4 Nov 2011 07:00
VALUE AND INCOME TRUST PLC
UNAUDITED HALF-YEARLY FINANCIAL REPORT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2011
SUMMARY
30 September 2011 | 31 March 2011 | 30 September 2010 | |
Net asset value per share | 205.88p | 233.67p | 215.48p |
(valuing debt at market) | |||
Net asset value per share | 231.36p | 249.10p | 235.86p |
(valuing debt at par) | |||
Share price (mid) | 176.00p | 186.00p | 163.00p |
Dividend per share | 3.90p | 7.80p | 3.80p |
(interim) | (total) | (interim) |
Value and Income Trust ('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 and net current assets 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 2011, VIT's share price fell by 5.4% while the net asset value, valuing debt at par, decreased by 7.1%. The FTSE All-Share Index fell by 13.5% over the half-year. VIT's property portfolio was revalued independently at 30 September 2011.
An interim dividend of 3.90p per share has been declared payable on 6 January 2012 to those shareholders on the register on 9 December 2011. The ex-dividend date will be 7 December 2011.
Summary of Portfolio | ||||||
30 September 2011 | 31 March 2011 | 30 September 2010 | ||||
£m | % | £m | % | £m | % | |
UK Equities | 90.0 | 64 | 99.4 | 66 | 91.7 | 65 |
UK Property | 48.7 | 34 | 49.8 | 33 | 47.6 | 33 |
Cash | 2.6 | 2 | 0.2 | 1 | 2.4 | 2 |
________ | ________ | ________ | ________ | ________ | ________ | |
141.3 | 100 | 149.4 | 100 | 141.7 | 100 | |
________ | ________ | ________ | ________ | ________ | ________ | |
ENQUIRIES: | Matthew Oakeshott / Angela Lascelles OLIM Limited, Investment Managers Tel: 0207 439 4400 / Fax: 0207 734 1445 Website: www.olim.co.uk |
INTERIM BOARD REPORT
Risks and Uncertainties
The Board regularly reviews, and agrees policies for managing, each of the principal risks and uncertainties which it has 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.
·; Discount volatility risk: The Company's shares may trade at a price which represents a discount to its underlying net asset value. The Board reviews regularly the level of the discount and considers what action, if any, to take in relation to minimising the discount.
·; Regulatory risk: The Company operates in a complex regulatory environment and therefore faces a number of regulatory risks. Breaches of regulations, such as Sections 1158 - 1159 of the Corporation Tax Act 2010, the UKLA Listing Rules or the Companies Act, could lead to a number of detrimental outcomes and reputational damage.
·; Market price risk: The fair value of, or future cash flows from, a financial instrument held by the Company 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 Company'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. Asset allocation and stock selection both act to reduce market risk. The Manager actively monitors market prices throughout the year and reports to the Board, which meets regularly in order to review investment strategy. The investments held by the Company are listed on the UK Stock Exchange and all investment properties are commercial properties located in 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. Borrowings comprise debenture stock, providing secure long term funding. It is the Board's policy to maintain a gearing level, measured on the most stringent basis of calculation after netting off cash equivalents, of between 25% and 40%.
Currency risk: A small proportion of the 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 Company will encounter difficulty in meeting obligations associated with financial liabilities. The Company'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 Company suffering a loss.
The risk is not significant and is managed as follows:
- investment transactions are carried out with a large number of brokers, whose credit-standing is reviewed periodically by the Manager and limits are set on the amount that may be due from any one broker;
- the risk of counterparty exposure due to failed trades causing a loss to the Company is mitigated by the review of failed trade reports on a daily basis. In addition, a stock reconciliation to third party administrators' records is carried out on a daily basis which ensures that discrepancies are picked up on a timely fashion. The Manager's Compliance Officer carries out periodic reviews of the Custodian's operations and reports its findings to the Manager's Risk Management Committee. This review will also include checks on the maintenance and security of investments held; and
- cash is held only with reputable banks with high quality external credit ratings.
