REG - Value & Index Prop - Annual Financial Report
12/06/2024 07:00
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RNS Number : 0229S Value and Indexed Prop Inc Tst PLC 12 June 2024
VALUE AND INDEXED PROPERTY INCOME TRUST PLC
ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED 31 MARCH 2024
Strategic Report
Chairman's Statement
The Company's capital performance was disappointing last year, with a net
asset value total return of -9.7%. The discount to net asset value also
widened, resulting in a share price total return of -10.3%. Since our year end
on 31 March 2024, however, the share price has rebounded and the discount
narrowed again. Rental income growth was well above inflation last year, and
since the year end, 100% of rent has become index-related.
The weakness of the property market is principally the result of the abrupt
end of the extended era of exceptionally low interest rates which followed the
global financial crisis. Central Banks around the world have been indicating
that the next moves in rates are more likely to be down than up. But we should
expect a return to historical normality rather than a resumption of the near
zero cost bank financing.
As a result, there are some indications that the worst is over for property,
although confidence is still fragile and transaction volumes are low. The
election in Britain, which will take place on July 4, may result in a degree
of political stability which has been missing for most of the current
Parliament. It is difficult to maintain similar hopes for the outcome of the
US Presidential contest in November. In both countries, fiscal projections
bear little relation to reality. The geopolitical uncertainties which
contributed to the rise in inflation and consequent increase in interest rates
have compounded. The war in Ukraine continues and hostilities have ravaged
Palestine. The ambitions of China's leaders are a growing source of tension
and concern.
While no asset classes are immune from these factors, the Company's portfolio
of UK property assets with good locations, strong covenants and rents linked
to inflation is well positioned to be robust to external events. During the
year, the portfolio was strengthened with the purchase of three long-let
leisure investments at yields over 8%, and the sale of seven weaker properties
including the last Stonegate pub holdings. That company has since announced it
is seeking to refinance its debts. All the remaining tenants appear well
financed. All rent due in the last year was collected in full.
We continue to improve the sustainability credentials of our properties, post
year end 100% of all Energy Performance Certificates are now A - C. All rent
due in the last year was collected in full.
A major restructuring of the Company's debt was completed last year with the
repayment of the costly debenture and the Company now has a comfortable loan
to value position locked in at affordable interest rates.
Underlying income growth was strong with 11 rent reviews adding 4.9% to total
rental income. As the revised name of the Company, adopted in 2021 emphasises,
our focus is on achieving value from secure indexed property income.
At the year end, the yield on the Company's shares (at the proposed dividend)
was 7.7% as against 0.1% on the UK Government's 2031 indexed gilt, which is
linked to the Retail Prices Index (RPI).
Some of the rents on VIP's properties are linked to the RPI, others to the
slightly slower rising Consumer Prices Index (CPI), which is the basis for the
2% target prescribed for the Bank of England. The Company's index-related rent
reviews should make it well placed to at least match inflation now it is
nearer to the official target.
The prior year accounts have been restated as set out in Note 24. This
restatement has resulted in an increase in the Group's basic earnings per
share from -55.22p to -54.20p and a reduction in the Net Asset Value per
Ordinary Share from 246.9p to 244.4p for the year ended 31 March 2023.
As anticipated, dividend cover has now been restored and the Board aims to
maintain the Company's thirty-seven year history of progressive dividend
increases. The Board is recommending a final dividend of 3.6p per share,
making total dividends of 13.2p per share for the year to 31 March 2024,
compared to 12.9p in the previous year, an increase of 2.3%. Subject to
Shareholder approval at the 2024 Annual General Meeting (AGM), the final
dividend will be paid on 26 July 2024 to Shareholders on the register on 28
June 2024. The ex-dividend date is 27 June 2024.
As Shareholders were advised when the new investment policy was adopted in
2021, proposals will be put to the 2026 AGM of the Company to offer
Shareholders an exit at net asset value less costs.
The AGM will be held at the offices of Shepherd & Wedderburn LLP, 9
Haymarket Square, Edinburgh EH3 8FY at 12.30pm on Thursday, 11 July 2024. The
Notice of Annual General Meeting can be found in the Annual Report. The Board
encourages Shareholders to vote using the proxy form, which can be submitted
to the Company's Registrars, Computershare Investor Services PLC, The
Pavilions, Bridgwater Road, Bristol, BS99 6ZY. Proxy forms should be completed
and returned in accordance with instructions thereon and the latest time for
the receipt of proxy forms is 12.30pm on 9 July 2024. Proxy votes can also be
submitted by Crest or online using the Registrar's Share Portal service at
www.investorcentre.co.uk/eproxy (http://www.investorcentre.co.uk/eproxy)
John Kay
Chairman
11 June 2024
VIP property portfolio - sector weightings since 2014
Sector March 2024 March 2023 March 2022 March 2021 March 2020 March 2014
Offices 0% 0% 0% 0% 0% 0%
Shops 0% 0% 0% 0% 0% 39%
Supermarkets 29% 31% 30% 16% 2% 5%
Pubs/Restaurants 6% 9% 13% 24% 32% 17%
Bowling and Health Club 19% 9% 5% 8% 12% 0%
Hotels 9% 9% 6% 0% 0% 0%
Industrial/Warehouse 28% 29% 33% 35% 32% 8%
Roadside 0% 4% 4% 3% 6% 16%
Other 9% 9% 9% 14% 16% 15%
Total 100% 100% 100% 100% 100% 100%
Number of Properties 35 39 43 31 26 29
Manager's Report
The property market
UK commercial property values, as measured by the MSCI UK Quarterly Property
Index, the main benchmark for institutional property performance, fell by 5.5%
over VIP's year to end March 2024, giving a total return of -1.1%. This brings
the average fall to 23% from the markets' mid-2022 peak.
Capital value % falls by sector - to end of March 2024
Sector 12 months to March 2024 June 2022 to March 2024
Retail -6 -19
Office -13 -27
Industrial 0 -26
Alternatives -5 -14
All Property -6 -23
Most capital values were slipping slowly throughout the year, but on very low
transaction volumes (around half their long term average, and even lower than
in 2020 during COVID). This has made valuers' jobs harder than usual, with a
wide spread between the prices most buyers are prepared to offer and most
sellers to accept. Many completed sales, therefore, are coming from vendors
under actual or potential pressure from redemptions, in the case of
institutional sellers, or rising interest rates and refinancing risk for
individuals and property companies.
As the table shows, the pain was worst in the office sector, with buyers few
and far between and many older offices only saleable, if at all, for
alternative uses. Total returns, including income, were 4% in the industrial
sector, and around zero in retail and the alternatives sectors, with offices
firmly at the bottom at -9%. Underlying rental values generally edged ahead,
by about 3%-4% on average with industrials leading the way, but growth slowed
across the board over the year.
UK commercial property - % growth rates to March 2024
6 months* 1 year 3 years 5 years 10 years
Capital values All property -5.6 -5.3 -3.2 -3.7 +0.2
Rental values All property +3.9 +3.7 +3.4 +1.3 +1.8
Total returns All property -0.8 -0.5 +1.2 +0.8 +5.0
Source: MSCI UK Quarterly Property Index March 2024 - Standing Investments
*Annualised
2024 has seen little change so far, with transaction volumes staying very low
and more pressure to sell than to buy. But in the non-office sectors, capital
values are starting to stabilise, with rental growth offsetting slight adverse
shifts in valuation yields.
Comparative investment yields - End December (except 2024 end March)
2024 2023 2022 2021 2020 2011 2008 2006
Property (equivalent yield) 6.6 6.5 6.1 5.1 5.8 6.9 8.3 5.4
Long Gilts Conventional 3.9 3.5 3.8 1.0 0.2 2.5 3.7 4.6
Index linked 0.4 0.2 0.3 -2.6 -2.6 -0.2 0.8 1.1
UK Equities 3.8 3.8 3.6 3.1 3.4 3.5 4.5 2.9
RPI (annual rate) 4.3 5.2 13.4 7.5 1.2 4.8 0.9 4.4
Yield gaps: Property less Conventional Gilts 2.7 3.0 2.3 4.1 5.6 4.4 4.6 0.8
Property less Index Linked Gilts 6.2 6.3 5.8 7.7 8.4 7.1 7.5 4.4
Property less Equities 2.8 2.7 2.5 2.0 2.4 3.4 3.8 2.5
Source: MSCI UK Quarterly Property Index and ONS for the RPI
After UK 10 year gilt yields rose to a high of 4.7% last October, the mood in
international bond markets grew calmer, bringing the gilt yield down to 3.5%
at the year end. But 10 year gilt yields then rose again to around 4% at end
March and have since traded in a 4%-4.5% range, influenced by rising US bond
yields and election and international concerns, despite a much improved
outlook for world food and energy prices. As the table above shows, UK
commercial property is fairly valued against equities and conventional
fixed-coupon gilts. It offers outstanding value against index-linked gilts,
which still only offer negligible real returns at considerable capital risk,
as their performance since 2021 has shown.
Average commercial property vacancy rates are at historic highs, with offices
well above them, and covenant and lease renewal risk will persist as indebted
companies face higher interest and labour costs. The premium for security and
quality of property income is set to grow further.
Property prospects by sector
Industrial/Warehouse - Slow but steady
Capital values in the industrial investment market were broadly stable last
quarter on low trading volumes. Investor sentiment has improved since the
start of the year as those who had been sitting on the sidelines are now
showing interest, but, the lack of suitable stock is stifling the market.
Investor preference is still focused on rare Grade A stock, which when
marketed generates plenty of interest with competitive bidding. Other
industrial/warehouse property attracts many window shoppers but few credible
offers when bidders are asked to show their hands.
The buyers vary according to asset quality. The institutions are active but
only for prime assets, other market participants such as the smaller funds,
property companies and, if they are cash buyers, private investors are
attracted by value add opportunities at higher initial yields with near-term
rent reviews to boost returns further. Investors needing finance are still
waiting for an expected base rate cut later in the year before committing.
Transaction volumes in Q1 2024 were around £1.6 billion, slightly up on the
£1.2 billion transacted in Q4 2023. Capital values of industrial properties
in the MSCI UK Quarterly Property Index were stagnant over the 12 months and
the average net initial yield moved marginally out.
The occupier market also remains slow as supply and demand move towards
equilibrium. Take up levels are steady as the sluggish economy continues to
hamper activity. Vacancy rates are edging up as some smaller tenants go under
and the recent increase in business rates hit this sector hardest. Economic
stagnation and a weak investment market are also hitting speculative
development. Only 10 million sq. ft of new development put spade to ground in
2023 (this contrasts with the previous peak of 23.6 million in 2022).
Occupational demand for prime stock remains steady, emanating mostly from
third party logistics firms and discount retailers. Consequently, rental
growth is still forecast for those brand-new prime assets, optimally located
for transport and workforce with full top level environmental certification,
however, this is at significantly more muted levels than recent years,
forecast at c4% for the year. On the other side, rental growth for more
secondary, older space will be minimal or worse over the next two years as the
polarisation between environmentally sound prime assets and secondary
properties widens amid the overall economic backdrop and total operational
costs increasing.
Despite the lacklustre start to the year, most active investors and potential
players in the industrial investment market want to be positive. The rest of
2024 should see more liquidity in the market and increased transaction volumes
despite the overall cautious backdrop - stable pricing and positive total
returns continue to attract desired investment into the sector but sourcing
stock is proving more difficult.
Offices - Still deteriorating
In contrast to the industrial sector, investor sentiment towards the office
sector is still very weak and transaction levels remain at their lowest level
for over 20 years. £8.5 billion was traded in 2023, a 54% decrease on 2022
levels. This negativity prevails in 2024. The sellers are the historic core
investors in the sector; both the retail and pension funds have effectively
become forced sellers due to either redemptions, to satisfy environmental law
changes or the need to decrease portfolio weighting in the weakening sector.
There are few genuine buyers for offices: well-funded family offices and
private individuals are interested but only in the smaller lot sizes (sub £20
million). American private equity buyers are also starting to appear, but only
at very high income yields to compensate for poor capital growth prospects.
Average net initial office yields in the MSCI UK Quarterly Property Index have
increased from 4.4% over the last year to 5.0%. These will move out further
over 2024 as valuers and the market twig that much office space is actually
unlettable. Capital values are down -13.0% over the 12 months to March 2024
and have further to fall.
Take up for UK offices remains at historically low levels. Outside London it
totalled 4.7m sq ft in 2023, a 15% decline on 2022 figures. The "flight to
quality" for occupiers is still happening and this selectiveness is widening
the gap for the two-tier market. Net disinvestment of space by occupiers
continues as working from home (even for only one to two days a week) is now
the norm. Occupiers are moving to upgrade their offices, with preferred space
being Grade A specification with a range of market-leading amenities and high
levels of sustainability check boxes ticked. But invariably at the same time
they vacate larger amounts of existing office space, with Canary Wharf the
most extreme example.
Whilst transaction volumes may increase during the rest of 2024, prices will
continue to fall and this will be on the back of purchases made for more
viable redevelopment such as hotel, mixed uses, life sciences and, where Local
Authorities allow, residential. The amendment of permitted development rights
for offices, regardless of size, to be converted into residential without full
planning permission, should help. But with conversion costs at their highest
for decades, capital values of existing offices will need to fall even further
to make change work. We also expect to see more forced sales as lenders,
having recently taken a more compassionate and pragmatic stance to that during
the global financial crisis, are going to have to become more forceful to
compensate for capital value falls triggering severe breaches of loan to value
covenants.
Retail - Food still driving growth
The first three months of 2024 have been strong for food retail and weak in
non-food. Whilst the value of total retail sales increased by 3.8% over the
three months to March 2024 in comparison to the same period last year, this
was below the corresponding figure for March 2023 (4.6%) but well above the
average growth over the last 12 months (0.9%). Once again this growth is being
driven by the food sector with sales increasing 5.3% year on year over the
three months to March in comparison to non-food sales 2.5%.
The positive effects of an early Easter and school holidays were tempered by
the exceptional levels of rainfall with UK footfall reducing by -1.3% year on
year to March. The proportion of sales online is currently 25.7% in comparison
to 22.1% in March 2020 and is slipping back towards pre-COVID levels.
Over the 12 weeks to 17 March, grocery price inflation fell to 4.5% from a
peak of 17% in March last year. Grocery sales rose by 4.6% over this 12 week
period boosted by seasonal sales in the run up to the early Easter weekend.
Tesco, Sainsbury's, Asda and Aldi maintained a combined market share of 66%
during the 12 weeks to 17 March with Lidl (7.8%) continuing to make ground on
Morrisons (8.7%). Tesco's results for the year to end February demonstrated
their dominance, with like for like UK sales up by 7.7% and retail operating
profit up from £2.3 billion to £2.7 billion.
Restrained discretionary spending is likely to continue to cast a shadow over
the non-food retail sector. It is estimated over 2,000 retailers collapsed in
the year to January, a 19% increase compared to the previous year. Since
Christmas, The Body Shop, Ted Baker and now Superdry have gone into
administration. The Body Shop closed 82 stores in February with the
administrator hoping to keep their remaining 116 stores open via a CVA. Ted
Baker is to close 15 unprofitable high street stores out of a total of 46 with
Next considering an acquisition of the company. However, the strongest
non-food retailers like Next and Primark continue to thrive.
Business rates increased significantly in April with the standard multiplier
linked to last September's CPI figure (6.7%). This and the National Living
Wage increase of at least 9.8% are raising operating costs.
During 2023, the volume of retail property investment transactions was £7.2
billion a fall of 5% year on year, with food stores accounting for 40% of this
total. Yields for prime supermarkets let on long index-related leases have
stabilised at 5.0% after rising from 4.0% in mid 2022. To date in 2024 limited
stock has been brought to the market with few sellers of the strong covenants.
