and Group numbers per the above fair value disclosures
are the same except for the investment of GBP200,000 made by the
Company in its subsidiary and the differing fair value of one
property which was the subject of an inter-group transfer in 2014,
as disclosed in Note 9.
Fair value categorisation within the hierarchy has been
determined on the basis of the degree to which the inputs to the
fair value measurements are observable and the significance of the
inputs to the fair value measurement in its entirety as
follows:-
Level 1 - inputs are unadjusted quoted prices in an active
market for identical assets
Level 2 - inputs, not being quoted prices, are observable,
either directly (i.e. as prices) or indirectly (i.e. derived from
prices)
Level 3 - inputs are not observable
There were no transfers between Levels during the year.
(ii) Borrowings
The fair value of borrowings has been calculated at
GBP81,317,000 as at 31 March 2020 (2019 - GBP59,244,000) compared
to a Balance Sheet value in the Financial Statements of
GBP71,623,000 (2019 - GBP49,913,000) per Notes 11 and 12.
The fair values of the debentures are determined by comparison
with the fair values of equivalent gilt edged securities,
discounted to reflect the differing levels of credit worthiness of
the borrowers. The fair values of the loans are determined by a
discounted cash flow calculation based on the appropriate
inter-bank rate plus the margin per the loan agreement. These
instruments are therefore considered to be Level 2 as defined
above. There were no transfers between Levels during the year.
All other assets and liabilities of the Group are included in
the Balance Sheet at fair value.
Fair Value Balance Sheet Value
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
11% First Mortgage Debenture Stock
2021 16,074 16,966 15,000 15,000
9.375% Debenture Stock 2026 26,740 26,620 20,159 20,182
42,814 43,586 35,159 35,182
Bank loan 38,503 15,658 36,464 14,731
81,317 59,244 71,623 49,913
There were no transfers between Levels
during the year.
22 Prior Year Adjustments
The Financial Statements have been restated on 31 March 2018 to
recognise finance lease liabilities for leasehold properties which
are classified as investment property at fair value under the
requirements of IAS 40 and IAS 17. Previously, the value of the
leased investment property recorded on the Balance Sheet had been
the net valuation of the leasehold property and the leases had been
accounted for as operating leases. This has been corrected to
recognise the gross valuation of the asset and a corresponding
finance lease liability at the present value of minimum lease
payments using the incremental borrowing rate at the inception of
the lease(s). There has also been a reclassification of the charges
previously netted off against Rental Income to Finance costs and
unrealised gains/losses in investment property.
After the adoption of IFRS 16, a right-of-use asset and lease
liability are required to be recognised on the Balance Sheet with
the right-of use asset classified as investment property and
subsequently fair-valued under IAS 40. As the leased assets have
been adjusted to have been recognised previously under finance
leases, and meet the definition of and are included in investment
property, they are not affected.
The impact of this revision had the following impact as at 1
April 2019:
(i) The Group as a lessee recognised an additional GBP4,287,000
as a right-of-use asset and as a lease liability (comprising a
current liability of GBP15,000, and a non-current liability of
GBP4,272,000). In addition, GBP204,000 has been reclassified from
rental to finance costs (Notes 2 and 5).
(ii) The Company as a lessee recognised an additional
GBP5,581,000 as a right-of-use asset and as a lease liability
(comprising a current liability of GBP47,000, and a non-current
liability of GBP5,534,000). The Group and Company figures are
different due to an inter-group transfer of property in 2014. In
addition, GBP204,000 has been reclassified from rental to interest
payable (Notes 2 and 5).
The following tables summarise the impact of the above on both
the Group's and the Company's Statement of Comprehensive Income,
Balance Sheet and Statement of Cash Flows.