None of the Company's assets are secured by collateral or other credit enhancements.
·; Property risk: The Company'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 Company's financial assets is past due or 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 fair review of the information required by 4.2.7R and 4.2.8R of the FSA's Disclosure and Transparency Rules.
For and on behalf of the Board of Value and Income Trust PLC
James Ferguson
Chairman
3 November 2011
VALUE AND INCOME TRUST PLC
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2011
6 months ended | 6 months ended | Year ended | ||||||||
30 September 2011 | 30 September 2010 | 31 March 2011 | ||||||||
(Unaudited) | (Unaudited) | (Audited) | ||||||||
Revenue | Capital | Total | Revenue | Capital | Total | Revenue | Capital | Total | ||
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||
Notes | ||||||||||
INVESTMENT INCOME | ||||||||||
Dividend income | 2,690 | - | 2,690 | 2,309 | - | 2,309 | 3,823 | - | 3,823 | |
OTHER OPERATING INCOME | 2 | 1,769 | - | 1,769 | 1,765 | - | 1,765 | 3,575 | - | 3,575 |
OTHER COMPREHENSIVE INCOME | ||||||||||
Unrealised losses on investment properties | (540) | (540) | - | (176) | (176) | - | (58) | (58) | ||
_______ | _______ | _______ | _______ | _______ | _______ | _______ | _______ | _______ | ||
4,459 | (540) | 3,919 | 4,074 | (176) | 3,898 | 7,398 | (58) | 7,340 | ||
GAINS AND LOSSES ON INVESTMENTS | ||||||||||
Realised (losses)/gains on held-at-fair-value investments | - | (822) | (822) | - | 2,744 | 2,744 | - | 3,090 | 3,090 | |
Unrealised (losses)/gains on held-at-fair-value investments | - | (6,919) | (6,919) | - | (712) | (712) | - | 5,743 | 5,743 | |
_______ | _______ | _______ | _______ | _______ | _______ | _______ | _______ | _______ | ||
TOTAL INCOME | 4,459 | (8,281) | (3,822) | 4,074 | 1,856 | 5,930 | 7,398 | 8,775 | 16,173 | |
_______ | _______ | _______ | _______ | _______ | _______ | _______ | _______ | _______ | ||
EXPENSES | ||||||||||
Investment management fees | (151) | (353) | (504) | (137) | (319) | (456) | (290) | (786) | (1,076) | |
Other operating expenses | (212) | - | (212) | (174) | - | (174) | (457) | - | (457) | |
FINANCE COSTS | (1,751) | - | (1,751) | (1,751) | - | (1,751) | (3,501) | - | (3,501) | |
_______ | _______ | _______ | _______ | _______ | _______ | _______ | _______ | _______ | ||
TOTAL EXPENSES | (2,114) | (353) | (2,467) | (2,062) | (319) | (2,381) | (4,248) | (786) | (5,034) | |
_______ | _______ | _______ | _______ | _______ | _______ | _______ | _______ | _______ | ||
(LOSS)/PROFIT BEFORE TAX | 2,345 | (8,634) | (6,289) | 2,012 | 1,537 | 3,549 | 3,150 | 7,989 | 11,139 | |
TAXATION | - | 27 | 27 | - | 51 | 51 | - | 221 | 221 | |
_______ | _______ | _______ | _______ | _______ | _______ | _______ | _______ | _______ | ||
(LOSS)/PROFIT FOR THE PERIOD | 2,345 | (8,607) | (6,262) | 2,012 | 1,588 | 3,600 | 3,150 | 8,210 | 11,360 | |
_______ | _______ | _______ | _______ | _______ | _______ | _______ | _______ | _______ | ||
EARNINGS PER ORDINARY SHARE (Pence) | 3 | 5.15 | (18.90) | (13.75) | 4.42 | 3.48 | 7.90 | 6.92 | 18.02 | 24.94 |
_______ | _______ | _______ | _______ | _______ | _______ | _______ | _______ | _______ | ||
The total column of this statement represents the Group's Income Statement prepared in accordance with IFRS. The supplementary revenue return and capital return columns are both 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 the parent company. There are no minority interests. | ||||||||||
VALUE AND INCOME TRUST PLC
STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2011
Group | 6 months ended 30 September 2011 | Year ended 31 March 2011 | |||||||
(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 2011 | 4,555 | 18,446 | 90,462 | 113,463 | 4,555 | 18,446 | 82,564 | 105,565 | |
Net (loss)/profit for the period | - | - | (6,262) | (6,262) | - | - | 11,360 | 11,360 | |
Dividends paid | 4 | - | - | (1,818) | (1,818) | - | - | (3,462) | (3,462) |
________ | _______ | _______ | _______ | _______ | _______ | _______ | _______ | ||
NET ASSETS AT 30 SEPTEMBER 2011 | 4,555 | 18,446 | 82,382 | 105,383 | 4,555 | 18,446 | 90,462 | 113,463 | |
________ | _______ | _______ | _______ | _______ | _______ | _______ | _______ | ||
Group | 6 months ended 30 September 2010 | ||||
(Unaudited) | |||||
Share | Share | Retained | |||
capital | premium | earnings | Total | ||
Notes | £000 | £000 | £000 | £000 | |
Net assets at 31 March 2011 | 4,555 | 18,446 | 82,564 | 105,565 | |
Net profit for the period | - | - | 3,600 | 3,600 | |
Dividends paid | 4 | - | - | (1,731) | (1,731) |
________ | _______ | _______ | _______ | ||
NET ASSETS AT 30 SEPTEMBER 2011 | 4,555 | 18,446 | 84,433 | 107,434 | |
________ | _______ | _______ | _______ | ||
VALUE AND INCOME TRUST PLC
GROUP STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2011
As at | As at | As at | |||||
30 September 2011 | 31 March 2011 | 30 September 2010 | |||||
(Unaudited) | (Audited) | (Unaudited) | |||||
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||
ASSETS | Notes | ||||||
NON CURRENT ASSETS | |||||||
Investments held at fair value through | 90,020 | 99,431 | 91,658 | ||||
profit or loss | |||||||
Investment properties held at fair value | 48,675 | 49,825 | 47,600 | ||||
through profit or loss | |||||||
_________ | _________ | _________ | |||||
138,695 | 149,256 | 139,258 | |||||
CURRENT ASSETS | |||||||
Cash and cash equivalents | 3,737 | 2,344 | 5,399 | ||||
Other receivables | 444 | 300 | 449 | ||||
_________ | _________ | _________ | |||||
4,181 | 2,644 | 5,848 | |||||
_________ | _________ | _________ | |||||
TOTAL ASSETS | 142,876 | 151,900 | 145,106 | ||||
CURRENT LIABILITIES | |||||||
Other payables | (1,587) | (2,493) | (1,545) | ||||
_________ | _________ | _________ | |||||
141,289 | 149,407 | 143,561 | |||||
NON-CURRENT LIABILITIES | |||||||
Debenture stock | (35,361) | (35,372) | (35,385) | ||||
Deferred tax | (545) | (572) | (742) | ||||
_________ | _________ | _________ | |||||
(35,906) | (35,944) | (36,127) | |||||
_________ | _________ | _________ | |||||
105,383 | 113,463 | 107,434 | |||||
_________ | _________ | _________ | |||||
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS | |||||||
Ordinary called up share capital | 4,555 | 4,555 | 4,555 | ||||
Share premium | 18,446 | 18,446 | 18,446 | ||||
Retained earnings | 6 | 82,382 | 90,462 | 84,433 | |||
_________ | _________ | _________ | |||||
105,383 | 113,463 | 107,434 | |||||
_________ | _________ | _________ | |||||
NET ASSET VALUE PER ORDINARY SHARE | 231.36p | 249.10p | 235.86p | ||||
_________ | _________ | _________ | |||||
VALUE AND INCOME TRUST PLC
GROUP STATEMENT OF CASH FLOW
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2011
6 months ended | 6 months ended | Year ended | ||||
30 September 2011 | 30 September 2010 | 31 March 2011 | ||||
(Unaudited) | (Unaudited) | (Audited) | ||||
£000 | £000 | £000 | £000 | £000 | £000 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||
Dividend income received | 2,470 | 2,146 | 3,783 | |||
Rental received | 1,722 | 1,641 | 3,595 | |||
Interest received | 1 | 139 | 139 | |||
