1 Nov 2016 07:00
VALUE AND INCOME TRUST PLC
UNAUDITED HALF-YEARLY FINANCIAL REPORT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2016
SUMMARY
30 September 2016 | 31 March 2016 | 30 September 2015 | |
Group net asset value per share | 300.20p | 299.17p | 284.13p |
(valuing debt at market) | |||
Group net asset value per share | 331.33p | 319.01p | 309.89p |
(valuing debt at par) | |||
Share price (mid) | 247.50p | 221.75p | 237.25p |
Dividend per share | 5.20p | 10.50p | 4.50p |
(first and second interim) | (total) | (interim) |
Value and Income Trust PLC ('VIT') is a specialist investment trust whose shares are traded on the London Stock Exchange. VIT invests in higher yielding, less fashionable areas of the UK commercial property and equity markets, particularly in medium and smaller sized companies. VIT aims for long term real growth in dividends and capital values without undue risk. Figures for net asset values shown in the tables above and below are calculated after deducting dividends declared but not yet paid, as in previous years.
Over the six months ended 30 September 2016, VIT's share price rose by 11.6% while the net asset value per share, valuing debt at par, increased by 3.9%. The FTSE All-Share Index (the "Index") rose by 10.6% over the half year. VIT's property portfolio was revalued independently at 30 September 2016.
The Company announced on 24 August 2016 that it intended to pay quarterly dividends in the future. The first quarterly dividend of 2.6p per share was paid on 28 October 2016 to all shareholders on the register on 30 September 2016. The second quarterly dividend of 2.6p per share will be paid on 27 January 2017 to those shareholders on the register on 30 December 2016. The ex-dividend date will be 29 December 2016.
The third quarterly dividend will be paid on 28 April 2017 to those shareholders on the register on 31 March 2017. The ex-dividend date will be 30 March 2017. The Board will announce in due course the proposed fourth and final payment for the year, which subject to shareholder approval, will be paid on or around 28 July 2017.
Summary of Portfolio | ||||||
30 September 2016 | 31 March 2016 | 30 September 2015 | ||||
£m | % | £m | % | £m | % | |
UK Equities | 131.9 | 66 | 127.3 | 68 | 123.3 | 68 |
UK Property | 61.0 | 30 | 55.1 | 30 | 52.9 | 29 |
Net current assets | 7.9 | 4 | 3.1 | 2 | 5.1 | 3 |
________ | ________ | ________ | ________ | ________ | ________ | |
200.8 | 100 | 185.5 | 100 | 181.3 | 100 | |
________ | ________ | ________ | ________ | ________ | _______ | |
ENQUIRIES: | Angela Lascelles OLIM Limited, Investment Manager, Equities Tel: 020 7408 7290 Website: www.olim.co.uk
Matthew Oakeshott OLIM Property Limited, Investment Manager, Property Tel: 020 7647 6701 Website: www.olimproperty.co.uk |
INTERIM BOARD REPORT
MANAGEMENT AND ADMINISTRATION OF VIT
Value and Income Services Limited (VIS), a wholly owned subsidiary of the Company, is the Company's Alternative Investment Fund Manager (AIFM). As AIFM, VIS has responsibility for the overall portfolio management and risk management of the assets of the Company. VIS has delegated its portfolio management responsibilities for the equity portfolio to OLIM Limited (OLIM) and for the property portfolio to OLIM Property Limited (OLIMP) (collectively the Investment Managers). The delegation by VIS of its portfolio management responsibilities is in accordance with the delegation requirements of the Alternative Investment Fund Managers Directive (AIFMD). The Investment Managers remain subject to the supervision and direction of VIS. The Investment Managers are responsible to VIS and ultimately to the Company in regard to the management of the investment of the assets of the Company in accordance with the Company's investment objectives and policies. VIS has a risk committee which reviews the effectiveness of the Company's internal controls and risk management systems and procedures and identifies, measures, manages and monitors the risks identified as affecting the Company's business.
BNP Paribas Securities Services is the Company's Depositary and oversees the Company's custody and cash arrangements.
PRINCIPAL RISKS AND UNCERTAINTIES
There is regular review of each of the principal risks and uncertainties which have been identified as affecting the Company's business. These risks and uncertainties are summarised below and are considered equally applicable to the second half of the financial year as for the period under review. Policies are in place for the management of each of these risks and uncertainties.
