VIN.L Regulatory News (VIN)

VALUE AND INCOME TRUST PLC

Annual financial report

FOR THE YEAR ENDED 31 MARCH 2013

SUMMARY

THE YEAR

·; Net Asset Value total return (with debt at par value) of 21.2% over one year and 40.1% over three years

·; Share price total return of 22.7% over one year and 43.6% over three years.

·; FTSE All-Share Index total return of 16.3% over one year and 28.2% over three years

·; Dividends for the year up 3.1% - increased for 26th consecutive year

DIVIDEND

The Directors recommend that a final dividend of 4.30 pence per share (2012 - 4.15 pence) is paid on 19 July 2013 to shareholders on the register on 21 June 2013. The ex-dividend date is 19 June 2013. An interim dividend of 4.0 pence per share (2012 - 3.9 pence) was paid on 4 January 2013.

CHAIRMAN'S STATEMENT

Over the year to 31 March 2013 Value and Income Trust's net asset value total return per share (that is taking the growth in net asset value and dividend together) showed an increase of 22.9% with debt valued at market and 21.2% with debt valued at par. Our equity portfolio had a particularly good year and our property portfolio performed satisfactorily in what continued to be a difficult market.

The share price total return was 22.7% while the FTSE All-Share Index total return was 16.3% over the same period. Over three years the share price total return was 43.6% compared to the increase in the Index of 28.2%. This result entitled OLIM to a performance fee of £ 83,000 and OLIM Property to a performance fee of £42,000.

The proposed final dividend of 4.30p would make total dividends for the year of 8.30p, an increase of 3.1 %. Subject to approval at the Annual General Meeting, the final dividend would be payable on 19 July 2013 to shareholders on the register on 21 June 2013. The ex dividend date is 19 June 2013. It is pleasing to report that the dividend has been increased every year since the change of investment policy in1986.

Our two debentures have covenants attached to them. Information about these is included in note 12 to the financial statements; there is plenty of headroom in terms of both capital and income.

During the course of last year Maven became our company secretary. The transfer from Aberdeen took place smoothly, which is a tribute to those involved. We are grateful to Aberdeen, our secretary since October 2000, and particularly to Stuart Reid, who was responsible for VIT for over 7 years.

The prospects for dividend growth from our equities are encouraging. Our property portfolio is providing an attractive yield with no voids in the portfolio. Consequently we remain fully invested, as was our position a year ago.

James Ferguson

Chairman

24 May 2013

INVESTMENT MANAGERS' REPORTS

EQUITY PORTFOLIO

Market Background

Our year began amidst further concerns about the state of the world economy and renewed strains within the Eurozone. Forecasts of GDP growth in 2012 were downgraded for the UK, US and China and generally in both developing parts of the world and in the emerging economies. In May the credit ratings of Spanish banks were downgraded to junk status, though the banks were subsequently rescued by €100bn loans and confidence in the Eurozone was further restored by Mario Draghi's statement in July that the ECB would do 'whatever is necessary to preserve the euro'. In the first quarter of our year the FTSE All Share Index fell by 3.7%. The remainder of our year to end March 2013 saw a steady recovery in UK equities, and for the year as a whole the All Share Index rose by 12.6% and recorded a total return of 16.3%. Mid and small sized companies both rose by 21% and recorded total returns of just over 24%. The FTSE Higher Yield Index rose slightly less than the All Share Index with a rise of 12.0% but gave a higher total return of 17.4%.

Equities generally rose in the developed economies of the world. In Japan, measured in yen, the Nikkei 225 Index rose by 23% and in America, measured in dollars, the S&P 500 rose by 11%. In contrast, the FTSE All Emerging All Cap Index fell by 0.5% in response to the slowdown in world economic growth. Interest rates remained low and bond yields fell further worldwide, supported by further programmes of Quantitative Easing in the UK and regular purchases of US Treasury bonds by the Federal Reserve. In the currency markets the pound fell by 5% against the dollar but rose by 13% against the yen. It was little changed against the euro.

The rise in equities during the last nine months may have surprised some investors, conscious of the lack of economic growth during this time. Looking back to the summer of 2012 will remind them that UK equities were yielding 3.7%, more than twice the 1.7% yield on UK ten year gilts and with cash returns remaining negligible. Moreover, equity dividends were growing, reflecting the health of the UK listed corporate sector. In the year to end March 2013 the ex-dividend adjustment on the All Share Index rose by 7.6%. After Mario Draghi's statement, referred to above, concerns about Europe faded and bond yields in the peripheral countries of Southern Europe fell back to manageable levels. Confidence was also restored by economists' forecasts for GDP growth in China, where the declining rate of growth levelled out, and is now gently rising again.