There is pent up demand from specialist supermarket and institutional
investors for the right-sized stock let at current market rents. The food
store sector continues to offer strong, long term investment criteria:
planning restrictions limit supply, customer demand for food is inelastic,
occupier covenants like Tesco, Sainsburys, M&S and Aldi are strong with
minimal risk of failure, and prospects for rental growth are good - long
leases with index-related uplifts are common and the threat from on-line
retailing is mitigated with over 70% of online food retailing serviced direct
from stores rather than warehouses.
In the non-food retail sub-sectors there is demand for well let retail
warehousing with good prospects for rental growth, although deal volumes
continue to be limited by valuation figures higher than prices investors are
willing to pay. After the significant rise in retail yields, there is demand
for high street shops, both for units let to strong covenants at realistic
rents in top tier retail locations such as cathedral cities and wealthy London
suburbs. Recent auction results also confirm increasing demand from investors
seeking higher income returns from sub £2 million shops let at rebased rents
at double figure yields in smaller towns. Shopping centres can also usually
only be sold at double figure yields.
Over the 12 months to March 2024 the Retail sector outperformed All Property
on the MSCI UK Quarterly Property Index total return (-0.2% for Retail v -1.1%
for All Property). This outperformance was due to a higher income return (6.0%
v 4.7%) with the sector underperforming All Property in terms of capital
growth (-6.0% for Retail v -5.5% All Property). The Retail sector currently
provides the highest income return out of all sectors, however, retail rental
value growth is low at 1.0%.
Alternatives - Operational resilience key to outperformance
Property in the "Alternatives" sector - i.e. everything except offices, retail
and industrial/warehouse property - accounts for 24% of the MSCI UK Quarterly
Property Index, against 23% for offices and 20% for retail property.
Properties in this sector are often defensive with long, index-related leases
and a wide range of property types and tenants.
Q4 2023 was the lowest quarter on record for transaction volumes since the
global financial crisis, but investment appetite for 'alternatives' (generally
for the sub £5 million lot sizes) now shows signs of picking up with property
companies and individual investors becoming more acquisitive. After a
challenging year, valuation yields in the alternatives sector are beginning to
look attractive. But the flight to quality remains, and investors continue to
take a more cautious view on covenant strength and the affordability of rents.
Properties let to well-funded tenants with robust balance sheets who operate
successful businesses will drive long term, sustainable outperformance.
Although real consumer incomes are rising again, core inflation remains
stubbornly high and labour markets very tight. The costs of doing business are
still rising rapidly, with the latest increase in the National Living Wage and
business rates. Encouragingly, however, leisure spending has seen a continued
uptick over the last 12 months, in spite of consumer belt-tightening and cost
of living increases. Consumers are prioritising 'experiences' over new shop
purchases and are still keen to make up for lost opportunities during the
pandemic or to escape the pressures of a tightening economy.
Occupationally, the pub/restaurant sector continues to be polarised between
the best and the rest. Many independents and most private-equity backed chains
are struggling. But well managed operators with resilient cashflows and strong
income growth potential, like Greene King, Wetherspoons, Brunning & Price,
Loungers and Shepherd Neame are flourishing.
Overborrowed private-equity owned groups such as Stonegate, with over 4,000
pubs, are now showing signs of serious financial strain, having to pay
interest rates as high as 12% on recent short term borrowings. Consumers are
still keen to eat and drink out, particularly in London with the partial
return to offices by city centre workers and a buoyant tourist trade. Well
managed, prosperous suburban and rural pubs are also thriving. The out-of-town
market continues to see a significant appetite for growth. People seek 'value'
in how they spend their money so operators have to deliver good service and
value for money to survive.
Bowling remains one of the most affordable family-friendly outings, attracting
all income groups. Both main operators, Hollywood Bowl and Ten Entertainment
(Tenpin) continue to trade very strongly. Bowling is an undervalued niche and
presents a good opportunity for the specialist investor to acquire long-let,
index-related leases at high yields, with rents below neighbouring retail
warehouses.
Modern budget hotels and caravan parks in rural and holiday areas are still
benefiting from the more cost-conscious consumer, while business and tourist
trade is returning to city centre hotels. Premier Inn/Whitbread remain best in
class but hotel investment yields are continuing to move up with many
institutional investors still needing to sell. More opportunities to invest at
attractive yields are likely.
Capital values for Health and Fitness clubs have been falling. David Lloyd,
the high-end operator, tend to occupy affluent commuter locations and are
reporting an increase in membership levels as they continue to invest in their
clubs, with more spa retreats and solar panels. But Nuffield Health and other
mid-market operators have failed to invest in their facilities and memberships
are dropping. The budget gym market remains highly competitive.
Care homes are struggling from staff shortages and insufficient public sector
funding. Only the strongest, mainly charity, operators in this sector are
attracting investment. The rent and cost burden for the main private-equity
owned groups is unsustainable, so further collapses as happened at Southern
Cross are likely. Cinemas are also a very high risk investment. Garden Centre
operators occupy large sites and so investments in affluent locations are in
demand. The strong operators are investing in their sites and increasing
concession income.
Capital values of student housing, as with other residential investment types,
have been slipping as investment competition had driven prices up too far and
valuation yields too low. But many universities are still facing a critical
shortage of student housing with new local supply limited and likely to remain
so.
The abolition of Multiple Dwellings Relief (MDR) across England and Northern
Ireland from 1 June 2024 will result in the effective rate of Stamp Duty Land
Tax (SDLT) for Build to Rent, Purpose Built Student Accommodation and
Co-Living schemes increasing to a maximum of 5% from an effective tax rate as
low as 1%. MDR was initially introduced to encourage institutional investment
in residential property and has been a significant tax saving for some
investors. This change is already hitting valuation yields. Crucially, this
may also affect the ability of investors and developers to secure land where
previously they would have benefited from this cost saving, accelerating the
current crisis in rented housing. Some residential developments are also
facing problems from the need to include a second staircase in blocks between
18 and 30 storeys high.
The economy
The world economic outlook is returning to nearer normal as food and energy
price inflation falls back to pre-Ukraine war levels in most developed Western
economies. Economic growth in 2024 should turn positive in the UK and
throughout the Eurozone, and stay above 2% in the United States. China's
growth rate, however, continues to slow, with deep-seated structural problems
in its property and credit markets and Western resistance to Chinese
technology and other exports. The war in Ukraine and turmoil in the Middle
East still pose real risks to all economies.
International bond and equity investors are less nervous than last autumn,
although still prone to short term mood swings about the timing of interest
rate cuts. They are not concerned about a probable Labour win in the UK
General Election on 4 July or a possible Trump victory in the US election
later this year. The yield on UK 10 year conventional gilts fell from a peak
of 4.7% in October to 3.5% at the year end and has recently traded in a range
of 4% to 4.5%.
The main Western bond markets tend to move together, but the USA and the main
European economies have been performing differently, as the chart below shows:
US GDP suffered less than Europe's over the COVID crisis, and has grown faster
over the past two years, partly because it is far less dependent on imported
food and energy and partly because it has been investing and borrowing much
more than most European countries, as it is able to do in the US dollar, the
world's reserve currency. The UK economy, by contrast, has underperformed even
the Eurozone economies since COVID, partly because of Brexit disruption and
partly because of persistent low investment and productivity growth and a
tight labour market.
Annual headline inflation rates have fallen sharply across Europe, as high
monthly increases last winter drop out of the indices and are replaced by
static or even falling recent numbers. In the UK, the annual rate of increase
in the CPIH (Consumer Prices Index including Housing) should fall below the
Bank of England's official target of 2% by June. As the table below shows,
CPIH has risen only 1.2% over the past six months and 0.8% over three months,
while the producer output (factory gate prices) and input price indices are
flat or falling. The Retail Prices Index annual rate fell from 13.5% a year
ago to 4.3% in March and has only risen by 1.2% since last June.
UK 12 month inflation to fall below 2% by June 2024
To March 2024 RPI % CPIH% Producer Producer
output prices input prices
12 months +4.3 +3.8 +0.6 -2.5
6 months +1.2 +1.2 +0.3 -0.6
3 months +1.1 +0.8 -0.1 -1.1
However, consumer price inflation may well be on the way up again by October
as core inflation (excluding energy, food, alcohol and tobacco) is still
running at 4.3% a year, with average annual earnings growth and service sector
price inflation at around 6%. The National Living (formerly Minimum) Wage rose
in March by 9.8% for adults and up to 21.2% for younger workers. State
Pensions are up 8.5% and most benefits by 6.7%. The Monetary Policy Committee
should, therefore, be cautious about cutting Bank Rate too soon and too far
from its current 5.25% or it risks having to raise it again next year. For
those rates of income increase to be consistent with sustainable 2% inflation
after 2025, UK investment and productivity growth will have to start catching
up with our closest competitors, and the UK's labour market, with its high and
rising inactivity levels since COVID, will need to limber up and loosen up
fast.
The UK's public finances, centrally and locally, are under serious strain,
because the tax burden (taxes as a percentage of UK GDP - as shown in the
chart below) has risen to levels not seen since the 1940s. But public spending
on health and social care has to rise in the short term, whatever the possible
savings from longer term reforms, and it is now very hard to cut many other
public spending priorities, from defence to education to law and order. Low
growth for many years in both private and public sector investment, especially
in public housing and other infrastructure, together with an eroded tax base,
is now casting its long shadow. The present official projections for public
expenditure from next year are just wishful thinking.
English local authorities' debts have risen by 78% to £119 billion since
2010, with debt interest now costing 15% of their annual budgets. Many years
of back door cuts in public services, through real term reductions in local
authority budgets, have now come home to roost, with many councils bankrupt
and struggling to cover even the most basic public needs such as social care,
children's services and repairing potholes. But the Council Tax system could
be reformed so that it again provides a realistic and sustainable source of
local finance for local councils.
It should be brought up to date from its antique 1991 valuations, with more
bands so that council tax payable properly reflects both today's relative
property values and a fairer share of local taxation to be paid by those with
the largest and most valuable properties. At present there is effectively a
perverse incentive not to downsize for people occupying larger properties than
they need, because properties in the highest council tax bands pay so little
more than the lowest.
The Government gilt buying spree under Quantitative Easing (QE) has left the
UK with far more of its bonds riskily index-linked than our main competitors.
Our national debt interest bill is now running at 3% of GDP. This grim state
of the UK public finances, the costly over-issuance of index-linked gilts, and
the dangerously short (under four years average) maturity of the UK gilt
market makes us a forced seller to foreigners of large quantities of gilts
every year for the foreseeable future. So, no Chancellor of the Exchequer or
Governor of the Bank of England can afford to take risks with inflation over
the next few years. Unlike the United States, we no longer enjoy the luxury of
printing and borrowing as much as we want of the world's reserve currency.
Real reform and simplification of savings taxation for private investors is
also long overdue. It could help stimulate investment and reduce the cost of
capital, especially for UK mid and small cap companies (which are far more
domestically focused than the FTSE-100 Index) quoted on The London Stock
Exchange, and help salvage the City of London's competitive position in
raising capital for growing companies post Brexit. The over-complicated seven
versions of ISA's should be redirected to focus in future on UK shares and
investments - it makes no economic sense for UK taxpayers' money to flow
abroad to subsidise investments in and by our competitors.
Only 30% of UK households now have mortgages, against 40% in the late 1980s.
Over the past decade the proportion of floating rate mortgages has collapsed
from 70% to just over 10%.
This means that rising interest rates cause less immediate pain in falling
house prices and rising repossessions than in the past, but with a delayed
effect as borrowers - 1.8 million of them this year - come off low rate deals.
New mortgage advances are currently at an average interest rate of 4.9%,
against the average rate of 3.49% paid on all existing mortgages, which will
slow down any potential house price recovery as affordability tightens and
millions of mortgages are re-fixed at higher rates each year.
There are more renters (9.2 million) than mortgage holders (7.4 million). Many
in both tenures are now facing unaffordable housing costs, especially as
private landlords sell up. Average UK house prices, adjusted for inflation,
fell by about 20% in the early 1990s, then between 2008-10, and again over the
last three years with house prices up by about 10% on average and the RPI up
by 30%. Real house prices are unlikely to recover for some time.
Housing costs, to buy or rent, are still unaffordable in most areas of the UK
by long-term standards. Only 70,000 social homes to rent have been built in
the last 10 years, against twice that number every year in the 1950s and
1960s: under Conservative as well as Labour Governments. The sustainable
solution to the UK's housing crisis is to build much more genuinely affordable
social housing, along with radical reform of the planning system to stop land
hoarding by private developers.
The economic outlook is improving for 2024, but it does depend on
international conflicts staying contained. The collapse in annual inflation
rates in the UK and the rest of Europe is boosting real incomes and business
and consumer confidence here but it shows no signs of improving the
Government's fortunes and investors are relaxed about the General Election
within the next nine months. The strength of the US economy and Mr Trump's
legal travails now give him and President Biden each a 50-50 chance, according
to the betting markets for what they are worth. US economic policy making
under a re-elected President Biden would be more prudent than under Trump but
the US election is unlikely to move markets until late autumn.
Meanwhile, as extreme weather records are being broken month by month around
the world, long term investors in direct property, even more than in other
asset classes, must keep ahead of the climate change curve.
Conclusion
The UK economy is growing slowly again after a flat year, annual consumer
price inflation will dip below 2%, if only briefly, this summer and short term
interest rates should be lower by the year end. But longer term interest rates
also need to be seen as stable before the property market as a whole, as
measured by the main indices, makes real progress. The key to outperformance
by property portfolios on both the income and total return fronts in this
tough economic climate, with public sector finances under serious long term
pressure, is therefore still to stick to strong tenants, paying affordable
rents on long, index-related leases for sustainable buildings in prosperous
locations.
That means avoiding office investments for the foreseeable future and
focussing hard in other sectors on upgrading portfolio quality, especially on
covenant strength, by constant vigilance in acquisitions, disposals and lease
extensions.
Annual portfolio summary
VIP specialises in direct investment in UK commercial properties with long,
strong, index-related income streams to deliver above average long term real
returns.
The portfolio comprises 35 properties across six well diversified sub-sectors,
all let on 38 full repairing and insuring leases (WAULT 11.6 years to the
tenants' option to break) to 20 different tenant covenants across England,
Scotland and Wales, with 55% of rents coming from the top five tenants. All
are freehold except two, which are long leasehold with 107 and 81 years to run
(Doncaster and Fareham). Fareham has since been sold in May after the year
end.
Index-related rent reviews
The contracted income on the whole portfolio stands at £9.7 million per
annum, where 95.6% (37 out of 38 tenancies) have index-related or fixed
increases. Only Fareham had open market reviews.
Over the financial year, 11 rent reviews completed representing 40% of the
rent roll, with an average increase of 12.2% on their rents passing. This
added £0.4 million (4.9%) to all held properties. Five were annual reviews:
three were RPI-linked and two with fixed increases. Five had five yearly
RPI-linked reviews, and one had a three-yearly open market rent review.
There are 38 leases, which are reviewed with either RPI-linked (71%),
CPI-linked (11%) or fixed increases (14%) and there was just one
industrial/warehouse (Fareham) with an open market review (4%).
Eight tenancies representing 32% (year ended 31 March 2024) of the rental
income have annual rent reviews and 29 (64%) have five yearly reviews with one
(4%) having a three yearly review pattern. Over the next five years, the
following percentage of rental income will be reviewed in each financial year,
based on the portfolio as at 31 March 2024.
Year ending 31 March Annual 5 yearly 3 yearly Total
2025 32% 3% - 35%
2026 32% 29% - 61%
2027 32% 8% 4% 44%
2028 32% 12% - 44%
2029 32% 12% - 44%
Over the next 12 months, 10 tenancies, representing 35% of the total rent
roll, will undergo a rent review.
Of the index-related rents within the portfolio; 68% of the RPI-linked and
CPI-linked rents are subject to collared uplifts, which average 1.7% per annum
and 74% are subject to capped uplifts, which average 3.8% per annum. 12% of
the total indexed income has uncapped RPI increases. Fixed rent review uplifts
average 2.4% per annum.