• 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 S1158 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 the Companies Act 2006, the FCA Listing Rules or the FCA Disclosure and Transparency Rules, could lead to a number of detrimental outcomes and reputational damage. Breaches of controls by service providers to the Company could also lead to reputational damage or loss. The Audit and Management Engagement Committee monitors compliance with regulations by reviewing internal control reports from the Administrator and the Investment Managers.
• Market price 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 price 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 both act to reduce market risk. The Investment Managers 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 UK Stock Exchange and 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 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. Current borrowings comprise debenture stocks and the fifteen 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 Board's policy to hedge this risk.
• Liquidity risk: This is the risk that the Group will encounter difficulty in meeting obligations associated with 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.
• Credit risk: This is the failure of a counterparty to a transaction to discharge its obligations under that transaction which could result in the Group suffering a loss. The risk is not significant and is managed as follows:
- investment transactions are carried out with a large number of brokers, whose credit-standing is reviewed periodically by the Investment Managers 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 which ensures that discrepancies are picked up in a timely fashion. The Investment Managers' Compliance Officers carry out periodic reviews of the Depositary's operations and report their findings to the respective Investment Manager's Risk Management Committee and to VIS. This review will also include checks on the maintenance and security of investments held; and
- cash is held only with reputable banks with high quality external credit ratings.
• 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. None of the Group's financial assets is impaired.
Statement of Directors' Responsibilities
The Directors confirm that to the best of their knowledge:
• the condensed set of financial statements within the Half-Yearly Financial Report has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting'; and
• the Interim Board Report includes a true and fair review of the information required by 4.2.7R and 4.2.8R of the FCA's Disclosure and Transparency Rules.
For and on behalf of the Board of Value and Income Trust PLC
James Ferguson
Chairman
31 October 2016
VALUE AND INCOME TRUST PLC
GROUP STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2016
As at | As at | As at | |||||
30 September 2016 | 31 March 2016 | 30 September 2015 | |||||
(Unaudited) | (Audited) | (Unaudited) | |||||
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||
ASSETS | Notes | ||||||
NON CURRENT ASSETS | |||||||
Investments held at fair value through profit or loss | 131,852 | 127,266 | 123,280 | ||||
Investment properties | 61,025 | 55,125 | 52,900 | ||||
8 | 192,877 | 182,391 | 176,180 | ||||
CURRENT ASSETS | |||||||
Cash and cash equivalents | 8,232 | 3,481 | 6,226 | ||||
Other receivables | 1,267 | 755 | 643 | ||||
9,499 | 4,236 | 6,869 | |||||
TOTAL ASSETS | 202,376 | 186,627 | 183,049 | ||||
CURRENT LIABILITIES | |||||||
Other payables | (1,582) | (1,152) | (1,727) | ||||
TOTAL ASSETS LESS CURRENT LIABILITIES | 200,794 | 185,475 | 181,322 | ||||
NON-CURRENT LIABILITIES | |||||||
Borrowings | (49,875) | (40,167) | (40,168) | ||||
150,919 | 145,308 | 141,154 | |||||
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS | |||||||
Called up share capital | 4,555 | 4,555 | 4,555 | ||||
Share premium | 18,446 | 18,446 | 18,446 | ||||
Retained earnings | 6 | 127,918 | 122,307 | 118,153 | |||
150,919 | 145,308 | 141,154 | |||||
NET ASSET VALUE PER ORDINARY SHARE |
331.33p |
319.01p |
309.89p | ||||
VALUE AND INCOME TRUST PLC
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2016
6 months ended | 6 months ended | Year ended | ||||||||
30 September 2016 | 30 September 2015 | 31 March 2016 | ||||||||
(Unaudited) | (Unaudited) | (Audited) | ||||||||
Revenue | Capital | Total | Revenue | Capital | Total | Revenue | Capital | Total | ||
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||
Notes | ||||||||||
INCOME | ||||||||||