Other income | - | - | - | |||
VAT recovered on management fees | - | - | - | |||
Operating expenses paid | (756) | (689) | (1,506) | |||
_________ | _________ | _________ | ||||
NET CASH INFLOW FROM OPERATING ACTIVITIES | 3,437 | 3,237 | 6,011 | |||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||
Purchase of investments | (5,026) | (7,799) | (15,352) | |||
Sale of investments | 6,563 | 7,785 | 13,002 | |||
_________ | _________ | _________ | ||||
NET CASH INFLOW/(OUTFLOW) FROM | ||||||
INVESTING ACTIVITIES | 1,537 | (14) | (2,350) | |||
CASH FLOW FROM FINANCING ACTIVITIES | ||||||
Interest paid | (1,763) | (1,763) | (3,525) | |||
Dividends paid | (1,818) | (1,731) | (3,462) | |||
_________ | _________ | _________ | ||||
NET CASH USED IN FINANCING ACTIVITIES | (3,581) | (3,494) | (6,987) | |||
_________ | _________ | _________ | ||||
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS | 1,393 | (271) | (3,326) | |||
Cash and cash equivalents at the start of the period | 2,344 | 5,670 | 5,670 | |||
_________ | _________ | _________ | ||||
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD | 3,737 | 5,399 | 2,344 | |||
_________ | _________ | _________ | ||||
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 reporting 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 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 January 2009 is consistent with the requirements of IFRSs, the directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP. | ||
The Directors are of the opinion that the Group is engaged in a single segment of business, being investment business. | ||
(b) | 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. | ||
(c) | Investments | |
All investments have been designated upon initial recognition as fair value though 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. | ||
In respect of property investments, fair value is established by a half-yearly professional valuation on an open market basis by Jones Lang LaSalle, Chartered Surveyors and Valuers and in accordance with the RICS Valuation Standards. | ||
2 | Other operating income | |||
6 months ended | 6 months ended | Year ended | ||
September 2011 | September 2010 | March 2011 | ||
Rental income | 1,768 | 1,763 | 3,573 | |
Interest receivable on short term deposits | 1 | 2 | 2 | |
________ | _______ | _______ | ||
1,769 | 1,765 | 3,575 | ||
________ | _______ | _______ |
3 | Earnings per ordinary share | |||
The return per ordinary share is based on the following figures: | ||||
6 months ended | 6 months ended | Year ended | ||
September 2011 | September 2010 | March 2011 | ||
£000 | £000 | £000 | ||
Revenue return | 2,345 | 2,012 | 3,150 | |
Capital return | (8,607) | 1,588 | 8,210 | |
Weighted average ordinary | ||||
shares in issue | 45,549,975 | 45,549,975 | 45,549,975 | |
Return per share - revenue | 5.15p | 4.42p | 6.92p | |
Return per share - capital | (18.90)p | 3.48p | 18.02p | |
________ | _______ | _______ | ||
Total return per share | (13.75)p | 7.90p | 24.94p | |
________ | _______ | _______ | ||
6 months ended 30 September 2011 | 6 months ended 30 September 2010 | Year ended 31 March 2011 | ||
4 | Dividends paid | £000 | £000 | £000 |
Ordinary dividends on equity shares deducted from reserves are as follows:- | ||||
Dividends on ordinary shares: | ||||
Final dividend of 4.0p per share (2010 - 3.8p) | 1,822 | 1,731 | 1,731 | |
paid 15 July 2011 | ||||
Interim dividend of 3.8p per share (2010 - 3.8p) | - | - | 1,731 | |
paid 7 January 2011 | ||||
Unclaimed dividends refunded by Registrar | (4) | - | - | |