Purchases and sales
Three purchases for £11.85 million and seven sales for £13.25 million
completed over the year.
Purchases completed
The purchase of three long-let index-related leisure properties completed
during the year for £11.85 million at a net initial yield of 7.8%, rising to
8.5% in May 2024.
Health Club - Clearview Health & Racquets Club, Little Warley Hall Lane,
Brentwood, Essex
This purchase of a 76,000 sq ft health club on a freehold 6.7 acre site near
Brentwood, 2 miles from M25 Junction 29, completed in November 2023 at a
purchase price of £6.1 million. It is let to Virgin Active Limited until July
2036 (WAULT 12.7 years); with annual RPI-linked rent increases with a minimum
of 1% and a maximum of 4% p.a. The net initial purchase yield was 7.5%, rising
to 8.7% in May 2024.
Bowling - Hollywood Bowls
The purchase of the following two freehold properties completed in March 2024
at a combined purchase price of £5.75 million. They are both let to Hollywood
Bowl Group plc until August 2040 (WAULT 16.4 years) with annual RPI-linked
rent reviews with a minimum of 2% and a maximum of 3% p.a. Their net initial
purchase yield was 8.2%.
Ashford, Kent: 43-79 Station Road is a freehold 20,165 sq ft building on a 0.7
acre town centre site.
Peterborough, Cambridgeshire: Sturrock Way is a freehold 22,667 sq ft building
on a 1.9 acre site.
Sales completed
The sale of seven weaker properties completed during the year for £13.25
million, just above valuation at an average net yield of 7.5%. Four were pubs
let to Stonegate, plus two short let petrol stations and an overrented
convenience store.
Sales exchanged
Contracts were exchanged in November 2023 for the sale to the tenant, Shepherd
Neame, of the pub in London EC1 at a net sale yield of 3.5%, rising to 4.7% in
January 2024 with completion fixed for 5 July 2024. This was above the
September 2023 valuation and in line with the March 2024 valuation. Contracts
were exchanged in May for the sale of a short-let industrial property in
Thurrock at a net sale yield of 5.3%, well above valuation. Completion is
fixed for June 2024.
Sales completed since 31 March 2024
The sale of the short-let leasehold industrial estate at Fareham let to
Hampshire County Council exchanged and completed in May above valuation at a
net sale yield of 8.8%.
We are actively seeking to reinvest the sales proceeds to further upgrade
portfolio quality and reduce risk.
Rent collection
100% of all contracted rents due were collected during the year to 31 March
2024. The top five tenants have 15 leases: Marks & Spencer, HM Government
and Local Authorities, Ten Entertainment Group, Premier Inn and Sainsbury's,
representing 55% of the contracted income.
Fully let
The portfolio is fully let, with no voids (MSCI UK Monthly Property Index void
rate: 10.4%)
Responsible impact based ESG management
OLIM Property has always taken a cautious and responsible approach to managing
VIP's property portfolio, with environmental impact, social responsibility and
governance (ESG) taken fully into account in selecting high quality properties
and suitable tenants for acquisition, long term management and disposal.
Occupier relationships are crucial. We engage with our tenants to understand
and establish sustainable rental levels and grow future income streams,
working closely with them to address value add energy performance targets.
All VIP's properties are regularly reviewed, ESG improvements implemented at
appropriate asset management stages and properties, such as Fareham, sold
where performance may be negatively impacted by ESG factors.
Energy Performance Certificates (EPCs)
97% of the properties now have an EPC rating A-C (up from 64% in 2022). This
rises to 100% after the sale of Fareham. We continue to work with our tenants
to upgrade properties and improve EPC ratings.
Top 10 properties by capital value
Property Tenant Sector % of portfolio by capital value
Dover Park Resorts Caravan Park 8%
Newport, Isle of Wight Marks and Spencer Supermarket 7%
Rayleigh Marks and Spencer Supermarket 6%
Garstang Sainsbury's Supermarket 6%
Coventry Tenpin, Pizza Hut & Starbucks Bowling 6%
Aylesford Kier Industrial/Warehouse 5%
Brentwood Virgin Active Health Club 5%
Catterick Premier Inn Hotel 4%
Alnwick Premier Inn Hotel 4%
Milton Keynes Winterbotham Darby Industrial/Warehouse 4%
Total 55%
Performance and independent revaluation
Savills' independent valuation at 31 March 2024 on all 35 properties totalled
£138,100,000, as detailed in Note 9 to the Financial Statements, reflecting a
net initial yield of 6.6% after deducting notional purchase costs (31 March
2023: 5.8%, 30 September 2023: 6.1%). The valuation totals at 31 March 2023
were £150,500,000 and at 30 September 2023 (half-year) £135,450,000.
On a like for like basis, excluding purchases and sales, the portfolio's
capital value declined by 5.0% in the first half of the year and by 3.7% in
the second, reflecting the impact of rising interest rates across the
investment property market. Purchases and sales were profitable, adding 0.4%
to the VIP portfolio's total value over the year.
Investment turnover across the market remains very low with a wide spread
between what most buyers are prepared to offer and most sellers to accept.
Most completed sales, therefore, are from vendors under redemption of
refinancing pressure. Investors are cautious and risk averse.
The only sector in the portfolio to gain in value over the year was pubs, up
by 16.9% on exceptional rent increases and a profitable deferred sale, with
bowling down by 3.2%. The supermarket, hotel and industrial/warehouse sectors
all fell by 10%- 12% as pressure on valuation yields on lower yielding
properties in particular outweighed rental growth.
Contracted rental income at the year end rose to £9.7 million against £9.3
million at end March 2023, due mainly to rent increases over the year
delivering rental growth of 4.9% on all held properties, usefully above
inflation.
The property portfolio has been upgraded and tenant quality improved with the
sale of seven weaker properties, which completed for £13.25 million (four
Stonegate pubs, two petrol stations and a convenience store) with the net sale
proceeds reinvested in three long-let leisure property purchases for £11.85
million, a Virgin Active Health Club in Brentwood, Essex and Hollywood Bowls
in Ashford, Kent and Peterborough, Cambridgeshire, all let on RPI-related
leases.
The property portfolio produced a total return of 0.0% over the past six
months and -1.8% over the past year to March, against -0.6% and -1.1% for the
MSCI UK Quarterly Property Index, the main benchmark for commercial property
performance.
The returns on VIP's property portfolio have been above the MSCI averages by
between 1.9% and 3.3% a year over 3, 5, 10, 20 and 37 years. The real returns
have been behind the Retail Price Index over one, three and five years but
above it over longer periods, with a real return of over 7.0% a year over 37
years since the inception of OLIM Property's Management.
Matthew Oakeshott & Louise Cleary
OLIM Property Limited
11 June 2024
Business Review
This Business Review is intended to provide an overview of the strategy and
business model of the Company, as well as the key measures used by the
Directors in overseeing its management. The Company is an investment trust
company that invests in accordance with the investment objective and
investment policy outlined in this Business Review.
Value and Indexed Property Income Trust PLC's (VIP or the Company) Ordinary
Shares are listed on the Premium segment of the Official List and traded on
the main market of the London Stock Exchange. The Company is registered as a
public limited company in Scotland under company number SC050366 and is an
investment company within the meaning of Section 833 of the Companies Act
2006. The Company has one class of share. VIP is a member of the Association
of Investment Companies (AIC).
The Group
Value and Indexed Property Income Services Limited (VIS), a wholly owned
subsidiary of the Company, is authorised by the Financial Conduct Authority to
act as the Company's Alternative Investment Fund Manager (AIFM).
VIS delegates its portfolio management responsibilities to OLIM Property
Limited (OLIM Property), the Investment Manager responsible for managing the
property portfolio, which reports to VIS and to the Board, which meet
regularly in order to review the investment strategy. All investment
properties held by the Group are commercial properties located in the UK,
mainly with long-term, index-related income streams.
Capital structure
As at 31 March 2024, VIP's share capital consisted of 42,664,550 Ordinary
Shares of 10p nominal value in issue and 2,885,425 Ordinary Shares of 10p held
in Treasury. As at the date of this Annual Report, VIP's share capital
consists of 42,476,147 Ordinary Shares of 10p in issue and 3,073,828 Ordinary
Shares of 10p held in Treasury. Each Ordinary Share in issue entitles the
holder to one vote on a show of hands and, on a poll, to one vote for every
share held.
Share dealing
Shares in VIP can be purchased and sold in the market through a stockbroker or
regulated investment platform, or indirectly through a lawyer, accountant or
other professional adviser. Further information on how to invest in VIP is
detailed in the Annual Report.
Recommendation of non-mainstream investment products
VIP currently conducts its affairs so that the shares issued by it can be
recommended by independent financial advisers to ordinary retail investors in
accordance with the rules of the Financial Conduct Authority (FCA) in relation
to non-mainstream investment products and intends to do so for the foreseeable
future. VIP's shares are excluded from the FCA's restrictions, which apply to
non-mainstream investment products, because they are shares in an investment
trust company. The returns to investors are based on investments in directly
held property.
Highlights of the year
• Net Asset Value total return (with debt at carrying value)* of
-9.7% (2023 restated: -18.7%) over one year and
-10.2% (2023 restated: 10.6%) over three years.
• Share Price total return* of -10.3% (2023:-9.2%) over one year and
-3.2% (2023: 48.3%) over three years.
• MSCI UK Quarterly Property Index total return of -1.1% over one
year (2023: -13.0%) and 2.9% (2023: +5.1%) over three years.
• Dividends for year up 2.3% - the 37th consecutive year of dividend
increases.
• Dividend yield at 31 March 2024 - 7.7% (2023: 6.3%).
Financial record
30 Sep 1986 31 Mar 1987 31 Mar 2015 31 Mar 2016 31 Mar 2017 31 Mar 2018 31 Mar 2019 31 Mar 2020 31 Mar 2021 31 Mar 2022 Restated 31 Mar 2023 31 Mar
Restated 2024
NAV (valuing debt at carrying value)* (p) 44.0 55.1 326.9 319.0 345.5 330.5 332.5 253.1 271.1 310.9 244.4 213.5
Share price (p) 42.0 52.0 254.3 221.8 255.0 262.0 251.0 165.0 218.0 239.0 204.5 171.3
Discount of share price to NAV (valuing debt at carrying value)* (%) 4.6 5.6 22.2 30.5 26.2 20.7 24.5 34.8 19.6 23.1 16.3 19.8
Dividend per share (p) N/A 1.25 9.0 10.5 11.0 11.4 11.8 12.1 12.3 12.6 12.9 13.2
Total assets less current liabilities (£m) 17.4 24.8 189.0 185.5 207.3 200.4 205.6 176.2 177.6 195.0 157.0 143.1
* This is an Alternative Performance Measure (APM) which has been explained in
the Glossary in the Annual Report.
Investment objective and investment policy
Investment objective
The Company invests directly in UK commercial property to deliver long,
strong, index-related income. The Company aims to achieve long-term, real
growth in dividends and capital value without undue risk.
Investment policy
The Company's policy is to invest in directly held UK commercial property and
cash or near cash securities. UK directly held commercial property will
usually account for at least 80% of the total portfolio but it may fall below
that level if relative market levels and investment value, or a desired
increase in cash or near cash securities, make it appropriate. The Company
will not use derivatives.
The Company is permitted to invest cash held for working capital purposes
pending re-investment in cash deposits, gilts and money market funds.
The UK commercial property portfolio
The Company will target secure income and capital returns linked to inflation,
mainly through its diversified portfolio of UK property assets, let or pre-let
to a broad range of strong tenants on long leases with rental growth subject
to index-related or fixed increases. The Company has not set any geographical
limits, except that it may invest in all four nations of the United Kingdom.
It has also set no structural limits and expects the portfolio to be focused
on (but not limited to), the industrial/warehouse, supermarket, roadside and
leisure sectors (including for example, caravan parks, pubs, hotels, garden
and bowling centres) income strips and ground rents. Offices and high street
retail properties would not be priority sectors for investment. In order to
manage risk in the portfolio, at the time of purchase, no single property
asset will exceed in value 25% of the Company's gross asset value and no
single tenant (except UK Government and public sector) will account for more
than 30% of the Company's total rental income.
Borrowing policy
The Company has a longstanding policy of funding most of the increases in its
property portfolio through the judicious use of borrowings. Gearing will
normally be within a range of 25% and 50% of the total portfolio. The Company
will not raise new borrowings if total net borrowings would then represent
more than 50% of the total assets.
Detail of the Company's current borrowings, comprising two fixed term secured
loan facilities can be found in Note 12 to the Financial Statements.
Performance, results and dividend
As at 31 March 2024, the Net Asset Value (NAV) total return (with debt at
carrying value) over one year was -9.7% and the Share Price total return over
one year was -10.3%. This compares to the MSCI UK Quarterly Property Index
total return of -1.1%. Total assets less current liabilities were £143.1
million. A review of the performance of the property portfolio is detailed in
the Chairman's Statement and in the Manager's Report.
For the year to 31 March 2024, quarterly dividends of 3.2p per share were paid
on 27 October 2023, 26 January 2024 and 26 April 2024, respectively. The
Directors have declared a final dividend of 3.6p per Ordinary Share (2023:
3.6p) which, if approved by Shareholders at the 2024 AGM, will be paid on, or
around, 26 July 2024 to Shareholders on the register on 28 June 2024. The
ex-dividend date is 27 June 2024. This represents an annual increase in
dividends of 2.3% as compared with the 4.3% and 3.8% annual increases in the
Retail Prices and Consumer Prices (including Housing) Indices, respectively,
as at the end of March 2024.
Principal and emerging risks and uncertainties
The Board has an ongoing process for identifying, evaluating and monitoring
the principal and emerging risks and uncertainties facing the Group and the
Parent Company. The risk register forms a key part of the Group and the Parent
Company's risk management framework used to carry out a robust assessment of
the risks, including a significant focus on the controls in place to mitigate
them. The principal and emerging risks and uncertainties which affect the
Group's and the Company's business are:
Market risk
The fair value of, or future cash flows from, a financial instrument held by
the Group may fluctuate because of changes in market prices. This market risk
comprises two elements - price risk and interest rate risk.
Price risk
Changes in market prices (other than those arising from interest rate or
currency risk) may affect the value of the Group's investments.
Interest rate risk
Interest rate movements may affect:
• the fair value of the investments in property;
• the level of income receivable on cash deposits; and
• the fair value of borrowings.
The possible effects on fair value and cash flows that could arise as a result
of changes in interest rates are taken into account when making investment and
borrowing decisions.
The Board imposes borrowing limits to ensure that gearing levels are
appropriate to market conditions and reviews these limits on a regular basis.
Current borrowings comprise of two secured term loans, with two and nine year
terms remaining, 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 50%.
Liquidity risk
This is the risk that the Group will encounter difficulty in meeting
obligations associated with its financial liabilities.
The Group's assets comprise investment properties which, by their nature, are
not readily realisable. The maturity of the Company's existing borrowings is
detailed in the interest rate risk profile section of Note 21 to the Financial
Statements.
Property risk
The Group's commercial property portfolio is subject to both market and
specific property risk. Since the UK commercial property market has been
markedly cyclical for many years, it is prudent to expect that to continue.
The price and availability of credit, real economic growth, and the
constraints on the development of new property, are the main influences on the
property investment market. Against that background, the specific risks to the
income from the portfolio are tenants being unable to pay their rents and
other charges or leaving their properties at the end of their leases. All
leases are on full repairing and insuring terms, with upward only rent
reviews, and the weighted average unexpired lease length to the break option
is 11.6 years. Details of the tenant and geographical spread of the portfolio
are set out in the Annual Report. The long-term performance record through the
varying property cycles since 1987 is set out in the Annual Report. OLIM
Property is responsible for property investment management, with surveyors,
solicitors and managing agents acting on the portfolio under OLIM Property's
supervision.