Dividend income | 3,418 | - | 3,418 | 3,337 | - | 3,337 | 5,898 | - | 5,898 | |
Other operating income | 2 | 2,004 | - | 2,004 | 2,069 | - | 2,069 | 3,938 | - | 3,938 |
5,422 | - | 5,422 | 5,406 | - | 5,406 | 9,836 | - | 9,836 | ||
GAINS AND LOSSES ON INVESTMENTS | ||||||||||
Realised gains on held-at-fair-value investments and investment properties |
- |
1,312 |
1,312 |
- |
123 |
123 |
- |
1,759 |
1,759 | |
Unrealised gains/(losses) on held-at-fair-value investments and investment properties |
- |
4,376 |
4,376 |
- |
(8,263) |
(8,263) |
- |
(5,295) |
(5,295) | |
TOTAL INCOME | 5,422 | 5,688 | 11,110 | 5,406 | (8,140) | (2,734) | 9,836 | (3,536) | 6,300 | |
EXPENSES | ||||||||||
Investment management fees |
(187) |
(435) |
(622) |
(191) |
(445) |
(636) |
(361) |
(843) |
(1,204) | |
Other operating expenses | (157) | - | (157) | (365) | - | (365) | (777) | - | (777) | |
FINANCE COSTS | (1,987) | - | (1,987) | (1,852) | - | (1,852) | (3,702) | - | (3,702) | |
TOTAL EXPENSES | (2,331) | (435) | (2,766) | (2,408) | (445) | (2,853) | (4,840) | (843) | (5,683) | |
PROFIT/(LOSS) BEFORE TAX |
3,091 |
5,253 |
8,344 |
2,998 |
(8,585) |
(5,587) |
4,996 |
(4,379) |
617 | |
TAXATION | - | - | - | - | - | - | - | - | - | |
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD |
3,091 |
5,253 |
8,344 |
2,998 |
(8,585) |
(5,587) |
4,996 |
(4,379) |
617 | |
EARNINGS PER ORDINARY SHARE (Pence) |
3 |
6.79 |
11.53 |
18.32 |
6.58 |
(18.84) |
(12.26) |
10.97 |
(9.61) |
1.36 |
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 issued by the Association of Investment Companies. All items in the above statement derive from continuing operations.
All income is attributable to the equity holders of Value and Income Trust PLC, the parent company. There are no minority interests.
The Board has declared a first interim dividend of 2.60p per share which was paid on 28 October 2016 to those shareholders on the register on 30 September 2016 with an ex-dividend date of 29 September 2016 and a second interim dividend of 2.6p per share which will be paid on 27 January 2017 to those shareholders on the register on 30 December 2016 with an ex-dividend date of 29 December 2016. The 2015 equivalent dividend rate was 4.50p per share. The third quarterly dividend will be paid on 28 April 2017 to those shareholders on the register on 31 March 2017. The ex-dividend date will be 30 March 2017. | ||||||||||
VALUE AND INCOME TRUST PLC
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2016
6 months ended 30 September 2016 | Year ended 31 March 2016 | ||||||||
(Unaudited) | (Audited) | ||||||||
Share | Share | Retained | Share | Share | Retained | ||||
capital | premium | earnings | Total | capital | premium | earnings | Total | ||
Notes | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
Net assets at 31 March 2016 | 4,555 | 18,446 | 122,307 | 145,308 | 4,555 | 18,446 | 125,881 | 148,882 | |
Net profit/(loss) for the period | - | - | 8,344 | 8,344 | - | - | 617 | 617 | |
Dividends paid | 4 | - | - | (2,733) | (2,733) | - | - | (4,191) | (4,191) |
_______ | _______ | _______ | ______ | ______ | _______ | _______ | ______ | ||
NET ASSETS AT 30 SEPTEMBER 2016 | 4,555 | 18,446 | 127,918 | 150,919 | 4,555 | 18,446 | 122,307 | 145,308 | |
_______ | _______ | _______ | ______ | ______ | _______ | _______ | ______ | ||
6 months ended 30 September 2015 | |||||
(Unaudited) | |||||
Share | Share | Retained | |||
capital | premium | earnings | Total | ||
Notes | £'000 | £'000 | £'000 | £'000 | |
Net assets at 31 March 2015 | 4,555 | 18,446 | 125,881 | 148,882 | |
Net (loss)/profit for the period | - | - | (5,587) | (5,587) | |
Dividends paid | 4 | - | - | (2,141) | (2,141) |
_______ | _______ | _______ | ______ | ||
4,555 | 18,446 | 118,153 | 141,154 | ||
_______ | _______ | _______ | _______ | ||
VALUE AND INCOME TRUST PLC
GROUP CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2016
6 months ended | 6 months ended | Year ended | ||||
30 September 2016 | 30 September 2015 | 31 March 2016 | ||||
(Unaudited) | (Unaudited) | (Audited) | ||||
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||
Dividend income received | 3,551 | 3,126 | 5,608 | |||
Rental income received | 2,522 | 2,109 | 3,374 | |||
Interest received | 1 | 1 | 1 | |||
Operating expenses paid | (878) | (847) | (1,830) | |||
________ | ________ | ________ | ||||
NET CASH INFLOW FROM OPERATING ACTIVITIES | 5,196 | 4,389 | 7,153 | |||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||
Purchase of investments | (11,158) | (2,273) | (8,935) | |||