________ | _______ | _______ | ||
1,818 | 1,731 | 3,462 | ||
________ | _______ | _______ |
5 | Interim dividend |
The Directors have declared an interim dividend of 3.90p (2011 - 3.80p) per ordinary share, payable on 6 January 2012 to shareholders registered on 9 December 2011. The shares will be quoted ex dividend on 7 December 2011. |
6 | Retained earnings | ||||||
The table below shows the movement in retained earnings analysed between revenue (distributable) and capital (non-distributable) items. | |||||||
Revenue | Capital | Total | |||||
£000 | £000 | £000 | |||||
At 31 March 2011 | 3,543 | 88,637 | 90,462 | ||||
Movement during the period:- | |||||||
Profit for the period | 2,345 | (8,418) | (6,262) | ||||
Dividends paid on ordinary shares | (1,818) | - | (1,818) | ||||
________ | _______ | _______ | |||||
At 30 September 2011 | 4,070 | 80,219 | 82,382 | ||||
________ | _______ | _______ | |||||
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 ended 30 September 2011 | 6 months ended 30 September 2010 | Year ended 31 March 2011 | ||
£000 | £000 | £000 | ||
The total costs are as follows:- | ||||
Purchases | 23 | 51 | 71 | |
Sales | 9 | 6 | 15 | |
________ | _______ | _______ | ||
32 | 57 | 86 | ||
________ | _______ | _______ | ||
8 | Related Party Transactions |
Angela Lascelles and Matthew Oakeshott, Directors of the Company, are directors of OLIM Limited ('OLIM') which has an agreement with the Group to provide investment management services. OLIM receives a quarterly fee of 1/6% of the Group's total assets less current liabilities. OLIM is also entitled to a performance fee, charged wholly to capital, if the total positive returns to shareholders from their investment in the Company exceed the total return on the FTSE All-Share Index by more than 10 percentage points in any three year period. | |
OLIM received an investment management fee of £504,000 (half year to 30 September 2010: £456,000 and year to 31 March 2011: £1,076,000). At the period end, the balance owed by the Group to OLIM Limited was £84,000 (31 March 2011: £191,000) comprising management fees for the month of September 2011, subsequently paid in October 2011. | |
On 27 September 2011, the Directors announced that, as a result of a management buyout of the property management side of OLIM, it had agreed terms to split its investment management contract between OLIM Limited, which will manage the Group's equity portfolio and OLIM Property Limited, which will manage the Group's property portfolio. The timing of the change in terms is subject to FSA approval. | |
There will be no change in the management team responsible for the Group's affairs or the total fees payable by the Group. | |
Audax Properties plc is a wholly owned subsidiary of Value and Income Trust plc and accordingly Value and Income Trust plc is the ultimate controlling party. |
9 | Comparative information |
The financial information contained in this report does not constitute statutory financial statements as defined in sections 434 - 436 of the Companies Act 2006. The financial information for the six months ended 30 September 2011 and 30 September 2010 has not been audited. | |
The financial information for the year ended 31 March 2011 has been extracted from latest published audited financial statements which have been filed with the Registrar of Companies. The report of the auditors on those accounts contained no qualification under section 498 (2), (3) or (4) of the Companies Act 2006. |
10 | Approval |
This Half-Yearly Financial Report was approved by the Board on 3 November 2011. |