Performance

VIT's equity performance over the year was again significantly ahead of the All Share Index. In capital terms the portfolio rose by 22.0%, which was 9.4 percentage points above the Index return. Including income, the total return was +26.5%, compared with the total return on the All Share Index of +16.3%. Over the last three years the performance of the portfolio has been +52.4% compared to the All Share Index return of +28.2%.

In the last year our strategy has continued to tilt the portfolio towards a heavy weighting in companies operating in industrial sectors trading in global economies. Rotork, our largest holding, rose by 42% over the year, and Spectris and Halma, also large holdings, both rose by 36%. In the chemical sector Croda rose by 30%. Some of our Mid-cap companies which depend on consumer spending performed very well, with rises of 58% in the price of Restaurant Group and 45% in Marstons. Our holdings in the insurance sector also rose strongly with Beazley up by 49%, Amlin by 28% and Legal and General with a rise of 32%. Amongst our large company holdings strong performances were recorded by Unilever (+35%) and Reed Elsevier (+41%).

 Portfolio

With dividends growing above the rate of inflation and a high starting yield on the market, we have continued to be fully invested all through the year. In stock selection we continued to overweight the sectors operating in the faster growing economies of the world, and the defensive areas of the UK economy. We continued to underweight the resource and financial sectors.

Transactions during the year totalled £20.1m, with net sales of just £156,000. We reduced the very large holdings in Babcock and Rotork during the year and we sold the small holding in Smiths News. In the utility sectors, we sold National Grid and re-invested in Pennon. We were concerned that National Grid's cashflow might not be sufficient to support both the dividend payout and the current capital spending programme. We were attracted to Pennon by the well managed water business as well as the long term potential of the energy-for-water operation. In the oil sector we reduced the position in Royal Dutch Shell and added to the holding in BP. We believe that the valuation of BP more than reflects the likely cost of the current legal action related to the Macondo oil leak. In addition the company's future growth prospects look superior to Shell. We started a new holding in AMEC, which gives engineering consultancy services to the oil and gas producers, and in BG Group, the natural gas company. We also started a holding in Johnson Matthey, the global specialty chemicals company. At the end of March we were holding 36 companies with a total value of £123.81m and an overall net yield of 3.9%

Outlook

UK GDP growth in 2012 was very muted, with a final reckoning for the year of +0.3%. Three of the four quarters recorded negative progress, but the third quarter showed growth stimulated partly by the Olympic games. The long hard winter has extended the flatlining of GDP into 2013 and in the Budget statement the Office for Budgetary Responsibility downgraded its forecast for this year to just +0.6% from the previous level of +1.2%. Analysts are now forecasting growth in earnings and dividends for UK listed companies in 2013 of about 5% on average, modestly positive in real terms.

The Budget forecast further delays in reducing the fiscal deficit, and public sector debt is not expected to decline until after the life of this parliament. Consumer spending received some stimulus in the Budget with the rise in personal allowances and some modest changes in indirect taxes. The economic background remains troubled, but markets are supported by the loose monetary policies pursued by central banks around the world. Though the immediate risks of a break-up of the Eurozone are perceived to have receded somewhat, the underlying problems of high levels of consumer and public debt in both Europe and the US remain. Equities continue to offer reasonable value to long-term investors. The yield on UK equities of 3.3% is still well ahead of the yield on ten-year gilts while the price earnings ratio of the market remains a little below the long term average of 14 times. We are continuing with our strategy of focusing our investments on high quality growth companies, particularly those with significant overseas economic exposure.

Angela Lascelles

OLIM Limited

17 May 2013

PROPERTY PORTFOLIO

The Market

UK commercial property showed an average total return of 2.5% over the year to March on the Investment Property Databank (IPD) Index, with a 4% fall in capital values. There is now a two way pull on property values. Very high yields on property compared with other asset classes are the main plus, as against the negative pressures on tenants and rents.