Sale of investments | 5,650 | 3,406 | 8,462 | |||
________ | ________ | ________ | ||||
NET CASH (OUTFLOW)/INFLOW FROM INVESTING ACTIVITIES |
(5,508) |
1,133 |
(473) | |||
CASH FLOW FROM FINANCING ACTIVITIES | ||||||
Loans drawn down | 9,703 | - | - | |||
Interest paid | (1,907) | (1,848) | (3,701) | |||
Dividends paid | (2,733) | (2,141) | (4,191) | |||
________ | ________ | ________ | ||||
NET CASH INFLOW/(OUTFLOW) FROM FINANCING ACTIVITIES | 5,063 | (3,989) | (7,892) | |||
________ | ________ | ________ | ||||
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS | 4,751 | 1,533 | (1,212) | |||
Cash and cash equivalents at the start of the period | 3,481 | 4,693 | 4,693 | |||
________ | ________ | ________ | ||||
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD |
8,232 |
6,226 |
3,481 | |||
________ | ________ | ________ | ||||
VALUE AND INCOME TRUST PLC
NOTES TO THE FINANCIAL STATEMENTS
1 | Accounting policies | |
(a) | The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) which comprise standards and interpretations approved by the International Accounting Standards Board (IASB) together with interpretations of the International Accounting Standards and Standing Interpretations Committee approved by the International Accounting Standards Committee (IASC) that remain in effect, and to the extent that they have been adopted by the European Union.
The functional and presentational currency of the Group is pounds sterling because that is the currency of the primary economic environment in which the Group operates. The financial statements and the accompanying notes are presented in pounds sterling and rounded to the nearest thousand pounds except where otherwise indicated.
The financial statements have been prepared on a going concern basis and on the historical cost basis, except for the revaluation of certain financial assets. 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 November 2014 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.
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.
All expenses and finance costs are accounted for on an accruals basis. Expenses are presented as capital where a connection with the maintenance or enhancement of the value of investments can be demonstrated. In this respect and in accordance with the SORP, the investment management fees are allocated 30% to revenue and 70% to capital to reflect the Board's expectations of long term investment returns. Any performance fees payable are allocated to capital, reflecting the fact that, although they are calculated on a total return basis, they are expected to be attributable largely to capital performance.
It is normal practice and in accordance with the SORP for investment trust companies to allocate finance costs to capital on the same basis as the investment management fee allocation. However as the Group 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.
The Group's financial statements have been prepared using the same accounting policies as those applied for the financial statements for the year ended 31 March 2016 which received an unqualified audit 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 Interim Board Report. The financial position of the Group as at 30 September 2016 is shown in the Statement of Financial Position. The cash flows of the Group for the half year to 30 September 2016, which are not untypical, are set out in the Group Cash Flow Statement. The Group had fixed debt totalling £49,875,000 as at 30 September 2016; none of the borrowings is repayable before 2021. The Group had no short term borrowings. As at 30 September 2016, the Group's total assets less current liabilities exceeded its total non-current liabilities by a factor of over four.
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 Group's 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. Value and Income Service 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 the 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, any surplus arising from the realisation of any investment may be distributed. | ||
(e) | 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. | ||
(f) | Investments | |
Equity investments | ||
All investments have been designated upon initial recognition as fair value through profit or loss. Investments are recognised and derecognised on the trade date where a purchase or sale is under a contract whose terms require delivery within the timeframe established by the market concerned, and are initially measured at fair value.