Political risk
Political changes that result in parties with extreme political or social
agendas having power or influence over policies could lead to instability and
uncertainty in the markets, legislation and the economy.
The Board reviews regularly the political situation, together with any
associated changes to the economic, regulatory and legislative environment, to
ensure that any risks arising are mitigated as effectively as possible.
An explanation of certain economic and financial risks and how they are
managed is contained in Note 21 to the Financial Statements.
Climate change and social responsibility risk
The Board recognises that climate change is an important risk that all
companies should take into consideration within their strategic planning. As
referred to elsewhere in the Strategic Report and in the Governance Report in
the Annual Report, the Company has little direct impact on environmental
issues. All of the Company's properties are let on full repairing and insuring
leases, with the tenants responsible for complying with statutory obligations.
The Board is aware that the Manager continues to take into account
environmental, social and governance (ESG) matters, and, in particular, Energy
Performance Certificates and flood risks, in managing the portfolio. In
accordance with the RICS Professional Standard 'Sustainability and ESG in
commercial property valuation and strategic advice', the Savills' valuation of
the Company's properties takes into consideration sustainability and ESG
factors.
Economic risk
The valuation of the Company's investments may be affected by underlying
economic conditions, such as fluctuating interest rates, rising inflation,
increased fuel and energy costs, and the availability of bank finance. These
factors can be impacted during times of geopolitical uncertainty and volatile
markets, including pandemics and the ongoing wars in Ukraine and the Middle
East. The Board monitors the economic and market environment closely, and
believes that the diverse, well-spread, long let indexed portfolio should
prove resilient.
Other key risks
Additional risks and uncertainties include:
• Discount volatility: The Company's shares may trade at a price
which represents a discount to its underlying net asset value.
• Regulatory risk: The Directors strive to maintain a good
understanding of the changing regulatory agenda and consider emerging issues
so that appropriate changes can be implemented and developed in good time. The
Group operates in a complex regulatory environment and, therefore, faces a
number of regulatory risks. A breach of Section 1158 of the Corporation Tax
Act 2010 would result in the Company being subject to capital gains tax on
portfolio investments. Breaches of other regulations, including but not
limited to, the Companies Act 2006, the FCA Listing Rules, the FCA Disclosure,
Guidance and Transparency Rules, the Market Abuse Regulation, the Packaged
Retail and Insurance-based Investment Products (PRIIPs) Regulation, the Second
Markets in Financial Instruments Directive (MiFID II) and the General Data
Protection Regulation (GDPR), could lead to a number of detrimental outcomes
and reputational damage.
The Company is also required to comply with tax legislation under the Foreign
Account Tax Compliance Act and the Common Reporting Standard. The Company has
appointed its registrar, Computershare, to act on its behalf to report
annually to HM Revenue & Customs (HMRC).
The Company's privacy policy is available to view on the Company's web pages
hosted by the Investment Manager at
www.olimproperty.co.uk/value-and-indexed-property-income-trust.html
(http://www.olimproperty.co.uk/value-and-indexed-property-income-trust.html)
.
Breaches of controls by service providers to the Company could also lead to
reputational damage or loss. The Audit and Management Engagement Committee
monitors compliance with regulations by reviewing internal control reports
from the Administrator and from the Investment Manager.
Alternative investment fund managers directive
The Alternative Investment Fund Managers Directive (AIFMD) introduced an
authorisation and supervisory regime for all managers of authorised investment
funds in the EU.
In accordance with the requirements of the AIFMD, the Company appointed VIS as
its Alternative Investment Fund Manager (AIFM) and BNP Paribas Securities
Services S.A. as its Depositary. VIS's status as AIFM remains unchanged
following the UK's departure from the EU. The Board has controls in place, in
the form of regular reporting from the AIFM and the Depositary, to ensure that
both are meeting their regulatory responsibilities in relation to the Company.
Key performance indicators
At each Board Meeting, the Directors consider a number of performance measures
to assess the Company's success in achieving its objectives, which also enable
Shareholders and prospective investors to gain an understanding of its
business.
A historical record of these performance measures, with comparatives, together
with the Alternative Performance Measures (APMs) are shown in the Highlights
of the year and Financial record section of the Business Review. Definitions
of the APMs can be found in the Glossary in the Annual Report.
The Directors have identified the following as key performance indicators:
• Net asset value and share price total returns relative to the
MSCI UK Quarterly Property Index (total returns); and
• Dividend growth relative to Consumer Price Inflation.
The net asset value (NAV) total return is considered to be an appropriate
measure of Shareholder value as it includes the current NAV per share and the
sum of dividends paid to date.
The medium term dividend policy is for increases at least in line with
inflation.
The Board reviews the Company's rental income and operational expenses on a
quarterly basis, as the Directors consider that both of these elements are
important components in the generation of Shareholder returns. Further
information can be found in Notes 2 and 4 to the Financial Statements.
In addition, the Directors will consider economic, regulatory, and political
trends and factors that may impact on the Company's future development and
performance.
Share buy-backs
347,914 Ordinary Shares were bought back in the year to 31 March 2024 (2023:
545,000 Ordinary Shares bought back). As at 31 March 2024, 2,885,425 Ordinary
Shares of 10p each were held in Treasury. Post the year end, 188,403 Ordinary
Shares were bought back and as at the date of this Annual Report 3,073,828
Ordinary Shares of 10p each are held in Treasury. Further information can be
found in Note 14 to the Financial Statements.
At the forthcoming AGM, the Board will seek the necessary Shareholder
authority to continue to conduct share buy-backs.
Statement of compliance with investment policy
The Company is adhering to its stated investment policy and managing the risks
arising from it. This can be seen in various tables and charts throughout the
Annual Report, and from the information provided in the Chairman's Statement
and in the Manager's Report.
The Board's section 172 duty and stakeholder engagement
The Directors recognise the importance of an effective Board and its ability
to discuss, review and make decisions to promote the long-term success of the
Company and protect the interests of its key stakeholders. As required by
Provision 5 of The AIC Code of Corporate Governance (the AIC Code) and, in
line with The UK Corporate Governance Code (the Code), the Board has discussed
the Directors' duty under Section 172 of the Companies Act and how the
interests of key stakeholders have been considered in the Board discussions
and decision making during the year. This has been summarised in the table
below:
Stakeholder Form of Engagement Influence on Board decision making
Shareholders AGM - Shareholders are encouraged to attend the AGM and are provided with the Dividend declarations - The Board recognises the importance of dividends to
opportunity to ask questions and engage with the Directors and the Manager. Shareholders and takes this into consideration when making decisions to pay
Shareholders are also encouraged to exercise their right to vote on the quarterly and propose final dividends for each year. Further details regarding
resolutions proposed at the AGM (please refer to the further information on dividends for the year under review can be found in the Chairman's Statement.
the AGM in the Directors' Report in the Annual Report).
Share buy-back policy - the Directors recognise the importance to Shareholders
Shareholder documents - The Company reports formally to Shareholders by of the Company maintaining a share buy-back policy and considered this when
publishing Annual and Interim Reports, normally in June and November each establishing the current programme. Further details can be found in the
year. Business Review and in the Directors' Report in the Annual Report.
Significant matters or reporting obligations are disseminated to Shareholders Shareholder communication and feedback from the Broker directly influences the
by way of announcement to the London Stock Exchange. Board's review of strategy, the asset allocation considerations, and the
Manager's guidance on desirable investment characteristics.
The Company Secretary acts as a key point of contact for the Board, and all
communications received from Shareholders are circulated to the Board. The Directors recognise the importance to Shareholders of having a diverse
Board with a range of skilled and experienced individuals represented.
Other Shareholder events include investor and wealth manager lunches and
roadshows organised by the Company's Corporate Broker at which the Manager is
invited to present.
Manager Quarterly Board Meetings - The Manager attends every Board Meeting and The Directors and the Manager are cognisant of the Company's investment policy
presents a detailed portfolio analysis and reports on key issues, including and the strategy agreed by the Board, which the Manager has been tasked with
the performance of the property portfolio. implementing.
The Directors challenge the Manager where they feel it is appropriate. The Board engages constructively with the Manager to ensure investments are
consistent with the agreed strategy and investment policy and supported the
decision during the year to strengthen the portfolio with the purchase of
three long-let leisure investments at yields over 8%, and the sale of seven
weaker properties, including the last Stonegate pub holdings.
The Manager works closely with all tenants and, as a result, 100% of all
contracted rents due were collected in the year to 31 March 2024.
Corporate Broker The Corporate Broker attends Board Meetings regularly to present an update on The Directors review the performance of all third party service providers;
the market, the Company's performance, and a comparison with the performance and, during the year, made the decision to appoint Joh. Berenberg, Gossler
of the Company's peers. & Co. KG as its new Corporate Broker.
Depositary and Custodian Regular statements and control reports received, with all holdings and The Directors review the performance of all third party service providers,
balances reconciled. including oversight of securing the Company's assets.
Advisers & Registrar The Company relies on the expert audit, accounting and legal advice received The Directors review the performance of all third party service providers and,
from its Auditor, Administrator and Legal Advisers. The Directors ensure that during the year, on the recommendation of the Audit and Management Engagement
the Registrar is a market leader in the services it provides to the Company's Committee, appointed RSM UK Audit LLP as new Auditors to the Company.
Shareholders.
There were no other key decisions made in the year to 31 March 2024 that
require to be disclosed.
Employee, environmental and human rights policy
As an investment trust company, the Company has no direct employee or
environmental responsibilities, nor is it responsible for the emission of
greenhouse gases. Its principal responsibility to Shareholders is to ensure
that the investment portfolio is properly managed and invested. The Company
has no employees and, accordingly, has no requirement to report separately on
employment matters.
Management of the investment portfolio is undertaken by the Investment Manager
through members of its portfolio management team. In light of the nature of
the Company's business, there are no relevant human rights issues and,
therefore, the Company does not have a human rights policy.
Independent auditor
The Company's Independent Auditor is required to report if there are any
material inconsistencies between the content of the Strategic Report and the
Financial Statements. The Independent Auditor's Report can be found in the
Annual Report.
Future strategy
The Board and the Investment Manager intend to maintain the strategic policies
set out above for the year ending 31 March 2025 as it is believed that these
are in the best interests of Shareholders.
The Company's Viability Statement is included in the Directors' Report in the
Annual Report.
Approval
This Business Review, and the Strategic Report as a whole, was approved by the
Board of Directors and signed on its behalf by:
John Kay
Chairman
11 June 2024
Going concern
The Group and the Parent Company's business activities, together with the
factors likely to affect their future development and performance, are set out
in the Directors' Report, and the financial position of the Group and of the
Parent Company is described in the Chairman's Statement within the Strategic
Report. In addition, Note 21 to the Financial Statements includes: the
policies and processes for managing the financial risks; details of the
financial instruments; and the exposures to market risk (price risk and
interest rate risk), liquidity risk, credit risk and property risk. The
Directors believe that the Group and the Parent Company are well placed to
manage their business risks.
Following a detailed review, the Directors have a reasonable expectation that
the Group and the Parent Company have adequate financial resources to enable
them to continue in operational existence for the foreseeable future, being at
least 12 months from approval of the Financial Statements, and accordingly,
they have continued to adopt the going concern basis (as set out in Note 1(b)
to the Financial Statements) when preparing the Annual Report and Financial
Statements.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Strategic Report and the
Directors' Report, the Directors' Remuneration Report and the Financial
Statements in accordance with UK adopted international accounting standards
and applicable laws and regulations.
Company law requires the Directors to prepare Group and Company Financial
Statements for each financial year. Under that law, the Directors are required
to prepare the Group Financial Statements, and have elected to prepare the
Company Financial Statements, in accordance with UK adopted international
accounting standards. The Group and Company Financial Statements are required
by law and UK-adopted International Accounting Standards to present fairly the
financial position of the Group and the Company and the financial performance
of the Group and the Company; the Companies Act 2006 provides in relation to
such financial statements that references in the relevant part of that Act to
financial statements giving a true and fair view are references to their
achieving a fair presentation. 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 Group and Company and of the
profit or loss for the Group and Company for that period.
In preparing these Financial Statements, the Directors are required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and accounting estimates that are reasonable and
prudent;
• state whether they have been prepared in accordance with UK
adopted international accounting standards, subject to any material departures
disclosed and explained in the Financial Statements; and
• prepare the Financial Statements on the going concern basis
unless it is inappropriate to presume that the Group and Company will continue
in business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group's and Company's transactions and
disclose with reasonable accuracy at any time the financial position of the
Group and 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.
The Directors are responsible for ensuring that the Annual Report and
Financial Statements, taken as a whole, is fair, balanced and understandable
and provides the information necessary for Shareholders to assess the Group's
position and performance, business model and strategy.
The Directors are responsible for ensuring the Annual Report and Financial
Statements are made available on a website. Financial Statements are published
on the Company's web pages hosted by the Investment Manager in accordance with
legislation in the United Kingdom governing the preparation and dissemination
of financial statements, which may vary from legislation in other
jurisdictions. The maintenance and integrity of the Company's web pages is the
responsibility of the Directors. The Directors' responsibility also extends to
the ongoing integrity of the Financial Statements contained therein.
Directors' responsibility statement
Each Director confirms, to the best of his or her knowledge, that:
• the Financial Statements have been prepared in accordance with
the applicable set of accounting standards and give a true and fair view of
the assets, liabilities, financial position and profit or loss of the Group
and Company; and that
• the Annual Report includes a fair review of the development and
performance of the business and the financial position of the Group and
Company, together with a description of the principal risks and uncertainties
that they face.
The Directors confirm that the Annual Report and Financial Statements taken as
a whole is fair, balanced and understandable and provides the information
necessary for Shareholders to assess the Group's position and performance,
business model and strategy.
For and on behalf of the Board of
Value and Indexed Property Income Trust PLC
John Kay
Chairman
11 June 2024
Group Statement of Comprehensive Income
Year ended 31 March 2024 Year ended 31 March 2023
Restated*
Note
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Income
Rental income 2 8,824 - 8,824 8,826 - 8,226
Investment income 2 - - - 168 - 168
Other income 2 242 - 242 314 - 314
9,066 - 9,066 8,708 - 8,708
Gains and losses on investments
Realised (losses)/gains on held-at- fair-value investments and investment 9 - (137) (137) - 1,446 1,446
properties
Unrealised (losses)/gains on held-at-fair-value investments and investment 9 - (11,480) (11,480) - (24,563) (24,563)
properties
Total income 9,066 (11,617) (2,551) 8,708 (23,117) (14,409)
Expenses
Investment management fees 3 (863) - (863) (990) - (990)
Other operating expenses 4 (894) - (894) (895) - (895)
Finance costs 5 (2,142) - (2,142) (1,779) (6,269) (8,048)
Total expenses (3,899) - (3,899) (3,664) (6,269) (9,933)
Profit/(loss) before taxation 5,167 (11,617) (6,450) 5,044 (29,386) (24,342)
Taxation 6 (1,251) - (1,251) (535) 1,425 890
Profit/(loss) attributable to equity shareholders of parent company
3,916 (11,617) (7,701) 4,509 (27,961) (23,452)
Earnings per Ordinary Share (pence)
7 9.14 (27.11) (17.97) 10.42 (64.62) (54.20)
* As explained in Note 24 to the Financial Statements in the Annual Report.
The total column of this statement represents the Statement of Comprehensive
Income of the Group, prepared in accordance with IFRS. The revenue return and
capital return columns are supplementary to this and are prepared under
guidance published by the Association of Investment Companies. All items in
the above statement derive from continuing operations.
The Group does not have any other comprehensive income and so the total
profit/(loss), as disclosed above, is the same as the Group's total
comprehensive income. All income is attributable to the equity holders of
Value and Indexed Property Income Trust PLC, the parent company. There are no
non-controlling interests.
The Board is proposing a final dividend of 3.6p per share, making a total
dividend of 13.2p per share for the year ended 31 March 2024 (2023: 12.9p per
share) which, if approved by Shareholders, will be payable on 26 July 2024
(see Note 8).