Capital values bounced back by about 20% from the depths of the property crash in mid-2009 to autumn 2011, but have been drifting down since in most sectors and regions. Retail and industrial/warehouse property, as well as office property outside Central London, fell in value by 4% - 6% on average last year. Rising London office values, mainly in the West End, reduced the national average fall in office capital values to 2%. In the retail sector, supermarkets (which have longer than average lease lengths and often indexed rent reviews) performed best, followed by retail warehouses, with high street shops and shopping centres under the most pressure. Industrial/warehouse and office property values held up better in South-East England than in the rest of the United Kingdom, but suffered everywhere, outside London, from shortening lease lengths and rising void levels where tenants exercised break clauses, or vacated property when leases ended. Three years of falling real incomes and a flat economy have cut the value of investment property let on conventional leases and increased the attraction of property let to strong tenants with indexed or fixed rent increases.

Rental values have also slipped slightly over the past year in the retail and industrial sectors, and in provincial offices, but office rents in the West End of London (where office buildings are increasingly being converted into residential use) are still growing. Letting markets generally are thin, with a shortage of evidence for valuers to use, and increasing incentives are necessary to persuade cautious tenants to sign or renew leases. This should be reflected in further falls in reported rental values over the year ahead.

2013 is shaping up as another tough year, both for the UK economy and most tenants of commercial property. Average property rental values may slip again as fierce competitive pressure on occupiers and shortage of finance for smaller companies accentuate the established trends for offices to use less space per worker, for retailers to rationalise their physical property requirements and trade more online, and for warehousing to be ever more concentrated near a few motorway junctions. But there are still plenty of recession-beating businesses gaining market share and leasing new space, such as discounters and high quality retailers taking both large and small stores, and restaurant, pub, hotel and other leisure operators growing strong brands and signing leases for at least ten years.

Property's yield premium over gilts is much too high at nearly 5 points over conventional and over 7 points over long-dated index-linked gilts. Long term property investors now have the chance to lock in an initial yield premium without precedent since Standard Life started to compile property yield statistics almost a century ago. Property's real yield premium is near a 30 year high since index-linked gilts were first issued in the UK. Property is fairly valued against UK equities at over double their running yield but with little rental growth likely over the next three years.

Average property capital values are likely to fall by about 2% this year, with average rental values slightly down again giving total returns of 4%-5%. Void levels are rising to approach their peak levels in 2009, with office voids already well above it. But index-linked properties offer outstanding value and should continue to outperform. For most property types, security of income will drive outperformance.

Britain's banking system remains fragile and banks are speeding up disposals of property owned by distressed borrowers both by formal Receiverships and "consensual sales" under the threat of Receivership. This gives cash buyers a happy hunting ground so long as they are highly selective. Specific tenant and individual property risk remains high, and high yielding property with short leases or shaky tenants will continue to fall in value until the economy is clearly enjoying sustained recovery and finance for property is flowing more freely.

The UK economy was basically flat last year and most forecasters see a return to modest growth in 2013. Despite the Budget increase in income tax thresholds, real consumer incomes still look likely to fall for again, with average earnings and transfer payments now growing just over 1% but price inflation stubbornly sticking near 3% under the influence of rising food and energy costs. Pressures in the Eurozone are hitting confidence and growth here, the service sector is inching ahead, but manufacturing is hesitant and construction remains deeply depressed. The Funding for Lending programme is clearly reducing mortgage interest rates but has not so far moved bank lending to small and medium sized businesses into positive territory.

The Bank of England Monetary Policy Committee's massive injections of Quantitative Easing are having uncomfortable side effects for pension funds and annuity rates, and are unlikely to be restarted in their present form. Larger businesses generally enjoy strong balance sheets and liquidity but many lack the confidence in future demand they need to invest. Britain's substantial public sector deficit is rising again, once special factors are stripped out, and the objective of public debt falling has now been postponed until after 2015.

The balance of risk and reward remains firmly in favour of safe property in all sectors, let at affordable rents to strong tenants on long leases, preferably with index-linked rent reviews where the net present value of the income stream alone often offers exceptional value against gilts and corporate bonds. Well-chosen and located property also provides significant capital growth potential based on its residual value at the end of the lease.

The Portfolio

VIT's property portfolio produced a total return of 3.5% over the year to March, 1% above the IPD Monthly Index return over the same period.

We concentrate on properties with strong income streams to meet the fixed interest payments on our long-term debt. These have also produced good long-term capital performance. The total return on our property portfolio has averaged 7% a year over the past 3 years, 5% over 5 years, 10% over 10 years, and 13% over the 26 years since the start. These returns are below the IPD average over 3 years but well above over longer periods.