Subsequent to initial recognition, investments are recognised at fair value through profit or loss. For listed investments, this is deemed to be bid market prices or closing prices for SETS stocks sourced from the London Stock Exchange. SETS is the London Stock Exchange electronic trading service covering most of the market including all FTSE 100 constituents and most liquid FTSE 250 constituents along with some other securities. Gains and losses arising from changes in fair value are included in net profit or loss for the period as a capital item in the Statement of Comprehensive Income and are ultimately recognised in the retained earnings.
Investment properties 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 included within the book cost of the property.
After initial recognition, investment properties are measured at fair value, with gains and losses recognised in the Statement of Comprehensive Income.
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 Professional Standards. The determination of fair value by Savills is supported by market evidence. It is not more heavily based on other factors because of the nature of the properties and the availability of comparable market data. | ||
2 | Other operating income | ||||||
6 months ended | 6 months ended | Year ended | |||||
30 September 2016 | 30 September 2015 | 31 March 2016 | |||||
£'000 | £'000 | £'000 | |||||
Rental income | 2,003 | 2,068 | 3,937 | ||||
Interest receivable on short term deposits | 1 | 1 | 1 | ||||
________ | ________ | _________ | |||||
2,004 | 2,069 | 3,938 | |||||
________ | _________ | _________ | |||||
3 | Return per ordinary share | ||||||
The return per ordinary share is based on the following figures: | |||||||
6 months ended | 6 months ended | Year ended | |||||
30 September 2016 | 30 September 2015 | 31 March 2016 | |||||
£'000 | £'000 | £'000 | |||||
Revenue return | 3,091 | 2,998 | 4,996 | ||||
Capital return | 5,253 | (8,585) | (4,379) | ||||
Weighted average ordinary | |||||||
shares in issue | 45,549,975 | 45,549,975 | 45,549,975 | ||||
Return per share - revenue | 6.79p | 6.58p | 10.97p | ||||
Return per share - capital | 11.53p | (18.84p) | (9.61p) | ||||
_________ | _________ | _________ | |||||
Total return per share | 18.32p | (12.26p) | 1.36p | ||||
_________ | _________ | _________ | |||||
6 months ended 30 September 2016 | 6 months ended 30 September 2015 | Year ended 31 March 2016 | ||
£'000 | £'000 | £'000 | ||
4 | Dividends paid | |||
Dividends on ordinary shares: | ||||
Final dividend of 6.00p per share (2015 - 4.70p) paid 15 July 2016 | 2,733 | 2,141 | 2,141 | |
Interim dividend of 4.50p per share (2015 - 4.30p) paid 4 January 2016 | - | - | 2,050 | |
_________ | _________ | _________ | ||
2,733 | 2,141 | 4,191 | ||
_________ | _________ | _________ |
5 | Interim dividend |
The directors have declared a first interim dividend of 2.60p per ordinary share, paid on 28 October 2016 to shareholders registered on 30 September 2016, with an ex-dividend date of 29 September 2016 and a second interim dividend of 2.60p per share, payable on 27 January 2017 to shareholders registered on 30 December 2016, with an ex-dividend date of 29 December 2016. The 2015 equivalent dividend rate was 4.50p per share. |
6 | Retained earnings | ||||
The table below shows the movement in retained earnings analysed between revenue and capital items. | |||||
Revenue | Capital | Total | |||
£'000 | £'000 | £'000 | |||
At 31 March 2016 | 4,892 | 117,415 | 122,307 | ||
Movement during the period:- | |||||
Profit for the period | 3,091 | 5,253 | 8,344 | ||
Dividends paid on ordinary shares | (2,733) | - | (2,733) | ||
________ | ________ | ________ | |||
At 30 September 2016 | 5,250 | 122,668 | 127,918 | ||
________ | ________ | ________ | |||
7 | Transaction costs | |||
During the period, expenses were incurred in acquiring and disposing of investments classified as fair value through profit or loss. These have been expensed through capital and are included within gains and losses on investments in the Statement of Comprehensive Income. | ||||
6 months ended30 September 2016 | 6 months ended30 September 2015 | Year ended31 March 2016 | ||
£'000 | £'000 | £'000 | ||
The total costs are as follows:- | ||||
Purchases | 6 | 5 | 32 | |
Sales | 3 | 1 | 4 | |
_________ | _________ | _________ | ||
9 | 6 | 36 | ||
_________ | _________ | _________ | ||
8 Fair value hierarchy disclosures | ||||||
The table below sets out fair value measurements using the IFRS 13 Fair Value hierarchy:- | ||||||