The Notes form part of these Financial Statements.
Company Statement of Comprehensive Income
Year ended 31 March 2024 Year ended 31 March 2023
Restated*
Note
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Income
Rental income 2 8,824 - 8,824 8,226 - 8,226
Investment income 2 - - - 168 - 168
Other income 2 242 - 242 314 - 314
9,066 - 9,066 8,708 - 8,708
Gains and losses on investments
Realised (losses)/gains on held-at- fair-value investments and investment 9 - (137) (137) - 1,446 1,446
properties
Unrealised (losses)/gains on held-at-fair-value investments and investment 9 - (11,480) (11,480) - (24,563) (24,563)
properties
Total income 9,066 (11,617) (2,551) 8,708 (23,117) (14,409)
Expenses
Investment management fees 3 (863) - (863) (990) - (990)
Other operating expenses 4 (894) - (894) (895) - (895)
Finance costs 5 (2,142) - (2,142) (1,779) (6,269) (8,048)
Total expenses (3,899) - (3,899) (3,664) (6,269) (9,933)
Profit/(loss) before taxation 5,167 (11,617) (6,450) 5,044 (29,386) (24,342)
Taxation 6 (1,251) - (1,251) (535) 1,425 890
Profit/(loss) attributable to equity shareholders of parent company
3,916 (11,617) (7,701) 4,509 (27,961) (23,452)
Earnings per Ordinary Share (pence)
7 9.14 (27.11) (17.97) 10.42 (64.62) (54.20)
* As explained in Note 24 to the Financial Statements in the Annual Report.
The total column of this statement represents the Statement of Comprehensive
Income of the Company prepared in accordance with IFRS. The revenue return and
capital return columns are supplementary to this and are prepared under
guidance published by the Association of Investment Companies. All items in
the above statement derive from continuing operations.
The Company does not have any other comprehensive income and so the total
profit/(loss), as disclosed above, is the same as the Company's total
comprehensive income.
The Notes form part of these Financial Statements.
Group Statement of Financial Position
As at As at As at
31 March 2024 31 March 2023 Restated 31 March 2022
Note Restated
£'000 £'000 £'000 £'000 £'000 £'000
Assets
Non current assets
Investment properties 9 135,112 147,055 152,330
Investments held at fair value through profit or loss 9 - - 26,871
135,112 147,055 179,201
Deferred tax asset 6 2,228 3,479 2,589
Receivables 10 5,792 6,209 5,934
143,132 156,743 187,724
Current assets 2,695 2,273 5,153
Cash and cash equivalents
Receivables 10 687 337 4,521
3,382 2,610 9,674
Total assets 146,514 159,353 197,398
Current liabilities
Payables 11 (3,428) (2,376) (2,423)
(3,428) (2,376) (2,423)
Total assets less current liabilities 143,086 156,977 194,975
Non-current liabilities
Payables 12 (2,913) (2,845) (2,854)
Borrowings 12 (49,073) (49,000) (56,723)
(51,986) (51,845) (59,577)
Net assets 91,100 105,132 135,398
Equity attributable to equity shareholders
Called up share capital 14 4,555 4,555 4,555
Share premium 15 18,446 18,446 18,446
Retained earnings 16 68,099 82,131 112,397
Total equity 91,100 105,132 135,398
213.53 310.85
Net asset value per Ordinary Share (pence) 17 244.42
These Financial Statements were approved by the Board on 11 June 2024 and were
signed on its behalf by:
John Kay
Chairman
The Notes form part of these Financial Statements.
Company Statement of Financial Position
As at As at As at
31 March 2024 31 March 2023 Restated 31 March 2022
Restated
Note
£'000 £'000 £'000 £'000 £'000 £'000
Assets
Non current assets
Investment properties 9 135,112 147,055 152,330
Investments held at fair value through profit or loss 9 200 200 27,071
135,312 147,255 179,401
Deferred tax asset 6 2,228 3,479 2,589
Receivables 10 5,792 6,209 5,934
143,332 156,943 187,924
Current assets 2,495 2,073 4,953
Cash and cash equivalents
Receivables 10 687 337 4,521
3,182 2,410 9,474
Total assets 146,514 159,353 197,398
Current liabilities
Payables 11 (3,428) (2,376) (2,423)
(3,428) (2,376) (2,423)
Total assets less current liabilities 143,086 156,977 194,975
Non-current liabilities
Payables 12 (2,913) (2,845) (2,854)
Borrowings 12 (49,073) (49,000) (56,723)
(51,986) (51,845) (59,577)
Net assets 91,100 105,132 135,398
Equity attributable to equity shareholders
Called up share capital 14 4,555 4,555 4,555
Share premium 15 18,446 18,446 18,446
Retained earnings 16 68,099 82,131 112,397
Total equity 91,100 105,132 135,398
213.53 310.85
Net asset value per Ordinary Share (pence) 17 244.42
These Financial Statements were approved by the Board on 11 June 2024 and were
signed on its behalf by:
John Kay
Chairman
The Notes form part of these Financial Statements.
Group Statement of Cashflows
Year ended Year ended
31 March 2024 31 March 2023
Note
£'000 £'000 £'000 £'000
Cash flows from operating activities
Rental income received 8,987 8,936
Dividend income received - 266
Interest and other income received 241 295
Operating expenses paid (1,694) (1,974)
Taxation paid - (29)
Net cash inflow from operating activities 18 7,534 7,494
Cash flows from investing activities
Purchase of investments held at fair value through profit or loss - (7,215)
Purchase of investment properties (11,363) (25,353)
Sale of investments held at fair value through profit or loss - 35,720
Sale of investment properties 12,633 9,746
Net cash inflow/(outflow) from investing activities 1,270 12,898
Cash flow from financing activities
Repayment of debenture stock - (26,380)
Drawdown of loan - 13,000
Fees paid on new loan - (176)
Interest paid on loans (1,962) (2,815)
Finance cost of leases (80) (78)
Payments of lease liabilities (9) (9)
Dividends paid 8 (5,661) (5,507)
Buyback of Ordinary Shares for Treasury 14 (670) (1,307)
Net cash outflow from financing activities (8,382) (23,272)
Net increase/(decrease) in cash and cash equivalents 422
(2,880)
Cash and cash equivalents at 1 April 2,273 5,153
Cash and cash equivalents at 31 March 2,695 2,273
The Notes form part of these Financial Statements.
Company Statement of Cashflows
Year ended Year ended
31 March 2024 31 March 2023
Note
£'000 £'000 £'000 £'000
Cash flows from operating activities
Rental income received 8,987 8,936
Dividend income received - 266
Interest and other income received 241 295
Operating expenses paid (1,694) (1,974)
Taxation paid - (29)
Net cash inflow from operating activities 18 7,534 7,494
Cash flows from investing activities
Purchase of investments held at fair value through profit or loss - (7,215)
Purchase of investment properties (11,363) (25,353)
Sale of investments held at fair value through profit or loss - 35,720
Sale of investment properties 12,633 9,746
Net cash inflow/(outflow) from investing activities 1,270 12,898
Cash flow from financing activities
Repayment of debenture stock - (26,380)
Drawdown of loan - 13,000
Fees paid on new loan - (176)
Interest paid on loans (1,962) (2,815)
Finance cost of leases (80) (78)
Payments of lease liabilities (9) (9)
Dividends paid 8 (5,661) (5,507)
Buyback of Ordinary Shares for Treasury 14 (670) (1,307)
Net cash outflow from financing activities (8,382) (23,272)
Net increase/(decrease) in cash and cash equivalents 422 (2,880)
Cash and cash equivalents at 1 April 2,073 4,953
Cash and cash equivalents at 31 March 2,495 2,073
The Notes form part of these Financial Statements.
Group and Company Statement of Changes in Equity
Year ended 31 March 2024
Note Share capital Share premium Retained earnings Total
£'000 £'000 £'000 £'000
Group
Net assets at 31 March 2023 4,555 18,446 82,131 105,132
Loss for the year - - (7,701) (7,701)
Dividends paid 8 - - (5,661) (5,661)
Buyback of Ordinary Shares for Treasury 14 - - (670) (670)
Net assets at 31 March 2024 4,555 18,446 68,099 91,100
Company
Net assets at 31 March 2023 4,555 18,446 82,131 105,132
Loss for the year - - (7,701) (7,701)
Dividends paid 8 - - (5,661) (5,661)
Buyback of Ordinary Shares for Treasury 14 - - (670) (670)
Net assets at 31 March 2024 4,555 18,446 68,099 91,100
Year ended 31 March 2023 Restated
Note Share capital Share premium Retained earnings Total
£'000 £'000 £'000 £'000
Group
Net assets at 31 March 2022 4,555 18,446 112,397 135,398
Loss for the year - - (23,452) (23,452)
Dividends paid 8 - - (5,507) (5,507)
Buyback of Ordinary Shares for Treasury - - (1,307) (1,307)
Net assets at 31 March 2023 4,555 18,446 82,131 105,132
Company
Net assets at 31 March 2022 4,555 18,446 112,397 135,398
Loss for the year - - (23,452) (23,452)
Dividends paid 8 - - (5,507) (5,507)
Buyback of Ordinary Shares for Treasury - - (1,307) (1,307)
Net assets at 31 March 2023 4,555 18,446 82,131 105,132
The Notes form part of these Financial Statements.
Notes to the Financial Statements
1. Accounting policies
The Financial Statements have been prepared in accordance with UK adopted
international accounting standards.
The presentational currency of the Group and Company, and functional currency
of the Company, is pounds sterling because that is the currency of the primary
economic environment in which the Group and Company operate. The Financial
Statements and the accompanying notes are presented in pounds sterling and
rounded to the nearest thousand pounds except where otherwise indicated.
(a) Basis of preparation
The Financial Statements have been prepared on a going concern basis as
disclosed in the Directors' Report in the Annual Report and on the historical
cost basis, except for the revaluation of investment properties, investment in
subsidiaries and the £35 million bank borrowings, which are valued at fair
value through profit and loss. The principal accounting policies adopted are
set out below. Where presentational guidance set out in the Statement of
Recommended Practice Financial Statements of Investment Trust Companies and
Venture Capital Trusts (the SORP) issued by the Association of Investment
Companies (AIC) in July 2022 is consistent with the requirements of IFRSs, the
Directors have sought to prepare the Financial Statements on a basis compliant
with the recommendations of the SORP, except for the allocation of finance
costs to revenue as explained in Note 1(f).
The Board has considered the requirements of IFRS 8, 'Operating Segments'. The
Board is charged with setting the Group's investment strategy. The Board has
delegated the day to day implementation of this strategy to the Investment
Manager 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 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 reports from the Investment Manager in the Annual
Report.
(b) Going concern
The Group's business activities, together with the factors likely to affect
its future development and performance, are set out in the Strategic Report in
the Annual Report. The financial position of the Group as at 31 March 2024 is
shown in the Statement of Financial Position. The cash flows of the Group for
the year ended 31 March 2024 are shown in the Group and Company Statement of
Cashflows. The Group had fixed debt totalling £49,073,000 as at 31 March
2024, as set out in Note 12; none of the borrowings is repayable before March
2026. Note 21 sets out the Group's risk management policies and procedures,
including those covering market price risk, liquidity risk and credit risk. As
at 31 March 2024, the Group's total assets less current liabilities exceeded
its total non current liabilities by a factor of 2.75. The assets of the Group
consist mainly of investment properties that are held in accordance with the
Group's investment policy. The Directors, who have reviewed carefully the
Group's forecasts for the coming year and having taken into account the
liquidity of the Group's investment portfolio and the Group's financial
position in respect of cash flows, borrowing facilities and investment
commitments (of which there is none of significance), are not aware of
anything that may cast significant doubt upon the Group's ability to continue
as a going concern. Accordingly, the Directors believe that it is appropriate
to continue to adopt the going concern basis in preparing the Financial
Statements.
(c) Basis of consolidation
The consolidated Financial Statements incorporate the Financial Statements of
the Company and the entity controlled by the Company (its subsidiary). An
investor controls an investee when it is exposed, or has rights, to variable
returns from its involvement with the investee and has ability to affect those
returns through its power over the investee. The Company consolidates the
investee that it controls. All intra-group transactions, balances, income and
expenses are eliminated on consolidation. The investment in the subsidiary is
recognised at fair value in the Financial Statements of the Company. This is
considered to be the net asset value of the Shareholders' funds, as shown in
its Statement of Financial Position.
Value and Indexed Property Income Services Limited is a private limited
company incorporated in Scotland under company number SC467598. It is a wholly
owned subsidiary of the Company and has been appointed to act as Alternative
Investment Fund Manager of the Company.
(d) Presentation of Statement of Comprehensive Income
In order to reflect better the activities of an investment trust company and
in accordance with guidance issued by the AIC, supplementary information which
analyses the Statement of Comprehensive Income between items of a revenue and
capital nature has been presented alongside the Statement of Comprehensive
Income. In accordance with the Company's Articles, net realised capital
returns may be distributed by way of dividend.
Additionally, the net revenue is the measure that the Directors believe to be
appropriate in assessing the Company's compliance with certain requirements
set out in sections 1158-1160 of the Corporation Tax Act 2010.
(e) Income
Dividend income from investments is recognised as revenue for the period on an
ex-dividend basis. Where no ex- dividend date is available, dividends
receivable on or before the period end are treated as revenue for the period.
Where the Group has elected to receive dividend income in the form of
additional shares rather than cash, the amount of cash dividend foregone is
recognised as income. Any excess in the value of shares received over the
amount of cash dividend foregone is recognised as a gain in the income
statement.
Interest receivable from cash and short term deposits and interest payable is
accrued to the end of the period.
Rental receivable and lease incentives, where material, from investment
properties under operating leases are recognised in the Statement of
Comprehensive Income over the term of the lease on a straight line basis.
Other income is recognised on an accruals basis.
(f) Expenses and Finance Costs
All expenses and finance costs are accounted for on an accruals basis.
Expenses are presented as capital where a connection with the maintenance or
enhancement of the value of investments can be demonstrated. In this respect
and in accordance with the SORP, the investment management fees have been
allocated, 100% to revenue to reflect the Board's expectations of long term
investment returns.
It is normal practice and in accordance with the SORP for investment trust
companies to allocate finance costs to capital on the same basis as the
investment management fee allocation. However, as the Company has a
significant exposure to property, and property companies allocate finance
costs to revenue to match rental income, the Directors consider that, contrary
to the SORP, it is inappropriate to allocate finance costs to capital.
(g) Other Receivables
Financial assets classified as loans and receivables are held to collect
contractual cash flows and give rise to cash flows representing solely
payments of principal and interest. As such they are measured at amortised
cost. Other receivables do not carry any interest, they have been assessed for
any expected credit losses over their lifetime due to their short-term nature.
(h) Other payables
Payables are non-interest bearing and are stated at their discounted cash
flow.
(i) Taxation
The Company's liability for current tax is calculated using tax rates that
have been enacted or substantially enacted by the date of the Statement of
Financial Position.
Deferred tax is recognised in respect of all temporary differences that have
originated but not reversed at the date of the Statement of Financial
Position, where transactions or events that result in an obligation to pay
more tax in the future or the right to pay less tax in the future have
occurred at the date of the Statement of Financial Position.
This is subject to deferred tax assets only being recognised if it is
considered more probable than not that there will be suitable profits from
which the future reversal of the temporary differences can be deducted.
Due to the Company's status as an investment trust company, and the intention
to continue to meet the conditions required to maintain approval for the
foreseeable future, the Company has not provided deferred tax on any capital
gains and losses arising on the revaluation or disposal of investments.
(j) 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.
(k) Investments
Equity investments
All equity investments were classified on the basis of their contractual
cashflow characteristics and the Group's business model for managing its
assets. The business model, which is the determining feature, was such that
the portfolio of equity investments was managed, and performance was
evaluated, on the basis of fair value. Consequently, all equity investments
were measured at fair value through profit or loss.