22 Prior Year Adjustments (Continued)
Group Statement of Comprehensive Income for the Year ended 31
March 2019
Original Adjustments Restated
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income Note
Investment
income 6,215 - 6,215 - - - 6,215 - 6,215
Rental income 4,287 - 4,287 204 - 204 4,491 - 4,491
Other income 9 - 9 - - - 9 - 9
2 10,511 - 10,511 204 - 204 10,715 - 10,715
Gains and losses
on investments
Realised
gains/(losses)
on
held-at-fair-value
investments
and investment
properties 9 - 5,294 5,294 - - - - 5,294 5,294
Unrealised
losses on
held-at-fair-value
investments
and investment
properties 9 - (3,600) (3,600) - - (13) (13) - (3,613) (3,613)
Total income 10,511 1,694 12,205 204 (13) 191 10,715 1,681 12,396
Expenses
Investment
management
fees 3 (348) (813) (1,161) - - - (348) (813) (1,161)
Other operating
expenses 4 (781) - (781) - - - (781) - (781)
Finance costs 5 (4,168) - (4,168) (191) - (191) (4,359) - (4,359)
Total expenses (5,297) (813) (6,110) (191) - (191) (5,488) (813) (6,301)
Profit/(loss)
before taxation 5,214 881 6,095 13 (13) - - 5,227 868 6,095
Taxation 6 (241) 343 102 - - - (241) 343 102
Profit/(loss)
attributable
to equity
shareholders
of parent company 4,973 1,224 6,197 13 (13) - - 4,986 1,211 6,197
Earnings per
ordinary share
(pence) 7 10.92 2.68 13.60 0.03 (0.03) ) - 10.95 2.65 13.60
22 Prior Year Adjustments (Continued)
Company Statement of Comprehensive Income for the Year ended 31
March 2019
Original Adjustments Restated
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income Note
Investment
income 6,215 - 6,215 - - - 6,215 - 6,215
Rental income 4,287 - 4,287 204 - 204 4,491 - 4,491
Other income 9 - 9 - - - 9 - 9
2 10,511 - 10,511 204 - 204 10,715 - 10,715
Gains and losses
on investments
Realised
gains/(losses)
on
held-at-fair-value
investments
and investment
properties 9 - 5,294 5,294 - - - - 5,294 5,294
Unrealised
losses on
held-at-fair-value
investments
and investment
properties 9 - (2,970) (2,970) - - (45) (45) - (3,015) (3,015)
Total income 10,511 2,324 12,835 204 (45) 159 10,715 2,279 12,994
Expenses
Investment
management
fees 3 (348) (813) (1,161) - - - (348) (813) (1,161)
Other operating
expenses 4 (781) - (781) - - - (781) - (781)
Finance costs 5 (4,168) - (4,168) (159) - (159) (4,327) - (4,327)
Total expenses (5,297) (813) (6,110) (159) - (159) (5,456) (813) (6,269)
Profit/(loss)
before taxation 5,214 1,511 6,725 45 (45) - 5,259 1,466 6,725
Taxation 6 (241) 343 102 - - - (241) 343 102
Profit/(loss)
attributable
to equity
shareholders
of parent company 4,973 1,854 6,827 45 (45) - 5,018 1,809 6,827
Earnings per
ordinary share
(pence) 7 10.92 4.07 14.99 0.09 (0.09) - 11.01 3.98 14.99
22 Prior Year Adjustments (Continued)
Group Statement of Financial Position as at 31 March 2018
Original Adjustments Restated
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
ASSETS
Non current assets
Investments held at fair
value through profit or
loss 9 128,925 - - 128,925
Investment properties 9 68,700 4,287 - 72,987
197,625 4,287 - 201,912
Deferred tax asset 6 287 - - 287
197,912 4,287 - 202,199
Current assets
Cash and cash equivalents 3,639 - - 3,639
Receivables 10 711 - - 711
4,350 - - 4,350
TOTAL ASSETS 202,262 4,287 - 206,549
Current liabilities
Payables 11 (1,845) - (15) (1,860)
TOTAL ASSETS LESS CURRENT
LIABILITIES 200,417 4,287 (15) 204,689
Non-current liabilities
Borrowings 12 (49,898) - (4,272) (54,170)
NET ASSETS 150,519 4,287 (4,287) 150,519
EQUITY ATTRIBUTABLE TO EQUITY
SHAREHOLDERS
Called up share capital 14 4,555 - - 4,555
Share premium 15 18,446 - - 18,446
Retained earnings 16 127,518 127,518
TOTAL EQUITY 150,519 - - 150,519
Net Asset Value per ordinary
share (pence) 17 330.45 0.00 0.00 330.45
22 Prior Year Adjustments (Continued)
Company Statement of Financial Position as at 31 March 2018