Level 1 £'000 | Level 2 £'000 | Level 3 £'000 | Total £'000 | |||
At 30 September 2016 (unaudited) | ||||||
Equity investments | 131,852 | - | - | 131,852 | ||
Investment properties | - | 61,025 | - | 61,025 | ||
_________ | _________ | _________ | _________ | |||
131,852 | 61,025 | - | 192,877 | |||
Borrowings | - | (64,178) | - | (64,178) | ||
_________ | _________ | _________ | _________ | |||
131,852 | (3,153) | - | 128,699 | |||
_________ | _________ | _________ | _________ | |||
At 31 March 2016 (audited) | ||||||
Equity investments | 127,266 | - | - | 127,266 | ||
Investment properties | - | 55,125 | - | 55,125 | ||
_________ | _________ | _________ | _________ | |||
127,266 | 55,125 | - | 182,391 | |||
Borrowings | - | (52,190) | - | (52,190) | ||
_________ | _________ | _________ | _________ | |||
127,266 | 2,935 | - | 130,201 | |||
_________ | _________ | _________ | _________ | |||
Level 1 £'000 | Level 2 £'000 | Level 3 £'000 | Level 4 £'000 | |
At 30 September 2015 (unaudited) | ||||
Equity investments | 123,280 | - | - | 123,280 |
Investment properties | - | 52,900 | - | 52,900 |
_________ | _________ | _________ | _________ | |
123,280 | 52,900 | - | 176,180 | |
Borrowings | - | (51,733) | - | (51,733) |
_________ | _________ | _________ | _________ | |
123,280 | 1,167 | - | 124,447 | |
_________ | _________ | _________ | _________ | |
Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset as follows:-
Level 1 - valued using quoted prices in an active market for identical assets
Level 2 - valued by reference to valuation techniques using observable inputs other than quoted prices
Level 3 - valued by reference to valuation techniques using inputs that are not based on observable market data
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 value of the loan is determined by a discounted cash flow calculation based on the appropriate inter-bank rate plus the margin per the loan agreement. All other assets and liabilities of the Group are included in the balance sheet at fair value.
There were no transfers between levels during the period.
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9 | Relationship with the Portfolio Managers and other Related Parties |
| Angela Lascelles is a Director of OLIM Limited which has an agreement with the Group to provide investment management services.
Matthew Oakeshott is a Director of OLIM Property Limited which has an agreement with the Group to provide property management services.
OLIM and OLIM Property receive an investment management fee of 2/3 of 1% of the Group's total assets, which is allocated 70% to OLIM and 30% 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 out-performance 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's total assets and is allocated 70% to OLIM and 30% to OLIM Property. The fee is charged wholly to capital.
OLIM Limited received an investment management fee of £435,000 (half year to 30 September 2015: £461,000 and year to 31 March 2016: £873,000 including a performance fee of £nil). At the period end, the balance owed by the Group to OLIM Limited was £71,000 (31 March 2016: £72,000) comprising management fees for the month of September 2016, subsequently paid in October 2016.
OLIM Property Limited received an investment management fee of £187,000 (half year to 30 September 2015: £175,000 and year to 31 March 2016: £331,000 including a performance fee of £nil). At the period end, the balance owed by the Group to OLIM Property Limited was £30,000 (31 March 2016: £27,000) comprising management fees for the month of September 2016, subsequently paid in October 2016.
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 period. |
10 | Half Yearly Report |
The financial information contained in this Half Yearly Report does not constitute statutory accounts as defined in sections 434 - 436 of the Companies Act 2006. The financial information for the six months ended 30 September 2016 and 30 September 2015 has not been audited.
The figures and financial information for the year ended 31 March 2016 has been extracted and abridged from the latest published audited financial statements and do not constitute the statutory accounts for that year. Those financial statements have been filed with the Registrar of Companies and included the Report of the Independent Auditor, which contained no qualification or statement under section 498 (2), (3) or (4) of the Companies Act 2006. |
11 | Approval |
This Half Yearly Report was approved by the Board on 31 October 2016. |