VIN.L Regulatory News (VIN)

VALUE AND INCOME TRUST PLC

ANNUAL FINANCIAL REPORT

FOR THE YEAR ENDED 31 MARCH 2011

SUMMARY

THE YEAR

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

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

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

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

CHAIRMAN'S STATEMENT

Value and Income Trust had a good year.

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

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

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

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

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

James Ferguson

2 June 2011

MANAGER'S REPORT

EQUITY PORTFOLIO

MARKET BACKGROUND

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

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

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

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

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

Performance

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

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

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

Portfolio

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

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

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

Outlook

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

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

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

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

2 June 2011

PROPERTY PORTFOLIO

The Market

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

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

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

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

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

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

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

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

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

The Portfolio

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

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

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

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

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

Results of Independent Revaluation

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

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

2 June 2011

BUSINESS REVIEW

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

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

Aims of the Company

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

Investment Policy

VIT's policy is to invest in quoted UK equities, UK commercial property and cash or near cash securities. It is VIT's policy not normally to invest in overseas shares or in unquoted companies. UK equities usually account for between half and three-quarters of the total portfolio and property for a quarter to a half but the asset allocation may go outside these ranges if relative market levels and investment value, or a desired increase in cash or near cash securities, make it appropriate.

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

VIT has had a long standing policy, since 1986, of increasing its exposure to equities and, particularly, to property through the judicious use of borrowings. All borrowings have been long term debentures to provide secure long term funding, avoiding the risks associated with short term funding of having to sell illiquid assets at a low point in markets if loans have to be repaid. Gearing has varied between a quarter and two-fifths of the total portfolio. VIT will not raise new borrowings if total net borrowings would then represent more than half of the total assets.

Principal Risks and Uncertainties

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

Additional risks include:

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

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

Key Performance Indicators

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

Results and Dividend

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

Principal Activity and Status

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

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

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

Share Capital

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

By order of the Board

Aberdeen Asset Management PLC

Secretaries

Edinburgh

2 June 2011 STATEMENT OF DIRECTORS' RESPONSIBILITIES

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

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

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

- properly select and apply accounting policies;

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

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

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

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

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

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

The Directors confirm to the best of their knowledge, that

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

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

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

James Ferguson

Chairman

2 June 2011

VALUE AND INCOME TRUST PLC

GROUP STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 March 2011

VALUE AND INCOME TRUST PLC

COMPANY STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 March 2011

VALUE AND INCOME TRUST PLC

STATEMENT OF FINANCIAL POSITION

As at 31 March 2011

VALUE AND INCOME TRUST PLC

GROUP STATEMENT OF CHANGES IN EQUITY

VALUE AND INCOME TRUST PLC

GROUP STATEMENT OF CASH FLOWS

For the year ended 31 March 2011

VALUE AND INCOME TRUST PLC

NOTES TO FINANCIAL STATEMENTS