Original Adjustments Restated
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
ASSETS
Non current assets
Investments held at fair
value through profit or
loss 9 129,125 - - 129,125
Investment properties 9 68,700 5,581 - 74,281
197,825 5,581 - 203,406
Deferred tax asset 6 287 - - 287
198,112 5,581 - 203,693
Current assets
Cash and cash equivalents 3,439 - - 3,439
Receivables 10 711 - - 711
4,150 - - 4,150
TOTAL ASSETS 202,262 5,581 - 207,843
Current liabilities
Payables 11 (1,845) - (49) (1,894)
TOTAL ASSETS LESS CURRENT
LIABILITIES 200,417 5,581 (49) 205,949
Non-current liabilities
Borrowings 12 (51,791) - (5,532) (57,323)
NET ASSETS 148,626 5,581 (5,581) 148,626
EQUITY ATTRIBUTABLE TO EQUITY
SHAREHOLDERS
Called up share capital 14 4,555 - - 4,555
Share premium 15 18,446 - - 18,446
Retained earnings 16 125,625 - - 125,626
TOTAL EQUITY 148,626 - - 148,626
Net Asset Value per ordinary
share (pence) 17 326.29 0.00 0.00 326.29
22 Prior Year Adjustments (Continued)
Group Statement of Financial Position as at 31 March 2019
Original Adjustments Restated
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
ASSETS
Non current assets
Investments held at fair
value through profit or
loss 9 128,706 - - 128,706
Investment properties 9 68,800 4,274 - 73,074
197,506 4,274 - 201,780
Deferred tax asset 6 389 - - 389
197,895 4,274 - 202,169
Current assets
Cash and cash equivalents 4,338 - - 4,338
Receivables 10 907 - - 907
5,245 - - 5,245
TOTAL ASSETS 203,140 4,274 - 207,414
Current liabilities
Payables 11 (1,794) - (15) (1,809)
TOTAL ASSETS LESS CURRENT
LIABILITIES 201,346 4,274 (15) 205,605
Non-current liabilities
Borrowings 12 (49,913) - (4,259) (54,172)
NET ASSETS 151,433 4,274 (4,274) 151,433
EQUITY ATTRIBUTABLE TO EQUITY
SHAREHOLDERS
Called up share capital 14 4,555 - - 4,555
Share premium 15 18,446 - - 18,446
Retained earnings 16 128,432 128,432
TOTAL EQUITY 151,433 - - 151,433
Net Asset Value per ordinary
share (pence) 17 332.45 0.00 0.00 332.45
22 Prior Year Adjustments (Continued)
Company Statement of Financial Position as at 31 March 2019
Original Adjustments Restated
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
ASSETS
Non current assets
Investments held at fair
value through profit or
loss 9 128,906 - - 128,906
Investment properties 9 68,800 5,536 - 74,336
197,706 5,536 - 203,242
Deferred tax asset 6 389 - - 389
198,095 5,536 - 203,631
Current assets
Cash and cash equivalents 4,138 - - 4,138
Receivables 10 907 - - 907
5,045 - - 5,045
TOTAL ASSETS 203,140 5,536 - 208,676
Current liabilities
Payables 11 (1,794) - (49) (1,843)
TOTAL ASSETS LESS CURRENT
LIABILITIES 201,346 5,536 (49) 206,833
Non-current liabilities
Borrowings 12 (51,176) - (5,487) (56,663)
NET ASSETS 150,170 5,536 (5,536) 150,170
EQUITY ATTRIBUTABLE TO EQUITY
SHAREHOLDERS
Called up share capital 14 4,555 - - 4,555
Share premium 15 18,446 - - 18,446
Retained earnings 16 127,169 - - 127,169
TOTAL EQUITY 150,170 - - 150,170
Net Asset Value per ordinary
share (pence) 17 329.68 0.00 0.00 329.68
22 Prior Year Adjustments (Continued)
Group Statement of Cash Flows for the Year ended 31 March
2019
Original Adjustments Restated
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Dividend income received 5,994 - 5,994
Rental income received 4,295 204 4,499
Interest received 8 - 8
Operating expenses paid (1,975) - (1,975)
NET CASH INFLOW FROM OPERATING
ACTIVITIES 18 8,322 8,526
Cash flows from investing
activities
Purchase of investments
held at fair value through
profit or loss (21,225) - (21,225)
Purchase of investment properties (9,409) - (9,409)
Sale of investments held
at fair value through profit
or loss 22,269 - 22,269
Sale of investment properties 10,178 - 10,178
NET CASH INFLOW FROM INVESTING
ACTIVITIES 1,813 1,813