Two properties were sold during the year, at Galashiels and Hereford, with the proceeds reinvested in properties at Risca, South Wales and Lynton, Devon with long index-linked leases to Caerphilly Council. Tesco and Costcutter. They were bought for £2,215,000 and valued at £2,350,000 at our year end.

All properties are fully let on full repairing and insuring leases, with upward only rent reviews and an average unexpired lease length of 13.5 years. Holland and Barrett, Card Factory and YMCA replaced tenants whose leases expired during the year. One tenant Metalrax, went into administration after the year end. The lease has since been assigned with no loss of rent. 99% of the rental income is reviewed five yearly, with 39% index-linked.

The property portfolio is matched with £35 million of long term, fixed rate loans - £20 million of VIT 9 3/8% Debenture Stock repayable in 2026 and £15 million of 11% Debenture Stock, issued by our subsidiary Audax Properties PLC and repayable in 2021. Because those Debenture Stocks were issued at a premium, their effective interest cost averaged 9%. We believe this is the right way to finance long-term property investment and we do not intend to replace it with shorter term bank debt. The upheavals in the property and banking markets since 2008 reinforce that view.

Results of Independent Valuation

The VIT property portfolio, including properties held within our subsidiary Audax Properties PLC, was subject to an independent professional revaluation by Jones Lang LaSalle. at 31st March 2013.

The revaluation showed a value of £46,225,000; properties within VIT were valued at £17,850,000 while Audax properties PLC totalled £28,375,000. Our properties are revalued independently every six months, at 30th September and 31st March.

Capital values fell by 4% in line with the IPD Index, while the income yield is 1% higher. Twenty-seven of the properties valued at 31 March 2013 were freehold or the Scottish equivalent and one is held on a long lease with 44 years to run.

Matthew Oakeshott

OLIM Property Limited

17 May 2013

BUSINESS REVIEW

The Directors have prepared this Business Review in accordance with the requirements of Section 417 of the Companies Act 2006. A review of the Company's activities is given in the Chairman's Statement and the Investment Managers' Report, which includes likely future developments of the business.

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

Additional risks include:

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

• Regulatory risk: The Company operates in a complex regulatory environment and faces a number of regulatory risks. A breach of Section 1158 of the Corporation Taxes Act 2010 ("Section 1158") would result in the Company being subject to capital gains tax on portfolio investments. Breaches of other regulations, including the Companies Act 2006, the UKLA Listing Rules or the UKLA Disclosure and Transparency Rules, could lead to a number of detrimental outcomes and reputational damage. Breaches of controls by service providers to the Company could also lead to reputational damage or loss. The Audit and Management Engagement Committee monitors compliance with regulations by reviewing internal control reports from the Company Secretary and Administrator and the Investment Managers, OLIM Limited ("OLIM") and OLIM Property Limited ("OLIM Property"), (collectively the "Managers").

There is also a further regulatory risk in the form of the Alternative Investment Fund Managers Directive ("AIFMD") which came into force in July 2011 and is due to be implemented by member states of the European Union by July 2013. The AIFMD will introduce a new authorisation and supervisory regime for all investment trust fund managers and investment companies in the European Union. This is expected to create some additional regulatory costs for the Company.

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

Results and Dividend

The Directors recommend that a final dividend of 4.30 pence per share (2012 - 4.15pence) is paid on 19 July 2013 to shareholders on the register on 21 June 2013. The ex-dividend date is 19 June 2013. An interim dividend of 4.0pence per share (2012 - 3.9 pence) was paid to shareholders on 4 January 2013.

Table 1 shows the revenue reserve position and dividends paid and payable by the Group and the Company, under the former basis of accounting, subject to shareholders' approval of the proposed final dividend at the forthcoming Annual General Meeting.

Table 1 Group and Company revenue reserves

Principal Activity and Status

The business of the Company is that of an investment trust and the Directors do not envisage any change in this activity in the foreseeable future. The Company is registered as a public limited company in Scotland under company number SC50366 and is an investment company within the meaning of Section 833 of the Companies Act 2006. The Company is a member of The Association of Investment Companies.

The Company has been approved by HM Revenue & Customs as an investment trust for the purposes of Section 1158 for the year ended 31 March 2012. The Company has applied for and been accepted as an approved investment trust under Sections 1158 and 1159 of the Corporation Taxes Act 2010 and Part 2, Chapter 1 of Statutory Instrument 2011/2999. This approval relates to accounting periods commencing on or after 1 April 2012. The Directors are of the opinion, that the Company has conducted its affairs so as to be able to retain such approval. The Company intends to manage its affairs so that its Ordinary shares continue to be a qualifying investment for inclusion in the stocks and shares component of an Individual Savings Account.