The Company accounts for its investment in its subsidiary at fair value. All
fair value adjustments in relation to the subsidiary are eliminated on
consolidation.
Investment property
Investment properties are initially recognised at cost, being the fair value
of consideration given, including transaction costs associated with the
investment property. Any subsequent capital expenditure incurred in improving
investment properties is capitalised in the period incurred and is included
within the book cost of the property.
After initial recognition, investment properties are measured at fair value.
Gains and losses arising from changes in fair value are included in net profit
or loss for the period as a capital item in the Statement of Comprehensive
Income and are ultimately recognised in the retained earnings.
As disclosed in Note 21, the Group leases out all of its properties on
operating leases. A property held under an operating lease is classified and
accounted for as an investment property where the Group holds it to earn
rental, capital appreciation or both. Any such property leased under an
operating lease is carried at fair value. Fair value is established by
half-yearly professional valuation on an open market basis by Savills (UK)
Limited, Chartered Surveyors and Valuers, and in accordance with the RICS
Valuation - Global Standards January 2022 (the 'RICS Red Book'). The
determination of fair value by Savills is supported by market evidence,
excluding prepaid or accrued operating lease income arising from the spreading
of lease incentives or minimum lease payments because it has been recognised
as a separate liability or asset. The fair value of investment property held
by a lessee as a right-of-use asset reflects expected cash flows (including
variable lease payments that are expected to become payable). Accordingly, if
a valuation obtained for a property is net of all payments expected to be
made, it will be necessary to add back any recognised lease liability, to
arrive at the carrying amount of the investment property using the fair value
model. These valuations are disclosed in Note 9.
(l) Cash and cash equivalents
Cash and cash equivalents comprises deposits held with banks.
(m) Non-current liabilities
All new loans and borrowings are initially measured at cost, being the fair
value of the consideration received, less issue costs where applicable.
Thereafter, all interest-bearing loans and borrowings are subsequently
measured at amortised cost. Amortised cost is calculated by taking into
account any discount or premium on settlement. The costs of arranging any
interest-bearing loans are capitalised and amortised over the life of the
loan. When the term of a loan is modified, the amortisation of costs is
adjusted in line and the loan measured at fair value on the balance sheet.
(n) Leases
The Group leases properties that meet the definition of investment property.
These right-of-use assets are presented as part of Investment Properties in
the Statement of Financial Position and held at fair value. All properties are
leased out under operating leases and rental income is recognised on a
straight line basis over the expected term of the relevant lease. Many leases
have fixed or minimum rental uplifts and where lease incentives or temporary
rent reductions have been granted as a result of the COVID pandemic, rental
income is recognised on a straight line basis over the expected term of the
lease. The capital element of lease obligations is recorded as a finance lease
payable liability in the Statement of Financial Position on inception of the
arrangement. Lease payments are apportioned between capital repayment and
finance charge, using the effective interest rate method, to produce a
constant rate of charge on the balance of the capital repayments outstanding.
The lease liability relates to the head rent on the property in Fareham. The
current lease is for a period of 99 years with an option for a further 26
years. The liability is based on the option being taken up and extinguishing
in December 2105.
(o) Critical accounting judgements and key estimates
The preparation of the Financial Statements requires the Directors to make
judgements, estimates and assumptions that may affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expenses. The critical accounting area involving a higher degree of
judgement or complexity comprises the determination of fair value of the
investment properties. The Group engages independent professional qualified
valuers to perform the valuation. Information about the valuation techniques
and inputs used in determining fair value as at 31 March 2024 is disclosed in
Note 9 to the Financial Statements.
(p) Adoption of new and revised Accounting Standards
New and revised standards and interpretations that became effective during the
year had no significant impact on the amounts reported in these Financial
Statements but may impact accounting for future transactions and arrangements.
At the date of authorisation of these Financial Statements, the following
Standards and interpretations, which have not been applied to these Financial
Statements, were in issue but were not yet effective.
Standards
IFRS 16 Amendments - Lease Liability in a Sale and Leaseback (effective 1
January 2024)
IAS 1 Amendments - Presentation of Financial Statements (effective 1 January
2024)
IAS 7 and IFRS 7 Amendments - Supplier Finance (effective 1 January 2024)
IAS 21 Amendments - Lack of Exchangeability (effective 1 January 2025)
The Directors do not expect the adoption of these Standards and
interpretations (or any other Standards and interpretations which are in issue
but not effective) will have a material impact on the Financial Statements of
the Group in future periods.
(q) Prior period adjustments and errors
Prior period adjustments may arise as a result of a change in accounting
policies or to correct a material error.
Generally, the majority of prior period items arise from corrections and
adjustments that are the natural result of estimates inherent in the
accounting process. Such
adjustments constitute normal transactions in the year in which they are
identified, and are accounted for accordingly. Material errors discovered in
prior period figures are corrected retrospectively by amending opening
balances and comparative amounts for the prior period.
2. Income
Year ended Year ended
31 March 2024 31 March 2023
Restated
Group Company Group Company
£'000 £'000 £'000 £'000
Other operating income
Rental income 8,824 8,824 8,226 8,226
Interest receivable on short term deposits 183 183 155 155
Other income 59 59 159 159
Investment income
Dividends from listed investments in UK - - 168 168
Total income 9,066 9,066 8,708 8,708
3. Investment management fee
Year ended 31 March 2024 Year ended 31 March 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Group and Company
Investment management fee 863 - 863 990 - 990
A summary of the terms of the management agreement is given in the Directors'
Report in the Annual Report.
OLIM Property Limited received an investment management fee of £863,000 (2023
- £990,000), the basis of calculation of which is detailed in the Directors'
Report in the Annual Report.
4. Other operating expenses
Year ended Year ended
31 March 2024 31 March 2023
Group Company Group Company
£'000 £'000 £'000 £'000
Fee payable to the Group's auditor for the audit of the Group's accounts 86 86 65 65
Directors' fees 109 109 97 97
NIC on Directors' fees 5 5 3 3
Fees for company secretarial services 270 270 237 237
Direct property costs - - (23) (23)
Other expenses 424 424 516 516
894 894 895 895
Directors' fees comprise the Chairman's fees of £33,000 (2023 - £30,000),
the Audit and Management Engagement Committee Chairman's fees of £27,000
(2023 - £24,500) and fees of £24,500 (2023 - £22,000) per annum paid to
each other Director.
Additional information on Directors' fees is given in the Directors'
Remuneration Report in the Annual Report.
5. Finance costs
Year ended Year ended
31 March 2024 31 March 2023
Group Company Group Company
£'000 £'000 £'000 £'000
Interest payable on:
9.375% Debenture Stock 2026 - - 456 456
Less amortisation of issue premium - - (111) (111)
Bank loan interest payable 1,988 1,988 1,753 1,753
Loan expenses derecognised - - 385 385
Gain on loan modification - - (908) (908)
Borrowing costs expensed on recognition of fair value - - 80 80
Effective interest 35 35 24 24
Amortisation of loan expenses 39 39 22 22
Finance costs attributable to lease liabilities 80 80 78 78
2,142 2,142 1,779 1,779
In June 2022, the 9.375% Debenture Stock 2026 was repaid early at a premium of
£6,380,000 and a balance of £111,000 unamortised premium from the issue of
the debenture was expensed, resulting in a capital charge of £6,269,000 for
the year to 31 March 2023.
On 28 November 2019, the Company entered into a £22,000,000 fixed term
secured loan facility for a period of up to seven years to 30 November 2026.
On 3 March 2021, this facility was extended until 31 March 2031. During the
year ended 31 March 2023, the loan was increased to £35,000,000 and extended
for a further two years until 31 March 2033, costs previously incurred on the
loan were extinguished at this point.
6. Taxation
Year ended 31 March 2024 Year ended 31 March 2023
Restated
Revenue Capital Total Revenue Capital T
o
£'000 £'000 £'000 £'000 £'000 t
a
l
£
'
0
0
0
a) Analysis of the tax credit/(charge) for the year:
Group and Company
Current tax - - - (979) 979 -
Deferred tax (1,251) - (1,251) 444 446 890
(1,251) - (1,251) (535) 1,425 890
Factors affecting the total tax credit/(charge) for year:
Loss before taxation (6,450) (24,342)
Tax (credit) thereon at 25% (2023 - 19%) (1,613) (4,625)
Effects of:
Non taxable dividends - 32
Losses on investments not relievable 2,904 4,392
Finance costs (40) (689)
1,251 (890)
Year ended 31 March 2024 Year ended 31 March 2023
Restated
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
b) Factors affecting future tax charges
Unutilised tax losses 8,913 13,918
Potential tax benefit at 25% 2,228 3,479
2,228 3,479
Recognised as a deferred tax non-current asset 2,228 3,479
Not recognised as a deferred tax asset - -
2,228 3,479
The Company and Group have deferred tax assets of £2,228,000 (2023 restated -
£3,479,000) at 31 March 2024 relating to total accumulated unrelieved tax
losses carried forward of £8,913,000 (2023 restated - £13,918,000). The
Company and Group have recognised deferred tax assets of £2,228,000 (2023
restated - £3,479,000), based on forecast profits for the next five years.
7. Return per Ordinary Share
Year ended Year ended
31 March 2024 31 March 2023
Restated
Group Company Group Company
£'000 £'000 £'000 £'000
The return per Ordinary Share is based on the following figures:
Revenue return 3,916 3,916 4,509 4,509
Capital return (11,617) (11,617) (27,961) (27,961)
Weighted average number of Ordinary Shares in issue 42,855,131 42,855,131 43,272,601 43,272,601
Return per share - revenue 9.14p 9.14p 10.42p 10.42p
Return per share - capital (27.11p) (27.11p) (64.62p) (64.62p)
Total return per share (17.97p) (17.97p) (54.20p) (54.20p)
8. Dividends
Year ended Year ended
31 March 2024 31 March 2023
£'000 £'000
Dividends on Ordinary Shares:
Third quarterly dividend of 3.20p per share (2023 - 3.00p) paid 28 April 2023 1,376 1,307
Final dividend of 3.60p per share (2023 - 3.60p) paid 4 August 2023 1,548 1,568
First quarterly dividend of 3.20p per share (2023 - 3.00p) paid 27 October 1,369 1,296
2023
Second quarterly dividend of 3.20p per share (2023 - 3.10p) paid 26 January 1,368 1,336
2024
Dividends paid in the period 5,661 5,507
The third interim dividend of 3.20p (2023 - 3.20p), paid on 26 April 2024, has
not been included as a liability in these financial statements.
The final dividend of 3.60p (2023 - 3.60p), being paid on 26 July 2024, has
not been included as a liability in these financial statements.
Set out below is the total dividend paid and proposed in respect of the
financial year, which is the basis upon which the requirements of Sections
1158 - 1159 of the Corporation Tax Act 2010 are considered. The current year's
revenue available for distribution by way of dividend is £3,916,000 (2023
restated - £4,509,000).
Year ended Year ended
31 March 2023 31 March 2022
£'000 £'000
First quarterly dividend of 3.20p per share (2023 - 3.00p) paid 27 October 1,369 1,296
2023
Second quarterly dividend of 3.20p per share (2023 - 3.10p) paid 26 January 1,368 1,336
2024
Third quarterly dividend of 3.20p per share (2023 - 3.20p) payable 26 April 1,365 1,376
2024
Final quarterly dividend of 3.60p per share (2023 - 3.60p) payable 26 July 1,529 1,549
2024
5,631 5,557
The final dividend is based on the latest share capital of 42,476,147 Ordinary
Shares excluding those held in Treasury.
9. Investments
Investment properties Equities Total
£'000 £'000 £'000
Group
Cost at 31 March 2023 146,525 - 146,525
Fair value movement brought forward 530 - 530
Valuation at 31 March 2023 - Restated 147,055 - 147,055
Purchases 12,737 - 12,737
Sales proceeds (13,063) - (13,063)
Realised losses on sales (137) - (137)
Fair value movement in year (11,480) - (11,480)
Valuation at 31 March 2024 135,112 - 135,112
Investment properties Investment in subsidiary Equities Total
£'000 £'000 £'000 £'000
Company
Cost at 31 March 2023 146,525 200 - 146,725
Fair value movement brought forward 530 - - 530
Valuation at 31 March 2023 - Restated 147,055 200 - 147,255
Purchases 12,737 - - 12,737
Sales proceeds (13,063) - - (13,063)
Realised losses on sales (137) - - (137)
Fair value movement in year (11,480) - - (11,480)
Valuation at 31 March 2024 135,112 200 - 135,312
The fair value valuation given by Savills plc excludes prepaid or accrued
operating lease income arising from the spreading of lease incentives or
minimum future uplifts and for adjustments to recognise finance lease
liabilities for one leasehold property, both in accordance with IFRS 16. The
valuation has, therefore, been decreased.
As at
As at 31 March 2023
31 March 2024 Restated
£'000 £'000
Savills plc valuation 138,100 150,500
Operating lease assets (5,911) (6,298)
Finance lease liabilities 2,923 2,853
135,112 147,055
Decrease in fair value (2,988) (3,445)
The fair value valuation given by Savills plc includes £4,200,000 relating to
the property at Mitchell Close, Fareham, where contracts have been exchanged
and completed for sale in May 2024, £700,000 relating to a property at
Thurrock where contracts have been exchanged for sale in June 2024 and
£3,700,000 relating to The Bishop's Finger, London, where contracts have been
exchanged for sale in July 2024.
Transaction costs
During the year expenses were incurred in acquiring and disposing of
investments classified as fair value through profit or loss. These have been
expensed through capital and are included within gains and losses on
investments in the Statement of Comprehensive Income. The total costs were as
follows:
Year ended Year ended
31 March 2024 31 March 2023
£'000 £'000
Purchases 154 9
Sales 179 32
333 41
The fair values of the investment properties were independently valued by
professional valuers from Savills (UK) Limited, acting in the capacity of
External Valuers as defined in the RICS Red Book (but not for the avoidance of
doubt as an External Valuers of the portfolio as defined by the Alternative
Investment Fund Managers Regulations 2013). The valuations were prepared on
the basis of Fair Value as required by the IFRS (International Financial
Reporting Standards). In addition, the valuations have also been prepared in
accordance with RICS Valuation - Professional Standards VPS 3.5 Fair Value and
VPS 4.1 Valuations for Inclusion in Financial Statements. The definition of
Fair Value is set out in IFRS 13 and is adopted by the International
Accounting Standards Board as follows:
"The price that would be received to sell an asset, or paid to transfer a
liability, in an orderly transaction between market participants at the
measurement date"
The RICS Red Book directs us to consider that Fair Value is consistent with
the concept of Market Value, the definition of which is set out in Valuation
Practice Statement 4 1.2 of the Red Book, as follows:
"The estimated amount for which an asset or liability should exchange on the
valuation date between a willing buyer and a willing seller in an arm's length
transaction after proper marketing and where the parties had each acted
knowledgeably, prudently and without compulsion."
The valuations have been arrived at predominantly by reference to market
evidence for comparable property (Level 3 of the Fair Value Hierarchy). As
part of Savills' standard process, the valuations were carried out by
specialist valuers, which were peer reviewed and reviewed again prior to the
valuation date. During the review process, the various characteristics of each
property were taken into consideration.