Cash flow from financing activities
Interest paid on loans (4,153) - (4,153)
Finance cost of leases - (191) (191)
Payments of lease liabilities - (13) (13)
Dividends paid 8 (5,283) (5,283)
NET CASH INFLOW/(OUTFLOW)
FROM FINANCING ACTIVITIES (9,436) (9,640)
NET INCREASE IN CASH AND CASH
EQUIVALENTS 699 699
Cash and cash equivalents
at 1 April 2018 3,639 3,639
CASH AND CASH EQUIVALENTS
AT 31 MARCH 2019 4,338 - 4,338
22 Prior Year Adjustments (Continued)
Company Statement of Cash Flows for the Year ended 31 March
2019
Original Adjustments Restated
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Note
Cash flows from operating
activities
Dividend income received 5,994 - 5,994
Rental income received 4,295 204 4,499
Interest received 8 - 8
Operating expenses paid (1,975) - (1,975)
NET CASH INFLOW FROM OPERATING
ACTIVITIES 18 8,322 8,526
Cash flows from investing
activities
Purchase of investments
held at fair value through
profit or loss (21,225) - (21,225)
Purchase of investment properties (9,409) - (9,409)
Sale of investments held
at fair value through profit
or loss 22,269 - 22,269
Sale of investment properties 10,178 - 10,178
NET CASH INFLOW FROM INVESTING
ACTIVITIES 1,813 1,813
Cash flow from financing activities
Interest paid on loans (4,153) (4,153)
Finance cost of leases - (159) (159)
Payment of lease liabilities - (45) (45)
Dividends paid 8 (5,283) (5,283)
NET CASH INFLOW/(OUTFLOW)
FROM FINANCING ACTIVITIES (9,436) (9,640)
NET INCREASE IN CASH AND CASH
EQUIVALENTS 699 699
Cash and cash equivalents
at 1 April 2018 3,439 3,439
CASH AND CASH EQUIVALENTS
AT 31 MARCH 2019 4,138 - 4,138
23 Capital management policies and procedures
The Group's capital management objectives are:
- to ensure that the Group will be able to continue as a going concern;
- to maximise the return to its equity shareholders in the form
of long term real growth in dividends and capital value without
undue risk through the optimisation of the debt and equity
balance.
The capital of the Group consists of equity, comprising issued
capital, reserves, borrowings 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 Notes 11 and 12.
24 Events after the Statement of Financial Position Date
There are no significant subsequent events for the Group or the
Company.
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 2020 but is derived from
these Financial Statements. The statutory Financial Statements for
the year ended 31 March 2019 have been delivered to the Registrar
of Companies and contained an audit report which was unqualified
and did not constitute statements under S498(2) or S498(3) of the
Companies Act 2006.
The Financial Statements for the period ended 31 March 2020 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 2020 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 Group and Company Statement of Financial Position at 31
March 2020 and the Group and Company Statement of Comprehensive
Income, Statement of Changes in Equity and 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.
The 2020 Annual Report and Financial Statements will be posted
to Shareholders shortly and will contain the Notice of the Annual
General Meeting of the Company to be held on Thursday, 3 September
2020 at 10.00am at the offices of Maven Capital Partners UK LLP,
First Floor Kintyre House, 205 West George Street, Glasgow G2 2LW.
As referred to in the Chairman's Statement, due to the Government
advice against all non-essential travel and the rules on
maintaining social distancing, Shareholders will be unable to
attend the Annual General Meeting in person.
For Value and Income Trust PLC
Maven Capital Partners UK LLP
Company Secretary
29 July 2020
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
ACSKKCBBOBKDNOB
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