The Company makes no political donations or expenditures or donations for charitable purposes and, in common with most investment trusts, has no employees.

Share Capital

As at 31 March 2012 and 31 March 2013, and the date of approval of this Report, the Company had 45,549,975 ordinary shares of 10p nominal in issue. Each ordinary share entitles the holder to one vote on a show of hands and, on a poll, to one vote for every share held.

Investment Management

 Up to 5 April 2012, investment management of the Company's assets and responsibility for the Company's operations was delegated to OLIM. With effect from 5 April 2012, responsibility for providing property investment management services to the Company was transferred from OLIM to OLIM Property. OLIM continues to provide equity investment management services to the Company.

Under two separate investment management agreements entered into by the Company on 5 April 2012, both of which may be terminated by either party on giving one year's notice, OLIM and OLIM Property receive an investment management fee of 2/3 of 1% of VIT total assets less current liabilities ("VIT total assets"), which is allocated 2/3 to OLIM and 1/3 to OLIM Property.

OLIM and OLIM Property are also entitled to a performance fee subject to the achievement of certain criteria. The objective is to give the Managers' a performance fee of 10% of any outperformance of the VIT share price total return ("VIT SPTR") over the FTSE All-Share Index share price total return ("FTSE SPTR").

The performance fee is paid annually in respect of performance over the preceding three years. The fee is payable only if the VIT SPTR has been positive over the period and, in addition, the NAV total return has been positive and has exceeded the FTSE SPTR over the period.

The maximum performance fee payable in any year is 1/3 of 1% of VIT total assets and is divided 1/3 to OLIM Property and 2/3 to OLIM. The fee is wholly charged to capital.

During the year ended 31 March 2013 OLIM received an annual investment management fee of £697,000, excluding VAT, and OLIM Property received an annual investment management fee of £344,000 excluding VAT.

In addition, a performance fee of £83,000, excluding VAT, was paid to OLIM, and a performance fee of £42,000, excluding VAT, was paid to OLIM Property.

An additional fee is payable to the Company Secretary in respect of company secretarial and administrative services. Up to 1 February 2013 the Company Secretary was Aberdeen Asset Management PLC. On 1 February 2013 Maven Capital Partners UK LLP was appointed Company Secretary.

The Directors (excluding Matthew Oakeshott and Angela Lascelles) review the terms and conditions of the appointment of OLIM and OLIM Property on a regular basis. Following the most recent review, the Directors are satisfied that the continuing appointment of OLIM and OLIM Property as investment managers, on the current terms, is in the best interests of shareholders as a whole as the Company benefits from the specialised teams of investment professionals at OLIM and OLIM Property. In the event of termination on less than the agreed notice period, compensation is payable in lieu of the unexpired notice period.

By order of the Board

Maven Capital Partners UK LLP

Company Secretary

Glasgow, 24 May 2013

STATEMENT OF DIRECTORS' RESPONSIBILITIES

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

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

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

·; properly select and apply accounting policies;

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

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

·; make an assessment of the Group's ability to continue as a going concern; and

·; make judgements and estimates that are reasonable and prudent.

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

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

Responsibility Statement

The Directors confirm to the best of their knowledge, that:

·; the Financial Statements, prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group and the Company and the undertakings included in the consolidation taken as a whole; and

·; the Directors' Report includes a fair review of the development and performance of the business and the position of the Group and 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.

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

James Ferguson

Chairman

24 May 2013

VALUE AND INCOME TRUST PLC

GROUP STATEMENT OF COMPREHENSIVE INCOME

VALUE AND INCOME TRUST PLC

COMPANY STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 March 2013

VALUE AND INCOME TRUST PLC

STATEMENT OF FINANCIAL POSITION

VALUE AND INCOME TRUST PLC

STATEMENTS OF CHANGES IN EQUITY

VALUE AND INCOME TRUST PLC

GROUP STATEMENT OF CASH FLOWS

For the year ended 31 March

VALUE AND INCOME TRUST PLC

COMPANY STATEMENT OF CASH FLOWS

For the year ended 31 March

 VALUE AND INCOME TRUST PLC

NOTES TO FINANCIAL STATEMENTS