Passing rent range Fair value - Group Key unobservable Blended
Property portfolio £ £'000 input Inputs range yield
Supermarkets 87,000 - 986,458 40,500 Net Equivalent Yield 5.50% - 7.50% 6.25%
Industrial 49,500 - 486,680 39,250 Net Equivalent Yield 5.50% - 8.50 % 6.50%
Leisure - Bowling and Health Club 217,160 - 610,324 26,350 Net Equivalent Yield 8.00% - 8.75% 8.25%
Hotels 360,000 - 373,549 11,900 Net Equivalent Yield 5.75% - 6.25% 6.00%
Other 168,610 - 599,166 11,800 Net Equivalent Yield 5.50% - 10.50% 8.00%
Public Houses 120,000 - 185,000 8,300 Net Equivalent Yield 4.75% - 6.00% 5.25%
138,100
A 25 bps decrease in the equivalent yield applied would have increased the net
assets attributable to the Group and Company's Shareholders and the total gain
for the year by £5,250,000. A 25 bps increase in the equivalent yield applied
would have decreased the net assets attributable to the Group and Company's
Shareholders and the total gain for the year by £4,975,000. A 5% decrease in
the rental value applied would have decreased the net assets attributable to
the Group and Company's Shareholders and the total gain for the year by
£3,550,000. A 5% increase in the rental value applied would have increased
the net assets attributable to the Group and Company's Shareholders and the
total loss for the year by £3,325,000.
Investment in subsidiary
Country of incorporation Date of incorporation % Principal activity
ownership
Name
Value and Indexed Property Income Services Limited, having its registered UK 16 January 2014 100 AIFM
office c/o Maven Capital Partners UK LLP, Kintyre House, 205 West George
Street, Glasgow G2 2LW.
10. Receivables
As at As at
31 March 2024 31 March 2023
Restated
Group Company Group Company
£'000 £'000 £'000 £'000
Amounts falling due within one year:
Operating lease asset 119 119 89 89
Other receivables 338 338 194 194
Prepayments and accrued income 57 57 54 54
Rents receivable 173 173 - -
687 687 337 337
Amounts falling due after more than one year:
Operating lease asset 5,792 5,792 6,209 6,209
6,479 6,479 6,546 6,546
Many of the Company's leases provide for minimum and maximum increases of
rental at future rent reviews. Minimum increases have been averaged over the
life of the lease, generating an operating lease asset.
11. Payables
As at As at
31 March 2024 31 March 2023
Group Company Group Company
£'000 £'000 £'000 £'000
Amounts due to OLIM Property Limited 65 65 53 53
Accruals and other creditors 2,966 2,966 1,907 1,907
Value Added Tax payable 387 387 408 408
Lease liability 10 10 8 8
3,428 3,428 2,376 2,376
The amount due to OLIM Property Limited comprises the monthly management fee
for March 2024, subsequently paid in April 2024.
12. Non-current liabilities
As at As at
31 March 2024 31 March 2023
Group Company Group Company
£'000 £'000 £'000 £'000
Bank loans held at fair value
Bank loan b/fwd 34,116 34,116 35,000 35,000
Balance of costs incurred - - (250) (250)
Costs written off in the year - - 385 385
Gain on modification of debt - - (908) (908)
Borrowing costs expensed on recognition of fair value - - 80 80
Costs incurred in the year - - (215) (215)
Effective interest 35 35 24 24
34,151 34,151 34,116 34,116
Bank loans held at amortised costs
Bank loan 15,000 15,000 15,000 15,000
Balance of costs incurred (116) (116) (138) (138)
Add: Debit to income for the year 38 38 22 22
14,922 14,922 14,884 14,884
Total bank borrowings 49,073 49,073 49,000 49,000
9.375% Debenture Stock 2026
Add: Balance of premium less issue expenses - - 111 111
Less: Credit to income for the year - - (111) (111)
- - - -
Total borrowings 49,073 49,073 49,000 49,000
Lease liability payable in more than one year
- within 2 - 5 years 42 42 28 28
- over 5 years 2,871 2,871 2,817 2,817
Total payables 2,913 2,913 2,845 2,845
51,986 51,986 51,845 51,845
The Company has a £15,000,000 fixed term secured loan facility for a period
of up to ten years to 31 March 2026 (2023 - £15,000,000). At 31 March 2024,
£11,893,750 was drawn down at a rate of 4.344% and £3,106,250 was drawn down
at a rate of 3.60%. The terms of the loan facility contain financial covenants
that require the Company to ensure that:
• in respect of each 3 month period ending on 31 March and 30
September (the Half Year dates), net rental income shall be at least 200 per
cent of interest costs;
• in respect of each 12 month period beginning immediately after
31 March and 30 September, net rental income shall be at least 200 per cent of
interest costs; and
• at all times, the loan shall not exceed 60 per cent of the value
of the properties that have been charged.
On 28 November 2019, the Company entered into a £22,000,000 fixed term
secured loan facility for a period of up to seven years to 30 November 2026.
On 3 March 2021, this facility was extended until 31 March 2031. On 27 April
2022, the loan was increased to £30,000,000 and on 22 June 2022, the loan was
increased to £35,000,000 and extended for a further two years until 31 March
2033, costs previously incurred on the loan were extinguished at this point.
Subsequent to this, the loan is recorded on the Statement of Financial
Position at it's fair value in the year to 31 March 2023. As at 31 March 2024,
the loan is recorded on an amortising basis. 95% of the loan is at a fixed
rate and 5% at a floating rate of interest. At 31 March 2024, £35,000,000 was
drawn down at a net effective interest rate of 3.81%. The terms of the loan
facility contain financial covenants that require the Company to ensure that:
• the total debt ratio does not at any time exceed 50 per cent;
• projected interest cover is not less than 200 per cent at all
times; and
• the Loan to Value shall not exceed 68% of the value of the
properties that have been charged.
The fair values of the loans are disclosed in Note 21 and the Net Asset Value
per share, calculated with the borrowings at fair value, is disclosed in Note
17.
13. Deferred tax
Under IAS 12, provision must be made for any potential tax liability on
revaluation surpluses. As an investment trust, the Company does not incur
capital gains tax and no provision for deferred tax is therefore required in
this respect.
As disclosed in Note 6, a deferred tax asset has been recognised to reflect
the estimated value of tax losses carried forward which are likely to be
capable of offset against future profits.
14. Share capital
As at As at
31 March 2024 31 March 2023
£'000 £'000
Authorised:
5,600 5,600
56,000,000 Ordinary Shares of 10p each (2023 - 56,000,000)
Called up, issued and fully paid:
42,664,550 Ordinary Shares of 10p each (2023 - 43,012,464) 4,266 4,301
Treasury shares:
2,885,425 Ordinary Shares of 10p each (2023 - 2,537,511) 289 254
4,555 4,555
The ordinary share capital on the Statement of Financial Position relates to
the number of Ordinary Shares in issue and held in Treasury. Only when shares
are cancelled, either from Treasury or directly, is a transfer made to the
Capital Redemption Reserve.
During the year, the Company repurchased 347,914 Ordinary Shares at a cost of
£670,000 including expenses. Subsequent to the year end, the Company
repurchased 188,403 Ordinary Shares at a cost of £315,000, including
expenses. All of these shares were placed in Treasury.
15. Share premium
As at As at
31 March 2024 31 March 2023
Group Company Group Company
£'000 £'000 £'000 £'000
Opening balance 18,446 18,446 18,446 18,446
16. Retained earnings
As at As at
31 March 2024 31 March 2023 Restated
Group Company Group Company
£'000 £'000 £'000 £'000
Opening balance at 31 March 2023 82,131 82,131 112,397 112,397
Loss for the year (7,701) (7,701) (23,452) (23,452)
Dividends paid (see Note 8) (5,661) (5,661) (5,507) (5,507)
Buyback of Ordinary Shares for Treasury (see Note 14) (670) (670) (1,307) (1,307)
Closing balance at 31 March 2024 68,099 68,099 82,131 82,131
The table below shows the movement in retained earnings analysed between
revenue and capital items.
Year ended 31 March 2024 Year ended 31 March 2023 Restated
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Group
Opening balance at 31 March 2023 (2,468) 84,599 82,131 (1,470) 113,867 112,397
Profit/(loss) for the year 3,916 (11,617) (7,701) 4,509 (27,961) (23,452)
Dividends paid (see Note 8) (5,661) - (5,661) (5,507) - (5,507)
Buyback of Ordinary Shares for Treasury - (670) (670) - (1,307) (1,307)
(see Note 14)
Closing balance at 31 March 2024 (4,213) 72,312 68,099 (2,468) 84,599 82,131
Company
Opening balance at 31 March 2023 (3,555) 85,686 82,131 (2,557) 114,954 112,397
Profit/(loss) for the year 3,916 (11,617) (7,701) 4,509 (27,961) (24,954)
Dividends paid (see Note 8) (5,661) - (5,661) (5,507) - (5,507)
Buyback of Ordinary Shares for Treasury - (670) (670) - (1,307) (1,307)
(see Note 14)
Closing balance at 31 March 2024 (5,300) 73,399 68,099 (3,555) 85,686 82,131
Of the Company's Retained Earnings of £68,099,000 (2023: £82,131,000),
£74,797,000 (2023 restated: £75,375,000) is considered to be distributable.
17. Net asset value per equity share
The net asset values per Ordinary Share are based on the Group's net assets
attributable of £91,100,000 (2023 restated - £105,132,000) and on the
Company's net assets attributable of £91,100,000 (2023 restated -
£105,132,000) and on 42,664,550 (2023 - 43,012,464) Ordinary Shares in issue
at the year end, excluding shares held in Treasury.
The net asset value per Ordinary Share, based on the net assets of the Group
and the Company adjusted for borrowings at fair value (see Note 21) of
£92,070,000 (2023 restated - £105,384,000) is 215.80p (2023 restated -
245.01p).
As at As at
31 March 2024 31 March 2023
Restated
Group Company Group Company
£'000 £'000 £'000 £'000
Net assets at 31 March 2024 91,100 91,100 105,132 105,132
Fair value adjustments 970 970 252 252
Net assets with borrowings at fair value 92,070 92,070 105,384 105,384
Number of shares in issue 42,664,550 42,664,550 43,012,464 43,012,464
Net asset value per share 213.53p 213.53p 244.42p 244.42p
Net asset value per share with borrowings at fair value 215.80p 215.80p 245.01p 245.01p
18. Reconciliation of income from operations before tax to net cash inflow
from operating activities
Year ended Year ended
31 March 2024 31 March 2023
Restated
Group Company Group Company
£'000 £'000 £'000 £'000
Income from operations before tax (2,551) (2,551) (14,409) (14,409)
Losses on investments 11,617 11,617 23,117 23,117
Investment management fee (863) (863) (990) (990)
Other operating expenses (894) (894) (895) (895)
(Increase)/decrease in receivables (322) (322) 653 653
Increase/(decrease) in other payables 547 547 18 18
Net cash from operating activities 7,534 7,534 7,494 7,494
19. Reconciliation of current and non-current liabilities arising from
financing activities
Year ended Year ended
31 March 2024 31 March 2023
Group Company Group Company
£'000 £'000 £'000 £'000
Cash movements
Payment of rental (for leasing) 89 89 87 87
Repayment of debenture - - 20,000 20,000
Drawdown of loans (for financing) - - (13,000) (13,000)
Loan costs - - 80 80
Non-cash movements
Finance costs (for leasing) (159) (159) (78) (78)
Changes in fair value - - 578 578
Issue premium on debenture - - 111 111
Effective interest (35) (35) (24) (24)
Amortisation of loan premium and expenses and fair value adjustment (38) (38) (22) (22)
Change in debt in the year (143) (143) 7,732 7,732
Opening debt at 31 March 2023 (51,853) (51,853) (59,585) (59,585)
Closing debt at 31 March 2024 (51,996) (51,996) (51,853) (51,583)
20. Relationship with the Investment Manager and Related Parties
Value and Indexed Property Income Services Limited is a wholly owned
subsidiary of Value and Indexed Property Income Trust PLC and all costs and
expenses are borne by Value and Indexed Property Income Trust PLC. Value and
Indexed Property Income Services Limited has not traded during the year.
Matthew Oakeshott is a director of OLIM Property Limited, which has an
agreement with the Group to provide investment management services, the terms
of which are outlined in the Directors' Report in the Annual Report and in
Note 3.
21. Financial instruments and investment property risks
Risk management
The Group's and the Company's financial instruments and investment property
comprise property and other investments, cash balances, loans and payables and
receivables that arise directly from its operations; for example, in respect
of sales and purchases awaiting settlement or debtors for accrued income.
The Managers have dedicated investment management processes which ensures that
the Investment Policy is achieved. The portfolio is reviewed on a periodic
basis by a senior investment manager and by OLIM Property's Investment
Committee.
Additionally, the Manager's Compliance Officer continually monitors the
Group's investment and borrowing powers and reports to the Manager.
The main risks that the Group faces from its financial instruments are:
(i) market risk (comprising price risk and interest rate risk)
(ii) liquidity risk
(iii) credit risk
The Board regularly reviews and agrees policies for managing each of these
risks. The Manager's policies for managing these risks are summarised below
and have been applied throughout the year.
(i) Market risk
The fair value of, or future cash flows from, a financial instrument held by
the Group may fluctuate because of changes in market prices. This market risk
comprises three elements - price risk, interest rate risk and currency risk.
Price risk
Price risks (i.e. changes in market prices other than those arising from
interest rate or currency risk) may affect the value of the Group's
investments.
All investment properties held by the Group are commercial properties located
in the UK with long, strong income streams.
Price risk sensitivity
If market prices at the date of the Statement of Financial Position had been
10% higher or lower, while all other variables remained constant, the return
attributable to ordinary shareholders for the year ended 31 March 2024 would
have increased/decreased by £13,511,000 (2023 - (restated) increase/decrease
of £14,706,000) and equity reserves would have increased/decreased by the
same amount.
Interest rate risk
Interest rate movements may affect:
• the fair value of the investments in property; and
• the level of income receivable on cash deposits.
The possible effects on fair value and cash flows that could arise as a result
of changes in interest rates are taken into account when making investment and
borrowing decisions.
The Board imposes borrowing limits to ensure gearing levels are appropriate to
market conditions and reviews these on a regular basis. Borrowings comprise
five and ten year bank loans, providing secure long term funding. It is the
Board's policy to maintain a gearing level, measured on the most stringent
basis of calculation after netting off cash equivalents, of between 25% and
50%. Details of borrowings at 31 March 2024 are shown in Note 12.
Interest risk profile
The interest rate risk profile of the portfolio of financial assets and
liabilities at the statement of financial position date was as follows:
Weighted average period for which rate is fixed Weighted average interest rate % Fixed rate Floating rate
Years £'000 £'000
At 31 March 2024
Assets
Sterling - 3.79 - 2,695
Total assets - 3.79 - 2,695
At 31 March 2024
Liabilities
Sterling 6.90 3.92 47,365 1,708
Total liabilities 6.90 3.92 47,365 1,708
At 31 March 2023
Assets
Sterling - 3.18 - 2,273
Total assets - 3.18 - 2,273
At 31 March 2023
Liabilities
Sterling 6.51 3.63 50,000 -
Total liabilities 6.51 3.63 50,000 -
The weighted average interest rate on borrowings is based on the interest rate
payable, weighted by the total value of the loans. The maturity dates of the
Group's loans are shown in Note 12.
The floating rate assets consist of cash deposits on call, earning interest at
prevailing market rates. The Group's equity and property portfolios and short
term receivables and payables are non interest bearing and have been excluded
from the above tables. All financial liabilities are measured at amortised
cost.
Interest rate sensitivity
The sensitivity analyses below have been determined based on the exposure to
interest rates at the statement of financial position date and the stipulated
change taking place at the beginning of the financial year and held constant
throughout the reporting period in the case of instruments that have floating
rates.
If interest rates had been 100 basis points higher or lower and all other
variables were held constant, the Group's:
• profit for the year ended 31 March 2024 would increase/decrease
by £18,000 (2023 - increase/decrease by £21,000). This is mainly
attributable to the Group's exposure to interest rates on its floating rate
cash balances.
• the Group holds no financial instruments that will have an
equity reserve impact.
In the opinion of the Directors, the above sensitivity analyses are not
representative of the year as a whole, since the level of exposure changes
frequently as part of the interest rate risk management process used to meet
the Group's objectives.
Currency sensitivity
There is no sensitivity analysis included as the Group has no outstanding
foreign currency denominated monetary items. Where the Group's equity
investments (which are non-monetary items) are affected, they have been
included within the other price risk sensitivity analysis so as to show the
overall level of exposure.
(ii) Liquidity risk
This is the risk that the Group will encounter difficulty in meeting
obligations associated with its financial liabilities.
The Group's assets of cash or near cash securities and investment properties
which, by their nature, are less readily realisable. The maturity of the
Group's mainly fixed rate borrowings is set out in the interest risk profile
section of this Note.
The table below details the Group's remaining contractual maturity for its
financial liabilities, based on the undiscounted cash outflows, including both
interest and principal cash flows, and on the earliest date upon which the
Group can be required to make payment.
Carrying value Expected cashflows Due within 3 months Due between Due after 1 year
£'000 £'000 £'000 3 months and £'000
1 year
£'000
At 31 March 2024
Borrowings 49,073 63,666 493 1,478 61,695
Leases 2,923 7,286 22 67 7,197
Other payables 3,418 3,418 3,418 - -
Total 55,414 74,370 3,933 1,545 68,892
At 31 March 2023
Borrowings 50,270 62,378 405 1,245 60,728
Leases 2,853 7,177 22 65 7,090
Other payables 1,500 1,500 1,500 - -
Total 54,623 71,055 1,927 1,310 67,818
(iii) Credit risk
This is the failure of a counterparty to a transaction to discharge its
obligations under that transaction that could result in the Group suffering a
loss. Cash is held only with reputable banks with high quality external credit
rating, which are monitored on a regular basis.
Credit risk exposure
In summary, compared to the amounts on the Group Statement of Financial
Position, the maximum exposure to credit risk during the year to 31 March was
as follows:
Year ended Year ended
31 March 2024 31 March 2023
Restated
Statement of Maximum exposure Statement of Financial Position Maximum exposure
Financial Position £'000 £'000 £'000
£'000
Current assets
Cash and cash equivalents 2,695 9,593 2,273 27,725
Other receivables 687 2,787 337 8,239
3,382 12,380 2,610 35,964
(iv) Property risk
The Group's commercial property portfolio is subject to both market and
specific property risk. Since the UK commercial property market has been
markedly cyclical for many years, it is prudent to expect that to continue.
The price and availability of credit, real economic growth and the constraints
on the development of new property are the main influences on the property
investment market.
Against that background, the specific risks to the income from the portfolio
are tenants being unable to pay their rents and other charges, or leaving
their properties at the end of their leases. All leases are on full repairing
and insuring terms, with upward only rent reviews and the average unexpired
lease length to the break option is 11.6 years (2023 - 12.6 years). Details of
the tenant and geographical spread of the portfolio are set out in the Annual
Report. The long term record of performance through the varying property
cycles since 1987 is set out in the Annual Report. OLIM Property is
responsible for property investment management, with surveyors, solicitors and
managing agents acting on the portfolio under OLIM Property's supervision.
The Group leases out its investment property to its tenants under operating
leases. At 31 March 2024, the future minimum lease receipts, including minimum
future uplifts in rent, under non-cancellable leases are as follows:
As at As at
31 March 2024 31 March 2023
£'000 £'000
Due within 1 year 10,383 9,338
Due between 2 and 5 years 39,073 36,302
Due after more than 5 years 75,930 89,151
125,386 134,791
This amount comprises the total contracted rent receivable as at 31 March
2024.
None of the Group's financial assets is past due or impaired.
Fair values of financial assets and financial liabilities
All assets and liabilities of the Group other than receivables and payables
and the borrowings are included in the Statement of Financial Position at fair
value.
(i) Fair value hierarchy disclosures
Investment properties, investment subsidiaries and the £35 million bank
borrowings are held in the Statement of Financial Position at fair value.
The table below sets out fair value measurements using the IFRS 13 Fair Value
hierarchy:
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
At 31 March 2024
Investment properties - - 135,112 135,112
- - 135,112 135,112
At 31 March 2023 (Restated)
Investment properties - - 147,055 147,055
- - 147,055 147,055
Company and Group numbers per the above fair value disclosures are the same
except for the investment of £200,000 made by the Company in its subsidiary,
which was the subject of an inter-group transfer in 2014. This investment
falls under Level 3.
Fair value categorisation within the hierarchy has been determined on the
basis of the degree to which the inputs to the fair value measurements are
observable and the significance of the inputs to the fair value measurement in
its entirety as follows:-
Level 1 - inputs are unadjusted quoted prices in an active market for
identical assets
Level 2 - inputs, not being quoted prices, are observable, either directly
(i.e. as prices) or indirectly (i.e. derived from
prices)
Level 3 - inputs are not observable
There were no transfers between Levels during the year.
(ii) Borrowings
The fair value of borrowings has been calculated at £48,103,000 as at 31
March 2024 (2023 - £48,748,000) compared to a Statement of Financial Position
value in the Financial Statements of £49,073,000 (2023 - £49,000,000) per
Note 12.
The fair values of the loans are determined by a discounted cash flow
calculation based on the appropriate inter-bank rate plus the margin per the
loan agreement. There were no transfers between Levels during the year.
All other assets and liabilities of the Group are included in the Statement of
Financial Position at fair value.
(iii) Financial instruments by category
Financial assets
Fair value through profit Amortised cost
or loss
2024 2023 2024 2023
£'000 £'000 £'000 Restated
£'000
Cash and cash equivalents - - 2,695 2,273
Other receivables - - 6,479 6,546
Total financial assets - - 9,174 8,819
Financial liabilities
Fair value through profit Amortised cost
or loss
2024 2023 2024 2023
Restated
£'000 £'000 £'000 £'000
Other payables - - (5,954) (5,103)
Loans and other borrowings - (34,116) (49,073) (14,884)
Total financial liabilities - (34,116) (55,027) (19,987)
22. Capital management policies and procedures
The Group's capital management objectives are:
• to ensure that the Group will be able to continue as a going
concern; and
• to maximise the return to its equity shareholders in the form of
long term real growth in dividends and capital value without undue risk.
The capital of the Group consists of equity, comprising issued capital,
reserves, borrowings and retained earnings.
The Board monitors and reviews the broad structure of the Group's capital.
This review includes:
• the planned level of gearing which takes into account the
Manager's view of the market and the extent to which revenue in excess of that
which requires to be distributed should be retained.
The Group's objectives, policies and processes for managing capital are
unchanged from the preceding accounting period.
Details of the Group's gearing and financial covenants are disclosed in Note
12.
23. Commitments
The Board is recommending the payment of a final dividend of 3.6p per Ordinary
Share (2023: 3.6p) and, subject to receiving Shareholder approval at the 2024
AGM, will be paid on 26 July 2024 to all Shareholders on the register 28 June
2024.
There are no significant subsequent events for the Group or the Company,
though purchases and sales of property in the normal course of business which
completed after the year end are disclosed in the Annual Report.
24. Correction of errors
During the year to 31 March 2024, the Group discovered an error in the
calculation of the operating lease asset brought forward, being the operating
lease income arising from the spreading of lease incentives or minimum future
uplifts over the length of the lease term for each of the investment
properties. The 2023 financial statements have been restated to take account
of this error, and the consequential tax impact, which resulted in a decrease
to Net Asset Value of £1,058,000 with the Net Asset Value per Ordinary Share
moving from 246.88p to 244.42p.
As a result of the restatement, the Group's basic earnings per share increased
from -55.22p to -54.20p. There has been no impact on the total operating,
investing or financing cash flows for the years ended 31 March 2024 and 2023.
The error has been corrected by restating each of the affected financial
statement line items for prior periods. The following tables summarise the
impacts on the Group and Company financial statements.
(i) Statement of Financial Position
Group Company
Impact of correction of error Impact of correction of error
As at 31 March 2022
As previously reported Adjustments As As previously reported Adjustments As
£'000 £'000 restated £'000 £'000 restated
£'000 £'000
Assets
Non current assets
Investment properties 155,838 (3,508) 152,330 155,838 (3,508) 152,330
Investments held at fair value through profit or loss 26,871 - 26,871 27,071 - 27,071
182,709 (3,508) 179,201 182,909 (3,508) 179,401
Deferred tax asset 4,091 (1,502) 2,589 4,091 (1,502) 2,589
Receivables 2,238 3,696 5,934 2,238 3,696 5,934
189,038 (1,314) 187,724 189,238 (1,314) 187,924
Current assets
Cash and cash equivalents 5,153 - 5,153 4,953 - 4,953
Receivables 4,709 (188) 4,521 4,709 (188) 4,521
9,862 (188) 9,674 9,662 (188) 9,474
Total assets 198,900 (1,502) 197,398 198,900 (1,502) 197,398
Current liabilities
Payables (2,423) - (2,423) (2,423) - (2,423)
Total assets less current liabilities 196,477 (1,502) 194,975 196,477 (1,502) 194,975
Non-current liabilities
Payables (2,854) - (2,854) (2,854) - (2,854)
Borrowings (56,723) - (56,723) (56,723) - (56,723)
(59,577) - (59,577) (59,577) - (59,577)
Net assets 136,900 (1,502) 135,398 136,900 (1,502) 135,398
Equity attributable to equity shareholders
Called up share capital 4,555 - 4,555 4,555 - 4,555
Share premium 18,446 - 18,446 18,446 - 18,446
Retained earnings 113,899 (1,502) 112,397 113,899 (1,502) 112,397
Total equity 136,900 (1,502) 135,398 136,900 (1,502) 135,398
Group Company
Impact of correction of error Impact of correction of error
As at 31 March 2023
As previously reported Adjustments As As previously reported Adjustments As
£'000 £'000 restated £'000 £'000 restated
£'000 £'000
Assets
Non current assets
Investment properties 150,636 (3,581) 147,055 150,636 (3,581) 147,055
Investments held at fair value through profit or loss - - - 200 - 200
150,636 (3,581) 147,055 150,836 (3,581) 147,255
Deferred tax asset 4,537 (1,058) 3,479 4,537 (1,058) 3,479
Receivables 2,366 3,843 6,209 2,366 3,843 6,209
157,539 (796) 156,743 157,739 (796) 156,943
Current assets
Cash and cash equivalents 2,273 - 2,273 2,073 - 2,073
Receivables 599 (262) 337 599 (262) 337
2,872 (262) 2,610 2,672 (262) 2,410
Total assets 160,411 (1,058) 159,353 160,411 (1,058) 159,353
Current liabilities
Payables (2,376) - (2,376) (2,376) - (2,376)
Total assets less current liabilities 158,035 (1,058) 156,977 158,035 (1,058) 156,977
Non-current liabilities
Payables (2,845) - (2,845) (2,845) - (2,845)
Borrowings (49,000) - (49,000) (49,000) - (49,000)
(51,845) - (51,845) (51,845) - (51,845)
Net assets 106,190 (1,058) 105,132 106,190 (1,058) 105,132
Equity attributable to equity shareholders
Called up share capital 4,555 - 4,555 4,555 - 4,555
Share premium 18,446 - 18,446 18,446 - 18,446
Retained earnings 83,189 (1,058) 82,131 83,189 (1,058) 82,131
Total equity 106,190 (1,058) 105,132 106,190 (1,058) 105,132
(ii) Statement of Comprehensive Income
For the year ended Group Group Group
31 March 2023 Impact of correction of error Impact of correction of error Impact of correction of error
As previously reported Adjustments As
res
tat
ed
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Income
Rental income 8,358 - 8,358 (132) - (132) 8,226 - 8,226
Investment income 168 - 168 - - - 168 - 168
Other income 314 - 314 - - - 314 - 314
8,840 - 8,840 (132) - (132) 8,708 - 8,708
Gains and losses on investments
Realised gains on held-at-fair-value investments and investment properties - 1,446 1,446 - - - 1,446 1,446
-
Unrealised (losses)/gains on held-at-fair-value investments and investment - (24,695) (24,695) - 132 132 - (24,563) (24,563)
properties
Total income 8,840 (23,249) (14,409) (132) 132 - 8,708 (23,117) (14,409)
Expenses
Investment management fees (990) - (990) - - - (990) - (990)
Other operating expenses (895) - (895) - - - (895) - (895)
Finance costs (1,779) (6,269) (8,048) - - - (1,779) (6,269) (8,048)
Total expenses (3,664) (6,269) (9,933) - - - (3,664) (6,269) (9,933)
Profit/(Loss) before taxation 5,176 (29,518) (24,342) (132) 132 - 5,044 (29,386) (24,342)
Taxation (979) 1,425 446 444 - 444 (535) 1,425 890
Profit/(Loss) attributable to equity shareholders of parent company 4,197 (28,093) (23,896) 312 132 444 4,509 (27,961) (23,452)
Earnings per Ordinary Share (pence) 9.70 (64.92) (55.22) 0.72 0.30 1.02 10.42 (64.62) (54.20)
For the year ended Company Company Company
31 March 2023 Impact of correction of error Impact of correction of error Impact of correction of error
As previously reported Adjustments As
res
tat
ed
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Income
Rental income 8,358 - 8,358 (132) - (132) 8,226 - 8,226
Investment income 168 - 168 - - - 168 - 168
Other income 314 - 314 - - - 314 - 314
8,840 - 8,840 (132) - (132) 8,708 - 8,708
Gains and losses on investments
Realised gains on held-at-fair-value investments and investment properties - 1,446 1,446 - - - 1,446 1,446
-
Unrealised (losses)/gains on held-at-fair-value investments and investment - (24,695) (24,695) - 132 132 - (24,563) (24,563)
properties
Total income 8,840 (23,249) (14,409) (132) 132 - 8,708 (23,117) (14,409)
Expenses
Investment management fees (990) - (990) - - - (990) - (990)
Other operating expenses (895) - (895) - - - (895) - (895)
Finance costs (1,779) (6,269) (8,048) - - - (1,779) (6,269) (8,048)
Total expenses (3,664) (6,269) (9,933) - - - (3,664) (6,269) (9,933)
Profit/(Loss) before taxation 5,176 (29,518) (24,342) (132) 132 - 5,044 (29,386) (24,342)
Taxation (979) 1,425 446 444 - 444 (535) 1,425 890
Profit/(Loss) attributable to equity shareholders of parent company 4,197 (28,093) (23,896) 312 132 444 4,509 (27,961) (23,452)
Earnings per Ordinary Share (pence) 9.70 (64.92) (55.22) 0.72 0.30 1.02 10.42 (64.62) (54.20)
Additional Information
In accordance with section 435 of the Companies Act 2006, the Directors advise
that the financial information set out in this announcement does not
constitute the Group's statutory Financial Statements for the period ended 31
March 2024 but is derived from these Financial Statements. The statutory
Financial Statements for the year ended 31 March 2023 have been delivered to
the Registrar of Companies and contained an audit report which was unqualified
and did not constitute statements under S498(2) or S498(3) of the Companies
Act 2006.
The Financial Statements for the period ended 31 March 2024 have been prepared
in accordance with UK adopted international accounting standards. The
Financial Statements for the period ended 31 March 2024 will be forwarded to
the Registrar of Companies following the Company's Annual General Meeting. The
Auditors have reported on these Financial Statements; their reports were
unqualified and did not contain statements under Section 498(2) or (3) of the
Companies Act 2006.
The Group and Company Statement of Financial Position at 31 March 2024 and the
Group and Company Statement of Comprehensive Income, Statement of Changes in
Equity and Statement of Cash Flows for the year then ended have been extracted
from the Group's Financial Statements. Those Financial Statements have not yet
been delivered to the Registrar.
The 2024 Annual Report and Financial Statements will be posted to Shareholders
shortly and will contain the Notice of the Annual General Meeting of the
Company to be held on Thursday, 11 July 2024 at 12.30pm at the offices of
Shepherd & Wedderburn LLP, 9 Haymarket Square, Edinburgh, EH3 8FY.
For Value and Indexed Property Income Trust PLC
Maven Capital Partners UK LLP
Company Secretary
11 June 2024
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